Building Pipeline To Drive Sales of A Hi-Tech Start Up

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Ordinarily, hi-tech startups are in a critical phase of their lives where the emphasis is on development and intensive research for brand new markets. Naturally at this stage the emphasis has to be on generating sales and finding enough customers to prove that the business is actually viable.

Unfortunately most founders tend to focus more on other things like the brilliance of their concept which established the start up in the first place. The reality is that the world is full of brilliant ideas that end up going absolutely nowhere because they were not marketed properly. Marketing is therefore of utmost importance. Ultimately the very survival of the hi-tech startup will hinge on how successful the selling ends up being. And that is why it is so important to create a quality pipeline to drive a consistent flow of prospects and customers to the business and build sales. Fortunately this is a lot easier than what most people imagine. You just need to grasp the secrets to successfully driving sales to your start-up discussed in this article.

Generate content focusing on what is special and different

The right way to go about it is to start by generating lots of interesting content. This content needs to address some basic questions. What is so special about the products or services the hi-tech startup is offering? What is different? Why should people care? What is the unique selling preposition here? The articles you come up with should not only be on the company website but should also be shared in multiple platforms including popular social media sites like Facebook and twitter. Done properly this should spread a lot of awareness to prospects and possible customers.

Highlight the benefits

An understanding of human nature is critical here. Folks don’t care about your technical qualities and high quality products. Instead the selfish nature in humans dictates that people will always start off asking what is in it for them. That means that your content should focus with laser precision on the benefits customers will enjoy. The right way to do this is to try as much as possible to put yourself in the shoes of the customers.

Give away something really valuable in exchange for email contacts

Your content created with a close eye on typical keyword phrases that your targeted leads are bound to use should attract plenty of prospects. You will then need to create a system for harvesting email addresses. The most effective way to do this is to give away something really valuable in exchange for the email addresses of prospects. This is precisely how you will be able to rapidly build up a permission-based email list which will enable you to regularly communicate with your leads with the ultimate goal being to turn as many of them as possible into paying customers. Research has shown that it takes more than half a dozen visits to a site for a folks to start thinking of purchasing something. Your email marketing will give you multiple opportunities to sell your products to your prospects. If you do not have a system that harvests email addresses from your audience then you are not making full use of your hard won traffic.

Remember that the really valuable asset of any business is its list of regular customers and targeted prospects.

Aligning Sales And Marketing Is Not a Choice Anymore

ImageOne of the most public secrets on the cooperation between Sales and Marketing in B2B business is what happens to marketing material…

The process goes as follows:

 

  1. VP marketing announces the building of new brochures (case study, white paper and product brochures with or without a company profile) 
  2. Graphic designer works on the design of the brochure
  3. Product manager and marketing work and struggle on the content of brochure
  4. VP marketing makes the font of the bullets bigger
  5. CEO, VP marketing and VP strategy fight on the wording of the headlines and why benefits should be emphasized and why we don’t need to mention the features, since it is all about value to the customer and not product features
  6. The content goes to the marketing and technical writers for the review
  7. The brochure is produced few days before the conference or exhibition, with very tight schedule.  This vital ammunition needs to be ready for the use of our sales people during the event.
  8. The proud Marketing hands the Sales people with the latest brochures, fresh from the oven
  9. Sales people carry the brochures and spread them on the booth table
  10. Sales people go after the customers and prospects to maintain relationship, discuss the needs, budget and milestones and try to take them out to dinner while forgetting all about the brochures!!!
  11. Towards the end of the conference, while packing back, Sales gets rid of the brochures in order to make place for the giveaways they collected in the conference
  12. Arriving to the office, Sales complement Marketing on the great job of timely production of the effective and high quality brochures. There was so much demand for the brochures that we run out of them.

Why do we do this? Marketing is happy since sales cannot blame them for not doing their job in building strategic content, and Sales is happy since marketing cannot blame them for not using their material

This process emphasizes the gap between Sales and Marketing mainly in the process of lead generation. Unless Marketing will be accountable, measured and compensated for generating qualified leads, and not only building ammunition for sales to generate leads, we will always have to deal with stigmas that Marketing is detached from the field and that sales does not feel comfortable using the theoretical ammunition in its war to win leads and prospects.

