You Sell To More People Than You Think
Bill Warner Tuesday, January 26, 2010
“Let’s get some good sales people. We need those hungry ones that know a lot of customers. That’s all we have to do. Right?” These are famous beginning and last words. You are selling your product to almost everyone you meet as your business matures. And, everybody in the company sells in one form or another; it’s not just the sales team’s role. You certainly have to identify and sell to potential customers. But, there are many other interested parties that you have to sell to as your company evolves. The sales process begins on day one and lasts for the life of your company.
Selling in the market research phase
Even before you have a product, you have to sell your ideas to contacts you make while doing your market research. This phase is not just filled with reading and finding numbers that support your business strategy. You will have to sell your idea to industry analysts, market consultants, companies providing similar products and potential customers in your chosen markets. Seeking out the opinions of analysts and consultants makes a lot of sense. They know your markets in detail. You present your product or service idea, supported by your business rationale, looking for further insight that they can provide. In a way, you are selling by trying out what you think the value proposition is and how you will take it to market. Understanding that you may not have it quite right, they will provide you feedback that helps you to further refine your business plan.
Contacting companies that are within your market segment is also smart. If they are a potential competitor, you may have to get information from a third party, but you are essentially trying to figure out how your product fits into the market. You are prepared to sell your ideas, but also have questions like:
- Are you complementary?
- Will you need their help?
- Do you add value to their products?
- Are they a competitor?
- How will we fit?
- Why are they succeeding or failing?
Of course, the best piece of research is to approach a potential customer and get their feedback. You sell your product or service, but really want to know:
- Do they really have the need you think they have?
- Will your product solve their problem?
- Do they see the value of your product or service?
- How do they become aware of and buy products?
- Are they in a position to buy?
Getting funded
Once you have a well formed business plan, your next sales call will be on an investor or potential strategic partner from whom you need money to get your business started. This is a critical sales call which has to be successful. In this case you are selling a lot more than your product or service. You are selling the value of your company, and trying to create a long lasting partnership that will give the funds to launch your company and your vision. The business plan story has to:
- Be complete
- Represent a compelling business idea
- Be attractive in a large market of needy buyers
- Reflect a rich financial model
- Have a truly competitive and differentiated product
- Be managed by a superior management team
- Provide strong financial performance
This sales call is made by the top executives of the company, who have to be very well prepared to explain all aspects of the business and create excitement with the potential partner.
Selling to your channel partners
If you are going to use indirect channels, you will need to have a sophisticated process to sell to the channel partners through which your product will reach the ultimate buyer. The value proposition has to be specifically tailored for this audience to show them how they are going to make money in a relationship with your company. The partnerships could be with wholesalers, distributors, integrators, value added resellers and dealers. All of these partnerships have to established, and in addition to your product or service, will require you to sell some combination of:
- Training
- Product information
- Sales support
- Problem support
- Warranty management
- Inventory
- Discounts that make them profitable
Your sales efforts are to close a channel partner agreement that will result in financial success for them and an increase in revenue for your company.
What about alliance partners? If your product requires that you have to go to market jointly with another company, you have to make sales calls to them too. For example, if your product is integrated with another company’s product, then you may have to have an agreement where you are jointly marketing and selling. You may be integrating some other company’s product into your solution, so an agreement is needed for you to market and sell their product along with yours. The value proposition here has to bring a share of the overall revenue to the partner to recover the expense that they incurred plus a reasonable profit.
Sell to the influencers
When your product is ready to be taken to market, it is important to make sure all of those that influence your customer are aware of it. Industry consultants, partners and early customers need to know of your plans to launch your product. During the time when the product is first being introduced, you want potential customers to be able to call their outside consultant and get advice on your product. You also want your customers to be able to contact your early customers as a reference for your product. So, you need to make sales calls on all these influencers and make sure they have the most important facts and messages about your product or service. You will look very smart if a potential customer contacts one of them and learns the truth about your product. That is, the truth that you taught them.
Oh, the media too
Who would ever give up on some free visibility? Another important influencer is the media. They represent trade magazines, local newspapers, business press, television specials and radio news programs. When you launch your product, they too will need to know about your product or service. You want your customers to read the right messages, and from the media source that makes them aware of new products and services. The media will want to get quotes from consultants, analysts, customers and partners. They make the story come to life with the reality that it’s not just your company talking about the new product or service. Always make the media aware of positive news and use them as a way to get effective marketing information to customers.
So, selling is a process that involves much more than sending the hungry sales people after potential customers. Selling involves approaching the whole set of stakeholders in your market segments. You need to make sure that your company properly fits and that your customers know all the right things about your product or service.
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When Was The Last Time You Walked Away From A Sale?
