What Baseball Can Teach Us About Building Successful Sales Teams
Learn how the baseball farm system and free agency strategies can help you build sales teams from the bottom up.
The relationship between sports and business is more common than people think. A great coach can be just as a valuable as a great CEO, an MVP player can be just as valuable as the #1 sales rep. If you think about it, the best sports teams in history have had a great combination of team strategy, leadership, player development and processes that makes them successful on the field. This mirrors what makes a company great.
Sports has always been a central part of my life, and I couldn’t help but notice one particular parallel to business success between building baseball teams and growing sales teams. In this post, we’ll examine what you can learn from baseball that can help you build your sales team and examine the types of strategies that you can implement as your organization grows.
Why Baseball Over Other Sports?
History of Analytics
Baseball was one of the first sports to adopt analytics in the late 80s. The value of analytics to sports has changed the way organizations evaluate players and build their teams. The same goes for companies.
Farm System Structure
Baseball is unique in that each organization has their own farm system for developing young talent. The farm system is the minor leagues of baseball where young players get promoted to a different level until they reach the major leagues. These promotions are based on performance and can be extremely valuable to the team if they work out in the long run. The same goes for companies that hire entry-level SDRs hoping they turn into all-star senior leaders.
New Players Every Year
Since baseball teams are large in size, they have to sign on 15-20 new players per year. This is similar to organizations that are growing YoY in that they have to keep bringing in new talent to scale the business.
Strategy #1: The Farm System Strategy
What is the baseball farm system strategy?
The baseball farm system strategy is built on the belief that bringing in the best young talent who have a lot of potential can ultimately turn into all-star players in the future. With a farm system strategy, you invest heavily in player development so you can turn your raw, but highly skilled players into future stars.
Why is it relevant to building sales teams?
This strategy is relevant to building sales teams since a lot of organizations opt to build their teams from the bottom up. By hiring sales reps at a junior-level (SDR for example), you aren’t just hiring them to fill their one function for the near term, you are developing them for the next roles within the company. With a farm system approach, you are investing in hiring very talented people and providing them the on-the-job skills training to become future leaders within the company.
What are the financial benefits of a farm system strategy?
The biggest financial benefit would be the value of internal promotion as it pertains to performance. If you are able to successfully hire well for junior roles, this will pay off in the long-run as you will limit turnover costs and not have to hire as many reps from the outside for mid-level and senior-level positions. A in-house developed top performer will bring the company better ROI in the long-run than an experienced hire you make on the outside. We have found that turnover for a sales rep increases significantly as they become more experienced and the costs to hire mid-to-senior level outside talent increase as well. This will help you maximize revenue and profitability.
Strategy #2: The Free Agency Strategy
What is the free agency strategy?
The free agency strategy focuses primarily on hiring the best available experienced talent. This is usually more costly since it focuses on hiring proven talent instead of working to develop young players. Organizations with bigger budgets and more revenue per sales rep can afford to execute a free agency strategy which has a lot of upfront hiring cost and labor costs.
Why is it relevant to building sales teams?
If you have big recruiting budgets and are short on mid-to-senior leadership, a free agency strategy could be the way to go. Depending on the circumstances of your company, you could opt to focus on just getting proven talent over developing new hires. This can be a great strategy if you are not in a rush to hire a large amount of talent in a short period of time, as it can take much longer to source and build relationships with the right people.
What are the financial benefits of a free agency?
Since you’ll be focused on getting proven talent, you will probably see much quicker revenue results. The time it takes the first deal can be lower than with junior level reps. A lot of proven talent has their own rolodex of contacts that they can bring on as customers, and their onboarding can be much quicker than with a sales rep who you hire through your farm system strategy.
The Optimal Strategy For Your Organization
Probably A Mixture Of Both
Most organizations do a mixture of both the farm system and free agency strategy when it comes to building their sales team. The lesson to be learned from this is what percentage and at what stage in the growth process does it make sense to use one or the other in terms of strategy? This is heavily dependent on your current sales team size, goals for the year, expected revenue per sales rep and talent development resources. The only way to really know what is right for your sales team growth cycle is by taking a financial approach to your data analytics to ensure that you maximize revenue and profitability with your strategy.