Copyright © Kent Summers 2008 – 2014 All rights reserved. MIT Venture SERVICE Mentoring SALES BOOT CAMP FOR START-UPS
Aug 23, 2014
Copyright © Kent Summers 2008 – 2014
All rights reserved.
MIT Venture
SERVICE Mentoring
SALES BOOT CAMP
FOR START-UPS
Sales Bootcamp Objectives
» Provide entrepreneurs with “block and tackle” education in sales fundamentals
Basic concepts, mechanics, vocabulary, tips, traps, etc.
Practical “how to” knowledge you can put into practice – not theory
Emphasis on how to land your first few customers
» Incorporate “Sales Thinking” into your company culture
Sales conversant teams increase likelihood of start-up success
» Assumes no sales knowledge/experience
» Not necessarily intended to make everyone great at sales
At a minimum — provide founders and key start-up personnel with the knowledge and confidence to support better sales decisions, and to work more productively with advisors and sales professionals
MIT Sales Bootcamp for Start-ups
Sales Bootcamp Objectives
» Focus on business-to-business sales skills
Higher-priced offerings — require intimate customer knowledge and “high touch” engagement through consultative sales approach
» Sales concepts/skills relevant to 90% of start-up needs
No-tech to high-tech, product or service offerings, for-profit or non-profit business models
» Caveat for non US-based Sales Bootcamps
Local governments/bureaucracies can impact sales very differently
Important cultural differences in buying and selling behaviors
» The only bad questions today… the ones not asked!
Questions, clarification, discussion encouraged
MIT Sales Bootcamp for Start-ups
» Started career in NYC Finance — Program Trader, Options Trading Desk @ Bear Stearns, Tech Analyst @ EJV Partners
» 20+ years high tech start-ups: marketing, sales and CEO roles
» Founded, financed, sold three software companies in Boston — advised on the sale of over a dozen companies
» Founding member, W3C Technical Advisory Board (MIT 1994), Director X Consortium and OASIS (1994 - 1996)
» Managing Partner, PCA (2005 to present)
» MIT: Mentor (2002), Instructor (2008), Visiting Lecturer (2009)
» Investor/Advisor/Board Member, several Boston area Start-ups
Sales Bootcamp Instructor
Kent Summers
MIT Sales Bootcamp for Start-ups
Sales Bootcamp Contributors
MIT Sales Bootcamp for Start-ups
» 20 years software sales start-ups
» Commerce Sales Leader, IBM
Al Stefan
» 25 years enterprise and start-up VP Sales
» Sales Consultant & Start-up Mentor
Jim Noschese
» 25 years high-tech sales and marketing
» VP Sales Americas, Mentor Graphics
Marc Corbacho
» 20 years high-tech sales and CEO
» Partner, Upfront Ventures
Mark Suster
Why are we here today?
When a new company generates its first sale, all the myriad
start-up issues seem manageable
MIT Sales Bootcamp for Start-ups
When sales are not happening — all the other start-up issues
don’t really matter
Sales Bootcamp for Start-ups
» Effective Sales Personality Traits
» The Sales Toolkit
» Customer Profiling
» The Sales Funnel
» How to Qualify Customers
» How to Work the Pipeline
Sales People & Tools
» Building Sales in a Start-up
» Sales Rep Characteristics
» Cardinal Rules for Founders
» Building a Sales Culture
Sales Organization
MIT Sales Bootcamp for Start-ups
» Marketing vs. Sales
» The Sales Function
» Hunting vs. Farming
» Direct Sales vs. Channel Sales
Basic Sales Concepts
THE MECHANICS OF SALES
» Your Market Space
» Selling into specialized market sectors
» ID’ing your Buyers
» Why People Buy
» How People Buy
» Buyer Personalities You Will Run Into
» Sales Tips, Traps, and Techniques
Closing Deals
THE ART OF SALES
“Failed Sales”
Case
Studies
The Mechanics f Sales Basic Concepts and Tools
Marketing vs. Sales The Sales Function
Hunting vs. Farming
MIT Sales Bootcamp for Start-ups
Direct vs. Channel Sales
Marketing vs. Sales Roles
» The Marketing role
Carve out a market presence — position the company and the offering to compete effectively
Profile the customer — industry, pain points, value
Evangelize your offering — become known, relevant, differentiated
Serve as a beacon for sales focus, and lever for sales efficiency
» How?
Sales Tools: messaging, collateral, website, whitepapers, case studies …
Leads: lists, outbound campaigns, website (SEO and PPC) …
Events: seminars, webinars, tradeshows (more sales leads)…
Air cover: advertising, PR, analysts, blogs …
MIT Sales Bootcamp for Start-ups
Marketing Essentials
» Find out where your prospective customers are hiding, and how to reach them, cost-effectively
Locate their watering holes
» Figure out the key messages that get their attention
And motivate them to talk with your sales people
e.g. “We have the only X that does Y… will save you Z”
» Marketing person, like the “rabbit” in a long distance race
Runs way out in front of the sales pack
Cuts and verifies the path to customers
Enables sales to run at a faster pace
» Start-ups: one really good marketing animal
An essential role starting Day -90
MIT Sales Bootcamp for Start-ups
Marketing vs. Sales Roles
» The Sales role leverages marketing efforts to:
Work the pipeline — qualify, engage, close deals
Orchestrate team resources to develop qualified opportunities
Develop/nurture customer accounts over time
» With start-ups, rapid adjustment/refinement between Sales and Marketing essential
Reconcile your working start-up theory with marketplace realities
Knowledge of sales obstacles MUST drive rapid changes to customer focus, positioning, value prop, pricing, etc.