Over the last years, we see major changes in this paradigm, due to the introduction of inbound marketing and digital marketing. Our prospects are much smarter than they use to be.. they know about us, our competitors, compare our solutions and build the ROI by themselves, even before contacting us. By the time they contact us, they are halfway towards choosing the solution.

Marketing is pushed to produce quality and quantity content to feed the prospects in their education and exploration trip. More important is that the distribution of this content is not done through sales, but through the endless social channels such as the website, webinars, twitter, linked-in discussions, e-books, blogs and Facebook. This content will be consumed by the prospects before even meeting the sales people. Leads are generated now by content which is designed, produced and this time distributed by Marketing acting as a one-stop-shop for lead generation. Now is the time to measure the quantity and quality of marketing leads and to finally be able to measure and evaluate the effectiveness of Marketing without pointing to Sales.

These are on one hand good news for Sales, since, instead being handed brochures, they are being handed actual leads from Marketing. On the other hand it is clear that the latest trends are diminishing the influence of sales and taking out the sales from the first 70% of the sales cycle

Why Sales CRM is not helping our VP Sales in controlling the sales

Despite the billions of dollars that have been spent to enable deep and wide reporting of sales force activities and outcomes, we have seen few examples of how this reporting has actually helped us, as management and VP Sales, in controlling the sales outcome and process. It only let to greater visibility, and this is only in the case that our Sales force is actually feeding and updating the CRM – as they should. So far, greater visibility provides exactly that – greater visibility. Not greater control.

How come that despite all the reporting, analysis and discussions taking place in the war room, we all too often see the same message emerge: Field, do more!!

Call on more prospects… put more opportunities in the pipeline… close more deals. It is somewhat concerning  that given the highly sophisticated analytic capabilities that CRM offers us, very little direction is given back to sales managers and their reps other than simply asking for more!!!

So why is that???

Unlike its corporate peers, finance, marketing, product development and manufacturing, Sales has not developed sales standards and metrics

Finance has a robust set of metrics with clearly understood implications and universal standards (GAAP). Manufacturing has a rich set of management frameworks that it uses to control and direct its outputs. They have programs such as TQM and Six Sigma that guide them to higher levels of performance.

Sales have somehow evaded developing a professional discipline. There is no sales GAAP or TQM framework for sales improvement. When the only Sales metrics that we work with are # of sales, # of new customers, and $ sales, we will never be able to manage and control the process. Compared to the others, the discipline of sales is still in its infancy.

So when information technology eventually came to support the sales force, there was relatively little to automate. Sales has no formal operating instructions for itself. In contrast to its peers, sales information systems were just layered on top of unstructured processes and inconsistent execution. Basically, sales forces automated their own forms of chaos.

Without a clear methodology and set of metrics for setting targets and measuring progress (metrics other than # of new customers or sales, etc.), VP sales will not be able to influence and control critical selling processes

Having said that, in this set of blogs, I will discuss use and implementation of best practices, methodology and metrics in sales and how this can offer the management tools to define and map formal selling processes, control Sales outcome and activities, and support critical selling activities

Coping With The Unattainable Quota Syndrome

TargetWe all went through the quota assignment dilemmas as sales reps or as sales executives. Quota assignment is a major tool to spur the sales force to reach the numbers and improve their performance. The compensation plans for the sales reps is dependent on how they stand towards reaching their quotas

Often does management tend to over-assign quotas to the salespeople. As salespeople are rarely in the position to argue about the quota assigned to them, they often respond with whispers and mumbles. Flurries of text messages are sent filled with fear and anger.

Although over-assigning is intuitive (why not ask for more if you can?), high quotas cause problems, they can create ill will among sales people; they can cause sales people to engage in unethical and other undesirable behaviors to make their quotas, sparking over-aggressiveness, manipulating sales milestones and all types of Sales shortcuts.

We all know of these shortcuts and how damaging it can be. Every corporate department is impacted, from marketing to distribution. Salespeople press for exceptions on everything from pricing, packaging, promotions, shipping, and payment terms. These shortcuts have real costs associated with them, both in hard cash, and in time spent determining whether and how to cope with.

When it comes to sales quota attainment, whose performance is measured?

Remember, the cause for not attaining a quota may be under-performance of the salesperson, but it can also mean that the quota was wrongly set. In the latter case, it indicates poor sales leadership quality. Unattainable quotas are a sign that the company and sales leaders misunderstand their market, their value proposition and their selling model.

