The Biggest Mistake I Made as Head of Sales

I’d like to think we can all learn from not only our own mistakes, but also from each other’s. I want to share with you the biggest mistake I made in my career, and it happened to be as a co-founder and Sales VP.

I was a co-founder of a software company called Open Environment. We developed middleware to help large companies connect various back-end systems. As a startup, my role began as the sole salesperson, and as we grew, my role quickly progressed into sales manager. Within four years I was the head of sales, leading a team of 35+ sales reps, sales engineers and a small group of consultants.

Just being around as a company after three years is reason to celebrate for most startups. But we weren’t just surviving, we were thriving. We went from revenue of under $1 million in our first year to nearly $15 million by year four.

As a result of us doing really well, we dreamed of taking our new company public. The founders all got together and we decided to recruit the CEO of one of our Fortune 500 customers to be our CEO.

How My Mistake Started

The new CEO joined our team, helped us raise new financing, and ultimately took us public.

As the Sales VP, I had my finger on the pulse. I knew exactly how much each rep was bringing in and what each rep needed to achieve for us to hit our collective goal.

Once our new CEO was on board, we sat down to talk about strategic growth and how we could meet our new – and aggressive – benchmarks.

For me, it was a simple case of math. I knew my reps were maxed out at how much they could each pull in, so my answer was to add headcount. My sales approach was to invest in our team, because without a sales team, you really can’t grow a business.

I tried to lay it out for the CEO that an investment in people was the best investment we could make at that time. Logically, if we were increasing our sales goal, then we should also increase our sales force. I pushed hard for more headcount, but my logic was met with strong resistance.

The new CEO had come from a different industry – he never sold middleware, or anything to business, before. He had an approach to sales that didn’t take into account what we were selling, or how we had been successful thus far in achieving our sales goals. He just didn’t want to invest any money into hiring more reps.

The Big Mistake

As the head of sales, anything that happened, good or bad, was on me. So although I’m referring to this as “my biggest sales mistake”, we all know it’s a collective company effort, but I took the fall as the one in charge.

My mistake was that I lacked the numbers to articulate my sales approach. Not only did I not have all the data, but I didn’t completely grasp how the numbers worked together to get us to that end result. It wasn’t necessarily a simple equation of more people equals more revenue. There were other factors involved, and although I was, in the end, correct in my assumption, the CEO was focused on those “other data points” that he thought could swing the pendulum.

Our CEO didn’t budge on hiring, our existing reps sold all they could, but we didn’t make our goal. Our stock depreciated in value by 75%, and we literally lost $200 million dollars in market valuation.

And this all because I didn’t have the numbers to argue my case that my sales approach was correct.

Learning From My Mistake

As a result of this experience, I made it my mission to focus on all of the metrics involved in the equation of sales success. Having data to back up your sales approach is the key to leveraging your way of thinking – especially when talking to a C-level executive.

Here are the numbers that matter for predicting sales success:

• total goal
• average deal size
• win rate
• % of leads that result in a  proposal
• leads generated
• maximum # of leads a rep can handle

What I then did was to build out a detailed spreadsheet to model how these numbers relate to each other, and to the final goal. By moving the dial on certain data points, I was able to realize where my focus would net the greatest impact in reaching our target. (By the way, if you want a copy of this worksheet and guide to see if your team is on goal to reach your number, you can request it here.)

The Good News

There is a light at the end of every dark tunnel. Although we lost $200 million in market capitalization, we launched some new products and the company rebounded. And we eventually we sold it to a larger publicly traded software company.

I also came out of the experience with a better knowledge of how to articulate and execute sales success. If you want to learn more about how these valuable numbers can help you exceed your sales quota, then I’d love to share that with you. We have created a spreadsheet and guide to help you calculate your team’s chance at meeting their goal. Request your own copy today. Hopefully this will help you avoid a 200 million dollar mistake, like mine!

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