Enterprise start-ups need thought-leadership selling, a mix of sales, marketing, technology and strategy May 4, 2014Posted by bernardlunn in Corporate Strategy, Enterprise Sales.
Tags: enterprise sales, messaging clarity, software business, thought leadership selling
This is post # 11 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.
There are two core jobs in enterprise software; you either code it or you sell it. All the other jobs, vital as they are, facilitate those two core tasks. In the great companies there is a culture that synthesizes the best of the coding world and the best of the sales world. In those great companies, both techies and hustlers respect each other and know that they depend on each other like mountain climbers roped together.
Sadly that kind of mutual respect culture is all too rare. For the first generation of enterprise software, the sales guys ruled and they often abused that privilege. It is therefore no surprise that in the next generation, characterized by SaaS and consumerization, many technical founders sought to write the sales guys out of the script. This is the world of Dropbox, Evernote and Yammer, using one click at a time to break into red ocean markets.
Marketing has become a science that is tightly integrated with the product (e.g lots of AB testing to find out what gets consumers to hit the buy button). Consumer marketing techniques have been translated to B2B. We now have a perfect quantitative feedback loop of Analytics feeding into Marketing Automation feeding back into product feeding back into Analytics….
This consumerized approach to the enterprise works well in red ocean markets, but even in those it is a venture life-stage issue. You get early traction, the foot in the door, one user at a time using Freemium. To grow your share of budget you need at some stage to engage with the people who manage these enterprises (or sell to an acquirer who can do this, but that is a very limited pool of acquirers). When you reach this stage, you can take an arrogant approach as in “your users already want this, your job is just to enable more of them to get it” or a more solution oriented approach as in “what big problems could we solve for you if we made this an enterprise-wide solution?”. The latter is more likely to work and it requires some real solution selling.
Even before you reach the stage of CIO conversations, the bots alone are not enough. Humans are needed to create a qualitative feedback loop integrated with this quantitative feedback loop. You need to hear what people are thinking and feeling about your product, to understand what would entice them to buy more. When you find this out, you need to quickly integrate this into your product and into your marketing; this has to be an agile feedback loop. For this you need humans who can understand the nuances of the enterprise you are selling to, the geography and the trend line dynamics in the market that you are focused on. They also need to be credible inside your company so that the voice of the customer is heard. In other words you need thought-leadership selling. Or you could have a marketing person do this, or product management person or a developer or the CEO or whoever can do this job well. This is a task that crosses what are today’s job description boundaries; to do this well, you need a mix of sales, marketing, technical knowledge and a head for strategy. The end game is to close a deal, deliver great software, get a happy reference customer, get cash; that is a classic sales job description. If your Product Manager can do this, great. It does not matter what the job description is, the reality is that it will involve both selling and thought-leadership.
So, what is the difference between thought-leadership selling and solution selling? One answer is “none”. The aim of thought-leadership selling is to solve a big problem for a big client and get paid big bucks, which is a definition of solution selling. The other answer is “everything” because “the Internet changes everything”. The twin tsunamis of change – digitization and globalization – create radical, disruptive threats and opportunities for enterprises. Solutions require radical, strategic thinking. It is no longer enough to shave a small % off G&A costs, you have to show how you can enter new markets, fix existential threats and transform the business. One way to look at the difference is simply that “thought-leadership selling is solution selling on steroids”.
Thought leadership selling is also key to creating a market-dominating company by helping to create a message that really resonates. This Forbes article describes how Salesforce.com did it:
“Take Salesforce.com as an example. This was an organization that took cloud-based software-as-a-service for customer relationships into the mainstream marketplace. There are several elements to its success, namely a strong product, but it also has an army of thought leaders who specialize in app development, sales lead development, sales management, etc. that helps customers do their jobs better. Salesforce’s model, driven by product success and thought leaders, has led to a familiarity with “the cloud” and a willingness to accept it in a corporate environment. These achievements not only helped the cloud computing industry with adoption rates, but helped make Salesforce a leader in the cloud-based CRM space.”
Marc Benioff is a salesman. He is also a technologist, thinker, marketer and strategist, but at heart he is a thought-leadership salesman. You can think of thought-leadership selling simply as industry expert bloggers who sell or salesmen who blog credibly about the industry. It is no longer OK for customers to read interesting blogs on your site and then meet sales people who cannot continue the conversation because they follow the old fashioned scripted model of selling. This is particularly true when crossing the chasm through the bowling alley of niche markets. Of course in the early days, the founders do this and in very late days you can hire teams of sales people who follow a more scripted approach, but you need thought leadership selling to make the tough transition from the early days of founder led selling to mature enterprise sales processes.
Enterprise software market leadership starts with mindshare. Winning the mindshare battle requires intense clarity about your message. If you can distill your message into a single word or phrase that defines your market, you have a big competitive advantage. That is what Marc Benioff did with Salesforce.com.
Of course it is not easy to do that. Thousands of marketing professionals get paid millions of dollars to come up with cringe-inducing phrases and tag lines that last as long as snowballs in hell. What makes it so hard is that messaging clarity has to be based on a very deep understanding of the dynamics of your industry and the position of your company within that industry and the customer’s pain point and your technology secret sauce. If your message does not seem real, it does not stand a chance. In fact it has to seem so real and obvious that when people hear it they assume they have heard it before.
