Q: If We Have Two Overlapping Products is it Better to Have One Sales Team or Two?
It’s almost always better to have different sales teams handling different products
Why? If for no other reason — Incentive Alignment.
Sales reps work on commission, and they are driven almost entirely by what they get the most commission for. When they sell 2 products, the #2 product almost always gets less attention.
It’s just natural. If you have 40 hours a week to work, and 50%+ of your comp comes from commission … you’ll put those 40 into what you perceive to make you the most money.
And that’s almost always the most proven, #1 product in the portfolio.
Yes, you can do “spiffs” and such. That will help a bit, but only a bit. A spiff is rarely enough to change fundamental incentives, however.
You can also have a secondary product count materially toward quota retirement. That will help a bit, too. But often, only just enough to hit that portion of quota retirement. After that, the rep will go back to spending most of her time selling the #1 product.
But … this doesn’t mean you should always have 2 sales teams.
- First, sometimes it simply isn’t practical to have 2 dedicated sales teams. At least not yet. If the second product is < $1m-$2m in ARR, sometimes there isn’t budget. Although I’d suggest there is always budget for at least 1–2 reps to sell any product that matters.
- Second, sometimes you just don’t know who and how you want to hire yet for Product #2. Sometimes you need time to figure that out. Having your existing sales team do a mediocre job is often better than no salespeople at all.
- Third, sometimes the new products are naturally “attaches” to the core product . I.e., the second product is as much a feature extension as a distinct product. Here, it makes sense to stick with one sales team. This works if > 50% of your customers could easily buy the second product in the initial sales discussion.
But specialization is key in sales.
We’ve all learned that the past few years. Ultimately, you need one product per sales team to maximize the revenue for each product.
A great quick bite on this from Rippling’s CEO here:
And a ton of other great insights here from the CEOs of Amplitude, Twilio, Veeva, Gainsight, and so much more:
