By Mark Suster on February 5, 2011
This article originally appeared on TechCrunch.
Most technology startups seem to be funded by product people or business people. Specifically what is often not in the DNA of founders are sales skills. Nor do they exist in the investors of early-stage companies. The result is a lack of knowledge of the process and of sales people themselves.
My first startup was no different. I had never had any sales training so everything we did for the first couple of years was instinctual. While we did fine learning on the fly, it turned out that a lot of what we did was wrong. I’ve started writing up some of those sales & marketing lessons and I plan to continue to build that section out over time.
As we grew into several millions of dollars of sales per year it was no longer acceptable to “wing it.”
So I did want any rational person who wants to improve does – I hired a coach. We focused together on improving our sales methodology, our training and our comp plans. These days there are even startups like SalesCrunch to make this easier for all of us. Back then it was a larger than life ex country manager from PTC named Kai Krickel. He taught me much – most of it unconventional. Most of it worked and his philosophies have proved enduring to me.
He called his business TEDIC. The Excuse Departement is Closed. That mindset always stayed with me and even rung true at the time. Excuses. Whenever I heard why we didn’t feel a sales process at an important customer was going well (or if we lost) I would get involved myself. Invariably the reasons I was hearing why we weren’t well positioned versus my own perception were different.
I boil it down to this: sales people are sales people. They are the lifeblood of many companies yet they are different than the traditional technology startup DNA so the ways that you hire, motivate, compensate and assess performance of these individuals will be different. Obviously to understand a “class” of people you have to make broad generalizations. Here are mine.
- Are motivated by cash. None of this namby pamby options stuff or “do it for the team – we’re all in this together” crap. Cash, cash, cash.
- Are more mercenaries than missionaries. That doesn’t make them bad – it just means that they know that they are “hired guns” and they act accordingly
- Many great ones don’t thrive in the early phase of a company where the sales is more consultative or evangelical. They like a solid product, well defined pricing, good references to sell against, a clear quota and well defined competitors. This is why I tell startups that most seasoned sales execs aren’t right for startups
- They are as good at selling you as they are at selling your product to customers. That means if you don’t understand the way they work you’re susceptible to being blind sided.
Before reading my tongue-in-cheek post, please know that I love sales people. I’ve talked many times on my blog about how they’re the lifeblood of most businesses – even those that pretend like they’re above it all. Treat them well and they’ll love working with you. Treat them like the rest of the company and you’ll struggle to hold on to them.
Here’s what I learned. It’s my guide to understanding when you’re being gamed.
1. Sales people often blame the product
Startups are the art of the possible. By definition an MVP (minimum viable product) means there’s room for improvement. Your competitors will always highlight a feature here or a feature there that is better. Features don’t win or lose sales – especially in nascent markets. People are buying YOU. They’re buying trust that you’re going to do what you’re saying you’re going to do.
Customer also buy social proof because others are acting as strong references. (there is a nascent industry to try and help you with this, too. The best thinker I met on the topic is Mark Organ who founded Influitive to solve this. They’re in beta). Customers buy solutions to solve their problems. They give orders to people they like, which is why despite your best well reasoned non-sales ethos – you need to understand that sales people do need money to schmooze.
But what customers don’t do is buy features. Don’t get my wrong – a great looking product can really help support a sale.
But customers use features as a rationalization for why they made the decision that they concluded for a complex set of other reasons that they probably don’t even understand. How can I be so sure? Ask yourself how they came to decide what features should they be making the decision upon. Who set in their mind what the “right” feature set was? If it wasn’t you, I guarantee you they were influenced by your competitor – either through their sales efforts or through marketing.
So know up front that many times sales people will blame the product when they lose or when they’re losing. It’s never them, their lack of effort or relationships.
And as you build out your team and grow you realize that it’s always the other guys fault. It’s why leaders need to be respected, not loved or you’ll constantly be gamed. In a startup you soon learn that not only does the sales guys blame the product, but the product guys blame the marketing guys for giving them too many requirements. The marketing guys blame the sales guys who can’t close their leads. The sales guys in turn say that they didn’t get the Glengarry leads from marketing.
