jump to navigation

Thought leadership selling for enterprise software creates a qualitative feedback loop that can get marketing & product management on the same page. May 5, 2014

Posted by bernardlunn in Blogging, Enterprise Sales, Enterprise Web 2.0, SAAS, start-ups.
Tags: , ,
add a comment

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 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.

In the consumer world, there is no selling (door to door salesmen are only in history books), there is marketing and that is tightly integrated with the product (lots of AB testing to find out what gets consumers to hit the buy button).

Marketing has become a science. The creative folks and their hustlers that we watch with such amusement on MadMen have been banished to the history books along with door to door salesmen. We now have a perfect quantitative feedback loop of Analytics feeding into Marketing Automation feeding back into product feeding back into Analytics….

That would be OK if selling to the enterprise one user at a time – the consumerization story – was all that was needed. It is a venture lifestage 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).

So what you need is a qualitative feedback loop integrated with this quantitative feedback loop. You need to hear what people are thinking and feeling about your product, what would entice them to buy more. When you find this out you need to quickly integrate this into your product and 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 niche you are focused on. They also need to be credible inside your company so that the voice of the customer is heard.

Thought leadership selling is a forgotten art. I think of it simply as industry expert bloggers who sell or salesmen who blog credibly about the industry. This Forbes article outlines it well, the key quote is here:

“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.”

I think of this 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.

Next post in series 

How to manage an enterprise sales team in the era of bring your own everything May 2, 2014

Posted by bernardlunn in Deal-making, Enterprise Sales, Enterprise Web 2.0, social networks.
Tags: , , ,
1 comment so far

This is # 9 in a serialized book called Enterprise Sales for the Digital Age, delivered here as 11 blog posts. You can get value from each in isolation, but if you really need to understand enterprise sales, reading the whole series is worthwhile.   You can buy an improved version, neatly printed and bound, for $6 from Amazon.  

Note: a version of this post has already been published on ReadWrite.

This applies to outside sales, particularly the rain-makers who get the early customers for startups.

Bring Your Own Device (BYOD) is now a well understood management issue. What mobile device a salesman uses is not that tough an issue to manage now that HTML5 has matured to a level where it is perfectly acceptable for most business apps. Its the app that matters, not the device.

However management is only just starting to wrestle with a world of “bring your own everything” including:

1. Bring your own social networks.You want to hire sales guys who “bring their own rolodex.” and technically speaking, the social networks such as Facebook, LinkedIn, and Twitter, are their rolodexes. This is not the same as just having a lot of Friends or Followers or Connections. What matters is the depth and quality of those relationships. Sales is all about “what have you done for me, or somebody like me that I can relate to, recently?” It is much better to have 10 who say “you have done something for me recently” than 100 who say “I vaguely recall interacting with that guy”. The key point here is that these are personal relationships, where the relationship data is stored in the cloud service and belongs to the individual, not corporate data in a CRM system that is used by the hired salesman while they are on the corporate pay roll. There is a change in the individual relationship to their employer that is going on here. Data is power and that data power is shifting to the individual. We can cheer the empowerement of the individual while also recognizing that this creates a management challenge which is quite legitimate.

2. Bring your own contact manager. LinkedIn has a special role in business social networking because it is the self-updating rolodex of business, managing content on people independent of their company affiliation. The individual owns and controls the data, not the employer.

3. Bring your own sales methodology. In ye olden days, the company told sales people what sales methodology to use. It was part of “the way we do things around here”. Onboarding included training in the company standard sales methodology. There are lots of these sales methodology and most of them are good. Famous ones are Miller Heiman, SPIN and Target Account Selling (TAS). However, will your startup be defined by your sales methodology? Or will you reject a sales star who made the key sales for a competitor because she prefers SPIN to your company standard? No, I did not think so.

4. Bring your own sales productivity tools and apps. This brings us back to mobile. It does not matter too much to the company whether a sales guy uses iPhone, Android, Windows or even Blackberry. However, what apps they use on that device has a bigger impact on management, because it relates to control over data and integration. The good sales guys will come in with their apps on phones and tablets hooked up to the networks and services they use in the cloud. They are onboard and productive on day one.