Changes can be subtle to transformative i.e. “pivot”
» In start-ups, one founder usually owns both sales and marketing functions
Makes tight collaboration between Marketing and Sales much easier : -)
MIT Sales Bootcamp for Start-ups
The Sales Function
» Direct Sales = a contact sport
Develop customers thru a series of pre-defined actions/steps
» Owns the customer acquisition process
Qualify Educate Build Confidence/Trust Gain Commitment
» Requires a “stand up and dust yourself off” attitude
Sales is a 90% failure-driven activity!
» Orchestrates external and internal needs
Captures customer needs, aligns with offering
Engages team contributions, a key to sales success
» Directly accountable for revenue performance
MIT Sales Bootcamp for Start-ups
The Sales Function
» Early-stage selling:
MIT Dictionary: “Debugging people’s objections to spending money”
» Gather and channel market intelligence back to the team
Key enhancements, differentiators, weaknesses, gaps — anything that impedes customer adoption
» Eliminating impediments to early-stage sales
Requires keen observation and communication skills, and occurs incrementally
» The start-up dilemma: where are the bugs?
The customer? The offering? The Sales Person?
» Manage people’s expectations, internal and external
Dampen internal optimism — sales will take twice as long, one-half the return
Overcome external pessimism — offering maturity, start-up viability
Recognize (and be true to) what you don’t know/don’t have
MIT Sales Bootcamp for Start-ups
The Sales Function
» #1 start-up goal: secure your “anchor, reference customer”
Good fit + recognizable to your target market
Nurture/over-service first (few) customers to insure successful adoption
Always takes more time than you think for the customer to realize the value of your offering and become fully referenceable
» Sales Economics: revenue – (cost-of-sales) = profit margin
Start-up challenge — reconciling cost-of-sales with your offering price point
Know your Cost of Customer Acquisition (COCA) — you can generate plenty of sales, and still go out of business!
Does your price-point support a Direct and/or Channel sales model?
» With most start-ups, Sales is your most expensive investment
In terms of real costs and opportunity costs
Can take 6 months or more before you know if sales is working
MIT Sales Bootcamp for Start-ups
Hunting vs. Farming
» Hunting: acquiring new customers
Bear hunting, deer hunting, hunting for pheasant, etc.
The larger the animal… the bigger the gun … the longer the sales cycle … the higher the risk/reward
You can fill up the company dinner pot with enough small game!
Equal opportunity hunting — good for cash flow, great for education
» Farming: selling into your existing customer base
Existing customers are your best buyers
Confidence, trust, value already established
You are already in their accounts payables system!
» Once your customer base is established…
Important to balance sales activity between hunting and farming
MIT Sales Bootcamp for Start-ups
All start-ups are hunters!
Lone Hunter
» Sales finds the lead
» Sales closes the deal
» Sales manages / oversees delivery and implementation
» Sales supports the customer
Start-up Challenge — The Transition from Lone Hunter to Team Hunting
Cashflow
Team Hunting
» Marketing finds the lead
» Sales closes the deal
» Engineers manage / oversee delivery and implementation
» Services supports the customer
Cashflow
MIT Sales Bootcamp for Start-ups
Direct vs. Channel Sales
MIT Sales Bootcamp for Start-ups
» Are channel sales viable for a start-up?
» Potential benefits and drawbacks of a channel sales model
» Channel sales guidelines
Are Channel Sales Viable for a Start-up?
» Start with, can your offering support a direct sales model?
What do your margins look like after $125-250K in sales compensation?
If your business can support a direct sales model, it can support a channel sales model too — the reverse is not always true
» Does your product/service fill an important gap in a well-established company’s offering?
A “me-too” gap, or better yet… a competitive differentiator
» Do sales opportunities exist outside of your market focus or reach?
E.g. different geographies, industries
» Ideally, a partner that lends a great deal of credibility to your start-up
If it’s good enough for <Big Name here>, it must be good for me
Gives the Customer a bigger neck to throttle
MIT Sales Bootcamp for Start-ups
Channel Sales — Important Considerations
» Potential Drawbacks…
Channels take much longer to develop than direct sales
Channels take a chunk of your profits
Can be 2x to 3x invoice-to-payment cycle (vs. direct sales)
Loss of customer knowledge / relationship
» Potential Benefits…
The chunk of profits that Channels take, might not otherwise exist
With the proper investment, channels can provide a low-cost (high margin) revenue flywheel
Strategic channel partners — often the best suitors for an exit
MIT Sales Bootcamp for Start-ups
Channel Sales — Important Considerations
» Product companies…
Most common practice — a royalty-based volume discount schedule
Establish the minimum price
Seek quota credit within the partner’s sales force
Agree on customer support protocol
» Service companies…
Most common practice — % mark-up on services provided
Establish minimum rates
» For ALL companies…
Dealing with the “E” word — exclusivity tied to performance schedule
Negotiate visibility of/access to the customer
Avoid the customary “are you for sale?” head-fake early in the relationship
MIT Sales Bootcamp for Start-ups
Channel Sales for Start-ups — a Few Guidelines
» Sales channels vastly different, from one marketplace to another
Corporations can be important customers, market channels and/or competitors
» Is your offering innovative/disruptive?
Can (does!) impact ability to attract a channel partner — selling direct may be your only option
» Approach thru CEO, BizDev, CorpDev, VP Sales functions
Typically not Marketing; definitely not another start-up!
» When possible, manage channels within your sales organization
Promotes necessary collaboration and support; avoids conflict
» Best pursued after your direct sales ‘recipe to revenue’ is established
Confirmation of customer need and revenue model
» Most effective way to get a Partner’s attention
Put a paying customer in their lap!
