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Why Most VP's of Sales Fail

Mary Grothe October 5 2022

Meet Host, Mary Grothe

Mary Grothe is a former #1 MidMarket B2B Sales Rep who after selling millions and breaking multiple records, formed House of Revenue™, a Denver-based firm of fractional Revenue Leaders who currently lead the marketing, sales, customer success, and RevOps departments for 10 companies nationwide. In the past year, they've helped multiple 2nd stage growth companies between $5M - $20M, on average, double their MRR within 10 months, resulting in an average ROI of 1,454% and an average annual revenue growth eclipsing $3.2 million.

 

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Hey, Revenue Radio®. It's Mary Grothe, by myself today. My microphone and cell phone keep me company, but that's okay. In that, we will talk about why most VPs of Sales fail. There's so much on this topic. You can Google and read to your heart's content on the internet. But I'm going to tell you from my perspective why I think most VPs of Sales fail. Part of it is on them. Part of it is on the company. So, let's break this down.

First, most scaling companies don't know when to hire their first VP of Sales. It's typically a chicken or egg problem. Here's what I mean by this. When you've scaled past founder-led sales, who's the next hire? Do you bring on a VP-level person that can build infrastructure that can build process, build playbook, and grow a team? Or do you bring on somebody that can execute and sell? Well, it's hard.

Typically, when you're scaling a company, and you move on from founder-led sales, there's no overhead for that when the founders are doing sales. You're not paying a base salary. You're not paying commission. Most founders aren't detail-oriented, so they hate using a CRM. There's usually no CRM. They keep track of everything in their email or an Excel spreadsheet. There's no overhead for management because they are the "salespeople." They're managing themselves.

They have a high close rate because they're the founder. They're smart about their product or service, and they have clout. So, when meeting with a prospective client, the way a founder can talk about their product or service will be unmatched by anyone who will come on and take that sales function. There are a few things that make it difficult.

One area where the VP of Sales will fail is that you take the founder sale I just described. It's very inexpensive with a high close rate. They take that model, and they try to replicate it. Then, they say, "Do we hire a VP of Sales, or do we hire a salesperson?" These two things happen: a VP of Sales gets hired, and they're not scrappy enough. So, for an early-stage company, investors often want that real flashy like the former IBM X app if it's investor-backed. They want these big flashy titles. Okay, cool. But you want to take a VP of Sales who worked in a Fortune company or even a Fortune company. You want to put them in an environment where they don't even have a CRM yet. That sounds like a disaster, but it happens all the time.

Another area that they'll fail is that we bring in someone overqualified, and they're not scrappy enough. They can't build from scratch, have been wildly successful in their careers, but had a lot of infrastructures already in place and sales team members. They've been responsible for a large sales organization. Great. Well, you don't want that person coming into a scrappy startup.

Then, there's my favorite. They are excited about working for a startup and doing something different. "Oh, if you've never worked for a startup, [laughter] let it not be a VP of Sales position, please." The company's survival depends on generating sales and doing it as profitably and quickly as possible. If this person has not worked for a startup, they will want a structure of black and white. They will not work well in a gray world with ambiguity and a lack of definition around systems or processes. Then, the worst is around the product or service itself.

As a founder, I want you to pause for a second. Founders, CEOs, and leaders ask yourselves, "How many times has your product or service ..." "... or the terms about pricing or contract changed when you're selling?" As the founder, you're sitting with a prospect, and you can create whatever deal you want while at the deal table. It's your company.

You may have closed many deals. You were able to come up with terms on the spot or say your product does something that it doesn't yet do. You can immediately go back and cascade that message to the product team. And within days, when new customers use it, they will have that feature. That stuff no longer exists when you bring on a VP of Sales or your first sales hire. This scenario is just so hard to get right. It's so hard. Plus, a VP of Sales typically is a high-earner. You're looking at what they want to make. You're trying to convince them to work for you for equity for future payout milestones or bonuses.

