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Updated August 22, 2022You’re reading an excerpt of Founding Sales: The Early-Stage Go-To-Market Handbook, a book by Pete Kazanjy. The most in-depth, tactical handbook ever written for early-stage B2B sales, it distills early sales first principles and teaches the skills required, from being a founder selling to being an early salesperson and a sales leader. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, commentary and future updates, and a high-quality PDF download.
Now that we’ve discussed the profile that you’d like to see on your sales team, we can talk about where to go to find it—or how to get it to come find you.
It’s important to realize that not all sources of hire will require the same approach or be appropriate at every stage of your growth. Some sources make more sense earlier on, but become less relevant as you grow. And some sources make it easy to home in on higher quality from the get go, while others will require more screening. These are the various sources to consider early on.
When you’re hiring your very first real sales staffer, agencies can be a great source of hire. Staffing agencies are set up to provide you with ready-to-go, qualified candidates who are seeking new roles, and for this, they typically take a fee of 20–30% of that candidate’s first-year salary. While 25% of a ~$60K base salary for an account executive is substantially more costly than a job-board posting or even a staff-referral fee, there are a variety of benefits to this approach.
Firstly, you want to target a sales-specific staffing agency, like The Lions in San Francisco, Betts Recruiting, or Rainmakers. Staffing agencies, like talent agencies, have first crack at all the best talent, because they have crafty recruiters in-house who are both proactively seeking it out and also filtering and vetting that talent. And because salespeople have short average tenures at organizations, they typically stay in close touch with recruiters who have placed them before—meaning that those recruiters have a hot list of great candidates they can engage. So not only do these recruiting agencies have ready-to-go candidates, those candidates are typically pre-vetted and screened known good hires.
Now, this isn’t always the case. Remember that these recruiters work with all manner of sales staff, from candidates who sell ~$1K advertising packages to small businesses at Yelp to enterprise reps who sell ~$1M deals to Fortune 500 clients. So it’s very important that you proactively characterize the profile that you’re seeking (which we conveniently defined above) to the recruiters that you’re working with—and continue to emphasize that profile as you get resumes. If you see candidates that do not fit your profile, it’s very important to drop the boom on those recruiters quickly and correct that. If you don’t, you could end up in big trouble.
cautionBecause these recruiters are paid based on placement, they have a big incentive to work quickly to get a butt in a seat, and to place a candidate that they have in-hand. This is good, because they work with urgency; it can also be bad, because they want to place that candidate quickly, before he takes another role or decides he doesn’t want to move roles after all. So if you are seeing candidates that don’t match the profile that you’re looking for, and you don’t push back, these staffing agency recruiters will smell a pushover. As a result, they’ll not only shove other, less-qualified candidates toward you, but now they’ll actively push their lower-quality candidates your way too, reserving higher-quality candidates for clients they know are pickier. So be stern in maintaining your filter.
Warnings aside, there are great benefits of working with staffing agencies to fill your earliest roles. As noted, they are quick and can help reduce your sourcing workload so you can focus on other things. Eventually, referral recruiting will likely be your highest-volume and highest-quality source of hire. But when you’re first starting out, you don’t have an existing staff of folks to refer candidates. Nor do you have a network, personally, to draw from. Candidates provided via staffing agencies can help you with exactly that—so when you’re looking at these candidates early on, you should consider that network value in your thinking.
If the candidate is coming out of a SaaS sales organization that’s currently peaking, he can help be your future funnel of talent out of that organization into yours and give you inside knowledge as to who was good and who was not. Staffing agencies can also be helpful with respect to compensation details. On the one hand, they have an incentive to enlarge any compensation offer to a candidate they place, since they are looking at a 25% piece of whatever incremental money is paid. On the other hand, they have extremely accurate state-of-the-market compensation information for the candidates they are placing, knowing both candidates’ current salaries and the offers made to those they’ve placed.
There are a number of other things to be mindful of when working with staffing agencies. One is to not skimp when it comes to negotiating fees. While it may be tempting to try to get that agency down to 20% or 17.5% of first-year compensation for their fee, what you’re actually doing is setting up an incentive for them to only show you candidates that they don’t think they can place with other clients paying full freight. And given the opportunity cost of an unfilled, or poorly filled, sales position, this sort of savings can end up being extremely costly. However, what you can sometimes negotiate is a biannual or quarterly payment plan on your hires, which will help lessen the impact on your cash flow.
Another trick is to not work with too many agencies concurrently. Again, these recruiters are motivated, so if you have three or four agencies sending you resumes, you’ll quickly be overwhelmed. I find that one or two is usually enough. It can be helpful to let them both know that you’re working with another agency, as well. It adds some additional motivation.