MIT Sales Bootcamp for Start-ups
The Sales Funnel Customer Profiling
The Sales Toolkit The Sales Personality
Sales People and Tools
MIT Sales Bootcamp for Start-ups
Common Myths About Sales
» Myth: In order to be successful in sales, you must be aggressive with people
This may be true for street vendors and the Hare Krishna
In most other professions, aggressive sales behavior with people is usually a recipe for failure, not success
Reality: sales people must be aggressive with their process and their beliefs, not aggressive with people
» Myth: In order to be successful in sales, you must be good looking and charming
Reality: In order to be successful in sales, you must be knowledgeable and authentic, with keen people perception
People tend to buy from people who are like them, that they connect with … and few customers are good looking and charming
MIT Sales Bootcamp for Start-ups
Common Myths About Sales
» Myth: sales people make more money than anyone else in the company, and that's not fair
Reality: Founders make more money than anyone else in the company
They do so by — among many other things — knowing how to recruit, educate and motivate great employees, sales people included
Reality: if you need any degree of certainty or predictability on your earnings, sales is probably not for you
» Myth: sales people are born bull-shitters... they will tell you anything to get a deal
This may be true for used car salesmen and politicians
Reality: BS'ing people in most other professions — especially in a start-up — is the quickest path to the unemployment line
MIT Sales Bootcamp for Start-ups
The Sales “Title”
» How often do you see the title "Sales" on someone's business card?
» Why so many pseudonyms for the sales role?
Consultant, Account Manager, Account Rep, Account Executive, Business Development, Customer Development…
» There is only one reason a prospective buyer is willing to meet with a salesperson (regardless of their title)
To exchange value
» Two important factors in determining a sales title
Industry practice, and "peerage"
MIT Sales Bootcamp for Start-ups
“No, really. I’m not here to sell you anything. Can’t you tell by my card?”
Effective Sales Personality Traits
» Authentic subject knowledge
Deep understanding of a business domain inspires confidence to buy
» Highly organized
Ability to track and serve 50 different agendas
» Process-oriented
Thrives on establishing and refining a repeatable process
» Competitive, team player
Knows how to be coached, doesn’t like to lose
» Empathetic
Ability to zero-in and share someone’s pain
MIT Sales Bootcamp for Start-ups
» Good people skills
Likeable (not over likeable), with keen people perception
» Integrity
Candid, straight shooter, OK with “Let me get back to you with that”
» Great listener
Ability to pick-up on nuanced buying/stalling signals
» Confidence / composure
Ability to engage C-level executives at a peer level
» Resilient
Willingness to accept and learn from failures, undaunted
The Sales Toolkit
» Marketing Collateral
Brochures, whitepapers, competitive matrix, ROI calculator, case studies
» Pipeline Management tool (aka “CRM”)
Salesforce, Act!, Goldmine, SugarCRM — start with an Excel spreadsheet!
» GoToMeeting account
» Internet resources
Google, LinkedIn, ZoomInfo, RainKing, Facebook, Websites, Yahoo Financials, …
» NDA, COI, W-9 forms
» Credentials/certifications specific to your target market
E.g. Sas 70, HIPAA, ISO …
» Customer Leads
Personal network, event attendees, professional org members
Dozens of cos sell / lease leads (proceed with caution!)
MIT Sales Bootcamp for Start-ups
Profiling Your Target Customer
» Define your “customer profile”
A narrowly-defined vertical market + geography + company type
E.g. Research labs at Universities, with 50+ staff, with significant R&D budgets, within 25 miles of Boston
» Define your “buyer profile”
A job title + responsibilities + unmet needs
E.g. Professor or Principal Investigator, with a need to collaborate with other labs, who has a concern with lab personnel turnover and knowledge retention
» Engage the market to verify both profiles
Whiteboards can’t talk, they can’t teach — you will learn far more from people’s reactions than internal strategy sessions
» Don’t muddy the waters
Start with people you know and trust — save your best opportunities until after you have de-bugged your sales approach
MIT Sales Bootcamp for Start-ups
The Sales Funnel aka “The Pipeline”
Sales Cycle
Develop & Close Engage Qualify
MIT Sales Bootcamp for Start-ups
Leads Suspects Prospects Customers Opportunities
Conversion Metrics
The Sales Pipeline
» The sequential, named steps of your sales process
That help you organize, focus and balance your sales activity
Customers
Opportunities that have signed on the dotted line
Suspects
Leads that meet your target customer profile e.g. geog., market segment, company size, etc.
What is your target customer profile?
Opportunities
Qualified Prospects who are actively engaged in your sales process
How do you separate real opportunities, from discussions that are likely to go nowhere?
Prospects
Initial contact confirms buyer profile exists
Are real buying signals present? i.e. Is this qualified to invest more of your time?
10% 15% 35%
MIT Sales Bootcamp for Start-ups
Working the Pipeline
» Define “pass / fail” criteria for each step in the sales funnel
Terms matter — your company-wide sales lingua franca
Fine-tune pipeline steps, terminology, qualification criteria over time
» Know your performance metrics — conversion rates between sales stages
Good indicators of where you can (need to) improve
The basis for sales forecasting
MIT Sales Bootcamp for Start-ups
Sales Stage Conversions Think About (examples)
Suspect to Prospect % Quality of your leads?
Prospect to Opportunity % Reaching the right people?
Opportunity to Close % Taking short-cuts? Shooting too high?
Working the Pipeline
» Communicate pipeline status to the rest of the team
Sales activity/obstacles must be 100% transparent to the team
Especially important early on, during customer and buyer profile definition
All hands pipeline meeting at least once/week
» Just as important as qualifying prospective customers
Disqualifying prospects who are a waste of your time
» Sales Pipeline: a tool for focus and priority management
Pull ‘em in, Move ‘em along, or Move ‘em out!
