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My Biggest Mistake as a Sales Leader Cost Over $200 Million

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My Biggest Mistake as a Sales Leader Cost Over $200 Million

Have you ever lost your company $200 million dollars?

Well, I did.

It was the biggest mistake I made as a sales leader. Possibly the biggest mistake I made in my life.

And here is the story of that mistake…

My Initial Success

It was back in my first sales manager role at my very first company, Open Environment. We sold middleware to big, Big, BIG companies.

I was one of the founders and the first salesperson. Then I was the first sales manager, and three years later the VP of Sales leading a team of 35+ sales reps, sales engineers and a small group of consultants.

We took off like a rocket! From under $1 million in our first year to nearly $15 million in year four.

Needless to say, I lived and breathed my job to help make that growth happen.

I had my fingers on the pulse of what was happening, and I knew that on average each of my sales reps would sell roughly $300,000 of new software each quarter.

As a result of us doing really well, we dreamed of taking our new company public, so we recruited the CEO of one of our Fortune 500 customers to be our CEO. Let’s call him Nathan.

My Big Mistake

Nathan had grown his last company to over a billion dollars, and was super smart, and a nice guy as well. As we continued to grow, we had a very successful IPO no doubt because Wall Street trusted Nathan’s judgement.

But his last company was in retail, and he didn’t have a sales background.

So when Nathan and I sat down in a room to talk through our strategy and upcoming sales targets, it was a big struggle. The company had set a huge benchmark, and I had to help figure out how to get us there.

So I worked backwards – dividing that goal by the amount I knew each salesperson could bring in, and voila, that was the number of reps I was certain we needed to be selling our product. I pushed for the headcount to support my math, but my logic was met with strong resistance.

Nathan didn’t want to approve the extra sales reps I knew we needed. I just couldn’t convince him we had the demand to warrant the additional hires to make goal.

My mistake was that I lacked the numbers to articulate my point of view. And not only did I not have all the data, but I didn’t understand how all the numbers worked together to get us to that end result.

When We Lost the $200 Million

Nathan didn’t budge on hiring, our existing reps sold all they could, but in the end we didn’t make our goal. Our stock depreciated in value by 75%, wiping out over 200 million dollars in value for the company’s shareholders.

And this all because I didn’t have the numbers to argue my case.

Related: Six Questions All Successful Salespeople Ask Themselves Every Single Day

Learning From My Mistake

What I really needed to do was figure out the metrics to present the whole picture to Nathan. If I could dial it back from the goal all the way to the number of leads we needed per quarter, then maybe I had a chance to convince him that adding more reps was the only solution…

I wish I knew then what I know now… the only numbers that matter:

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

What you need to do is jot down all these numbers and then figure out how you can swing the pendulum on certain data points to get to that final goal.

In my case, I knew we were already maxing out our reps, but I didn’t have the specific numbers to back it up.

I couldn’t lay out the story for Nathan that we were converting more leads than the industry standard of 25%. I just didn’t have the data to prove it.

But my biggest mistake wasn’t my inability to articulate my case with numbers, it was the fact that I just didn’t know how all of these numbers worked together.

To assist you in understanding the numbers you need to exceed your quota, we created a worksheet to help you calculate your team’s chance at meeting their goal. You can request that worksheet and guide here: Numbers to Keep Your Sales Team Focused on Worksheet and Guide.

And hopefully this will help you avoid a 200 million dollar mistake, like mine!

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