 

5. Bring your own content. The thought-leadership sales guys who are rain-makers for startups could be described as “bloggers who sell” or, if you prefer, “sales guys who blog”. They will of course use the content created by the company, but when prospects can self-educate online before meeting anybody from the company, there has to be a reason why the prospect wants to meet that sales person (as opposed to meeting the CEO or CTO or CMO who is doing the company blogging). This is another management headache or tremendous opportunity depending on how you deal with it. 

The mission you are giving these sales guys is tough – break into a new market for a relatively unknown startup and do it fast and do it big. You cannot also say “oh, and by the way, you also have to use all the systems, processes and tools we give you whether you like them or not”. Imagine telling a sales guy who has used one methodology and tool set successfully for years that she must switch to your company standard. Do you want her to do that – or generate sales quickly, put you on the map in a new market and make $ millions for your company?

This does change the balance of power between sales guys and their employer and creates a management headache. Luckily there are new solutions appearing to crack this problem.

New ventures focussed on this challenge include Nimble, RelateIQ, ClearSlide, Yesware, Tylr Mobile, Social Pandas and Selligy. These “sales productivity” ventures focus on making sales people more productive as opposed to traditional CRM which made their managers more productive. They focus on two types of solution:

 

  1. Integration at the mobile device level. Outside sales people should be – outside. Any system that is not mobile first, that does not allow sales people to do most of their work when they are out of the office, is a productivity drain. A sales person who is in the office too much is not a good sign. Mobile is the obvious answer. Mobile is also key to the integration of all those single feature cloud apps. Thanks to APIs, it is relatively easy to integrate these at the mobile app level. This is where the types of services that sales people use every day to get their job done – LinkedIn, email, presentations, CRM, maps, online meeting systems etc – can be integrated and presented in a single user experience.2. Digital exhaust to replace sales data entry. If the sales guys are in the office filling in reports for management, that is a management and systems failure. You want them meeting customers and prospects, that is when they are adding value. The great sales guys can write really short reports such as “beat quota by x% this month/quarter”. The long reports are all about reasons why the sales guy did not hit the numbers. Yet management does need data. The mobile apps do enable quick simple reporting while in between meetings (in the elevator, on a train, getting coffee). More strategically interesting is the trend towards auto aggregation of what may become known as “sales big data”. Like all big data, this is aggregated automatically from “digital exhaust”, in this case from what the sales guys are doing all day on their mobile devices. This answers questions like:1. Who did you meet?
    2. Where (in the cloud or F2F?)
    3. For how long?
    4. How engaged was the customer?The first three questions answer the most basic management concern whch is “are the sales guys doing their job, are they working hard?”. Much better to get this reported automatically rather than asking the sales guys to spend time doing this, knowing that they are incentivized to not tell you the truth. The current system of CRM reporting is doubly broken – it wastes valuable time and delivers suspect data. 

    However the really valuable data comes if you can answer the last question. This could help companies to do consistently what really great sales people do, which is to qualify prospects with great care and discipline. We all know that is what we should do, but very, very few sales people do it at all well. We think that sales is all about hard work, persistence, determination and all those other good Protestant work ethics. So we drive relentlessly on, calling that prospect for the umpteenth time.

The best sales guys wait until they can see that the customer’s need is real and urgent. They “wait until you hear the screams.”

One way of checking for pain and urgency is how much effort the prospect puts into the relationship. You need to see some equality of effort. If you call five times before the prospect returns your call that is not equality. If you send reams of information and give multiple presentations but the prospect won’t fill in a requirements questionnaire, then that is not equality of effort. With every call you want the prospect to DO something. If this does not happen then the screams are not loud enough and you should move onto your next opportunity.

Sales big data could start to answer questions like this at the customer level, by aggregating data such as:

  • How many hours has this customer spent talking to us?

  • Do they open mails from us and how quickly?

  • Are they clicking through our slides during webinars or is their attention engaged elsewhere?

  • How many emails did they send us?

It is still really early days in the market for sales productivity tools, but the need is there, so it is likely to happen quickly. In the era of “bring your own everything” our sales management systems and tools need to evolve. We need tools that primarily focus on making the front-line sales folks more productive while incidentally also allowing better management oversight.

