The Hardest Thing About Scaling Territories | Holdouts Are The Devil

keep-calm-and-watch-out-213If you’ve been in a high growth company, you know what I’m talking about. As companies grow, new sales people are hired constantly. Territories get cut, new sales teams get segmented, industry verticals get created, round robin leads turns into strict territories…

That dope patch you had covering all of the world is now shrinking by some degree. Depending on the hiring class coming in to your sales team it could be by a significant margin. At one point @ Box I recall we hired something like 20 reps in 30 days. Be prepared, Don’t be scared! Its normal, healthy, positive and if done right will grow your stock and career. 5 years ago @ Box we had 9 sales people and no boundaries on territory, none. Sky was the limit, globally. Now with a company of 1,200+ people I manage a team that only works with companies in North America, with more than 1,000 employees and that fall into one of 4 industries. I still have an awesome job where I can make money and succeed but it took us many,many holdout transitions to get here. We now have a process, and pretty much everyone gets it. We keep growing and succeeding.

So here is the raw. There should be a collective “Yay” because that means your company is likely selling something and your stock is getting more valuable, there is also usually a collective “Boo” from someone because that means your territory shrinks and some of those deals you’ve got your eye on may go to someone else. That someone else may be a slick-looking dude/lady that is a couple of years older than you and has more experience or knows one of the VCs. You probably hate him/her a little bit. Even if you don’t know them. Reserve judgment but its ok to be skeptical. Coin flip on if that bro/gal is really legit. Sometimes they are momentum builders. Sometimes they are douches that steal paychecks. Good companies flush the turds and keep the gems.

I’ll dig into some of the politics later but here is a quick overview of how I’ve seen it done as well as pros and cons. I’ll also say here that IN GENERAL I’m an advocate of having holdouts. I’ve been on every side of this coin and giving reps time to complete deals (when legit) is better for everyone in the long run. Step carefully though! Many landmines. These are black diamond slopes.

The logic behind the concept is pretty much:

Holdouts on some number of open opportunities will be allowed in order to ease tricky/touchy account ownership transitions (more reps, new segments etc) and although we need to scale this puppy I want to reward my current reps for their hard work with near term momentum deals as well as not screw up revenue that we all need in order to keep this rocket flying up. I also need to retain my talent. I’ve spent many cycles finding, hiring, and ramping them. Territory transitions are a great way to alienate the ones you love. 

Here are the ways I’ve seen it done ranked descending by least favorite first:

5)  No holdouts – This hurts your dedicated, seasoned and ramped folks the most. The ones that have been grinding and baking deals get burned and this likely puts a lot of revenue at risk. This sends the signal that you are heartless don’t reward long-term investment in building customers and likely don’t care about your people. These folks will not be on board with you for the long haul and it will be difficult to retain your top reps  Word will spread around about your strategies and top talent will not come work for you. The worst drawback here is the likely rift it will create between the two groups. Instead of the new and old embracing one another they will draw lines and not share best practices with one another.

4) Unlimited holdouts for X number of days – Better than zilch but this hurts you the other direction. It tells your new people who you favor the old guard and you prefer them to be wildly successful vs your new hires. The newbies need to cold call, earn their stripes before they deserve a crack at good deals/accounts. While some of that may be true it also creates a scenario where two distinct sides are created. In order to ramp your new folks as quickly as possible you need your old folks to take part and impart wisdom. I promise you a boot-camp, although a great idea, is not going to give you information transference velocity you desire.

3) 1 holdout for X number of days – This makes you less of a tyrant than 5) above but unless your reps are only doing a couple deals a quarter it’s still going to leave people chaffed.

2) Deal Splits or Double Comp – This is awesome in the right scenarios. For example the deal needs longer term tender care, the existing rep has built a ton of rapport and you want their help ramping the new rep into the deal or you are grooming one or the other for a manager job etc. This is a terrible deal if the reps have personality/control issues. The double comp is not ideal and its also VERY difficult to do at any scale. I recommend  this strategy only for early stage companies or very special scenarios where you have a specific long-term company goal in mind.

1)  3 holdouts for X number of days – I’ve seen the houldout dance at least 10 times in my career now and this is by far the cleanest. I would also add the “Up to 3” caveat. Meaning not everyone gets 3. You only get holdouts on legitimate opportunities of high value with ear term momentum for closure. Some reps will have 3, some will have none. This is especially successful when done with crisp guidelines (deal value, deal stage, executive sponsorship, submission timeline) and the promise of upper management reviews on each submission. No matter what deal size the team is working on 3 holdouts for 90-180 days should be plenty of time and opportunity for one rep to chase as they move into their new territory. Their will be exceptions to the rule but this one seems to break the least amount of hearts and if used repeatedly makes the most sense.

Holdouts are a necessary part of the job. Get used to it and learn to manage emotions. In order to scale a successful company, reps can’t have unlimited territories and holdouts for eternity.

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