Bill Warner Wednesday, August 05, 2009
The answer for most of us lies somewhere between I can’t remember and never. It is totally counter-intuitive to everything we expect to do. Yet, we all have memories of deals that we wish we had never won or opportunities where we wasted too much time, before finally losing out to a competitor.
The fact of the matter is that there are times when we would be much better off cutting our losses early and moving on to a more attractive opportunity. These situations generally fall into one of two categories: Bad Business and Low Probability of Sale.
Bad Business
The most unfortunate characteristic about this category is that it derives from a conscious thought process, with deliberate and calculated intent to win a business deal. In other words, it almost always happens by choice. But when we review the fruits of our labor, a few billing cycles later, why do they feel so much less rewarding?
The possibilities are numerous:
- Your costs exceed your revenues, for this project.
- You are having collection problems.
- Your resources are now focused on issues that are not your core business.
- You are under attack by the customer for not providing the contracted items.
- You have an on-going adversarial relationship with the customer.
- You are facing liability issues you don’t have with other customers.
- You have not realized additional sales opportunities your were counting on.
So, let’s examine the harbingers of doom that preceded this fiasco, because at some point we misread the opportunity to stop the sales process and move on. This typically happens when we are so emotionally driven to capture a new customer that we fail to validate the legitimacy and fundamental value of the sale. Here are a few examples of how and when the wheels fall off the sales cart:
- The deal margin has fallen below your minimum and it is not a strategic customer. Often, the sales team will rationalize this with the explanation that all future sales, which they will assure you will be many, will be at the normal price. Don’t believe it; it rarely happens that a customer orders more and does not demand the same pricing.
- You do not have the resources to deliver the product or service. This is an immediate red flag that should cause you to evaluate the reasons for booking this business. One-off products/services are not only costly to deliver, but disrupt your normal business process and impact other customers.
- The terms and conditions of the contract are unfair or unreasonable. Lopsided contract terms not only increase your exposure, but they are also indicators of a potentially flawed customer relationship and unreasonable customer expectations.
- The risk-reward ratio is too high. There are many variables that can cause this type of imbalance, but none of them can rationalize it. If it appears that you will have to assume unusual risk in order to satisfy a contract, proceed cautiously.
- Sales team convinces you to make concessions that are too aggressive, because there will be numerous, higher margin orders to follow. Don’t believe this either. It will not happen.
- The customer has a reputation in the market for being unfair, unreasonable, or no-pay. The amount of time you will spend trying to make things right for this type of customer merely delays the inevitable. A good business relationship should benefit both parties.
- Minimal due diligence in your sales review process will provide sufficient insight to evaluate and/or prevent this situation from occurring. Avoiding them will allow you to focus your resources on more rewarding opportunities, lower your risk, and improve productivity.
Low Probability of Sale
This category represents one of the most frequently misunderstood elements of the Sales process. It is the root cause of missed Sales forecasts, overstated revenue projections, frustrated executives, irritated boards, and pre-mature celebration by optimistic sales representatives. But, it doesn’t have to be that way.
Think of each situation as a puzzle with ten pieces, but the customer holds all the pieces. Your challenge is to guess the picture created by the completed puzzle. Your annual bonus depends upon how quickly and accurately you guess the picture. If customer A is willing to give you four pieces of the puzzle and customer B is willing to give you eight pieces, where would you spend your time? But, if customer C is also willing to give you eight pieces, in half the time as customer B, then where would you spend your time?
The amazing thing is there is a pattern of reasonably accurate predictors (the puzzle pieces) that can be obtained from most customers and interpreted to determine if and when to move on to the next opportunity. There is a correlation between the number of correct predictors (pieces) your sales representative can gather and the likelihood of a positive outcome. If it appears there are too few correct answers to support an opportunity, maybe it’s not really an opportunity at all. Here are some examples:
- Who is the sponsor for this project for your product/service? It must be someone with enough credibility and influence (ideally at the executive level) to get a commitment from the decision maker and overcome other obstacles. In a typical technology-based sale, a sales representative is likely to interact with a techie-type, who, although enamored with the product and a great source of encouragement, cannot carry the ball into the end zone.
- Who is the decision maker? Everyone in the process is going to claim to be the decision maker, until you ask about ownership of the budget to cover the check and/or signature authority to sign the check and/or who else has authority to veto his or her decision. That, ladies and gentleman, will be the real decision maker.
- Is the project requiring your product/service on the corporate priority list? If it is, where on the list does it appear and do they expect to get to it in the current fiscal year? If the answer to either question is no, move on.
- Is this project funded in the current budget? If not, you have an uphill battle, depending on the amount of money involved. Occasionally, monies can be reallocated from another part of the budget, but be prepared for a fight, which requires even more executive sponsorship.