Next post in series

Why Enterprise Software Sales is like Chess (with elements of Poker) November 4, 2013

Posted by bernardlunn in Enterprise Sales, SAAS.
Tags: , , , ,
add a comment

Many cerebral developers have an image of sales as a game for smooth talking silver tongued devils who are not over-endowed with grey matter.

Coding is very hard intellectual work. So is enterprise selling. Enterprise sales is like a game of chess with opening moves, middle game and end-game:

Opening moves in chess are fairly well-defined. You cannot win through brilliant opening moves, but you can lose quite quickly through some dumb moves. The same is true in enterprise sales. People over estimate the value of an introduction. It is not much more than Pawn to Queen four. You need to get through the door to sell, but its what you do when you are through the door that matters. Its not just the credibility of your introduction (first move) but also how you position your value proposition on first email, call and meeting that will determine how well you do when you get to the negotiation phase.

Middle game is when the sales support guys make all the difference. The process of proving product fit to the specific enterprise requirements is long and complex with a track running from demos to gap analysis to proof of concept. Then the process of aligning stakeholders towards a specific proposal can take place. You cannot plan more than two moves ahead, the best players mix analysis with intuition (“sight of the board”) as well as some time-proven maxims (such as “control the center of the board”).

End game is when the closers score. Some sales guys are no good in the opening moves (they expect the company to set them up with lots of qualified leads) and they are hands-off during the complex hard work of the middle game. This may annoy the hard-working folks in marketing and sales support, but they can get away with it because they are great closers. Watch out for these guys at your Gorilla competitors. A naive start up can align people around a perfect demo, gap analysis and proof of concept only to find the deal snatched away by salesman sammy at Bigco who trashed you with a well timed comment to the decision-maker over golf or cocktails.

The reason that winning at enterprise sales is so much fun is that it is cerebral but it is not only cerebral. You need good EQ as well as good IQ. Or, to put it another way it is a mix of chess and poker and as Bond says in Casino Royale “in poker you don’t just play the cards, you play the person sitting across from you”.

Thought leadership selling for enterprise software October 31, 2013

Posted by bernardlunn in Enterprise Sales.
Tags: , , ,
add a comment

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 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 consumerization, many technical founders sought to write the sales guys out of the script.

In the consumer world, there is no selling (door to door salesmen are only in history books), there is marketing and that is tightly integrated with the product (lots of AB testing to find out what gets consumers to hit the buy button).

Marketing has become a science. The creative folks and their hustlers, who we watch with such amusement on MadMen, have been banished to the history books along with door to door salesmen. We now have a perfect quantitive feedback loop of analytics feeding into Marketing Automation feeding back into product management feeding back into analytics….

That would be OK if selling to the enterprise one user at a time – the consumerization story – was all that was needed. It is a venture life-stage issue. You may get early traction, the foot in the door, one user at a time using Freemium. To grow your share of budget you need 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).

In order to sell the big ticket deals to the Global 2000, you need a qualitative feedback loop integrated with this quantitative feedback loop. That needs flesh and blood humans, there is no way algorithms can do that.

These humans need to practice a form of creative thought-leadership selling that has become a forgotten art. It is an art not a science because you need to interact with a lot of smart, powerful people and no amount of process will replace a talent for convincing people. It is a forgotten art because enterprise software has been in a coma for the last decade. Most of the best minds moved into consumer ventures.

Unfortunately when you find the folks who still know how to do big ticket deals with the Global 2000, many of them are uncomfortable in the new consumerized social media data driven world.

Here is how Forbes describes thought-leadership sales people as the new rain-makers.

The money quote is here:

“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.”

I think of this more simply as “bloggers who sell or salesmen who blog”. I use “blog” as short-hand for insightful trend analysis about your market (fully recognizing that lots of blogging is empty drivel).

It is no longer good enough to have thought leaders blog and sales people sell. The buyer has to want to meet the sales person. They can get the insights from the blog. Why would they want to spend an hour with a sales guy who will just parrot the same info you just read on the blog?

This is easy when all the selling is done by a founder, which is clearly not scalable and is a tough transition for many ventures. Getting a whole team of thought-leader sales people is harder.

Enterprise Software Sales – The Art and Science Of Accurate Forecasting September 30, 2012

Posted by bernardlunn in Deal-making, Enterprise Sales, SAAS.
Tags: , , , ,
add a comment

Forecasting new business sales revenue is hard. As any sales manager will tell you, that is the ultimate “no, duh” statement. Yes forecasting is very hard.

