A Revenue Spike and Its Fallout

We launched our first commercial product in January 2009. In the following 10 months, we lived without a sales process. One of my co-founders and I processed orders as they came in the door and tried to respond in a timely manner to inbound emails. As for outbound work, it was the best we could do to send occasional newsletters out to our user base.

After 10 months of that, we decided to bring salespeople on board. We hired two: 1) a heavy-hitter VP of Sales which I described here, and 2) a Sales Manager which was full-time heads-down focused on inside sales. In this post, I am going to describe a revenue spike and its fallout that resulted from the inside Sales Manager.

The Sales Manager joined 10 months after we started selling our product and nearly two years after we first launched initial versions of the product. A lot of pent-up demand was in our funnel waiting to be tapped by good sales practices, and we didn’t even realize it.

The result was that two months after joining, the Sales Manager tripled our monthly sales with a $100k month in December of 2009. We were elated to be on a >$1mm run rate within 1-year of product launch, a huge milestone for startups. Even more, we were pleased that all of this money was from ground-level product sales, i.e. there were no big individual customers that were tipping the scales. It was also reassuring that we were able to build that revenue in spite of competitive forces that had begun to take place in our market.

So there was a general air of chest-pounding at AccelerEyes as the 2010 New Year rolled around. We thought that sales people were magical!

Unfortunately, this turned out to be a revenue spike. The Sales Manager had milked our existing funnel and pulled the cream out of the batch that we had built up over previous years. In 2010, revenue came back down before it started to grow again. The chest-pounding turned to head-shaking and even some finger-pointing.

Luckily, we pulled ourselves back together. We still grew 2010 revenue by nearly 2x over 2009 levels, but it came through hard work and implementation of good business processes, not from magical month-over-month multipliers.

A Side Note: One of the most difficult things to deal with in a startup is spikiness in metrics. How can you make decisions based upon spiky metrics? Also, the same can be said for flat metrics. Consistent metrics that reveal correlation between efforts and outcomes are most desirable.

What revenue spikes have you seen in your business? How do you cope with spiky or flat metrics?

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