Contributed by Dinesh Kandanchatha, Managing Director of Macadamian.

So, you have finally done it.

Your inbound marketing machine is generating 100 or so trials a month. You follow up aggressively. 10-15 opportunities turn into 4 to 5 sales. That’s awesome, all those years of grinding are finally working. You think to yourself,

“Self, I need to figure out how to double revenue this year. It’s time I brought in a SaaS sales leader to manage this machine.”

Promptly, you post a job, reach out to your network, and start searching LinkedIn to find your ideal sales commander. The candidates arrive. These bright eyed, perfect teethed leaders have impressive resumes, commanding yet approachable voices, and multiple 6 figure salaries under their belts.

You connect. You laugh. You cringe at how much this is going to cost you. Nevertheless, you buckle down to spend the money required to hire the very best candidate.

6 months go by with your new sales commander. You look at your pipeline: 100 trials coming in, 10-15 opportunities, 4-5 sales. The same as before. Only now the cost has gone up significantly.

Your commander demands more marketing, more ramp time, new software, more leads lists, an additional SDR. But, all your free cash flow is going to pay for her. You have found yourself in quite a predicament.

Well founder, you have fallen victim to the second most deadly mistake made by technology leaders: insufficient resourcing of a sales initiative. (The most deadly mistake is planning a protracted land war in Asia but I digress…)

Sales leadership is expensive, and for most early growth companies, leadership must be coupled with resourcing in lead generation, sales personnel, and marketing. However, most companies simply cannot afford to spend in all these areas at once. There just aren’t enough dollars to go around.

So, if you had to pick one area to spend, what should it be?

Hands down the most valuable spend for technology sales is in lead generation.

Investing in lead generation is so important — and should be prioritized over other areas –because lead quality impacts every other area of your sales and marketing strategy. Let’s look in detail:

  • Having extra leads allows you to validate market pull and focus on higher LTV customers. Investing in quality leads is leverage on sales expense.
  • Leads that do not respond to an initial sales message can be passed to commission-only sales people as “bonus ops.” Non-responsive leads can always be recycled.
  • Better leads mean better LTV. Higher LTVs squeeze more revenue per dollar out of your business costs.
  • With lead generation you will see incremental results which can be used to optimize conversion. You can then fund sales leadership organically rather than force it.
  • Simple rule: If you don’t yet have a lead surplus, you should be investing in them outright rather than hiring sales leaders to acquire them for you.

Naturally the next question is how to get to a lead surplus. Well, if it were as easy as a five point plan I would be sitting on my private island selling the magic formula to you along with a pair of Ginsu knives not writing this blog post.

So, no formula, but here are 3 principles I have learned building three businesses, and working with hundreds of startups along the way:

  1. Social Signals are key to identifying prospects who are primed to buy when doing outbound campaigns. You target audience is always talking. You just need to know where to listen and how to capture the data. For example, if you are a Cloud services provider, there are no shortage of social signals you can use to identify potential customers. Attendance at a cloud conference can be identified through participation in the conference’s LinkedIn group, or scraped from the conference’s website. You can look for status updates recruiting candidates with AWS or Azure experience. You can research the contact info for users asking and answering questions about cloud computing on Quora. On Twitter, look for users discussing #vmware or #hyperv.
  1. Look for change events in your buying persona. Change requires new ideas, solutions, vendors, partnerships. Change agents are always open to a business conversation if you can show it will make things better. LinkedIn’s status updates are your friend! People changing jobs or getting promoted are out to prove themselves. Understand your personas well and look for any sort of change.
  1. Bring in the experts. It’s rarely efficient to attempt lead generation in house. Remember, time is limited and you have to invest your resources where they are going to be most effective. You don’t want account executives researching leads. You want them selling. You don’t want SDR cleaning up data for outbound email blasts, you want them qualifying positive responses.

I have used many tools — everything from elance contractors and full time SDRs to the big list providers. I am getting the best lead generation results from the LeadGenius team. Without sounding like a sales pitch, they know their stuff.

Focusing on my 3 principles I have worked with LeadGenius to generate leads for 3 of my clients. We have seen incredible growth. All 3 of my clients doubled their pipeline within 45 days of starting. One of my investments actually paid for a year’s worth of services within 30 days of signing up, by closing a client worth more than the entire LeadGenius contract.

So no surprise I am a fan!

If you are interested in learning more about how I am using LeadGenius to grow my businesses, reach out. I am happy to share. dineshk@myvpsales.com, or on LinkedIn.

About the Author

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Dinesh Kandanchatha is an angel investor, mentor, and Managing Director of Macadamian. Dinesh’s passion is building businesses. Dinesh has over 15 years of experience helping early stage companies generate new revenue, market products and manage sales. His former incarnations include being the lead enterprise sales executive for a SAAS infrastructure play that was acquired for $200M+. Dinesh is a Top 40 under 40 winner, investor in over 10 early stage companies, board member on a variety of Not-for-profits such as Oneprosper.org, and has been featured in the Canadian Business Journal’s entrepreneur spotlight.