Thought leadership selling for enterprise software creates a qualitative feedback loop that can get marketing & product management on the same page. May 5, 2014Posted by Bernard Lunn in Blogging, Enterprise Sales, Enterprise Web 2.0, SAAS, start-ups.
Tags: sales, sales management, thought leadeship selling
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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.
Tags: enterprise software, negotiation, sales
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As a sales rookie I was reviewing the key issues before a major contract negotiation with my boss. We made a list of a) showstopper issues and b) “not a big issue for us” clauses.
During the meeting one of the “not a big issue for us” items came up. My boss said;
“Hmm, that is difficult. Do you mind if my colleague and I step out of the meeting to discuss this?”.
I walked out thinking WTF; why make so much fuss about a clause that did not matter to us? When we were alone my boss said:
“So what do you think will happen in the cricket today?”
We spent 10 minutes talking about cricket. The idea was simply to make them sweat about a point we were willing to concede so that we could trade it for something we wanted.
Why Enterprise Software Sales is like Chess (with elements of Poker) November 4, 2013Posted by Bernard Lunn in Enterprise Sales, SAAS.
Tags: enterprise software, revenue, sales, sales management, software ventures
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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”.
Tags: adjacent markets, bowling alley, crossing the chasm, enterprise software, marketing, niche markets, sales, whole product
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For years Crossing the Chasm was the closest that Silicon Valley startups had to an operating manual. It fell out of favor when the focus was on digital consumer ventures, but people are dusting off their copies as we are now in an enterprise software renaissance.
“Market momentum picks back up in the Bowling Alley phase, as early pragmatists in certain
customer segments overcome their reluctance toward discontinuity and adopt the new
technology to solve niche-specific problems. By their nature, pragmatists are reluctant to
adopt new technology and prefer to follow the herd. Early pragmatists are forced out of
their comfort zone to find solutions for broken, mission-critical business processes.
The Bowling Alley phase takes its name from the market strategy that is appropriate. The
key to success is to provide a complete solution for one segment while identifying closely
aligned segments that could benefit from a similar solution. When the momentum from
successfully capturing market share in the first segment (the lead bowling pin) is felt,
this momentum is leveraged into adjacent segments. By dominating several segments, your
company may start to emerge as a sector leader.”
That describes the strategic mission – that is the easy bit. Actually winning those deals and delivering those move-the-needle projects is a lot tougher, particularly today after “enterprise software’s decade in a coma” has left many of those skills rather rusty from lack of use.
Each niche is like a foreign market. Literally, niches like this have their own lingo, the jargon that feels like listening to a foreign language. You can translate the jargon, study the subject, but you will still feel like a foreigner mangling French in a Parisian cafe getting supercilious stares from the waiter. The people in these niches all know each other
well, these are dense networks which spit out antibodies to reject outsiders.
You can break through into these niches but it requires creative selling techniques that have been forgotten in the last decade. Consumer start-ups don’t need to sell, they market online using their product. Consumerized SaaS startups believe that this is also the way to win the enterprise. It may be the way to get your foot in the door of the enterprise, but to really win the big tickets you have to solve really big pain points.
These creative selling techniques usually start with some variant of asking “what keeps you up at night?” You are looking for the kind of pain that is so acute that the customer will overlook the fact that you are a startup with radically new technology.
It is good to first read the guide books to this foreign land and talk to people who have lived there. You need some familiarity with the lingo of this niche market, understand “what makes it tick” and some theory of where the pain might lie that you can fix. Even open ended questions need a focus. But remember, “no theory survives first contact with a customer”, keep an open mind and stay light on your skis. Opportunity often lurks in the parentheses, the seemingly unimportant throwaway comment that shows you the real hot buttons.
You need more than a 10x proposition based on a technological breakthrough. You need that to be able to deliver the solution, but that alone only works if your 10x proposition is purely a cost-cutting proposition. That tends to be a tough sell in most enterprises because it involves rip and replace and that is too big a risk to take on a start-up. You can sell a 10x rip and replace cost-cutting proposition if your technology is down the bottom layers of the tech stack and you sell to data centers. For example if you have a way to 10x cut the electricity consumption by servers, Amazon, Google and Facebook will all listen intently even if you are a bunch of techies in a garage and sell one of them and you are off to the races….