Important to balance activity at each stage
» Weighted pipeline — the basis for revenue forecasting
MIT Sales Bootcamp for Start-ups
Weighted Pipeline: A Revenue Forecasting Tool
» Potential value vs. current value of a $10K offering:
» Weighting percentages vary, depending upon the product or service being sold, the customer … other factors
» Think thru your sales stages, arrive at a model that is practical and useful for you, and validate
Sales Stage Weight Current Value
Lead that meets profile 0 $0
Discussion Qualifies Lead 5% $500.-
Need is confirmed 25% $2,500.-
Budget is confirmed 50% $5,000.-
Buyer/timing is known 75% $7,500.-
Proposal is sent 90% $9,000
Signed Agreement 100% $10,000
MIT Sales Bootcamp for Start-ups
Sample Weighted Pipeline: $10K Offering
Meets Profile
Interest Expressed
Need Validated
Budget Validated
Sent Proposal
Weighted Value
Company A $7,500.-
Company B $9,000.-
Company C $2,500.-
Company D $5,000.-
Company E $1,500.-
Company F $5,000.-
Potential Value = $60,000
Current Weighted Value = $30,500
MIT Sales Bootcamp for Start-ups
Sales Forecast = Weighted Pipeline + Calendar + Intuition
Lets walk thru a sample Sales Pipeline
Proposals
75 Proposals
Opportunities
51 New Clients
?
Cost per New Client
Opportunity = $4,2K
85K Visitors
320 / day
38K Visitors
145 / day
$145K $70K
Website 1 Website 2
Clients
49 Signed
Agreements
27 Existing Clients
2 Duds
22 New Clients
Suspects Revenue
Bookings
$3.9M
$2.1M Current Year
+ $1.8M (Tail Year)
Prospects
160 RFIs
140 Chats
200 Phone Calls
500 Inquiries / Year
2 / Day
Cost per New
Client = $9,7K
30 Farming
+
81 Opportunities
.4%
10% 60%
Cost per Prospect = $430
Sales Economics
Assuming 2 Sales Reps @ $175K / Year
Total Sales & Marketing Expense = ~15%
Cost per visit = $1.75
COCA
4.5%
.04%
The Key to a Productive Pipeline Qualifying Prospective Customers
» Are real buying signals present?
Must-have (vs. nice-to-have), immediacy (vs. exploring), budget (vs. ??), management buy-in (vs. unsupported)
» What are your prospect’s alternatives?
Understand them — and get them on the table early!
“Do Nothing” the most prevalent alternative — you need to understand the cost of indecision (this is your leverage)
» Always pre-empt customer’s alternatives, lest they will revisit you
Builds trust, avoids wasting your time
» Qualifying: a process of developing a mutual plan for success
What’s in it for your customer… what’s in it for you?
Is there a fair exchange of value? Lop-sided deals rarely end well
WMT
MIT Sales Bootcamp for Start-ups
The Key to a Productive Pipeline Qualifying Prospective Customers
» Use non-threatening questions to qualify
Option A: “Do you have the authority to make a decision, or is this 3 hours of my life I will never get back?”
Option B: “What is your decision process, how are you involved, and how can I support you?”
» Qualifying prospective customers never stops…
The process of determining if there is a “good fit” occurs both ways… incrementally… throughout each step of the sale process
» Some prospects will not have a strong enough reason to purchase
Some won’t pay your prices; some can’t or won’t make a decision; some feel they have found a better solution
» In other words, some are not qualified to take your time
MIT Sales Bootcamp for Start-ups
The Key to a Productive Pipeline Balanced Activity and Efficiency
» Establish and track sales activity
Early on, sales activity is the only thing you can measure e.g. # of phone calls, meetings, demos, proposals, etc.
After time, sales performance is the only thing worth measuring
One year (or more) of tracking conversion metrics, before areas you can improve becomes apparent
» Balance sales activity throughout each stage of the funnel
Whether incredibly busy, or hearing an echo — sales must know “What is the best use of my time?”
Unbalanced activity = choppy deal flow = choppy cash flow
» Use pipeline to focus and throttle your sales activity
Opportunity timing: the countertop, the fridge or the freezer?
Establish your own Sales discipline and rhythm
Positive value will accumulate in the pipeline over time Veolia
MIT Sales Bootcamp for Start-ups
Top Deal Focus
» Sales focus exclusively on the top 2-3 deals most likely to close (the “shiny object” syndrome)
» Ignores new leads
» Ignores developing leads into opportunities
» Ignores existing customers
The Key to a Productive Pipeline Balanced Activity and Efficiency
Cashflow
Balanced Activity
» Sales focus is 50% on the top 2-3 deals, 50% on developing the rest of the funnel
» Continual efforts to qualify and develop new leads
» Continue to explore opportunities within your customer base
Cashflow
MIT Sales Bootcamp for Start-ups
Basic Rules of Pipeline Management
» Common sales mistake: responding to fresh inquiries via email
A lose-lose proposition
» Appropriate use of email vs. phone vs. face-to-face
Knowing the buyer’s preference can make a big difference
» Appear bigger and more professional than you are
Use “we” not “I” — and make sure everyone on your team does too!
» Keep all sales communication brief and to the point
Diminishing return on people’s attention occurs very quickly with sales
» Pace your responsiveness
Initially, ASAP… then catered to the prospect (the female in a waltz)
» Know thyself
Positive mojo days — make those important calls!
Bad mojo days — go to the movies, do not interact with any humans
MIT Sales Bootcamp for Start-ups
Working the Pipeline Essential Items to Track
MIT Sales Bootcamp for Start-ups
Initial contact date length of sales cycle
People influencers, blockers, decision makers
Need / Pain specific hot buttons and priorities
Revenue Type selling product, services, both?
