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Once you are through the door, forget the sales process and focus on the buy process April 28, 2014

Posted by Bernard Lunn in Deal-making, Enterprise Sales, SAAS.


This is post # 4 in a serialized book called Enterprise Sales for the Digital Age. You can get value from each post in isolation, but if you really need to understand enterprise sales, it is worth reading the whole series.   You can buy an improved version, neatly printed and bound, for $6 from Amazon.  

When you get through that door, your job is testing your theory. You created a theory about why this specific customer should be a good prospect. That is what I described in the last post, the proactive lead generation process. You now want to find out if that theory works in practice. You are trying to find out if your product is a fit to your customer’s need. Your prospective customer is also trying to figure this out. This is a cooperative process between buyer and seller; neither of you wants to waste time if the fit is not good.

Product fit to market is the key step in the entrepreneurial journey. Product fit to customer is the key step in the sales journey. It may sound strange to think of a single customer like a market, but enterprise means really, really large customers. Selling to an enterprise as big as Google, Citibank or Pfizer is as much of an opportunity as selling to tens or even hundreds of small firms.

Your goal is to become an enterprise-wide approved vendor. That is a ticket to 8 figures (tens of millions of $) per enterprise per year. Clearly, that takes time and is done in steps but, if you are in the enterprise game, that is your mission.

Once you have your foot in the door, you have to prove that your product is the right fit for that customer’s need. This is the complex, lengthy middle game where your CAC (Customer Acquisition Cost) metrics can get so damaged that investors conclude that you have “a great product, but a lousy business”.

The enterprise sale is notoriously long and expensive (high CAC), but there is far too much emphasis on sales cycles and sales processes. As a vendor you should be focused on the buy cycle and the buy process and how to gently nudge it in your direction. That is the only way to get your CAC to a level where your venture can scale its profits.

The buy process typically has four steps:

1. Senior management recognition that there is a problem to be solved. This recognition usually evolves slowly through conversations between multiple stakeholders. “Wait ’till you hear the screams” before you engage seriously; you must know that the pain is acute, that this is a heart transplant kind of problem, not a problem that an aspirin can solve. Start-ups have to get involved at this stage, even though on normal sales qualification criteria you should wait until there is a budget for an approved project. Incumbents can afford to wait, they will always get invited to bid. Start-ups cannot afford that luxury. You have to be involved now, not only to get on a list of vendors which is relatively simple. What you have to do now is influence the requirements. This is where great sales people can make a difference at this stage. Great sales people have a deep understanding of three things a) the customer pain point b) your technical advantage c) your incumbent competitor’s weakness. At the intersection of that venn diagram is the key to the sale. You have to find the “innovator with clout” (see earlier post on leads) who has the background to understand it when you say “the only way you can fix xxx (customer pain point) is with yyy (your technical advantage)”. The innovator with clout can then carry that message to stakeholders. If you manage to insert your technical advantage as a requirement and make sure that enough stakeholders are aware how important it is, then you will be able to block the counter attack from the incumbent when they wake up to the fact that you are a threat. Note that all this critical selling is done well before the customer would be recognized as a “prospect” or even “suspect” in most sales methodologies. The key to doing this well is to cast your net very wide and qualify ruthlessly, a subject that we cover in the next post on having the courage, patience and smarts to “wait until you hear the screams”. Think of this stage as planting seeds. It should not take too long, most seeds won’t make it but you certainly cannot hope to reap later if you don’t seed at this stage. Note also that this is the time when you can build senior management relationships; as soon as you at the next step, you will be managed by more junior managers whose job it is to manage vendors and “keep them in their place”; incumbents always win this game. 