6 steps for determining the right quota’s 

In order not to fall into the trap of over-assigning quota’s, we need to systematically follow these basic steps:

  1. Historical      trends: How much of each product and each service have been sold in total      and in your various sales territories over time?
  2. Last      year’s revenue: What was the total revenue from all products, services and      sales territories?
  3. Industry      standards: How much did other competitors (selling similar types of      products and services) sell?
  4. Territory      analysis: what is the ratio of new and existing customers per territory? What      are the existing pipeline and recent successes?
  5. Product      life cycles: Particularly in high tech industries, product life cycle      impacts the revenues on a yearly basis and should therefore, be      considered.
  6. Growth      expectation: add a growth % on top of the historical results and make sure      it is both realistic and challenging

Not to forget, while designing your Quota assignment

  • Have      in mind the company’s revenue goals and the business plan
  • It is      recommended that salespeople will be shown exactly how their quotas are      derived. They are much more likely to accept quotas that are related to      market potential when they can see the used assumptions
  • A      simple, clear and easy to understand quota and compensation system is      required to ensure sales person focus on the right goals
  • Define      the event(s) for which quota is paid (order, collection, recognition..),      in the context of determining how the quota attainment commission is going      to be paid
  • Don’t punish      over-performers by pushing their quota out of reach; this can demotivate      them and cause churn

Why Setting Targets and Quotas to our Employees Can Be So Frustrating

Setting targets and quotas is an integral part of any business. Targets and quotas provide employees with a goal that they should strive to achieve. At the same time they provide a standard against which employees achievements can be measured. When used correctly targets and quotas also serve the purpose of motivating employees to achieve more than they normally would thus increasing productivity and work quality. They also help clarify employer expectations letting employees know exactly what their employer expects from them. There are several dilemmas that may have encountered in the past when setting targets and quotas;

  • To set personal targets and quotas or not; personal targets and quotas interfere with the spirit of team work. As an employer you will notice that when you put in place personal targets and quotas then your employees focus more at achieving their individual targets at whatever cost which causes unhealthy competition and destroys team spirit among your employees.
  • How to set achievable targets; if, as the employer, you set goals that are unreachable or too demanding to your employees it ends up being counterproductive. We noticed that unattainable targets and quotas leave the employees feeling like underachievers and makes them feel constantly under a lot of pressure to perform leaving you with stressed out employees. In some cases it can lead to a high employee turnover which will be costly to your business in terms of worker experience lost, work hours lost before the employee is replaced and the additional cost of recruiting and training new employees.

As an employer you can avoid the above dilemmas when setting targets and quotas for our employees by doing the following:

  • Include all employees in setting the targets and quotas. This way each employee will be accountable for the targets they set and in majority of the cases employees set higher targets than you would have set for them but which they know are achievable with some bit of hard work.
  • Divide the long time goals into short term goals. By breaking annual targets into monthly, weekly and daily targets makes it easier for the employees to visualize and achieve. Also instead of focusing on the money part of the targets employees can be encouraged to focus on the activities that will lead to getting the money such as making the necessary sales or relevant calls.
  • Recognizing and rewarding all the team members when targets and quotas are met helps build team spirit. Most of the time team spirit is destroyed by recognizing and rewarding only the team leader when targets are achieved forgetting that it took the efforts of the entire team for the targets to be achieved. The rewards offered to employees who achieve targets can be monetary or non-monetary (such as tickets to a game) can be quite motivating for entire team.
  • Avoid setting general goals for all members of the team. Looking at the annual target and dividing the figure equally among all the employees is a bad approach since different employees have differing capabilities. If you use this method you might end up giving the high achievers low targets which fail to motivate them while giving the less experienced or new employees targets that are unreachable. Instead each employee should be given targets that they can achieve but that are hard enough to keep them motivated to work hard.

Why we lose our margins throughout the sales process

We all faced and are facing the process in which our prospects are constantly devaluing the differentiators and unique capabilities of our products. This is quite frustrating and brings down the value of our complex products, the deal size and thus the profit margin.