Deal size + potential initial sale $$ vs. follow-on $$
Timing moving slow/fast, decision date
Next Step ball is in who’s court?
Engagement Notes can you/someone else understand?
Working the Pipeline: Decision Making
» You are driving down the highway and notice what appears to be a squished squirrel by the side of the road…
What is your decision? “The squirrel is dead” Or… “We should pull over and investigate further”
MIT Sales Bootcamp for Start-ups
A B
Pipeline Decision Making
» In sales, you must always make decisions with an incomplete set of information
Anathema to the engineering mind-set — incomplete information does not compile!
» Over analysis rarely helpful
Keep moving prospects through the funnel
Do not belabor incomplete knowledge
Trust your instincts — understand what is important and act
» The deal you’ve been working on for a long time, is dead?
Don’t dwell upon dead deals… RIP, amen, move on
Nothing to move onto? Your sales activity is unbalanced!
MIT Sales Bootcamp for Start-ups
Realities of Managing a Sales Pipeline
» You will uncover excellent opportunities that exhibit all the signs of a deal
That sit in your pipeline for months/quarters, and go nowhere
» You will encounter opportunities that are not a perfect fit — and do not send strong buying signals
Who will request and sign a proposal
» Some deals will go from initial call to close in a matter of days
Even before you enter them into your pipeline
» In sales, there is only so much under your influence and control
The rest is up to market conditions, timing, buyer idiosyncrasies, the weather
» Do not agonize the unpredictability nature of sales
Focus on activities you can influence and control
MIT Sales Bootcamp for Start-ups
Managing the Timing Factor The Key to Sales Focus
» Opportunities, like perishable food
Keep on the countertop, in the refrigerator, or in the freezer?
» The Countertop
Highly-perishable deals (ready to eat) with immediate needs and near-term decision dates e.g. days or weeks
» The Refrigerator
Deals with a decision date that is further out, that will take some time to develop e.g. several months/quarters
» The Freezer
Opportunities that meet all your criteria, but not actively driving toward a decision e.g. helping to influence an RFP for next year's budget
» Successful sales — the ability to manage the timing factor, and prioritize your activity accordingly
MIT Sales Bootcamp for Start-ups
Sales Pipeline Management
» The practice of tracking essential items in your pipeline
So you know where to focus your time and attention, every day
» The key to successful sales is balancing your activity between…
Qualifying (and disqualifying) Leads
Developing Opportunities (moving qualified deals along)
Keeping everyone on your team informed, contributing to the sale
Prioritizing your activity around customer timing
Writing and closing agreements
» Wishing and hoping is not part of the sales process
Optimism not a healthy sales trait — with prospects, or with your team
» Chasing opportunities that do not satisfy your buyer criteria
Always offer the perception that you are working hard
Rarely offer the satisfaction of working smart (getting paid)
MIT Sales Bootcamp for Start-ups
The Art of Sales: Closing Deals
MIT Sales Bootcamp for Start-ups
» Understanding your Space
» Industry Examples
» Who are your Buyers?
» Why People Buy
» How People Buy
» Buyer Personalities
» Sales Tips, Traps and Techniques
Understand the Market You are Selling Into
» Fundamental differences in the “market space” you are selling into have a significant impact on sales
E.g. industry sector, department, ownership, stage, market position, health, …
Not subtle differences, but game changers when it comes to sales
» Industry Sector
E.g. pharmaceutical, financial services, manufacturing, health care, aerospace, higher education, media & entertainment, etc.
Some market cultures are very conservative and risk-adverse, highly deliberative on investment decisions
» Department
E.g. operations, management, executives, sales and marketing, quality assurance, HR, finance/accounting, legal, service and support, etc.
Front-office vs. back-office functions, cost- vs. profit-center, proximity to executives… often determine relative access to company capital
MIT Sales Bootcamp for Start-ups
Understand the Market You are Selling Into
» Ownership structure
E.g. public vs. private, profit/non-profit, sole ownership, family-owned, wholly-owned subsidiary, VC-backed, etc.
Ability to make decisions, decision unit complexities dramatically different
» Position within industry “food chain”
E.g. OEM, distributor, supplier, value-add reseller, consultant, service provider
Ability to control/influence changes to their business vs. co-dependencies on partners upstream/downstream in a market ecosystem
» Business stage/maturity
Start-up vs. SMB vs. multi-national
» Business health
Down-sizing, flat, incremental growth, rapid growth
MIT Sales Bootcamp for Start-ups
Selling into Bureaucracies
» From local municipalities… to Federal agencies
Highly regulated, highly bureaucratic, highly political
In the USA, often not the “A Team”
» Like any good government effort, there’s an acronym (or at least something resembling one)
Understand government speak… MATOC, IDIQ, OSDBU, SAP, FUBAR…
» Invest in Government procurement mechanisms and special business certifications (how they buy)
GSA Schedule, 8(a) Certification, DoD STD 2167A (Software), System for Award Management (SAM), MWOSB, HUBZone Certification, Disabled Veteran Owned Small Business
MIT Sales Bootcamp for Start-ups
Selling into Bureaucracies
» Bureaucracies unlike private-sector sales…
Procurement requirements can be half the battle
Remove language about “increased profitability” or “increased ROI”
Use “increased efficiency” with caution :-)
» Be persistent — government purchasing cycles much longer than private sector sales cycles
Most Gov’t sales is a exercise of patience and persistence
RFP with 3 bids very common; “sole source” deals increasingly rare
» Pay attention to (and support in your offering) political trends, so you become the “easier buy”
Going green, cloud computing, just-in-time, etc.
