What if I told you that as your sales and marketing team grows, its overall performance is likely to decline? While this may sound counterintuitive and – worse – discouraging, understanding why and how to combat this phenomena is crucial.
In the early days of your company, you handpicked a group of top-tier sales reps who not only understood your product but also had the drive and skills to close deals quickly and efficiently. They were outliers—top performers who set the bar high and drove your revenue growth.
However, as your company scales and you add more salespeople to meet the increasing demand, you might notice a shift in performance. Your team’s overall performance starts to decline, and those early top performers don’t seem to have the same impact as they did. It feels like the magic is slipping away.
This shift is not a fluke. It’s a statistical phenomenon called regression to the mean.
In this edition of “Math Meets B2B SaaS,” we’ll explore the implications of regression to the mean for your sales and marketing efficiency, and what you can do to counteract the natural dilution of performance as your team scales.
Let’s start with the basics: What is Regression to the Mean?
Regression to the mean is a statistical concept that refers to the tendency for extreme values in a dataset to move closer to the average upon subsequent measurements or iterations.
In simple terms, if something happens that is way above or below the average (like an extremely high test score or a really bad performance), the next time you measure it, the result is likely to be closer to the average. This happens because extreme outcomes are often the result of random factors or luck, and when the same conditions are repeated, those random factors are less likely to align in the same extreme way.
The graph above represents the concept of “regression to the mean” in a talent pool:
- Light Blue Line: This represents the performance levels of individuals in the talent pool, where most individuals are close to the average talent level (around 70).
- Yellow Dashed Line: This is the average talent level of the pool.
In subsequent measurements or performances, the outliers are likely to regress toward the mean, performing more in line with the overall talent of the pool, as seen in the pattern of data. This shows the concept of regression to the mean in action—extreme results tend to be followed by more typical, average ones.
How’s this relevant to my sales and marketing efficiency?
Let’s look at the statistically likely scenario for your sales and marketing team performance to follow with scale, when the laws of maths are at play (and they always are).
1. Your First Sales Hires Were Outliers
In the early days, you likely recruited a handful of standout sales reps. In fact, you very likely brought in top talent from your network, people you’ve known from previous roles whose performance was exceptional. These individuals were incredibly driven and fully aligned with your company’s vision. They were outliers, and their success became the foundation of your initial sales growth.
2. New Hires Are Statistically More Likely to Be Average Performers
As your company scales and you begin to hire more reps to meet growing demand, the talent pool from which you recruit expands. Statistically, it becomes much more likely that the new hires will perform closer to the mean of all potential candidates. These hires may still be good, but they are less likely to be extraordinary performers who can replicate the exceptional success of the initial outliers.
This is where regression to the mean shows its effects: The more new hires you make, the closer the overall team performance will move toward the average of the candidate pool.
3. Dilution of High-Performing Outliers
As you scale, the performance of your sales team becomes more reflective of the broader candidate pool, and the impact of your early hires—the top performers—becomes less pronounced. While the outliers still perform at a high level, their individual contributions are diluted by the inclusion of more average performers, causing the team’s overall performance to appear weaker.
Why does this happen?
Regression to the mean happens because extreme performance is often driven by a combination of factors—luck, timing, opportunity, and exceptional individual skill. However, those exceptional circumstances aren’t as likely to repeat with every hire. As your company grows, it’s harder to find multiple outliers who can maintain the same level of extraordinary performance.
Additionally, the sales strategies and processes that worked in the early days—tailored coaching, one-on-one mentorship, and close-knit teams—become harder to scale. Without the same level of individualised attention, newer hires may struggle to ramp up as quickly, contributing to an overall decline in team performance.
The graph illustrates regression to the mean in your sales and marketing team:
- Initial Hires (dark blue crosses): High-performing individuals with scores around 90, representing outliers selected early in the hiring process.
- Subsequent Hires (light blue dots): New hires closer to the population mean (70), with greater variation.
- Cumulative Average (burgundy line): As more hires are added, the team’s average performance declines and stabilizes closer to the population mean (yellow dashed line).
This demonstrates how the influence of exceptional early hires is diluted as the team grows, reflecting regression to the mean.
How can you combat regression to the mean?
While regression to the mean is a natural part of scaling your sales team, it doesn’t mean your company is doomed to a decline in performance. With the right strategies in place, you can maintain a high-performing team and counteract the dilution of talent.