I learned a trick for constraining resume overload from the CEO of Pure Storage: one in, one out. Tell the agency recruiters that you’re working with that you will only take one resume at a time and that they cannot send you another one before you have given the thumbs up or down. This creates a helpful incentive wherein the recruiter has to be mindful of sending you the best fits for the job, and the highest-quality staff first, lest you get turned off by bad resumes and don’t respond. This cuts down on the incentive to test you with a lower-quality candidate to see if you might take them off their hands. If you have a good working relationship with your agency account manager, have done a rigorous intake meeting, and have a well-specified and documented candidate profile, a lot of these tricks will be less necessary. But proper incentive alignment can make sure that things don’t go sideways.
Later in your scaling process, when you have a base of staff from which to draw referrals, and potentially in-house recruiting staff to do proactive sourcing, you will likely not need agency help as much. But at the very beginning, it can be extremely helpful and worth the cost.
When you’re making your first hires, referral recruiting can be challenging. As mentioned above, you don’t have any staff to refer candidates to you, and you yourself likely do not have a network of sales professionals to pull from. However, once you have established those precursors, referral recruiting is simply the lowest-cost, highest-quality source of hire that you can leverage.
First things first: Make sure that your staff has access to recruiting marketing materials, like the job postings in question. It doesn’t have to be polished, but it needs to be available as a hyperlink that can be emailed/texted/tweeted/shared on Facebook. Here’s an an example, and here’s another one. Additionally, you’ll want your staff to be intimate with the hiring profile that you’re looking for. Just as you communicated that clearly to staffing agency recruiters, you now need to communicate it to your own staff—who should be fairly familiar with the type of person you hire—as your agents in sniffing out talent.
Second, you’ll want to have a referral-recruiting bonus in place. Depending on the seniority of the role, you can do something between ~$2.5K and ~$5K. The goal of a referral-recruiting bonus isn’t to keep referral recruiting top of mind for your staff; you generally won’t be able to get your folks to constantly think about recruiting, because they have their jobs to do. That will have to be your job. However, the referral bonus is there so that when someone does fall into the lap of one of your team members, they’ll work hard to get that candidate across the line.
Lastly, and requiring the most amount of labor, is the recurring activity of both reminding your staff about your hiring needs and engaging in proactive referral-recruiting activity. The best way to keep recruiting top of mind for your staff is to bake it into recurring team meetings. When you’re in team or all-hands meetings, note the open roles that the organization is trying to fill and the successes you’ve had to date. When it comes to proactive referral recruiting, though, it’s going to take some more elbow grease. I wrote an article in First Round Review about proactive referral recruiting; the long and short of it is that sitting down with your staff—walking through their LinkedIn and Facebook connections, flagging those who fit your hiring profile—is a great way to create a lead list of potential candidates and fill your hiring funnel.
When you have successes via referral recruiting, spread them around. Make sure that everyone knows that this approach works, that the best hires come from this source, and that you too can get a nice referral bonus check for helping out!
Even though your quality of candidate will likely be the highest coming from referrals, in that your staff will implement a good filter, it’s still important to maintain the level of screening discussed below. And at the same time, you’ll want to provide a feedback loop to the staff who refer people. If a candidate ends up not being a fit, it’s important to express why, so that your staff can get better at referring good fits. Feedback also ensures that your staff knows that you are executing on their referrals—even if it didn’t end up in a hire this time.
Job boards get a lot of flack. The primary ding against them is that because the candidates on job boards are looking, they must not be any good; if they were, they’d be promoted and happy in their existing organizations. There is some truth to this; there will be candidates that come through postings who are lower quality or less apt to fit your profile. But that doesn’t mean that all candidates that come through postings will be a poor fit. It just means your signal-to-noise ratio may be noisier than it is with referral recruiting or direct sourcing. However, sales professionals are active networkers, career-minded and riser-oriented. They are typically on the lookout for good options, so even the best staff can have an eye open for their next opportunities. Couple this with the fact that the candidates on job boards are active candidates—they are actively seeking new roles—and job boards can be a high-velocity source of candidate flow for your sales hiring.
The one thing that you will have to be particularly mindful of is screening. There is no filter on candidates who apply from your job board posting, so you’ll have to have a screening mindset from the very beginning to ensure that you don’t chew up unnecessary time running poorly qualified candidates through a time-consuming interview process. Even as you write your job ad—using the hiring profile you’ve documented—you should be clear about what your required and nice-to-have options are. You can even make it clear what your screening and functional interviewing (mock pitches, and so on) process is, both to excite those who are eager to tackle a challenge (the folks you’re looking for) and to proactively turn away those who are turned off by that sort of legwork.