However if your proposition is further up the stack, for example at the middleware layer or the application layer, well as they say in Brooklyn….fuggedaboutit. That’s when you have to find a business problem to solve that fits these three criteria:
1. A “big, bad problem” something that really, really matters, that gets the attention of the CXO level guys, that keeps them awake at night. Don’t worry, the Global 200 are going through wrenching changes thanks to the triple tsunami of globalization, digitization and the debt crisis, so there is no shortage of big, bad problems.
2. A problem that is ideally suited to your unique technology, that none of the incumbents can easily solve. There is no point in discovering a big, bad problem that can be easily solved by Oracle, IBM, SAP, etc. All that will happen is you spend a lot of time getting the proposal up the chain of command until a salesman from an incumbent spots it and closes the deal.
3. An internal “sponsor”. We used to call them angels, but has a different meaning now. This is your inside person, who keeps the message going after you have left the room. I think of him/her as an innovator with clout. They have to be innovators because you are an upstart with new technology, so they have to think outside the box and be ready to challenge orthodoxy and incumbency. You will easily find many like this and have lots of conversations where they bemoan how stupid their company is, how politics gets in the way of innovation, blah, blah. These conversations go nowhere. You need an innovator with clout, somebody who is trusted and respected by those with the power to close a deal.
So you have to cast your net really wide to find the few that sit at the intersection of this three-way venn diagram. Cast a wide net and then qualify like hell. Lots and lots of conversations, lots of active listening, lots of “see ya later” when you don’t hear the screams of pain that indicate these guys really, really need you. This has to be more like a guy who has had a
heart attack needing a surgeon than somebody with a headache needing an aspirin.
Once you have found the problem, the hard work starts. This is what I think of as the middle of the chess game. You have opened well, now it gets complex with lots of options and moving parts. Now you have to assemble a solution. It is an assembly job, great for Lego fans. You need these pieces:
1. Your technology at the heart. You will need easy interfaces to all the other bits as you are the newcomer and therefore the one who is most motivated.
2. The other components that deliver a total solution. This could be as simple as the hardware and networking if you are running behind the firewall (yes, that is technically simple but the incumbency innovation antibodies lurk here) or include software components up and down the stack. Remember, you are solving a problem, not selling technology. If you don’t do this hard work, the incumbency innovation antibodies will attack you; an existing vendor will show a “just good enough alternative”.
3. A team that can pull it all together, the system integrator. Your view has to be pragmatic; use your own people, or one of their approved integration vendors or an internal team. This is a key area where your Sponsor needs to guide you.
If you get through this part you are positioned for the end game, you are in the closing zone. That is the subject for other posts.
Global Expansion for Enterprise Software: don’t wait too long or ignore the subtle signals. October 11, 2013Posted by Bernard Lunn in Uncategorized.
Tags: enterprise software, globalization, marketing, sales
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Enterprise software knows no boundaries. The customers are obviously global, so vendors have to go global to match that. This article describes the “why, when, how” of going global.
Lets start with why and when.
Many enterprise software vendors originate from markets that are relatively small – think
of SAP from Germany, Autonomy from the UK, Business Objects from France, NICE Systems from
(I am using the word “relatively” in relation to America, the biggest market, from where
most enterprise software firms originate).
Companies from these relatively small home markets have to go global early in their life.
In some cases the first customer may even be outside their domestic market.
Even US ventures, which used to wait till late in the cycle, are going global earlier as
they recognize the realities of the global economic rebalancing. McKinsey Research
estimates that “the emerging economies’ share of Fortune Global 500 companies will probably
jump to more than 45 percent by 2025, up from just 5 percent in 2000.” This means that
“going global” no longer just means a quick trip to London, some serious air miles to
“exotic” locations are needed.
So, the answer to when to go global is “earlier than we used to”.
Getting to the how to go global, computers help but humans are still needed.
Yes, the world is getting flatter. We can connect across borders using all kinds of social
media, we are all available on our mobile phones and on Skype. However, while we can
maintain relationships using these tools, the initial job of building relationships
requires air miles and “breaking bread together”. Yes, the Anglo Saxon business culture
rules, but unless you know the local culture, you miss the subtle signals that tells you
whether a deal is on track or heading for a train wreck.