They may not always understand what these mean, but they do influence purchases
MIT Sales Bootcamp for Start-ups
Selling into Non-Profits
» E.g. Hospitals, health-service providers, higher education
Like most private sector markets, unique markets that require specialized sales knowledge and focus to be successful
» Like bureaucracies, social values play a role in doing business with them
Terms like green, clouds, free range, natural, recycled etc. get their attention — and demonstrate alignment with their social mission
» Almost all purchasing decisions made at the Director / board level
If you are not pitching directly to the board, with management support, and addressing an issue critical to their mission, guess what the answer will be?
» Unlike most private sector markets…
Higher on social values, lower on business acumen
Known to seek alignment/empathy with their mission, as a means to lower cost
» If your core business focus is the private sector
Avoid getting distracted by non-profits
MIT Sales Bootcamp for Start-ups
Selling into I/T Organizations
» Prevailing attitude:
When the ship is moored to the dock, nothing bad can happen
» Front-office personnel get paid to sail and fish!
Will often seek outside help to avoid working with internal I/T
» Unless your offering is central to the I/T function
Most I/T orgs do not approve purchases, but they are good at blocking
» Purchasing drivers — business efficiency, quality, new capabilities, etc. — come from the front-office, not from I/T
Security, control, compatibility with in-house skills, often the main purchasing drivers inside I/T
» I/T powers vary widely, from organization to the next
MIT Sales Bootcamp for Start-ups
Understand the Market You are Selling Into
» Market sectors, very unique from one another
Each requires specialized knowledge and sales focus to be successful
Channels, especially different from one market to the next
» Selling deeper into a market, where you have established presence
Much easier than breaking into a new market segment
The deeper you penetrate a market, the smaller and more-connected it will appear
» Market knowledge and focus allows you to respond credibly to the same question every buyer has…
“Have you solved a similar problem, for someone just like me, and when can I speak with them”?
In sales, there is no substitute for authentic subject matter knowledge, with credible case studies and references!
MIT Sales Bootcamp for Start-ups
Who Are Your Buyers? View Inside a Typical Organization
Management Executives
Operations
Economic Imperatives
CEO, CTO, VP Engineering
Access to funds
Accepts responsibility
NOT: details
Strategic Initiatives
Time-to-Revenue
Quality or Yield goals
Cost Reduction
NOT: product features
Tactical Needs
Centered on need / problem
Better, cheaper, faster value
NOT: a strategic initiative
MIT Sales Bootcamp for Start-ups
Who Are Your Buyers?
» Occasionally, a single buyer is all you need
Evaluate the offering + make the decision + write the check
» In most cases, purchasing decisions require team buy-in
A team evaluates, makes recommendation to management, management sells business case to executive, executive approves the purchase
Sales job is to drive this process, build consensus
» Recognize the difference between influencers vs. buyers
Influencers are key to building consensus… but they don’t make decisions, and they don’t write checks
» Identify blockers, and how to steer around them
» Discover and develop the decision making unit
Get to the right people, and drive consensus
Do not assume they are talking with one other!
MIT Sales Bootcamp for Start-ups
Where Are Your Buyers?
Management
Executives
Operations
Small Cos
Management Executives
Operations
Medium Size Cos
MIT Sales Bootcamp for Start-ups
Management
Executives
Operations
Management
Big Companies
Operations
How People Buy
MIT Sales Bootcamp for Start-ups
» Gather “how they buy” intelligence… and develop a synergy
Capital vs. Expense preference?
FY budget planning and allocation cycles?
Veolia Water
» Coordinate your selling cycle with their buying cycle and available funds
HP » What is considered a discretionary expense?
Requires no formal approval process
Lahey Clinic
» What budgets are available?
Training, research, another department…
Grafton Village
» What do they have?
Ski lift tickets, cheese, beer brewing equipment, anything else?
» Can you “finance” the deal?
Accrued and deferred payment? Tru
Touch
The Ideal Buyer — a Senior line-of-business Professional
» Directly accountable for P&L, staff efficiency, product/service quality, industry/regulatory compliance, time-to-market, etc.
» Deep understanding of business needs and priorities
» Direct access to (and support from) C-level executives
» Long tenure in the organization, well respected
» Known to seek outside help to avoid working with internal staff
» Listen for something like:
“We just don’t have the bandwidth right now to focus on this critical issue”
» What this likely means:
“This is a critical issue, and I’m convinced we need some outside expertise to solve this problem”
MIT Sales Bootcamp for Start-ups
People buy when the following conditions exist
» Recognition of unsolved problem / need
» The need is a top priority for the organization
» Pain/cost/risk is clear and quantifiable
» A well-respected executive owns the initiative
MIT Sales Bootcamp for Start-ups
» Perception that your offering is the best alternative
» Confidence in your team + company viability
» Trust and likeability established with the Sales rep
Budget is available to invest in you
» How effective are you at capturing and tracking all the above?
» Not just the offering… people buy knowledge, credibility, trust
Lots of proxies for “No” when just one of these criteria is not firmly established
Budget is available to invest
» People have 25 different ways of saying “No”
24 of which are ambiguous — learn to interpret proxies for No
Learn to Interpret Proxies for “No”
“We are still evaluating our options.”
… And your company is not one of them.
“I really like what I’m hearing, but (take your pick)...”
I remain somewhere between confused and unconvinced.
“Management has decided to reassess our priorities...”
And my lack of insight into what mgmt really thinks continues to astound me.
MIT Sales Bootcamp for Start-ups
» In Sales, No is always your second best answer
The “Slow No” is your worst
Your Space and Buyer, How and Why People Buy
» The space you are selling into will present (sometimes vastly) different budgets, willingness/ability to purchase, decision points, etc.