- Your competitor is the brother of the wife of the CEO. Find another opportunity!
- Is it a must-have or a nice-to-have item? Unless it is a must have item, you will not likely get enough attention from the executive level (CEO, CFO, decision maker, etc.). The worst case will drag your organization through numerous demonstrations and proposals before fading into the sunset.
- The tangible savings are minimal or non-existent. In today’s climate, it is all about cost containment or, better yet, cost reduction. If your proposal doesn’t contribute to this goal, you are unlikely to succeed, unless it satisfies the next point.
- Does it add to revenue generation or increase profits? This is the corollary to the previous item and has obvious value. The challenge here is to quantify the value in a credible way.
- The customer has the ability and inclination to do it themselves. This is especially true for IT projects, primarily due to the perceived threat to job security. You will need strong sponsorship and a top down directive to win this battle. Even then, expect a lot of resistance.
Summary
At the end of the day, this part of the sales process is all about probability, profitability, resource utilization, and risk management. It requires focus and commitment to provide the appropriate training, review steps, and enforcement. However, the benefits are attractive: accurate forecasting, better sales productivity, better customer relations, better margins, less frustration, and lower cost of sales associated with wasted effort.
Can you really afford the alternative?
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Practice Your Elevator Pitch
Bill Warner Thursday, June 11, 2009
I can’t tell you how many entrepreneurs have told me that they cannot possibly explain their business in 45 seconds. I get the typical responses. It’s far too complex a business model. It’s hard to explain the technology. The market is too broad to get it across that quickly. My marketing and sales plan is difficult to understand. The list goes on.
Why even try
The purpose of such a presentation is simple. You will run into many situations in both your business and your social life where you have to give a brief answer to the question, “what business are you in?” This could come from people at trade show events, passengers on airplanes, people at parties, associates in business meetings, etc. Sometimes, the perso
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Know the Buyer’s Food Chain
Bill Warner Saturday, March 22, 2008
Knowing that you have, or will have, a winning product does not give you time to rest. You have to grease the skids by making your buyers aware that you have a product that solves an important problem that they have. Founded upon your in-depth understanding of your buyers, you need to structure the appropriate marketing campaigns that raise buyer awareness of the product’s value and availability. This can be mind numbing work, but is very necessary in order to not have surprises that could stop your business later. Many hours spent on understanding the distribution channel can save you from a whole lot of costly mistakes later when you are trying to get the revenue for your hard work.
Know How the Buyer Buys
Almost always, it is not obvious how the buyer actually buys. Knowing this is the subject of millions of dollars that some companies spend in order to introduce products to the consumer retail industries. Advertising agencies and research firms get rich figuring this stuff out. The best way, and a lot cheaper, is to ask them yourself. Approach representative examples of your buyers and ask them how they purchase products in your market segment. Answer these questions:
- Who do they buy from
- Where do they learn about new products
- What are the payment requirements
- What incentives are offered
- What are the terms and conditions for the purchase
- Is credit required
- What are the price ranges
- How is the delivered
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Be Referable
Bill Warner Saturday, February 23, 2008
We have all heard the old saying, “it’s not what you know, it’s who you know.” Well, there is a lot to be said about that. Look back on the business you have won recently. How much of it came by referral from someone you know, versus a cold call to a prospect or an inquiry directly to you or through your website? Like many of the business people I meet, the majority of their business comes by referral.
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Who Are Your Buyers, and Who Feeds Them
Bill Warner Tuesday, January 15, 2008
Once you have the overall industry landscape figured out, the next step is to go deeper and describe who the buyers, suppliers and distributors are, and what drives them. This is the food chain that some researchers refer to. Start with the buyer; your customer. Within a company, who is the buyer? Is it a CIO? Is it a VP of service? Is it the purchasing manager? Is it the buyer for a retail store? Is it the VP of development? Whoever it is, describe the buyer’s recognition of the problem you solve, the criteria that will be used to determine the purchase, the likely availability of resources to support the purchase, and the decision process that you will be confronted with.
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Suspects and Prospects
Bill Warner Thursday, January 10, 2008
Successful sales people really know the difference between suspects and prospects. What makes them successful isn’t so much that they are smarter or more dynamic than others, but it is that they don’t waste their time on chasing potential customers that really won’t lead to a closed sale. Knowing the difference between suspects and prospects makes the difference between making your sales objectives and having to look for another job.
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Developing a Sales Quota
Bill Warner Thursday, January 03, 2008
Do you set goals for yourself? What happens when you establish a goal and believe in it? You work hard to achieve it. What happens when you achieve it? You feel good about yourself and your success drives you to achieve more.
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