Unrealistic Expectations for Sales Teams in B2B Tech Startups: A Conversation on Market Maturity and OTE

Drawing from four decades of expertise in disruptive technologies, it has been abundantly clear that startups venturing into new markets grapple with many complexities. Paramount among these is the often-underestimated challenge of aligning market expectations, particularly concerning sales performance.

Recently, I had an enriching conversation with an individual deeply ingrained in the startup sphere, one who specializes in facilitating investment opportunities for fledgling businesses. Hearing them corroborated my long-held stance on the unrealistic sales salaries and OTE expectations that beleaguers startups, particularly those in the B2B tech space, was remarkably validating.

These startups, often nascent entities without a proven track record, venture boldly into untapped markets with groundbreaking technologies. What strikes me is the oversight, particularly from founders and newly-installed experienced CROs or VPs of Sales who ought to have a more nuanced understanding. They operate under the flawed assumption that their sales teams should match the performance levels seen in established markets, typically paired with overly ambitious On-Target Earnings (OTE) expectations.

The affirmation from someone of such calibrated insight was akin to an intellectual exhale—a moment that vindicated years of assertions previously met with scepticism. It was a gratifying affirmation that my perspectives were not merely conjectural but substantiated by market realities.

The crux of the issue is a dichotomy between the very natures of startups and B2B sales. Startups inherently operate on a plane of innovation and risk, while B2B sales thrive on stability, existing relationships, and proven commodities. Attempting to conflate these disparate realms often results in a volatile mismatch, akin to trying to mix oil and water.

Having personally engaged with various startups in the construction technology sector over the past 12 years, I can attest that the promises of OTE never enticed me. I've always regarded such expectations as fanciful, particularly during the "education and risk reduction" phase, which is indispensable for gaining market acceptance.

Unrealistic OTEs and the Burden on Sales Teams

Setting high 100% OTEs for sales teams in new markets with unproven technologies is unrealistic and could also harm the team's morale and the business. Even the most skilled sales professionals can find it challenging to match the targets in these circumstances. The issue is not the need for more effort or expertise but rather the incongruence between expectations and market realities.

It's fundamental to understand that selling new, unproven technologies requires different commercial skills, primarily focused on education and relationship-building. These sales cycles are often longer, the stakeholders more varied, and the customer education process more intensive.

Reality of Market Maturity

A mature market for a technology product generally means a level of standardization, a set of best practices, and, most importantly, a degree of trust in the product or solution. None of these elements exist when entering new markets with new technologies. Here, even if the product is exceptional, the market needs to be educated enough to realize its value fully.

The critical word is ‘education,’ where the sales process in startups differs significantly from those in mature markets. Sales teams must invest significant time in educating prospective clients about the product and the problems it solves. It's not merely a sales effort; it's almost a consultative approach.

Strategic Infusion of Commercial Skills

In my experience providing bespoke fractional sales and marketing services to B2B technology companies, I’ve found that the commercial skills required in this situation are far more nuanced. The role of sales in these scenarios is more aligned with that of a business consultant rather than a traditional salesperson. The need to align the right business strategies and tactical plans at these critical moments is paramount to optimize outcomes, boost revenue, and increase profitability.

Realistic Approach to OTE

Having never expected to make the OTE in the first or second year with new tech in new markets, startups must be realistic. OTE should be a measure of success when there's enough data to make it a tangible goal. Until then, consider using KPIs like customer engagement levels, the rate of return on educational content, or the sales cycle length as more accurate indicators of your sales team’s performance.

Conclusion

Startups entering new markets with unproven technologies must recognize the unique challenges they pose and adjust their expectations accordingly. This involves adopting a realistic approach to OTE, embracing consultative selling, and most importantly, being patient and persistent. Ignoring these nuances can not only demoralize your sales team but could also hinder your innovative enterprise's overall growth and success.

When embracing new technologies and markets, the journey is just as crucial as the destination. And for this journey to be successful, aligning expectations with market realities is not just advisable—it's indispensable.

Author

Andy Hamer

Andy has consistently been the guiding force behind numerous B2B technology startups, spanning hardware, networking, services, and SaaS. Not restricted to just the UK, his influence is recognized internationally. With an illustrious track record, he is known for shaping innovative go-to-market strategies addressing the needs of emerging startups and sprawling global corporations.

With years of professional experience, I am well-versed in communications, electronics, information services, silicon, and software. Throughout an expansive 40-year career, Andy has secured esteemed senior management and board positions in renowned firms, including Marconi, Strategic Analytics, Equant, Informa, Wongs Electronics, and Bentley Systems.

More recently, he delved into the Architecture, Engineering, Construction, and Owner sectors, specifically in building information management and digital twins. His leadership acumen was evident as he worked at senior and board levels at institutions like Codebook, Xinaps, Invicara, Bentley, XYZ Reality, and Archdesk.

Andy, a graduate with a BA (Hons) in Marketing Engineering, is also a certified BIM Information Manager. Adding to his repertoire, he has authored a book on structured data management in BIM. His proficiencies have been further stamped with his esteemed title as a Fellow of the Chartered Institute of Marketing (FCIM).