2. Somebody is given the job of defining a solution. This includes coming up with a list of potential vendors and a budget. This is where most “leads” come from and this is why experienced sales people are wary of these leads. Often the vendor list just needs a couple more names. Maybe they already have Incumbent Vendor A and Innovator Start-up B. They want to see what else is out there. They just need a list with say 3 or 5 vendors, because that’s what their buying process requires. You can jump in at this stage and win but the odds are against you. This is before a budget is allocated. It can take a long time for a budget to get allocated. That may never happen for many reasons – the problem just goes away, they find a non-technical way to solve it, an incumbent vendor may show a just good enough solution based on an incremental module or version upgrade. This is where rookie salesmen are buried. The person that the rookie is talking to may be sincere or may be just getting some “suckers to the table” to fill out a list and make the buying process look good. Even if the person who is tasked with contacting the vendors is sincere, he or she may simply not know that the deal has already been tied up by another vendor. It is possible to “come from behind” and win in these situations, but the odds are stacked against you; so be cautious of leads that come from this stage of the buyer’s process.

3. Vendor evaluation & selection. By this stage you are down to a short-list, typically with 2 to 3 vendors. This is when you have to prove what you have claimed. This is a three part process for the seller:

A. Demo to formally insert your secret sauce into the recipe. Informally you have done this far earlier, at the first step of the buy process as described above. This can be a generic demo, there is no cost to customize at this stage. The good news is that all the “buyer self education tools” such as Freemium make this less expensive. Using online demos, Freemium and free trials, customers can self-educate before sales and sales support have to put in time. The buyer is investing time. The seller has the option of investing resources to use a human to give the demo. This is a qualification decision. Technical founders and technically driven sales people mix a demo with a training course, feeling the need to show every feature. This is where you need a great sales person working with a great sales support person. Remember what your mission here and KISS. You have to create a enough stakeholders who tell their peers “I just saw xxx, we would be crazy to opt for a solution without xxx, its the only way we can fix yyy (pain-point)”.

B. State what you have.  Now is when you describe that secret sauce. If you have done your work earlier, the requirement your competitors have to respond to will be precise and only you can meet those requirements; this is why the customer will take a risk on an unknown start-up. You have to do this in such way that the incumbents cannot easily “put a tick in the box” with a BS response. So don’t just say “real time approval process” but be as precise as “approval process in less than 1 second on data from three external sources”. This will typically be in a proposal. It maybe in response to an RFP. This may become an addendum to the contract, so it must be accurate. Technical or product management folks must do this, sales people have too much motivation to exaggerate and many sales people are brilliant at communicating face to face but terrible at written communication.

C. Prove that you have what you say you have. There are two ways to do this. One is the Proof Of Concept (POC). This is a customized demo that you leave with them for some time. It is usually free. It is like a free trial, but you put in the effort to customize your product to their needs. This costs money, so make sure the prospect is properly qualified before you invest this time. You must know budget, timescale, decision team, competitors before investing in a POC.

The other way to do this is via a Paid Pilot. This gets used for real and the buyer pays – unlike a POC. This is a real sale, but it is a small investment by the buyer. As the vendor, you look at this as the first Land in a Land & Expand strategy. Tactically you may choose a Paid Pilot instead of a POC or do POC and then Paid Pilot. The decision is complex and situation-dependent and is covered at the end of this series under FAQ.

The prove phase is where you can leverage technology to reduce CAC. Tools that make auto discovery of requirements and facilitate quick customization can help lower CAC.

4. Negotiation & close. This is the subject of a future post in this series.

The buying process can take a long time, a minimum of 6 months and often longer than 12. When you are deep in the middle game of chess, it gets horribly complex. It is the same when you are trying to prove product fit to an enterprise’s requirements, there are too many variables to manage. The next post gives you a way to focus and KISS.

Deep in the complexity of the middle game, keep focus by imagining the press conference and concentrating on the “power of one”. 



1. Introducing Enterprise Sales for the Digital Age | Emergent Business Networks - April 28, 2014

[…] Once you are through the door, focus on the buy process to reduce your Customer Acquisition Cost (C… […]

2. How to get enterprise leads that generate the right Customer Acquisition Cost (CAC). | Emergent Business Networks - May 3, 2014

[…]  Next post in series. […]

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