This is the constant push and pull that global brands face between standardization and localization. The American way of scaling through standardization is epitomized by McDonalds, yet even McDonalds have changed menus
in India and sell in Switzerland on buying local beef and potatoes. All good
software now has tools for localization, but there are subtler cultural, human and branding
issues that determine whether the locals see you as trustworthy. You need standardization
to scale, but you win one country at a time and one customer at a time; insensitive, brute
force standardization is no longer a winning formula as it was in the post war years when
American multinationals grew up.
The consumerization of enterprise software changes the rules and enables globalization with
less friction and less cost. The “foot in the door” is now usually a Freemium product
rather than a salesman dialing for dollars. This is a game-changer, the consumerization of
software does change everything. Well, not quite everything! The vision of a world where
all business development is done by software algorithms makes as much sense as all
stockmarket trading being done by High Frequency Trading (HFT).
Machines are very fast. High Frequency Trading (HFT) machines beat human day traders on
speed. Freemium conversions feeding automatically into Marketing Automation (MA) systems
beats lots of sales folks punching feedback into CRM systems. Yet machines can also be very
stupid, as HFT driven flash crashes teach us regularly. The same is true in sales driven
by Freemium and MA algorithms; a data point that is a reliable signal of customer intent in
America or even England, might totally miss what a customer is thinking in India, China,
Turkey, Germany, Switzerland, etc. Humans need to understand these cultures in order to
fine tune the Freemium and MA algorithms. Even in a consumerized enterprise software world,
there are three other inflection points where a human is needed:
1. Early, when even consumer startups “do things that don’t scale”. (The classic story
tells of AirBnB founders going door to door in New York to recruit the first apartment
owners). Network effects need to be seeded; build it and they will come is usually a mirage
that tech founders fall prey to (sometimes build it and they will come does work. there are
exceptions to prove this rule).
2. When your Freemium traction gets you a meeting with the CIO. Dell was the first company
to understand that you “schmooze in person and deliver online”. Get to that CIO too early
and you waste your time. Get to that CIO too late and you risk your early traction being
replaced by a competitor who knows how to balance digital marketing with human selling. You
need just-in-time CIO selling.
3. When you need to understand the whole product in order to move into adjacent spaces and
cross the chasm. That requires the old selling discipline of “two ears, one mouth”, lots of
active listening and open questions that unearth the real drivers of value in your
If Siri still has trouble with something as simple as voice recognition, imagine computers
parsing body language, the twinkle in the eye or the quality of a handshake. Phew, humans
do still have a role to play!
The question then is what type of human? The old way went through three iterations –
distributors to expats to local teams.
1. Distributors used to be the inexpensive way to get initial traction. This is less relevant in the SaaS/consumerization world; there is nothing to “distribute” and the foot in the door is done by Freemium. However something is lost here. There is nobody local saying “try this, yes it is foreign, but it works here, let me explain”.
2. Expats. In 1994 Misys moved me from running the American region to running Asia. One mission was to replace distributors who had got the early sales in countries like Indonesia, Malaysia and Thailand with wholly owned branches. There were enough sales to make it worth paying an expat package to capture the additional margin.
3. Local teams eventually replace expats as they are cheaper and more likely to stay for a long term mission to dominate a local market.
The new SaaS/Freemium way goes something like this:
1. Ignore the local markets. If it catches on, great, if not ignore the market as there is too much to do in the priority market(s). This lets local vendors win.
2. Buy the local vendors. That works but the acquisitions can be expensive and hard to integrate. Customers, only a click away from an alternative, may migrate to competitors when you attempt to switch your “acquired” customers over to your globally standardized solution. The beauty of Freemium, low friction on entry, works in reverse as well, low friction on exit.
Understanding this, many founding teams are spending a lot more time circling the globe than they had planned. This comes at a cost of founding team management bandwidth.
What ventures going global need is a bridge between the globally standardised ideal and the localized reality. This bridge is built from people who can move easily between these two worlds, who know that a globally standardized solution is the end game but who can bring on the early customers and local teams that are needed to win on a country by country basis. They may also spot the local competitors early and “head them off at the pass” or buy them when they are still young and cheap.