It can get interesting. That poor VP of Sales potentially is walking away from a very successful career with the product-market fit on their product or service with a great performing sales team. They're walking away from many comforts and potentially good money in the hope of your company's success. They will not be a good fit if they haven't worked for a startup and scaled it. That's a big failure point for a new VP of Sales.

Now, this is not every scenario, right? I'm just talking about--. You get past your startup scale and want to grow more. It happens. Let's say you didn't pull the trigger on a VP of Sales. You hire a salesperson and then make that awful mistake of saying, "Just sell for a few months, and then you can build a team, and you'll be the VP of Sales." Have they ever done that before? Have they ever sold for a startup that doesn't have a product-market fit that doesn't have a plethora of happy paying customers that are referenceable?

As a salesperson, let me tell you this. I'm a salesperson, but I'm also a founder and CEO. So, for you founders and CEOs that need to hear this message, it's not easy for salespeople to sell a product or service with no name brand recognition without a lot of paying customers or without that reference. As a salesperson, we get questions like, "Well, this all looks great. I think we're ready to move forward." "We just need to speak with three customers of our same size ..." "... that came off of our same product or service ..." "... that we're using today in this specific use case." You're like, "Well, I work for a small company." "We don't even have three customers in your industry." They're not set up for success.

Okay, I'm just going to pause because any good sales guru or trainer listening to this will say, "Mary don't you know how to overcome that." Yes, I know how to overcome that. But in reality, when you are a small company, you don't have a lot of market share or name recognition, and buyers will be very skeptical about paying for your product or service. So, having those case study testimonials or references for clients brings social proof and validation to the conversation. That is highly beneficial to get the sale.

Okay, let's move on. So, that is a scenario. You bring on this salesperson and tell them, "Hey, just sell for a few months." "Then you can go into VP of Sales. You can build a team around you." "Can we all just for a moment talk about the job description ..." "... of a VP of Sales. I have seen this dozen and dozens of times. A VP of Sales requires much knowledge, training, and real-world experience. Great.

The VPs of Sales work with Finance. They inherit a number. They know how to interpret data. They know how to survey the total addressable market and carve it into a serviceable bull market into a target market. They know how to survey territories and geographical areas to understand how to assign or develop quotas. Great VPs of Sales can understand the metrics in a revenue economics plan. They know the client acquisition cost. They know what the client acquisition cost payback period is. They can understand where there's growth and room for opportunity to grow revenue on existing accounts.

A great VP of Sales can build a compensation plan that will incentivize the salesperson to do the right things for the right amount of money. They know how to make a comp plan that has accelerators in it. It has ways to increase its commission based on the volume of sales. It has milestone bonuses. There are opportunities for the salesperson to win awards recognition trips or maybe a President Club if your company is big enough to have something like that.

A great VP of Sales can build a job description that makes sense, not some lame bro culture sales ad that says, "Are you a rock star with more horsepower than your current company is allowing you to execute?" "You want to come work for one of the fastest growing, coolest startups out there?" You're like, "Okay, these job ads have to go."

That's not how we market for salespeople. If I hear the word rockstar one more time about a salesperson, can we all agree that a rockstar is a person that sings and plays an instrument and is on a stage? That is a rock star. Let's let them be on the stage. Rockstars are all over the place. They're tough to manage. They're difficult people to be around. They have a ton of ego. They're messy. They drink. They do drugs. They tear up hotel rooms. They need rehab by the time they're.

We don't need a sales team of rockstars. Let's let rock stars play music, be on the stage, and be in a rock band. Let them be that. We need to stop using that descriptor for salespeople. As a woman who grew up in the sales ranks, I am anything but a rock star. I have big hair today, though, and hoop earrings. I may be a little rock star sequel today.

On that note, I'm a sales professional who puts my client first. I'm a sales professional who learns my product inside and out to be an engaged, knowledgeable technical ninja in front of my prospective clients. I'm a salesperson who is professional and articulate, does my homework, and shows up prepared. I know how to serve my prospect and win their business. I'm a salesperson that doesn't stop the sale at winning a prospect. I stay through the entire onboarding experience to ensure that everything promised was delivered even when it's not in my job description.

