Gretchen Ertl / The New York TimesThe idea behind Yesware, a software company founded by Matthew Bellows that employs 48, was to eliminate the data entry on sales by capturing the information automatically, most of it from each sales representative’s email traffic.

Yesware is a 4-year-old company that designs and sells software intended to make it easier for sales teams to record and analyze customer data. Released in late 2012, Yesware’s basic version, which can be downloaded free, quickly attracted more than 100,000 users.

What’s the challenge? Converting free users into paying customers. By early 2013, even with a newly hired 10-person sales team, Yesware’s sales were abysmal and the company had yet to turn a profit, casting a pall over pending efforts to raise venture capital. Because he was struggling to sell a product built to make sales easier, Matthew Bellows, a co-founder, felt like the shoemaker whose own children pad about barefoot.

The background

Bellows and a software engineer, Cashman Andrus, founded Yesware in 2010 to improve upon existing customer relations software and address problems that Bellows had experienced throughout his 15-year career managing sales teams.

“As a sales manager,” Bellows said, “I want to know all the deals my sales team is working on — make sure they’re actually following up on each one, help them if I can with encouragement, tips, introductions or other ideas for how to reach the decision makers in these companies. I want to be involved in the process.”

But this kind of oversight requires salespeople to type updates into customer relations systems, rather like police detectives pecking away on case reports back at their desks. Sales agents hate doing it, and sales managers hate hectoring them. “Frankly, they don’t do a good job of it,” Bellows said. “They’re not paid to do data entry; they’re paid to close deals.”

The idea behind Yesware, which is based in Boston and employs 48, was to eliminate the data entry by capturing information automatically, most of it from each sales representative’s email traffic. And business started well for Yesware. The software got good reviews and generated word-of-mouth referrals.

The company’s website pumped out thousands of requested free downloads. Bellows landed Groupon as a paying customer. Even more encouraging, he thought, was a big sale made by a former marketing intern. “We’ve just got to hire more people like Paul,” he thought. “This thing can scale.”

Six of his 10 sales hires had one to four years of sales experience. Bellows set a quota of $4,000 of new, monthly, recurring sales revenue per member of the sales team. “We already had over 100,000 users,” he said. All the sales team had to do, he noted, “was explain the added benefits of paying for it, which could be as little as $10 a month for small companies, up to $1,000 a month for bigger companies.”

The website soon offered client testimonials crediting Yesware with increased response rates. But the proof, said Bellows, has always been in the using — creating enthusiastic advocates within a company among sales representatives who sign up individually for the free version. In his Groupon sales visit, Bellows listened happily as an employee of the daily deals website, who had adopted Yesware on his own, “made the pitch better than I could.”

Nonetheless, revenue idled far below projections in the early months of 2013. Several salespeople remained stuck at their opening month’s sales levels of $1,000 to $2,000. One failed to close a single sale in three months. Underperforming seemed contagious. And the sales team dynamics were “cancerous,” Bellows said.

“Here I am, I have a bachelor’s in psychology,” he said. “I’m a sales manager. This is what I do. Yet I can’t find enough time to sit down with the team several times a day and coach them on a deal-by-deal basis.” Nor did the obvious escape him: “And we make software for salespeople.”

In his previous company, with no investors and no need to be out raising money, business had been simpler. He could serve as chief executive and the lone sales rep. Any doubt that he was wearing too many hats at Yesware evaporated the day he discovered his entire sales team in a conference room at 2 p.m. on a Wednesday in June — “hanging out, listening to loud music and drinking beer, like it was a frat house.”

Bellows closed the conference room door without a word. That weekend, he escaped to a meditation center in Vermont to ponder how he might fix his sales team.

The options

He came up with three alternatives:

• Clean house. Fire seven of the 10 salespeople. Step in himself as vice president of sales and devote the necessary time to training and supervision. To ensure he would have that time, he would hire a chief executive to serve in his stead.

• Hire a vice president of sales. Have this person do the firing, hiring and supervision while Bellows remained chief executive. Such a search might take as long as six months, and with the need to raise venture capital looming, Bellows wondered if he could wait that long. He worried, too, about the conventional criticism directed at former vice presidents of sales who become chief executives and then hire heads sales. Company leaders with this background, the story goes, are never satisfied and often micromanage the sales managers out the door. Would he be different?

• Promote the best salesperson among the three he deemed worthy of keeping to manage the team. The person he had in mind had six years of sales experience. He had never led a sales team but had demonstrated an aptitude for mentoring and leadership.

What others say

• Suzanne Paling, founder of Sales Management Services, a consulting firm in Boston: “I recommend hiring and mentoring a vice president of sales with strong coaching skills and experience holding representatives accountable. Together, they should focus on building a core sales team that can close deals, with more junior reps — or an outside firm — focused on early-stage qualification. As far as the current sales team goes, Bellows should use a sales-specific online assessment tool to dispassionately evaluate the strengths and weaknesses of each rep. Then they can identify who to keep and what role they should have, what to coach them on.”

• Andrew Brooks, co-founder and chief operating officer of SmartThings, a Washington-based creator of apps for remote home control and monitoring: “For a freemium software model at relatively low subscriber rates, sales conversions from free to premium are often the most critical proof point to achieving a successful funding round. If Bellows believes he has the skills to achieve that result, then it’s time to put the hand on the joystick. Fire underperformers — in sales, it should have never gotten that far — and take control. Assuming an organization with the basics in place, day-to-day operations should continue effectively while Bellows demonstrates that, with the right team, sales conversions can exceed expectations. He’ll then have the funding and runway to build a broader sales organization that either he continues to lead or staffs with professionals.”

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