And they all secretly blame you. “It doesn’t look that tough to be a CEO. I’m doing all the hard work anyways.”
Stop the madness. You need to teach your sales team Objection Handling and make it clear that you don’t lose on features. They can give you product input, customer requests and wish lists – sure. But the excuse department is closed.
2. Sales people will often blame your pricing
They lost the deal because your competitors dropped price. Customers seldom buy on price. They buy on perceived value. Sure, you need to be competitive on price. But a sales person needs to be able to demonstrate the business case of why using your product will deliver more total ROI than your competitors. Otherwise you need not keep building out great features – just always drop your price! Of course that’s not true.
If your team (and you) see a competitor massively undercut you on price you sure better be able to sell to your customer that the temporary offset in a cheaper price will be eroded by the much great benefit of working with you.
“Sure, they can sell at 50% of our price. Their customer support is much smaller and therefore won’t be able to respond to your needs as quickly. We have 12 developers and they have 3. That matters because over the next 12 months our product will continue to pull further away from them. That’s why we raised $5 million from top-tier VCs.
Please call our references. We worked with customer X who saved 38% of their costs in the first year and increased sales by 14%. The pay-back period on our product was 16 months. We have lots of cases of demonstrable business success.
If we just dropped prices to match our less funded competitors we wouldn’t be able to keep innovating and adding value for our clients. If short-term price is your primary drive then our competitor might actually might be a better fit for you. We’re definitely a premium product, which is why we don’t just drop prices to match their moves to “buy” business.
Or whatever. You need to justify value. And this has to be led by your sales teams and driven home through training.
Also, don’t give your sales teams too much authority on price negotiations. Given them small authority to discount, give the sales leader a slightly larger level and anything above that comes to your desk for negotiation. Too big of discount authority will lead to price drops because it’s easier for sales reps to drop price than to sell on value and do the hard business-case work. The excuse department is closed.
3. Sales people will often sell future development work
If your sales teams think that they can throw in some extra features that you’ll build to win the big contract they will. I’ve seen it a thousand times. They feel like they need to show a customer that they’re flexible, listening to their needs and building features the customer perceives as important.
They’ll always lobby you to approve it. ”They can’t win the deal without it!” They’ll throw in extra storage, extra modules, extra freebies. Hold the line on any additional dev work. There will be times where you do need to commit. But find a way where the bonus program is adjusted for any work that has a higher COGS due to dev work and they’ll sell around it – I promise. Don’t let them sell futures. The excuse department is closed.
4. Sales people will often exaggerate the strength of competitors
Sales people will always tell you how far ahead the competition is. It’s the easiest way to justify losing deals, put pressure on your to build the features they want and they always believe a competitors PR more than the reality they see inside your business. Always make your own assessment of your competitors. Talk personally to customers. Encourage the sales teams to give you feedback but make it clear that it’s no excuse for losing. The excuse department is closed.
5. Sales people will always ask for more sales support
Sales people are bag carriers. That’s the most important thing in your business to get revenues up. They somehow always want junior bag carriers. The more, the better.
They want lots of post-sales support. They want junior staff to work on proposals for them. “It’s not efficient for me to do my own proposals.” They want technical sales to help with customer objections. You’re a startup. That stuff is for Oracle or IBM. They need to be scrappy, rollup their sleeves, learn multiple functions. When you hit scale you need to add staff. And division of labor really will drive up productivity. For now? The excuse department is closed.
6. Sales people will always tell you their quotas are too high
And my favorite. The quota. It’s always too high. It’s always unachievable. They were always above quota at every other company they’ve ever worked for. It’s all your fault. And when you get their forecasts they’re always sandbagged. And they know that you play games back. Management always sets sales budgets that roll up to a number beyond the actual board budget.
Sales people are smart – they know this. That’s where the sandbagging comes. They know you’re going to play games and ask for more so they need to leave room for you to do so. It’s the game everybody plays, everybody says they wish nobody played and yet it’s human nature. Just accept it and play the game.
Seriously, you DO need to be careful about not setting unattainable quotas. But as a general rule – the excuse department is closed.
