04 Dec Sales Strategies for the High-Tech Entrepreneur
Wisconsin technology leaders hit the road
MILWAUKEE – Ask any successful entrepreneur what the #1 priority for a small business is and you will get one answer: SALES. Despite this, sales force structure and management remains probably the most neglected discipline in business school curricula today. “What They Don’t Teach You (in B-school)” was the subtitle for an event held by the Kellogg Alumni Club of Chicago titled “Creating, Growing and Managing a Sales Force.” Needless to say, this message grabbed the attention of three relentless technology road warriors.
Just before Thanksgiving it was road trip time. Ted Feierstein, from the Prism Opportunity Fund, and I escape southeastern Wisconsin at least once a month to explore the Midwest’s high-tech communities. Usually we head west to Madison, but this month we were southbound to Chicago for this meeting.
George Roberts, a former Oracle senior vice president of sales and a panelist for the Kellogg session, was along for the ride. Other panelists included Andris Zoltners, the session moderator and a professor at the Kellogg School of Management at Northwestern, Maria Burund, a 20-year software industry sales executive most recently at Placeware, Inc, Jai Shekhawat, CEO and co-founder of Chicago-based Fieldglass, and Thom Disch of Handi-Ramp, Inc.
The magnitude of the sales issue was first set afire by Professor Zoltners, who opened by saying that he has consulted with several hundred sales organizations and has found that they are not run well – especially within startup businesses. He estimates that there is a “10 percent revenue upside” in even the best-run sales organizations. However, realizing that potential is a difficult challenge. He observed that entrepreneurs are not good at hiring sales staff—not a surprise considering that many startups are led by founders with a technical background.
The panel addressed sales force structure, attracting sales force talent, incentive systems, and building a sales culture with anecdotes, humor and some sage advice.
A tale of attracting sales talent
When Jai Shekhawat started Fieldglass, a human capital management software and services company, he had little money to attract a talented sales executive. When he found the sales pro he wanted, his only hope was to sell the candidate on the vision of the company, as he did not have much working capital. Once he achieved that, it was time to talk about compensation. Shekhawat asked his recruit to bring in his monthly house expense receipts. They added them up together and he said would pay that amount plus 10 percent — so that the new person could sleep at night. That, plus ample equity, helped to close the deal.
Great sales pros are well paid for a reason. There is a big difference between a great salesperson and an average salesperson. According to Maria Burund, the biggest mistake companies make is worrying about spending money on the sales staff. She recommends putting rich incentive compensation behind the sales plan. Even though her company had a better product than her competitors, she sometimes got “outsold,” so it’s worth it to pay for the best sales talent.
According to Shekhawat startup companies need to reward sales progress, since sales in the early years are harder to obtain. He said that companies should reach for the very best sales people. “It is impossible to overpay for a good sales person.”
Sales force structure
All the panelists agreed that figuring out the sales process was critical to defining what structure works best for an organization. In a complex sale that involves technology-based solutions, nearly all the panelists said a team approach is best. A typical team consists of the sales person, the Website, inside salespeople, the CEO, a sales engineer, and call centers. The salesperson’s role on the team is to manage the relationships of the buyer and the seller. Their efforts are then supported by inside sales representatives and call centers that provide feedback that should be used for market intelligence, contact information, early stage interest, and buyer behavior. The sales engineer validates the technical solution to influencers at a target account.
Burund emphasized the point about “matching the person to the model.” She said “some people are relationship builders (farmers) and some are transaction-based (hunters), so make sure you don’t give a farmer a sales position that is geared for a hunter and vice versa.” She also said she likes to build her sales processes around the competitive advantages exhibited by her product offerings. For example, one of her prior employers had a very satisfied user base with many customers as references. Her competitors had marketing hype and VC money behind them, but hardly any references. In their sales cycle, Burund said she encouraged prospective customers to ask for and call references early in their product evaluation phase. This set traps for the competition and shortened sales cycles for her sales team.
Roberts’ tips for sales success
When Roberts started with Oracle, North American sales were less than $50 million. When he retired from Oracle this past summer, he was managing a revenue stream in excess of $1.2 billion and 2,000 employees. After seven years as Oracle’s top sales honcho, all while never moving from his residence in Mequon (Milwaukee area), and with 3 million frequent flyer miles to prove it, George shared some pearls of wisdom:
Everyone (the CEO, CFO, the customer service representative) is selling, some simply better than others.
Every day think about how to make your people more productive.
People are your only sustainable strategic advantage.
If it can’t be measured, don’t waste time on it.
Take the best practices/processes of the “A” sales players and put them in place for everybody; the best demo, the best objection-handler, the best closer, and transfer those best practices to the whole sales team. You’ll find your 10% + sales lift just from this.
Sales performance is a function of sales skills (the best will yield the highest close rate) + territory management (the best will yield the most territory coverage) + product knowledge. Product knowledge improves the performance of those with selling skills and territory management skills.
Change is the only constant. What made you successful last year, will not this year – constantly reevaluate.
It’s a marathon, not a sprint… but you still want to get up in the morning on the run.
If there is a decision to be made – make it. Get the facts and then make the decision. Ultimately a quick decision-maker will be ten decisions ahead of a slow decision-maker and that’s a competitive advantage.
People pay attention to what the boss pays attention to. “I paid attention to what Larry Ellison paid attention to and made my people pay attention to things that were aligned with that.”
Listen to customers, employees, and people on the front lines—don’t think that you know or see everything from the executive level.
Run a sales process no different than say a manufacturing process. What are the opportunities for processimprovements? Where can cycle and throughput times be improved?
Prioritize. What are the three things that provide the most leverage, then forget to-do’s 4-10 because you’ll never get to them and they are not worth it.
Don’t be afraid to ask the tough questions.
Roberts said he was always trial closing with prospective customers. “If I do this or that, will you sign up?” He said most sales people are afraid to ask tough questions because they may not like the answer.
Kelley Starr, is Founder and President of Venture Out and member of Telaric Alliance. Ted Feierstein is a Partner with the Prism Opportunity Fund. Kelley can be reached at firstname.lastname@example.org. Ted can be reached at email@example.com. Kelley and Ted have collaborated on a number of client projects focused on strategy, fund raising, and sales development for high-growth companies in the Midwest.