Lead to Win

Lead to Win

“Sales 101”June 24, 2009

Andrew Fisher

Lead to Win

Agenda

• Assumptions

• Introduction – How do I get started?

• How to build a pipeline

• Sales Organizational Structures

• Sales Planning Exercise

• Closing Strategies / Negotiation 101

• Ethics of selling - Have I ever lied to you?

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Assumptions – Go to Market

• You have at least a basic idea of you core skill set / offer

• You have done extensive competitive analysis and understand where you are WRT the competition

$

Features

Competitor C

Competitor B Competitor A

YOU!

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Assumptions - Etiquette • Look and act professional (use good hygiene)

• Be a good listener– 2 ears ,1 mouth (Do twice as much listening as talking)

• Stay positive

• Even if you are right if any conflict arises, immediately apologize to defuse the situation

• Remember:– Customers don’t have needs they have problems

– You won’t sell anything until you get a rapport with the buyer

– Urgency is proportional to pain

– Point of decision is emotional, and usually subconscious

– Love thy customer

– If you don't talk product, they won't object

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Introduction – How do I get started?

• Questions to ask yourself:– Who is my first customer?

– Who is my fifth customer?

– Who is my one hundredth customer?

– Who is my one thousandth customer?

• As customer volumes increase there are different metrics / strategies for:

– Lead generation

– Lead Qualification / Time to close

– Lead Conversion Ratios

– Deal Size

– Gross Profit Margin

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Who is my first customer?

• Risk (speculation) vs Return

• Remove speculation from your business plan by focusing on a real customer problem from the beginning

– Use lead generation to identify the customer / problem

– Develop trusting partnership / relationship

– If you are truly solving a pain point for the customer you will either land your first sale or get your first reference account

– Try and make the solution generic enough you can productize a significant portion of the effort (repeatable, patents and IP = royalties)

• Product vs Service

• If the service is specific to a single customer its considered “professional services or integration”

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Lead Generation

• Friends / Family

• Cold Calling / Door to Door

• News Paper / Internet

• Snail / Email Marketing

• Merx (RFP / RFI)

• Pending Events– 2011 Olympics

– Government instituted change to current law / procedures• No cell phone use in cars

• New reporting standard for GAP

• New tax laws

– For Rent (LEASED) / For Sale (SOLD)

– Competitor Manufacture Discontinuation

– Competitor Foreclosure

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Lead Qualification

• Lead is not qualified unless you can answer the following simple questions:

– What is the problem the customer is looking to have solved?

– Who is responsible for making the purchasing decision?

– What time frame will the decision be made?

– How much budget has been assigned for the purchase?

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What is the customer problem?

• Do you have a product or service that can fulfill the customers requirement?

• Yes – Proceed to next qualification step

• No– Is this a product or service you can deliver?

– Will the cost of producing / modifying the product or service out weigh the revenue / profit?

– Can you deliver the product / service within the required timeframe?

– Can the timeframe be extended / negotiated?

– Are their competitive products / services that can deliver within the required timeframe?

– Overhang? When is the right time to use it?• 3D’s - Distract, Deter, Delay

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Who is responsible for the purchasing?

• Is this a complex sale? (Requires more than one person to give their approval)

• Don’t forget common sense rules! Understand their buyer values.

• Economic Buyer, the User Buyer, the Technical Buyer, the Gatekeeper and the Coach.

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What time frame will the decision be made?

• Rules of thumb– Can this deal be closed within the next 180 days?

– Yes – Go for it!

– Keep in mind current quarter targets (where are you WRT the current quarter?)

– No – Should this be considered business development (+180 days)?• Park in the CRM and touch the account on a regular cycle until

returns to <180 and preferably <90 days

• Find an excuse to call them back

• Try and determine any sort of hook (hockey fan, likes dogs…and report this in the CRM so you have something to talk about that they can identify with, ask them about their business and listen)

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How much is the budget?

• Do not be afraid to ask about money

• Utilize the “pregnant pause” and whatever you do don’t be the first to flinch / answer

• Practice on your friends

• Better to get this out of the way as soon as possible so you know where each party stands

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How to build a pipeline?

• Once you have a qualified lead its time to start thinking about your next sale (Who is your 5th customer?).

• First priority: Lead Generation– How do you replicate the success from customer 1?

– Not every lead is a winner so on average need 100 leads to close 5 deals.

– DO NOT UNDERESTIMATE THIS STATISTIC• Cold Call 5-10 customers and or channel partners a day

• Engage low cost email / snail mail out bound marketing campaigns

• Qualify, Qualify, Qualify

• How long is your sales cycle (longer means need to keep overhead down = less sales personnel on staff)

• Persistence is the only method!

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Cold Calling – Techniques

• May at first not be obvious but:– Really just trying to get the word out about your company / solution.

– On average will not lead to a deal for first 3-6 months

– Find an excuse to call them back

– Do not take rejection personally

– After a bad call walk around and purge any negative feelings as it will show on the next call.

– Some out bound call centers make their agents look in the mirror and smile at themselves.

– A happy call has higher percentage change of success and will leave a better overall image of your company.

– Put 10 rocks in your pocket each morning, as you make a call remove from your pocket. Don’t leave until all the rocks are gone.