Here’s how:
1. Refine Your Hiring Process
As you scale, it’s crucial to continuously refine your hiring process. Instead of just looking for top performers who may be outliers, also focus on identifying candidates who exhibit the potential for growth and adaptability. While the extreme top performers may be fewer and farther between, you can still find high-potential candidates who have the ability to learn and adapt quickly, even if they don’t have the same track record of success as your first hires.
2. Invest in Comprehensive Onboarding, Training and Documentation
To ensure your newer hires reach their full potential, invest in a structured onboarding and training program that’s tailored specifically to your business needs. This is particularly important as your team grows, since the individualised training your first hires likely have received may no longer be feasible. A well-structured onboarding program helps set clear expectations, ensures that all new hires are equipped with the tools and knowledge they need to succeed, and minimizes the impact of inconsistent ramp-up times.
Moreover, documenting your processes and creating tailored sales playbooks is crucial for maintaining consistency and aligning your team with your company’s best practices. A comprehensive sales playbook should capture your unique sales strategies, key messaging, objection handling techniques, and product knowledge specific to your business. By providing new reps with easy access to these resources, you ensure that they have the right guidance to perform at a high level from the start and helphelps address inconsistent ramp-up times.
A well-documented playbook helps new hires quickly ramp up without relying solely on personal mentorship or trial and error, ensuring they can replicate the success of your top performers.
To complement that, encourage a culture of mentorship where your most experienced reps pass on their knowledge and strategies to newer hires. This helps maintain the high standards set by your initial outliers and ensures that your top performers’ methods are shared across the team. A mentorship-driven culture will help raise the performance of your newer hires, even as the team grows and diversifies.
3. Set Clear Goals and Metrics, Track Performance Closely, and Proactively Manage Your Team
As your team grows, it becomes even more crucial to set clear, measurable goals and track performance regularly. Having well-defined KPIs and performance metrics ensures that everyone knows what’s expected and helps you spot any issues early. Proactively managing performance means regularly checking in with reps, providing constructive feedback, and adjusting support where needed to help them succeed.
Some individuals simply won’t work out, and that’s a reality of scaling a team. It is crucial to make timely tough decisions when necessary—let go of low performers who aren’t meeting expectations, as soon as you know that they are not, not a year after you first knew.
One company I worked with hired a VP of Sales, and less than six months into their tenure, it became clear that the hire was not working out. The Principle of Least Effort (i.e., systems or individuals will naturally seek the path of least resistance – something we’re all prone to do at times) led the company to keep wanting to wait for another quarter to see if performance would improve. The VP of Sales was finally let go more than a year after the initial ‘diagnosis’ or ‘moment of knowing.’ Interestingly, the company accelerated its growth immediately following the VP’s departure, even without a replacement. There was a significant positive impact on sales and marketing efficiency, as the most expensive talent was no longer part of the cost base. And imagine the opportunity cost of not having a high-performing VP of Sales all that time.
At the same time, focus on incentivizing your top performers to keep them motivated and engaged. Whether through recognition, compensation, or growth opportunities, make sure your high achievers feel valued. This dual approach—holding low performers accountable while nurturing top talent—ensures that your team maintains high standards and continues to drive growth even as the pool of candidates expands.
4. Monitor and Adjust Team Structures
As your team grows, consider adjusting its structure to better align with the requirements of your go-to-market strategy and the capabilities of your sales reps. As your company scales, its go-to-market motion will become more complex, and you’ll need to think about specializing roles based on Ideal Customer Profile (ICP) type, region, sales motion, and other factors. This will ensure that each team member has a role that aligns with their strengths, while also creating opportunities for newer reps to grow into higher-impact positions.
For more on this, check out the Specialising team roles section in our Go-To-Market-Fit ToolKit.
Conclusion
As your company scales, it’s inevitable that the initial high-performing early hires will be joined by a larger pool of candidates, and statistically, the overall performance will tend to regress toward the mean. However, this doesn’t mean your team is doomed to grow to mediocrity. By proactively addressing this phenomenon, you can maintain a high level of performance across your team.
The key to success lies in managing this natural shift, by fostering the right culture and setting up the right processes, and you can ensure that your sales team continues to perform at a high level, even as the early outliers become less prevalent.
