When building a sales organization from the ground up, setting accurate quotas for early hires can be challenging due to a lack of historical data. Max Freeman, SVP of Sales at Ramp, who joined the company as its first sales hire and built a team of over 300 salespeople, argues that this uncertainty can lead to either overpaying or demotivating new reps.
He proposes a compensation strategy that eliminates quotas for the first two quarters, ensuring that new hires are motivated by a clear, consistent target. These insights are drawn from Max Freeman's interview with Harry Stebbings on 20VC.
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100% OTE for early sales hires. Max Freeman advises that for the first sales hires, compensation should be 100% On-Target Earnings (OTE) for at least the initial two quarters. This approach is crucial because founders often lack sufficient data to set accurate quotas, which can lead to issues like overpaying if quotas are too low or demotivation if they are unattainable.
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Hire sales reps in pairs. Founders should avoid hiring a single sales representative at a time. Instead, Max Freeman recommends hiring in pairs to facilitate performance benchmarking, foster healthy competition, and provide mutual support, preventing isolation for new hires.
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Internal tools for sales productivity. Ramp developed an internal revenue operating system, 'Ramp Revenue,' to automate pre-call research, reducing the time spent from 15-30 minutes to just 90 seconds. This system bridges talent gaps by providing necessary information at sellers' fingertips and significantly unlocks capacity, allowing for more selling days.
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Testing prospect influence. To assess a prospect's true influence and commitment, Max Freeman suggests testing their willingness to involve senior stakeholders. For example, if a contact is not a VP or C-suite executive, a salesperson should ask them to bring their boss, such as a VP of procurement, into the next conversation. Their response reveals their actual sway and seriousness.
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Building an 'all-in' sales culture. Max Freeman emphasizes building a sales culture that attracts 'all-in' professionals, citing examples of younger sellers who voluntarily work on weekends. This culture, once established, naturally identifies and filters out individuals who do not align with the team's strong work ethic and commitment.