Many first time founders struggle with organizing the areas of responsibility in their company. Here is a simple overview, that many founders I have talked to found useful.
The area most founders struggle with is commercial. At its most simplistic level, there are three tasks a company must achieve in order to be in business:
- Marketing: Qualified leads
A qualified lead is an individual who has expressed interest in buying the product and has the budget and authority to make a purchase decision. Marketing’s primary role is to produce and deliver qualified leads. - Sales: Closing deals
Sales is converting qualified leads into closed deals. This function can be operated by a sales person; it can be operated by the product itself. Somebody or something has to convert leads into customers. - Customer success: Keeping customers happy & upselling them
Selling to customers is great, but you need to actually deliver what you promised. Customers should purchase again and preferably purchase more in the future. This function is frequently referred to as customer success.
Marketing, sales, customer success are the three key building blocks of a commercial business function.
Now, here is the trick. Each of these three areas should be owned by one individual. At the same time, any individual should own only one area of responsibility, not two or three. For example, ideally you have one person responsible for marketing, another for sales and another for customer success. Each of those three should report to the CEO. Each may have their own team reporting to them.
This makes hiring for these functions easier. It makes formulating targets easy. It makes incentivizing easy. It makes management easy. It leads to focus on achieving goals. It removes excuses.
As soon as you mix those responsibilities, performance drops. Individuals who are good at marketing are not good at sales. Salespeople are not good at customer success and so forth.
I always suggest to founders to focus on:
- Number of qualified leads produced per day / week (and the cost peer qualified lead)
- Percentage of leads closed by sales (and the time to close)
- Churn of existing customers (and overall customer satisfaction)
This is the most basic structure of a commercial team. I find it serves as a good starting point.
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