I'm not a rockstar. Quit marketing to me that way. We look at how we're going to make this first sales hire and how we're going to grow this team. Unfortunately, we have this mentality that we're going to put somebody who's a great salesperson into a VP of Sales role. I rattled off many things typically in a VP of Sales job description. I got to the comp plan part and then got into the actual. How do we write a job out of our job description for this hire?

Then, we have to think about the playbook. What is the actual systematic sales process in the playbook? Also, what is the tech stack? How well-versed is this VP of Sales in CRM and automation? What does the VP of Sales know about partnering with marketing? What do they know about sales enablement? What does this VP of Sales know about market testing with the customers' understanding of ICP and buyer personas, and how do they need to adjust the sales pitch in conversation with each unique buyer? Is a VP of Sales able to draw out a process map with the "if-then" and map out all unique processes?

If you're hiring a salesperson, you're saying, "Oh, there's a VP of Sales. Then, what training are you providing? What courses are you putting through? What mentorship are you giving them to be successful?

A glorified salesperson is not a VP of Sales. Get your terminology right, or you're going to fail. It's so frustrating. How often have I seen somebody with a VP of Sales title and heard all the time with the CEOs I work with? They have a VP of Sales title, but they're not a VP of Sales. No kidding. Tell me more about that. It's so common. We can stop the madness now. We have a lot of VP of Sales who have a title that isn't a VP of Sales. This is a huge failure point. So why is it up on that?

Let's say your company is a little bit bigger. Maybe the sales org already has two people. We're talking about a real VP of sales position. They've got some experience. They've got a good track record. They've scaled some companies and maybe been along for an IPO. They've got some great experience. So, they come on board. We're talking about a slightly more mature company with a sales org. You bring on that VP of Sales. Why might they fail?

Okay, here are some common things that I've seen companies do. They have a great product for SMBs. Then their investors are pushing them to grow that average sales revenue. They say, "Well, the easiest way to do ..." "... that is to have a larger customer because it's a per user per month ..." "... fee or it's CPs license fees volume-based whatever it is." So, let's go after larger customers. Okay great.

The VP of Sales gets tasked with entry into a new market, but no testing is done. Is the product or service even viable for that market segment? What research confirmed that you could sell that product or service into that market? That buyer has a use case for it agrees. It solves their problems. It goes head-to-head or is better than the current competitors in that space that your price point is validated, tested, and confirmed by the market and that they're willing to spend that money. Often, those steps don't happen.

The VP of Sales is tasked with growing in a market segment, but the product and marketing teams didn't do their work to validate. That it even should be in that segment. That could be where the VP of Sales fails. What about inheriting a team that is burnt out, overworked untrained, inconsistently hitting numbers, and the culture is just toxic? What are you doing as a leader from the top to fix that? It comes down to you. A VP of Sales can't magically come in and fix that toxicity in a sales org overnight.

Often, it's fed because your revenue departments run in silos. They don't have marketing support. Marketing doesn't listen to them. They're frustrated with the leads that come through. They're not valuable or worth anything. Often there's friction between sales and operations. Maybe operations and sales haven't historically worked well together in the past. So, Operations thinks that sales oversell. They must clean up their messes if there hasn't been camaraderie at the leadership level and people working holistically on a single revenue plan. Often, the salespeople are going to pay the price for that. They are the ones who have compensation based on performance.

If anyone's going to have a bad attitude or be worried about getting fired or not maximizing their comp plan and Faux-TE. By the way, that's a topic for another episode is Faux-TE. Faux, as in not real Faux-TE, TE is on-target earnings. I think it is one of the -- Okay, I'm going to save all my thoughts for a different episode. Let me just tell you, if I'm already calling it Faux-TE, you should know how I feel about it.

Anyway, we'll make a note for future episodes of Faux-TE. I did not come up with that, by the way. I read it on LinkedIn. I will track down the source to credit that person because it's brilliant. Faux TE. We're going to talk about that. What did the VP of Sales inherit if they inherited a toxic mess? Please do not expect them to turn that around overnight. That is going to be an effort by everyone.