Before we discuss ways to fight this process, we will need to understand the nature of this destructive process, which we call “commoditization” of your product

Except for the obvious reasons for commoditization, such as the fast response time of the market to follow, replicate and imitate new technologies, and the concrete lack of differentiations on your product which are rational reasons for commoditization, there are major psychological and emotional reasons that we need to understand.

For one, buyers do not want to differentiate… The more complex the products and services are, the harder it is for customers to compare and evaluate them, think of the long lists of non-identical features. Customers, especially purchasing departments, who are incentivized to drive down the price of goods and services, are always trying to reduce complex and valuable solutions to their lowest common denominators. When they can persuade the suppliers that the offers are more or less the same, they can cause a tremendous price pressure

Customers also try to commoditize complex products for emotional reasons. Sometimes they are in denial about the extent of their problems. As long as they think superficially about their problems, the solution will be off-the-shelf and simple. They are afraid in digging deeper to understand and analyze the problems, since then they will need to evaluate complex offerings

Customers are often concerned about looking less competent in front of us, their bosses or their peers. As a result, when customers don’t understand something we tell them, they frequently merely nod and proceed to shrink the offering to what they do understand, the purchase price.

Finally, customers are fearful that by admitting complexity and disclosing their own lack of understanding, they will lose control of the process and open themselves to “manipulative” sales practices. The simpler customers can make a sale, the less they must depend on salespeople to assist them.

Commoditization in this sense is a way for customers to maintain control of the process and protect themselves.

The net outcome of all these causes of commoditization is the fatal spiral of price pressure and shrinking profit margins. Well, here is the thing: commoditization is OUR choice!!!

I am not suggesting that customers are incompetent… In fact our customers are fully skilled of understanding complex businesses, the real problem is that they don’t have a systematic process to diagnose their problem, identify the business impact and connect to the right solution.

What customers are looking for is your help and guidance in facilitating the buying process;

  • Understanding their problems
  • Identifying the business impact of their problems
  • Guiding your customer through their internal decision chain

Once established, your customer will be ready to digest and value your solution’s benefits.

Many sales people ignore this simple fact and go on preaching the benefits of the solutions, while the customers are still trying to figure out how to diagnose of the problem and how to manage the change.

My next blogs will discuss how we can guide our customers through this process, be in control of the sales process and avoid the commoditization pitfalls

3 HUGE Sales Management Mistakes

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Being a good sales manager requires not only a good sales effectiveness tools but mastering of a vast set of skills. Unfortunately, while in order to be a good sales manager you must do a lot of things the right way, in order to be a bad one you only need to do a few things wrong. This post will list 3 HUGE sales management mistakes every sales manager needs to avoid in order to be successful.

Failing to recognize work ethics. The sales reps’ recognition is often based solely on their result. This sort of representative evaluation fails to recognize the activities leading to the actual sale. The surrounding activities tend to be very time and effort consuming and are essential for the success of the sale. Failing to recognize the effort of the representatives (even by as little as a compliment) and rewarding sales only will de-motivate the sales rep overtime and vice versa.

Failing to recognize small achievements. Small accomplishments, like reaching quota, selling to a challenging customers or gaining access to a top decision maker, may seem almost insignificant to the manager, but are very important to the sales rep. Recognizing and rewarding the smaller achievements the sales representative make will keep him motivated and boost sales in the long run.

Failing to be open to new ideas. Even though, some of the ideas and suggestion brought up by the sales reps can be ineffective, the sales manager must not dismiss them dispassionately. The reps must feel like they can voice their opinions, and know that they are taken into account. New ideas voiced by the reps may often lead to much needed changes that can increase sales or improve procedures. In addition, making the representatives feel like their voice is being heard will make them feel validated and motivated.
The common ground between all three huge mistakes often made by sales manager is the failures in making the sales reps feel appreciated. These mistakes, which often go unnoticed, can have just as big of an impact on improving sales if they are avoided or corrected.

Employee Incentives in Difficult Times

Though recent numbers show that unemployment in the U.S is declining, the reality is still far from perfect. Even with unemployment rates showing an improvement, one must wonder if the workers are better off. Are they choosing between multiple employment options or just accepting the first job offer that comes their way or the first place that is willing to hire them?