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Channel Models

Reseller Agreement

Channel Agreement

You

Partner Direct or

Managed Services

$PS

S – Support

P – Product and Collateral

C – Just Collateral

Customer

S P $

You

Partner Certified / Preferred

$PS

VAR / SI or

Distributor

C

C$

Customer

S P $

Support Sold by

Partner

Support Sold by

VAR

Partner Acts as

Integrator

Channel Acts as

Integrator

Niche Domain

Expertise

Master Subcontractor Agreement or OEM Reseller / Distribution Agreement

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Channel Models

• Understand the deal flow – Follow the $1.00 bill

You

Partner

Customer

$0.60

$1.00

$0.40

Gross Profit Vs Markup

Markup Percentage = (Sales Price - Unit Cost)/Unit CostGross Profit = (Sales Price - Unit Cost)/Sales Price

Examples15% Markup = 13.0% Gross Profit20% Markup = 16.7% Gross Profit25% Markup = 20.0% Gross Profit30% Markup = 23.0% Gross Profit40% Markup = 28.6% Gross Profit43% Markup = 30.0% Gross Profit50% Markup = 33.0% Gross Profit100% Markup = 50.0% Gross Profit

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Channel Models

• Downstream sales reps are coin operated

• Ensure your reseller agreements include– Sales Rep Quota Relief

– Sales Rep Commission

– An ability to directly “Spiff” the Sales Rep to kick off the product or service launch

• E.g. AMEX gift card of $500 for the sales rep for every $10,000 worth of your product sold

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Reporting

• Set your targets and metric against them

• Quarterly reporting is critical

• Investors want to see quarterly revenue growth

• Understand booking verses cash realization

• Use a CRM immediately and track everything!– Spreadsheet

– Sugar

• Under stand the difference between bookings and revenue recognition!

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Sales Planning Example

Quarter Q1 Q2 Q3 Q4

Bookings 0 10K 25K 45K

Revenue

Calls 25 100 150 200

Leads 3 10 20 30

Quotes 0 2 4 8

Average Deal 0 10K 12.5k 15k

Inside Reps 0 0 1 1

Outside Reps 1 1 1 1

Sales Eng 0 0 0 1

Salaries 0 6k 15k 25k

Expenses 2k 2k 4k 10k

Cash Flow (2K) 0 6K 16K

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Sales Organizational Structures

VP Sales Global

VP Sales Regional

Sales Manager

Sales Engineer InsideSales Reps

OutsideSales Reps

1

23 4

5

6

Number represents logical order for most startups.

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Sales Manager to Sales Rep

• Inside Sales– Lowest cost

• No travel

• All you need is a computer and a phone

– Least risk• Hiring good sales people is hard

• May take 90-180 to determine if they are any good.

• Can monitor their progress daily

– Easiest to metric• Leads Generated

• Leads Qualified

• Quotes Generated

• Singed PO’s

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Sales Manager to Sales Rep

• Outside Sales– When hiring ask the obvious questions:

• What was you target at the last sales job?

• Did you meet / exceed quota? By how much / how little?

– Chances are if they have been sloppy on reporting at the last sales job they are not about to change.

• RECOMMENDATION: Hire people that exhibit:• Good analytics / tracking skills

• Persistence

• Good communication skills

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Sales Manager to Sales Rep

• Track your new hires– ON Track: Weekly face to face meetings with each rep

– OFF TRACK: Daily face to face meetings with each rep• PIP – Personal Incentive Plan

• Participate on sales calls to provide guidance / leadership

• Hand hold them with friendly leads

– Sales is results driven• If your sales personnel are not providing results they are hurting the

not helping the business

• Make sure you protect the company with any employment agreements by specifying clear and concise Key Performance Indicators

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Sales Manager to Sales Rep

• Compensation Plans– Work backwards from your quarterly targets– Be reasonable– E.g. Q1: 100K, Q2: 200K Q3: 300K Q4: 400K– 2 Sales Reps each carrying 500K quota

– Base Compensation: 50K per annum• No draw down on commission until 50% of quota has been met in each

quarter

• At 50% of target commission of 5% (first time warning, two consecutive quarters = PIP / Risk of termination)

• At 100% of target commission of 10%

• At 110% of target commission of 12%

• At 115% of target commission of 15%

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Sales Manager to Sales Engineer

• When lead generation is being slowed down from site surveys, custom configuration / quotes, technical reference architecture discussions….its time to bring on a sales engineer.

• Harder to metric – Customer satisfaction

– Number of RFP’s submitted

– Technical White papers

– Grant submissions / Patents filled (less likely)

– Online leadership / blog coverage

• Depends on the complexity / length of your sales cycle

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Closing Strategies

• Many closing techniques so you need to test out what works best for you– Be honest and respectful of your clients– Provide lead customer examples– Be sincere about helping your customers achieve their goals– ABC – Always be closing– Pregnant Pause– Generally, if you are getting the other person to commit to some action, you are moving the sale forward

Techniques to avoid:• Distraction Close - catch them in a weak moment.• Embarrassment Close - make not buying embarrassing.• Puppy Close - acting cute to invoke sympathy and a nurturing response.• Save-the-world close - buy now and help save the world.• Ultimatum Close - show negative consequences of not buying.• Yes-set Close - get them saying 'yes' and they'll keep saying 'yes'.

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Ethics of selling - Have I ever lied to you?

• Overhang– When you don’t have what the customer needs and promise it

anyways.

– Negotiate with the customers as they sometimes don’t need all of the features at the same time.

• Be honest but not overly honest– If you are speeding and drive by a police officer do you pull over?

• Quarterly Reports / Marketing Collateral– External collateral needs to over state the truth but not give away

any trade secrets

• Act like who you want to become / Fake it till you make it.

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Recommended Readings

• One reference that stands out: Strategic Selling (many editions, latest will have updated material for reference but same basic principles apply across all)

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Andrew FisherExecutive Vice-PresidentWesley Clover Technologiesafisher@wesleyclover.com+1 (613) 866-2017

Stephanie MeadowsHuman Resources Coordinator;Manager of Global RecruitmentWesley Clover Internationalstephanie.meadows@wesleyclover.com+1 (613) 271-6305 x 1016

www.wesleyclover.com

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