When your VP of Sales says their initial research when they come into the role, and they come to you and say, "I believe that these are the root causes of why ..." "... we're experiencing the symptoms that we are with lack of performance." Then, you need to listen to them. You need to honor that. You need to be willing to make suitable investments to change the ecosystem at the core root of the problem.

Quit expecting them to solve the problem by only addressing the symptoms, which is where many VPs of Sales are brought in to manage the symptoms. Is there a lack of sales? You know we want to go upmarket or whatnot, and we want to expand. The symptom is our average revenue per sale is too low. We believe the way to maximize that is to get bigger clients et cetera.

What is the symptom? What are they trying to solve? Go to the root and dig in. Allow your of Sales the time to do that. When this brilliant, wonderful VP of Sales comes back to you with a complete data report, you must do something. You can't look at it and say, "Okay. Well, that's not possible." "I can't allocate any more budget to your department." You know, "I can't allocate for any more headcount." "You're going to have to work with what you have."

Well, come on. Let's be realistic. That doesn't even make any sense. You want a different outcome but doing the same thing. Great. I think you brought on a brilliant, talented VP of Sales who now must do their job. But their hands were tied behind their back, blindfolded, and duct tape over their mouth. It isn't realistic. Then you're going to wonder why they don't perform in months. They will get turned if they don't proactively look for another job. You're going to have a lot of turnovers in that position.

My advice to you is to understand why most VPs of Sales fail. When you make this hire looking at the stage of business, you are in, be smart in conducting the proper evaluation of where you are and who you need in the role. From there, you decide: is it a salesperson? Is it a VP of Sales? Is it a sales manager? What is it? When you look at that, then you are educated. You should be in a better spot than your peers have been in the past and avoid some of those mistakes.

The last thing I will say about VP of Sales, especially in an earlier stage company, is that there's a difference in VP of Sales between the left brain and right brain. In an earlier stage company, whether a startup or second stage, a VP of Sales is usually tasked with two things: infrastructure - process, playbooks, systems, technology, all of that, and sales - coaching, mentoring training, and actual selling and execution. Good luck finding a VP of Sales unicorn who can do both. Even if they can do both, they will have a bias toward one side. They're very rare.

As an example, I can do both. You can plug me in as a VP of Sales. I'll build you a great process. I will build a great team. I can build a great playbook. But my passion, energy, and bias are toward the actual sale in front of customers and in the field. That's the work I like; it's not the work behind the desk.

I'm not detail-oriented. So, if you hire me, you better feel comfortable with the fact. If you hire someone like me who can do both, they're always going to have the bias to be out in the field doing the actual work with their team, be more than player-coach, not doing the work behind the scenes, and be detail-oriented. Then there could be a failure point there for you.

We've had a lot. We've heard a lot. A VP of Sales has a stronger bias toward the actual sales component of the role they're brought in to build a playbook. It's a joke, right? They're brought in to help build a CRM, which is a mess. They just don't have the talent and skills to bring forth in that area. They're also VP of Sales who are operationally minded and systems minded. Guess what? They're going to build the best infrastructure for you. They're going to develop the best playbook. But when it comes to getting out in the field, you're going to feel like you are pulling teeth to get that VP of Sales to be present with your sales team and to be on calls.

They will be way more comfortable behind their desk and in their spreadsheets than in the field. So, the challenge with that is an earlier stage. It would be best if you had somebody that's going to be actively engaged with the customer because they are -- when you're smaller, it's more focused on revenue generation.

In a bigger company, you probably want a VP of Sales that is more operationally minded. In the bigger sales, you have sales managers typically in the field with their salespeople. So, your VP of Sales shouldn't be that player-coach. They need to be detail-oriented, process-oriented, and operationally minded. That's a better VP of Sales. This goes so deep, and I'm hoping this was helpful for people trying to evaluate, "Well, who do we hire next?" "Is it a salesperson? Is a VP of Sales?" What's the difference between a sales manager and a VP of sales? "We're at this specific growth stage; what do we do?"

It is a topic near and dear to my heart. It's how we got started in the business about five years ago. Hopefully, that was helpful. Until next time.


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