OK, so if any sales people reading this took it in good enough humor for the broad generalizations that I made – I would say two things to management:
1. Treat your sales people well. Train them, arm them with a great product and sales collateral. Get out there with them – no hiding in the ivory tower. Customers want to see you. It’s the hardest job in the company. They sink or swim on their results. And as a result they’re the best paid people in the company. If they start sucking – they’re out. They know this.
2. Don’t do silly things like cap bonus payments. Make their pay-for-performance unlimited, but well structured. They are supposed to be the best paid people in the company. That’s why they endure the jobs that they have and the constant pressure to deliver results. Don’t hire sales people if you expect to be over-the-top cheap on T&E. They need some money for schmoozing. You can book them at budget hotels – but don’t go too far. Treat them with utmost respect or their next interview is right around the corner.
(Cross-posted @ Both Sides of the Table)
It’d be wonderful if you could run a business without interacting with anyone else — never relying on others to deliver quality work on time and never having to « be salesy » on the phone.
Yeah, but unfortunately you do have to rely on others to respond to emails and phone calls. This reliance can be a constant source of heartburn. So you can either take some Tagamet or learn how to get permission to follow-up with people.
You Are Not Alone
Most people dread following up with customers, vendors and even employees. It sounds weird to extroverts, but many of us have performance anxiety that prevents us from following-up even when it’s in our own best interest. You would think that, as social creatures, we would love to interact with our fellow humans, but alas no.
[Editor’s Note: I have an irrational fear of the phone. When it rings I’m overcome with a sense of dread. I have to work myself up to placing an out-bound call. It’s not anti-social — I love personal and electronic interactions equally — it’s something specific and bizarre and, I’ve since learned, fairly common.]
Our irrational dread stems from the following fears:
- Fear of rejection: The real reason people don’t follow-up. It’s hard to get rejected by a customer or partner, or even a stranger. If you get permission to follow-up, this rejection is less likely.
- Don’t want to be annoying: This is the most common excuse people give for not following up. This is why it’s important to set natural follow-up points so you can get permission to call, email or meet.
- Conflict avoidance: A reason that people don’t call you back. If you set up the interactions so that any potential conflict is reduced, then they will want to talk to you.
- Awkwardness in asking for something: Asking for the sale or clarification produces a lot of anxiety. The trick to asking for something is to make it the natural next step to your series of follow-ups. That way, it builds up gradually.
- Trust that what you say will happen: A common problem when someone works with you. No matter who you interact with, you need to follow-up with them if they committed to get something done for you. They might have forgotten or gotten busy.
- Too busy to worry about it: This is common for the overworked entrepreneur. You should never be too busy to follow-up on things you want done. Think about it. If it’s important, then you need to ensure it gets done. Otherwise why did you start it?
The most powerful technique to get others to help you achieve your objectives is to create natural follow-up points that make it easy for you to contact someone. Think of this as permission marketing applied to following-up. Permission Follow-up allows you to contact your customer, vendor or employee because you have a pre-established agreement on when it’s appropriate for you to communicate with them. The power of this technique is that you make them want to receive your email, call or meeting.
Or at least expect it. When the other person expects you to contact them, and you do, none of the excuses above are applicable.
Natural Ways to Follow-Up
Okay, I am sure most of you are feeling that Italian veggie sub you had for lunch starting to bubble up in your throat. Relax. There are tons of ways to create natural follow-up points that will make getting that customer meeting, dealing with that difficult vendor or making sure your team releases it’s products on time.
Here’s a bunch of specific methods. Next we’ll apply them in a scenario.
- Take responsibility to do the follow-up: This is most direct way to get permission to follow-up since you actively took responsibility to contact them. When they agree, then you are set. It’s on your calendar, not theirs.
- Set mutual deadlines: Deadlines are a great way to set expectations and points of reengagement. This will make whomever you are interacting with expect your next communications especially if the deadline is to give them something.
- Additional information: Committing to and delivering additional information will setup a natural way for you to interact. When you do follow-up, your contact will expect your call.
- Specific actions you are responsible for: When you take and complete actions it shows that you value follow-up and that makes others expect this from you.