Many factors to consider: industry, department, ownership, stage, health…
» Most purchasing decisions will require team buy-in
Recognize the difference between influences, blockers and decision makers
» Align how you get paid
With how the customer buys
» Learn to interpret proxies for “No”
Especially the “Slow No”
» If all of this is not enough to think about…
You will run into vastly different personalities while selling
MIT Sales Bootcamp for Start-ups
Buyer Personalities
» While selling, you will run into many different types of personalities
Some very functional and constructive; others Dilbertesque
» In sales, you constantly need to make judgment calls whether the person you are speaking with…
Is helpful, a waste of time, or blocking
» Some people are an open book — others an illusion
MIT Sales Bootcamp for Start-ups
“Lucy speaking, I am Director of
HR. We are missing a very critical
business function that is impacting
every area of our company.”
PERCEPTION
“Lucy speaking, HR sits at the very
bottom of company priorities. I
cannot recall the last time we got
approval to spend any money.”
REALITY
Buyer Personalities
» Key to successful selling — your ability to spot (and navigate through) different personalities and agendas
MIT Sales Bootcamp for Start-ups
Green Flag personalities (deal enablers)
Ready-willing-and-able, knowledgeable, apolitical, well organized, open to ideas, straight shooters, stable and grounded people …
Red Flag personalities (deal blockers)
Change-adverse, incompetent, highly political, disorganized, dishonest, unstable, paranoid …
Personalities You Will Run Into While Selling
Christina the
Collaborator
Norman the
Naysayer
Otto the Autocrat
Ben the Bottleneck
Barry the Baiter
David the Doer
Chatty Cathy
Calvin the Cowboy
Erica the Engineer
Paul the Politician
Know it all Joe
Greg the Gambler
MIT Sales Bootcamp for Start-ups
Peter the
Pocket Picker
Personalities You Will Run Into While Selling
» In sales, you MUST work successfully with both Green and Red flag personalities
MIT Sales Bootcamp for Start-ups
» Navigate around the Reds, target the Greens
Probe for clues, trust your instincts
Personalities You Will Run Into While Selling
» Always research the company and the person you are speaking with, before you pick up the phone
Website, LinkedIn, Google, Facebook, D&B, Jigsaw, etc.
The person listed on the management team? LinkedIn background? How long have they been at the company? Phone ext. 103 or 30192?
» Probe for real business drivers and personal motivations
A legitimate business need or a waste of time?
» Listen for clues
Can you hear people talking in the background? Is the person anxious or defensive? Overly optimistic? Do they sound like someone you would respect?
» Develop a conversational rapport
Hidden personality issues / agendas rarely survive a genuine, in-depth discussion
MIT Sales Bootcamp for Start-ups
Helpful Questions to Qualify an Opportunity and the Person You are Speaking With
» Break the ice e.g. Where are you located?
Don’t jump right into the subject — establish yourself as human first
» Tell me about your company
The breadth/depth of his/her understanding — often very insightful
» What is your role?
Not, what is your title? Influencer, decision maker?
» How long have you been there?
Can indicate level of influence / political clout
» What is driving your interest in X?
Operational Need, Management Initiative, or Executive Imperative?
MIT Sales Bootcamp for Start-ups
Helpful Questions to Qualify an Opportunity and the Person You are Speaking With
» How long have you been looking into this?
An indication of priority, and decision making/buying process
» Where does X stack up in your list of priorities?
Anything beyond the top 2 or 3 priorities rarely gets funded
» What alternatives are you looking at; what do you like/dislike about them?
Useful insights into what you are up against, and their priorities
» How are you going to measure success on this?
Write these down: your ability to satisfy these needs can win/lose the deal
» Who is involved in the decision?
Insight into the decision making unit
MIT Sales Bootcamp for Start-ups
Sales Tips, Traps and Techniques
MIT Sales Bootcamp for Start-ups
» Opportunity Engagement
» Managing Objections
» Competition
» Pricing & ROI
» Agreements
» Negotiation & Closing
“Sales is the art of extracting money from another man's Pocket, without resorting to violence.” – Max Amsterdam
Opportunity Engagement
» Leads that make it to the Opportunity stage are “expensive”
Considerable time and energy invested in filtering down to a qualified sub-set of prospective buyers
» On face value, every opportunity is “qualified” to become a new customer
In reality, some will, some won’t
» Use good judgment, but avoid the temptation to pick the winners
In sales, you want to avoid making too many assumptions on which opportunities will actually buy, which will not
» Effective “Off Ramping” sales skills will allow you to:
Enable deals that are real to surface and develop on their own
Enable deals with “the appearance of real” to self-select out
MIT Sales Bootcamp for Start-ups
Opportunity “Off Ramping”
» Non-threatening, leading questions or challenges
That provoke prospects to confirm value, share insights, surface feelings or bias, send buying or stalling signals
» “Off Ramping” an efficient and effective sales technique
That enable prospects to determine whether to keep moving forward, or self-select out (gracefully)
» Questions or challenges, related to…
Needs and priorities, personal agitation or predisposition, objection testing questions, ROI, decision making process…
Listen carefully for buying signals, or “off ramp” responses
» Thoughtful / probing questions not only qualify an opportunity
They help build rapport and confidence in your organization
MIT Sales Bootcamp for Start-ups
Opportunity “Off Ramping” Examples
» “It sounds like you have a lot on your plate right now… maybe we should pick up our discussion in another month or two?”
Off-ramp: “You’re probably right” or…
Buying signal: “No way, we are dying here!”
» “Can’t you just do X or Y?”
Off-ramp: “Those options hadn’t really occurred to us” or…
Buying signal: “Both X and Y are non-starters, and here is why”
» “Isn’t management just going to tell you to suck it up?”
Off-ramp: “That is a distinct possibility” or…
Buying signal: “I am management”
» “I’m not clear how you are going to sell this internally”
Off-ramp: “That’s a mystery to me too” or…
Buying signal: “This will sell itself, and here is why”
MIT Sales Bootcamp for Start-ups
Priority?