Depending on what the candidate flow looks like from a job board, you may have to tune your postings. If you aren’t getting enough candidates, you may need to dial back the commentary on screening rigor; if you are getting a large number of unqualified candidates, you may have to dial it up to dissuade those folks from applying and crufting up your candidate flow. Generally speaking, if you’re getting a dozen or so good-quality resumes per week from a posting, that’s a good rate of candidate flow.
Direct sourcing is the process by which you use candidate databases—like resume databases, professional social networks like LinkedIn, or talent search engines like TalentBin—to search out and proactively qualify potential candidates, and then reach out to those that look like they could match your profile.
On the one hand, direct sourcing is great because you can find exactly those candidates that have the characteristics that you’re looking for, and not waste time on potentially unqualified inbound applications that don’t match your profile. On the other hand, it takes a substantial amount of work, and the potential candidates that you’re sourcing may not be looking for a role (known in recruiting parlance as passive candidates). Not only do you have to search out relevant candidates in the talent pools you’re sourcing from (say, LinkedIn), you have to build a lead list and reach out to those potential candidates. Sound like sales? Good catch. It is.
As such, be mindful of the labor requirements for this sort of exercise. At the earliest stages of your hiring ramp, when you don’t have a recruiter on hand to assist you, you may be better off sticking to staffing agencies, referral recruiting, and job postings. Read more on stage-appropriate recruiter usage in this article I wrote for First Round Review.
However, if you do decide that you want to allocate a few dozen hours to a passive-candidate sourcing campaign, these are some things to think about. Unlike software engineering, design, or product professionals, who don’t spend much time proactively on LinkedIn, salespeople are on LinkedIn constantly. They use LinkedIn for prospecting and learning about their prospects; they spend almost as much time there as they do in their CRM and email. For that reason, they tend to have extremely up-to-date, and well-embellished, LinkedIn profiles, often with direct contact information.
This is a boon to you, as a direct sourcer, because you can use the criteria we established above—company membership, role execution focus/title, and so on—as search criteria, so that only those who match those criteria are returned in search results. Effectively, you can screen via search query. You will likely have to pay for one of LinkedIn’s premium products, but you won’t need the top of the line, LinkedIn Recruiter. And if you tune your search queries correctly, you’ll cut your searches down substantially so that you get under any results limits that a cheaper version of LinkedIn imposes.
exampleDon’t just search for “Sales, San Francisco Bay Area.” Instead use a combination of specific titles and companies of interest, or something like this: “market development” OR “sales development” OR “business development rep” OR “business development representative” AND “LinkedIn” OR “Simply Hired” OR “Indeed” OR “Box” OR “Salesforce.” And don’t forget your industry’s acronyms; these reps are just as likely to turn up by searching “SDR” OR “MDR” OR “BDR.”
Contacting these candidates shouldn’t be hard. While LinkedIn provides InMail access for a fee—and sales professionals will see their inbound LinkedIn messages because they’re strong LinkedIn users—InMails are generally a contact vector of last resort. Email and phone is preferable. Again, because salespeople know that prospects are often looking at their profiles, they will merchandise their work email and phone; because salespeople are typically open to new opportunities (everything’s for sale for a price, right?), they’ll often post their personal email and cell phone too. Make use of that in your outreach. It will make you more efficient and raise your contact rates.
While you are able to hone your searches and qualification criteria more minutely in this fashion, these folks are often not actively looking for a role and may have less motivation to jump through screening hoops. This does not mean that you should not screen them. Instead, this may require a “sell, screen, sell” approach. You will have to start the conversation in a selling mode, getting the candidate excited about the role and the opportunity, until they say, “Yes, I would like to go through an interview process.” At that point, you should run them through the same screening and interview process you’d use with any candidate.
cautionThere are a lot of really bad salespeople at industry bellwethers who would jump at the opportunity to work at an exciting startup—but who turn out to be absolutely terrible and just haven’t yet been flushed out of their organization. I can’t tell you how many LinkedIn AEs failed our basic written screen at TalentBin—typos, grammatical errors, the works. Do you want that person to be your first line of offense with clients? Don’t be the place to which they jump before being pushed.
While sourcing for the top of your hiring funnel can stock your pipeline with higher-probability candidates, your screening, interviewing, and closing process is what will maximize your conversion of these potential hires.
I find that a lot of organizations don’t know what they’re looking to achieve in the screening and interviewing part of the hiring funnel. I boil it down as this: the screening and interviewing process exists to authenticate that would-be candidates have the characteristics required for success in your sales org. Authentication is the key. While experience at a prestigious organization, a degree from a compelling school, or a shiny-looking resume may be potential leading indicators of success at your organization, the goal of the screening and interviewing process is to prove it, and once proved, to close the candidate on working at your organization. All the steps in your screening and interviewing process should support that goal.