- Status updates: Anytime your situation changes or you release a new revision, is a perfect time to give a quick reminder or update.
- Relevant books and articles: A good way to reengage with people is to send them relevant posts or articles. When you do this, it reminds people who you are and allows you to dialog about other opportunities.
- In town: Face to face meetings are the most effective ways to follow-up on cold leads or to accelerate a deal. Just being in town makes it easier for your contact to meet you and that might be the one thing that pushes your interactions to the next level.
[Editor’s Note: I have found this to be an especially effective tool. My technique: Whenever you’re going to be in a city, call everyone and say « I’m going to be in town anyway, could I just swing by for 15 minutes? Or longer if you want to go over something? » Almost everyone will agree, and there is nothing like real face-to-face interactions, especially in the age of digital arms-length relationships.]
- Mutual friends: An introduction (or reintroduction) by a mutual friend can be a powerful follow-up method if your interactions have stalled. Your mutual friend can also be an excuse to reconnect.
- Ask for clarification: When you ask for clarification, it shows that you are striving for understanding and if done after an interaction, reminds your contact of what you talked about.
- Time has passed: Sometimes the passage of time can be used to your advantage as long as you have another entry point (like a status update or a mutual friend). In some cases, just sending a “checking in” email or note, can be all that is needed to follow up with other interactions.
These natural follow-up points must be injected into an interaction at the appropriate time — when the interaction needs an inflection point or as a way to tie up some loose ends. Sometimes, it may take several different methods since people respond differently to following-up. (Most have the same anxieties as you do!)
Scenario: A Customer Interaction
Let’s put this into action.
Perhaps the most important customer interaction is your first meeting. It sets the tone for everything to come and is ripe for planting those follow-up seeds. Here’s how it might go:
You: Beth, thanks for meeting with us. We were introduced to you via Matt over at KoolTech. Matt uses our Wizbang SaaS client and thought you guys might find it useful too.
Beth: Yeah, Matt told me about you guys. It sounds like you might have something that will work for us.
You: Excellent. Matt’s a great guy and we were excited to have Matt recommend we get together. Did you get the information I sent you about Wizbang?
Beth: Actually, no I didn’t. However, I did read you site and think I have a good idea what you do.
You: Why don’t I reconfirm your email and send it on to you?
Beth: Sure, it’s ….
You: I will send this out when I get back to the office. Does that work for you?
You: Excellent. How about we show you our demo?
Beth: Thought you’d never ask.
Demo Ensues. Ooo’s, ahh’s
Beth: Great demo. It looks like just what we need. Can you send me a quote? Budgets are tight.
You: Sure. We can also set up a guest account for you and your team to try it out.
Beth: That will work.
You: Why don’t you give me their contact info and I will set them up
You: Beth, thanks for your time. We really enjoyed meeting you.
Beth: As did I.
You: I captured a couple of next-actions for me. They are …. Do you agree?
Beth: That’s great, just so long as I don’t have to do anything else.
You: Wonderful. I will get back to you in a week with that quote. Will that work for you?
Beth: Yeah, that works.
You: In the mean time, I will setup some guest accounts and follow-up with you to see how it’s going.
Beth: Sounds good. Talk to you soon.
The above interaction had several follow-up seeds planted (in bold) that are ready to be harvested. All of the responsibilities are on your shoulders, and your customer gave you permission to follow-up. This means that they will be expecting your call or email.
So what happens when they don’t return your calls or email? Permission follow-up handles this as well. Not only are you planting follow-up actions with your direct contact, but with others they work with, like what happened above (setting up a guest account for other team members). Doing this allows you to have several entry points. Taken in combination, these entry points give you a better shot at getting your call or email returned.
Go Ahead, Give it a Shot
Practicing permission follow-up does feel awkward. Just stick with it. Over time, permission follow-up will produce results and you will get more comfortable with it. The simple fact is that other people usually don’t place as high a priority on these things as you do, and you have to lean on them to get things done.
It’s not about leaning hard or being an asshole. It’s just about getting permission to follow up.
What tips do you have for following up with customers or vendors? Would any of the techniques here bother you? Leave a comment and join the conversation.
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