These questions are important when examining the payment methods that make up the employees’ income, which are usually broken up into four categories:

  • Basic salary – a fixed compensation periodically paid to a person for regular work or services.
  • Compensation – something given or received as an equivalent for services.
  • Bonus – a sum of money granted or given to an employee in addition to regular pay, usually in appreciation for the work done.
  • Incentive – a performance based pay, something that incites or tends to incite to action or greater effort.

For an employer, it is easy to figure out the basic salary and compensation segments. There is plenty of comparative information available and a minimum wage is also usually legislated.  It is the bonus and incentive segments that are tricky to figure out. In order to do that you, as an employer, need to really know and understand your employees, their mindset and motivation factors.

Cash is the first thing that comes to mind when we think about incentive and bonuses; it is the “natural answer” – but is it “the answer”? Not necessarily. Research shows us that incentive dollars, when embodied in the monthly salary, get lost, and is not really seen or remembered by the employee. Thus, minimizing the incentive value.

Cash, or any incentive solutions for that matter, must also be accompanied by recognition. An employee must know exactly why he deserved the incentive to maximize the efficiency of the reward, for him not to take the incentive for granted. It’s also a way for the employer to show the employee that he knows and understands him, by giving him a personalized incentive rather than just cash. For example, an employee that loves sports and talks a lot about a certain basketball team – will appreciate courtside tickets to a game and will likely be more motivated by that reward as well as grateful and humble that the employer pays attention to him.

Sometimes, an incentive that is personalized and thoughtful may be more valuable to the employee than the monetary value of it. For that reason, it is important to have a good incentive compensation plan that really strives to know and understand the employees. After all, working at a place where you know you’re appreciated and heard and cared for is a serious motivator – valuable at least, if not more, than cash.

Boosting Your Sales Incentives to Boost Your Profits

I recently came across an interesting article at allBusiness that outlined ways to improve your sales compensation plans in ways that will increase the company’s profits. A good compensation plan is substantial when it comes to sales; a poorly crafted plan can have various effects on a company – from disgruntled employees to bankruptcy. Many managers fail to see or acknowledge that their sales incentive compensation plan is poor of flawed and hang the blame on everything and everyone else, be it a lack of motivation or skill among the sales personnel, inadequate information systems, the poor economy, etc. There are six key features that must be taken into consideration when formulating a compensation plan. While many of them will seem obvious to you, still many compensation plans exist that don’t include these following features:

  • Pay more for what you want to sell more – Usually companies have more than one product, and not all products are alike. In order to stress the importance of one particular product over the others a higher compensation is needed, otherwise the sales personnel have no incentive to favor selling that product over the others, and as a result the company will suffer.
  • Higher profit margin = Higher compensation – Again, seems obvious but the trick here is for the company to find out which product adds the most to the bottom line profit and compensate accordingly. Some companies don’t take the necessary steps in finding out important details like these about their products and the way they affect the profit margin and end up compensating more (or at least the same) for products that earn it less.
  • No earnings limits – When you set a salesperson an earnings limit it’s like you’re telling him: “I only want you to work that hard”. The idea is that even after the compensation is deducted, the company is still left with a net profit for each product sold. In other words, the more product sold – the higher the profit will be. As a company the goal should be to sell an infinite amount of profitable products and an earnings limit goes against that logic.
  • Reward ASAP – It may sound bad to say it like that but it’s like training a dog. If you tell a dog to sit but give him the treat 2 hours later, he will not connect the treat to the command and may not seat next time you tell him to. The idea is to strengthen the link in the salesperson’s mind between the sales and the rewards. The best method is to pay the compensations at the beginning of each month (for the work done in the previous month of course).
  • Top it all off with a bonus – In addition to the commissions it’s best to also give out rewards that acknowledge that person’s hard work (like “sales person of the month”), this shouldn’t be done on a daily or weekly basis in order for it to remain effective and must be “saved” for special occasions/performances.
  • Be clear – Probably the most important one of all. You can formulate the best compensation plan the world has ever seen but if it’s too complicated for anyone to understand, particularly the sales personnel, it will be poorly executed. A clear and understandable plan will help everyone get on board with ease.

In conclusion, follow these features when formulating a new compensation budgeting and you’ll immensely improve your chances to succeed. However, it’s also important to put the plan in the hand of the right person – a good plan at the hands of a poor sales manager will go to waste. It’s like building the world’s most advanced bus but putting someone without a driving license at the wheel.