How to Build a Recession-Proof Revenue Team

How Startups Generate Revenue in Challenging Markets

Successful startup founders already know that going to market requires important steps beyond developing a potential product to sell. For example, core messaging provides direction for how your team will communicate your value proposition from marketing through initial sales and post-sales support, setting the stage for positioning and creating categories. However, experienced founders also know the importance of making sure there’s enough capital to keep their businesses going–which means being able to generate recession-proof revenue even in down markets. In this brief interview, go-to-market (GTM) expert Kevin Kinkor explains some of the most important factors to consider when building out a sales function for developer-first startups, and how to manage GTM when budgets are tight.

How Startups Should Think About Their First Sales Hire

When looking to build a GTM team that will get them off the ground, early-stage startups need to gauge their product’s ability to deliver value and scope out a proper initial sales motion, such as offering a free trial or freemium/premium offering. Finding the right person will be a matter of fitting into the early-stage sales processes you’ve started to run to help achieve your goals. Some important factors to consider are:

• Building Your GTM Team Around Product-Market Fit and Initial Value: Early-stage startups need a sense of how they achieve product-market fit (PMF) and how they deliver value to customers, such as through usage analytics pulled from a free trial or freemium product.
• Understanding the Initial Sales Delivery Process: Founders can and should perform due diligence on best practices, perhaps by polling their networks for feedback to understand what will work best for their organization. In all cases, they should plan to have a technical partner, such as an engineering lead, available to enable sales to tackle complicated technical objections from sales prospects.
• Finding the Right Person to Scale Your GTM: There’s no one-size-fits-all best choice for a first sales hire. For some orgs, it may make sense to hire a senior “doer” sales professional ready to transition into a leadership role. For others, founders first hire an early-stage sales development representative (SDR) to help source qualified leads, while they themselves act as late-stage sales account executives (AEs) who close deals.
• Getting Great Sales Talent in the Door: Attracting the right talent, even in down markets, can be tough. Founders can strengthen their hiring pitch by clearly indicating they have both the capital and the will to seriously invest in a GTM team...an important reassurance for a prospective sales hire and for marketing hires as well.
  

“Consider the value of your product and how you handle sales without that formal sales hire. Do you have a delivery vehicle for sales? Decide whether you’re hiring a leader, which means more experience at a higher cost, or a ‘doer,’ or a more-senior ‘doer’ who may come at a lower cost, but will need time to mature into a leader.”

- Kevin Kinkor, CEO and Co-Founder | Kinkor Consulting

Building a GTM Team in Adverse Markets

Experienced founders understand that to adapt to adverse markets, startups must take defensive measures to ensure they have enough runway to ride out the storm, including driving retention among their most loyal customers, triaging at-risk customer accounts, and cutting costs where possible. However, there may be opportunities to seek new markets or new revenue sources–as startups explore new opportunities, they must also be vigilant about measuring their progress. To weather a downturn, startups should consider:

• Re-Evaluating Previous Successes vs. Today’s Tougher Markets: Were previous sales wins based on tried-and-true best practices or were sellers just selling “inside the box” by following a narrow playbook that was successful due to frothier markets and more free-flowing money?
• Looking for “Recession-Proof” Ways to Drive Revenue: Pursuing a land-and-expand approach across your current customer accounts can help your startup conserve considerable expense in terms of customer acquisition cost (CAC)...the high cost of marketing to and building relationships with net-new leads that become first-time customers. Can you instead secure recurring revenue by providing outstanding customer service that ensures little to no customer churn? Can you upsell highly engaged customers to higher tiers or cross-sell additional products?
• Re-Evaluating Your Total Addressable Market (TAM): Are there entirely net-new verticals (or net-new accounts, or even net-new personas within existing customer accounts) that might make sense to try to break into? Founders may want to ask themselves what opportunities they’ve missed by selling “inside the box”...and how much they’d consider investing in exploring new markets.
• Measure Performance of Current and New Programs Regularly: It’s common for tech startups to evaluate sales performance quarterly–a cadence that also lends itself well to measuring sales performance, understanding that making changes to your sales motion will require time to bear out.
  

“When times were good, it might’ve been easy to sell ‘inside the box.’ When things get tough, startups need to figure out what ‘the box’ looks like, and what opportunities exist outside of it. Think about re-evaluating your TAM quarterly.”

Avoiding Costly GTM Mistakes in Any Market Conditions

Experienced founders know that running a startup can involve quite a bit of trial and error. Regardless of market conditions, it’s a good idea to try to avoid these common startup GTM mistakes:

• Immediately Walking Away from Closed-Lost Deals: No startup ever wins 100% of the sales deals it pitches, and no sales professional enjoys hearing a prospect say “no.” However, closed-lost deals can be a vital source of feedback on your product and your sales approach. It can be surprisingly productive to have one last follow-up with prospects who are still willing to talk. The reason they engaged with you was that they thought you had a valuable solution–and they may give you important insights that help you win more deals in the future.
• Hiring at Seniority Levels Below Candidates’ Experience: Another surprisingly common mistake is hiring experienced sales professionals into excessively junior positions, leading to them eventually becoming bored and wandering off to better opportunities.
• Not Hiring Intentionally: Even in the toughest markets, top sales professionals tend to be in demand. It’s a good idea to ensure your sales hires are a fit for your current sales motion but can also grow into the next phase of your startup’s journey. Understand that top performers may grow restless in the face of a lack of opportunity and make sure you have enough runway and can offer interesting enough career development opportunities to hold onto highly valued team members.
  

“Avoid common mistakes–don’t be afraid to dig deeper into closed-lost deals. You’d be amazed at what kind of info those prospects will share with you. Also, hire the right person at the right level and do it intentionally. You don’t want to lose a top seller over a couple of months’ worth of runway.”

Interested in learning more about how to generate recession-proof revenue with the right team? Join GTM veterans Kevin Kinkor and Todd Lathrope in this Sales Master Class session on February 9.