The reason is obvious – the future is uncertain.

Sales revenue forecasting is also enormously important. Ask any CEO who got hammered by their Board for missing their numbers. Forecasting drives so many critical decisions. Without good forecasts you cannot have a good relationship with investors and you cannot plan your business.

If the company is big and old you have lots of data to guide your forecasts and errors become rounding errors. However if you run a company that gets revenue from say 5 sales executives, you cannot rely on the usual statistical models.  In startups the forecasting is also a lot tougher because there is a step ladder of forecasting difficulty:

– Very Easy: add-on sales to existing accounts. As a start-up you don’t have that much of this.

– Fairly Easy: new accounts within a geography and a niche where you have been selling for years. It is unlikely you will have many of these.

– Hard: sales of a well established product into a new geography or a new horizontal or vertical market.

– Really Hard: sales of a new product into a market that is not even well-defined yet. These are the blue ocean markets that allow startups to get traction and scale, but this is a very tough forecasting challenge.

Forecasting recurring revenue contracts such as maintenance can be automated quite easily. You can apply standard assumptions about decay (how many will cancel) and the growth will be based on new contracts.

The problems all come from forecasting new contracts. These are outside your direct control. You are extremely dependent on the judgment of your sales team. SaaS subscription models make new contracts less critical, but investors are still mostly looking for the new contracts (and churn) as the signals of success or failure. Whichever way you cut it, your VP Sales (Sales Director, Chief Revenue Officer, Chief Hustling Officer, whatever you want to call her) has a tough job where everything is on the line every day.

You obviously want more sales. Perhaps even more, you want to know what is likely to happen. You want accuracy.

Attempts to automate new contract revenue forecasting usually do more harm than good. The standard approach is to apply closure rates to the sales funnel. The idea is to make assumptions about how many calls it takes to get meetings and how many meetings it takes to prepare a proposal and how many proposals it takes to get a contract. Then you can say we have 10 deals at 40% probability, 5 deals at 60%, 3 deals at 80% and one deal at 90% based on where your deals are in the funnel.

This approach appeals to engineers and accountants. It appears to be scientific. The problem is that it generates a false sense of confidence and is very susceptible to gaming as in “lets bump up the number of meetings until we get the desired result”. It is a classic “garbage in, garbage out” problem.

It is better to build a system around what good sales managers do in the real world. What they want to know from a sales guy is “will this deal close this quarter?” In the real world it is always binary – it either closes or does not close. 90% closure does not hit the revenue numbers.

Sure this leads to “sandbagging”. The sales guy may have 2 deals that can close in the quarter. He will tell his manager that one will definitely close and keep the other one in reserve. If his “committed close” blows out he hustles to close his back-up deal. If his main deal closes, he can either get his back-up deal in this quarter and be the star of the quarter and pick up some nice accelerator commissions, or push it into the next quarter and get ahead of the game.

Everybody sandbags right up the CEO providing “earnings guidance” to investors. Is this a problem? As one Board Director put it, “I love getting sandbagged, it means surprises are much more likely to be positive rather than negative”.

Whatever system you put in place it will be gamed. The trick is not to try and avoid gaming as that runs against human nature. The trick is to get game theory working on your side.

Key recommendations for a sales revenue forecasting include:

  • Align the input from sales guys with what the CEO has to report to investors. This sounds obvious, but there is a major disconnect in many companies.
  • Measure input accuracy. The old saw, you cannot manage what you don’t measure, applies here. How accurate was salesman x in the past? Note that this is not the same as “did salesman X make target? The question is “at end Q2, salesman X forecast $1m for Q3 and $1.2m for Q4. Now at end Q3 what was the actual result?
  • Reward accuracy. Revenue is always rewarded, but with accuracy being so critical to the company why don’t we explicitly reward accuracy? One reason is that we are too focused on budgets and targets. These are only plans. What we really want to know is what will happen this quarter? Accountants and spreadsheets can measure the difference between actual, forecast, budget and target and the gaps can be used to kick ass. But don’t confuse that with the main objective of getting accuracy.

If you get good input, the rest of the job is fairly routine and can be automated relatively easily.