History Lesson – Information Bus
That final touch of clarity that is enshrined in a single phrase or word, can make all the difference. I learnt this the hard way in the early days of the market for real-time application integration middleware, when technology such as Publish & Subscribe, real time messaging bus and Enterprise Application Integration was being adopted on a large scale in the first vertical niche market – financial trading rooms on Wall Street.
My company, Aregon, was an early innovator with solutions dating back to 1984 that were the first implementations in the industry. We were the technical pioneers. However when customers started to ask us whether we had an “Information Bus”, a term invented by a rival company, things started to go wrong.
How To Respond When A Rival Has Mindshare?
None of our responses was very effective.
For example, “no, that is not what we call our technology, let me explain” left people cold. Customers saw the Information Bus concept and automatically “got it”. They did not want to waste time understanding some new concept. Coming up with an alternative message is doomed unless you catch things very early and you are very, very good at coming up with an alternative that will crush the concept invented by your competitor. I mean crush, mindshare is not a game of percentages.
Replying that “yes, we have an Information Bus and ours is better for the following reasons” will get you sales, but will automatically relegate you to the position of follower. You can build a good business as the number two or three vendor in the market and, if you time it right, you can sell out at the right time for a reasonable valuation. That is what happened to Aregon. However that is a far cry from being the market leader in a large market that you define, which was what happened to Teknekron, which was later renamed TIBCO (as in the The Information Bus Company). They invented the market-defining messaging concept andthen became the leader in the booming enterprise integration market.
Why Was Information Bus Messaging So Powerful?
The payoff from getting it right is huge. However there are very, very few examples of great successes. Why was Information Bus so powerful as a message?
It was simple and easy to understand for the target audience. This does not mean “dumbing down” for everybody. This was a technically sophisticated audience, so TIBCO could count on a base level of knowledge.
It was based on a genuine “aha moment”. As related by Vivek Ranadive, TIBCO’s founder, the moment came when he asked a software expert to describe why so many software projects failed. As a hardware engineer by training, Vivek, could not understand why well-tested components could not simply plug into the system Bus. Why not do the same with software?
TIBCO created a clear and simple visual diagram of the Information Bus that anybody could draw on a napkin and understand in a heartbeat.
The company executed by ensuring that everybody stayed on message. Execution consistency is critical to success. The phrase enabled a dialogue that went into increasing levels of details as the company engaged in customer dialogues. Yet at every level they could come back to the simple Information Bus concept and diagram.
Think SAVE – Simple, Aha, Visual, Execution.
Thought-leadership sales guys are critical to Messaging Execution at the early stage
The best messages come from a synthesis of what you are hearing from the customers and an understanding of your technology secret sauce. You cannot rush that process.
If you force it and hire a lot of standard sales guys to deliver the message, it is unlikely to resonate in the market, you will just blow a lot of capital on sales and marketing. Hiring external consultants to create your messaging is usually a mistake. At best external consultants can act as facilitators, drawing out what is already known but hidden. Great messages cannot be forced out; they have to emerge. You cannot set a firm deadline and it is better to have no message (just great technology and a solution-selling mindset) than a bad one.
This is why you need a breed of thought-leadership sales guys at the early stage who are totally different from the standard sales guys who help you to scale once you have got a message that resonates. Standard sales guys deliver a message, thought-leadership sales guys help to create the message.
Many entrepreneurs fail by not hiring sales people that fit the life-stage of the venture.
Don’t rush to replace the passion and creativity of the founders – the thought-leaders who got those critical and tough early deals – with too much process too soon. This is a chasm that many entrepreneurs fall into. You have to replace the passion and creativity of the founder-led sales in order to build a valuable business, but if you rush that transition you end up destroying what made your company viable .
Everybody wants process – for the other guy!
Developers want to see sales guys follow a process, so that they sell what can be delivered. Sales guys also want developers to follow a process so that the customers they sell to get quality deliveries on time. Both tend to underestimate the amount of art vs science in the other person’s job. That lack of respect can lead to toxic behavior that damages the business.
When you see how the really great developers are not just a bit more productive than the average, not just 2x more productive but 10x, you would be crazy to load process onto their creativity.
Working with armies of average developers requires boatloads of process, but that is typically the maintenance type of work that is sent offshore. It is all about where you are in the life-cycle. Early in the life-cycle, you want to give individual creativity full rein. A bit later you have some light processes for small teams – that is what Agile is all about. In the latter stages it is all about metrics and scalable, repeatable processes. You move from artisan to factory worker.
The same is true in sales. By the time the product is a market leader in a big mature market, the sales teams need lots of process. You can visit the sales teams of companies like Oracle and IBM to find out how to do this well. However, if you are bringing a new product to market, you need to unleash the creative drive of a few great thought-leadership sales people.
Enterprise software is complex. A simple concept/name/diagram like Information Bus is just the enabler for productive conversations that go into greater detail on the value proposition and technology. It takes years for a concept like Information Bus to become fully realized in the market and in those years you need thought-leadership sales guys who don’t expect all marketing material to be delivered in a neat package, they are comfortable with the uncertainty of refining materials on the fly (those final adjustments in the taxi on route to a meeting and the post meeting debrief where you change a message that clearly did not resonate).
Startups need thought-leadership selling because “you have to capture mindshare before you capture market share”. That may sound like marketing, but the thought-leader sales people are also marketers. They don’t expect brochures and canned messages to deliver. They create the messages based on a thoughtful synthesis of their company’s value proposition and the pain that they hear from the market. Startups need to see evidence of that kind of thought-leadership selling before hiring.