Six years after its publishing, Lean Start-Up principles still permeate intense working sessions and cocktail mixer banter. What’s a Silicon Valley SaaS conversation without discussing Product Market Fit, Minimum Viable Products, and iterative testing, after all?
One reason Lean Start-Up concepts resonate so broadly is because they have an applicability to business and personal facets of life that intrigue us. I find myself coaching my daughter to use one of my favorite Lean Start-Up concepts in her learning games, for example — which is the practice of working in small batches.
“Small batches” is the concept that smaller work projects act as experiments that allow better overall efficiency. Efficiencies come both from the ability to more rapidly iterate your processes, and from avoiding hidden inefficiencies of working in larger batches. Breaking your projects into smaller modules that span the project lifecycle allows you to quickly spot and fix problems, rather than having to go back and diagnose numerous variables in an uncontrolled environment. The book gives the example of sending holiday cards, which is done more efficiently when each card is completed in full before moving on to the next, rather than writing all of the cards first, then addressing all of the envelopes, then stuffing the envelopes, then applying the stamps, etc – like you’d see in a production factory. I know, it’s not at all intuitive!
I still question at what point scale-based efficiencies of larger batches take over –as I believe that they do — but I’m convinced that small batches are the way to iterate with new products and processes.
Here are several examples of small batch applicability to sales and sales development.
Building Your Sales Team
Author Pete Kazanjy applies small batch concepts to start-ups building their sales teams. In a “Founder-Led Sales” environment described in Pete’s upcoming book, rather than first hiring a CRO or VP of Sales out of the gates, the founder leads the company’s sales efforts through several important stages, each with its own proof points along the way, that evolve from:
– Value Creation (does your product solve real problems) to
– Value Exchange (will people pay), then
– Repeated Value Exchange (will many people pay), then
– Specialization & Abstraction (can non-founders sell it), then
– Cohesive Unit of Revenue Product (can we make a mini-sales team).
Somewhere between Specialization & Abstraction and Cohesive Unit of Revenue Product is when you’d reach some notion of Product Market Fit, when average sellers can sell your product to an average customer (that definition borrowed from Ashu Garg).
With this approach, the founder’s first sales hires are sales development (Repeated Value Exchange), to give the founder-sale more leverage, then AEs (Abstraction), to understand if others can close the business, then lastly a VP who’s seen as a manager of a structure, or structures, that are already humming (Cohesive Unit). It’s a bottoms-up vs top-down approach that ensures sales-DNA permeates the org, and that founders own the sales ethos and experience. It’s also a more efficient model because small batches allow validation of each step along the way, similar to my daughter’s video games, before moving to the next stage of the process.
This is a different approach than what 95% of companies in the Valley take, but not unheard of – keep an eye on how this trend develops.
Building Your Sales Development Function
There’s a lot of important batch-building within the stages outlined above.
While many of us in the sales development community believe that once you have Product Market Fit, sales development success is or at least can be “inevitable,” the road is littered with companies who’ve tried and failed at it.
One common error is mistaking demand generation (carpet bombing emails to your CRM) for sales development (targeted outreach). Marketing plays an important role in sales development, but specialized skills, tools and SDR resources are needed to make it work, including solid ICP and persona mapping, a strategy for content and story-telling, frameworks and training, simple and thoughtful metrics, well-oiled hand-off processes. When sales development is led by Sales, this is where that VP hire can be so critical – a smart VP will know where her attention and skills are best applied, and where she needs help.
What about outsourcing vs insourcing? At Acceleration Labs we think of ourselves as the anti-outsourcer, so we’re biased. We’re generally of the belief that outsourcing sales development is a short-sighted strategy. The sales development function is the tip of the spear and so core to growth, culture, and generating market learnings, that it needs to live inside the company. If you decide to outsource, try to find a way to understand what worked and what didn’t so you aren’t starting from scratch when you bring it in-house. And just because an outsourced approach doesn’t work for your business, don’t assume sales development can’t or won’t work – think of outsourcing as validating vs invalidating.
Another common organizational small batch best practice is to hire a minimum of two SDRs –especially if they’re less experienced SDRs — to create a type of controlled experiment and avoid having success overly tethered to a single SDR. More on this topic in a future post.
A small batch approach to insourcing will catch and fix mistakes before further investing in them, and won’t slow you down when it comes time to scale.
Small Batches within Sales Development
Small Batches apply within sales development on an even more tactical level as well.
We like to launch small sets of target company test clusters, just big enough to give meaningful indicators, but small enough to be curated and managed end-to-end before scaling out outreach. We parse those initial target companies into batches of their own—such as industry verticals, or stages of market maturity—this helps further control variables, refine product-market-fit and determine areas of focus even further. Within these small batches we’ve begun experimenting with breaking down the workflows into smaller more discrete batches –e.g. rather than prospecting (looking for contacts) all at once across all companies in the batch, then enriching with data, then launching sequences, we’ve found value in prospecting, enriching, and launching one target company at a time to help connect the knowledge developed while prospecting into more personalized messaging.
I’m looking forward to hearing from others on this topic – in particular, when do larger batches make more sense? E.g. are there certain sales operations functions that can be done more efficiently across a large body of data by specialized resources vs being parsed into smaller batches?