Competition?
Decision Unit?
Influence?
Opportunity “Off Ramping” Examples
» “I certainly understand the issue, but what is the real cost?”
Off-ramp: “We haven’t really measured the impact of X” or…
Buying signal: “X is costing our company around Y dollars every year”
» “Is management even aware this is a real problem?”
Off-ramp: “We have just started to focus on this issue” or…
Buying signal: “Everyone on our team knows this is a real problem”
» “Sam seems to be taking a different view on this … do you have any suggestions?”
Off-ramp: “Sam got burned on this before, let’s get him on board” or…
Buying signal: “No worry… Sam takes a different view on everything”
MIT Sales Bootcamp for Start-ups
ROI?
Priority?
Decision Unit?
Opportunity “Off Ramping”
» In Sales, resist the temptation to pick winners
Instead, put prospects in a position to reveal important insights
They will “sell themselves” or opt out
» Develop your own set of probing/non-threatening questions or challenges
That provoke prospects to send important signals
» Listen carefully for buying (and stalling) signals
Opportunities that are real, will develop on their own
Opportunities that are not real, will self-select out
» A few important tips for Opportunity Engagement…
MIT Sales Bootcamp for Start-ups
Opportunity Engagement Tips
» Resist the temptation to “solve the problem” too early in the discussion
Can be construed as impulsive; does not leave room for relationship building
Invest your time to listen carefully to customer’s key needs, concerns, hot-buttons, pot-holes, business priorities, buying and stalling signals
» Get comfortable with “we don’t do that” (yet)
A little credibility goes a long way
» Any legitimate concern your prospect has that goes unaddressed
A potential landmine waiting to explode
Ferret out concerns early in the sales process, lest they revisit you later!
» Any legitimate concern you may have that goes unaddressed
Another potential landmine: don’t be afraid to probe / challenge for your needs
Be candid with your concerns — candor builds trust
MIT Sales Bootcamp for Start-ups
Opportunity Engagement Tips
» Don’t spill all of your candy in the lobby
Trust and confidence is established through a continuous back-and forth exchange of information — not by unloading all your information in the first meeting
Always define the “next reason” you have to talk
» Develop a “Sales Conversation”
A signed agreement is the logical end-step in an effective sales conversation
» If you are successful in establishing trust and confidence
You will notice a shift in attitude, from “Sell me,” to “Let’s work on this together”
» Don’t Sell… Wait to be asked to sell
Not: “Can I send you a proposal?”
Wait for: “I really like what I’m hearing… how do we get started?”
MIT Sales Bootcamp for Start-ups
Opportunity Engagement Tips
MIT Sales Bootcamp for Start-ups
$$$$$ Prospect
Sales Rep
Recipe for Sales Failure
$$ Prospect
Sales Rep
Recipe for Sales Success
Objection Handlers
» A prepared list of canned responses to the most common objections to purchasing your product or service
Different types: competitive, product usefulness, benefits, risk, ROI, price…
» Responses are thoughtful and balanced
Not perceived as “sales bias”
You are educating, not selling
» Objections are unfounded?
Usually a proxy for something else… probe or punt!
» Dealing with significant objections late in the sales process?
You failed to uncover land minds early, when it’s less expensive
» Objections over Price?
Congratulations, you are getting close to a deal!!
MIT Sales Bootcamp for Start-ups
“This is very thoughtful. Thank you for the guidance. It does sound a bit like go away, you’re not ready for us, which may be the case. As soon as I purchase
the data I will get back to you.” - Mel
Pricing Considerations — Products or Services
» The price for any product or service:
Must be supported by the value of the problem you are solving
» Value – Price = Return on Investment
ROI needs to be obvious, not incremental, to change the status quo
» Capture ROI — this is your leverage to negotiate price
ROI not obvious?… the opportunity is probably not qualified
» People spend money to reduce cost (save money), eliminate pain or risk
Cost reduction, much easier to quantify than implied gains
Risk reduction, translates directly to cost avoidance
» Higher priced offerings: extrapolate ROI over time
» The only difference between strategic and tactical purchasing decisions?
The economic value and sustainability of the ROI
MIT Sales Bootcamp for Start-ups
Measuring Return On Investment Reduced Cost, Complexity and Risk
» Quality: cost of returns, poor customer satisfaction, errors and omissions?
» Safety: cost of legal and medical expenses?
» Time-to-market: economic consequences of missing key schedule demands?
» Industry Compliance: loss of credibility, legal costs?
» Other business metrics that may be unique to your offering value
» Efficiency: people are the #1 expense in most organizations
How do you know how to position efficiency?
» Is the company in growth-mode, flat or downsizing?
Downsizing message: “Solution will offset the cost of 2 FTEs in the first year”
Growth message: “Solution will allow 2 FTEs to do smarter/more valuable things with their time”
MIT Sales Bootcamp for Start-ups
Pricing Considerations — Products or Services
» The answer to “How much will it cost me?” unknown?
The cost of getting to a reliable price is the first thing you are selling!
» Be wary of setting price expectations too early
The first number that comes out of your mouth usually sticks (very difficult to un-ring this bell)
» Put a price tag on everything of value
Common mistake with product start-ups — overlooking the value of expertise and services E.g. consulting, training, etc.
There is no perceived value in anything you give away
» Price Pressure? OK to discount (or add product) to get a deal
Lowering your price undermines your value proposition
Discounting against the list price preserves value
Refer to existing contractual obligations with “best price” clause
MIT Sales Bootcamp for Start-ups
Pricing Considerations — Products or Services
» SELL SMALL!!
The lower the entry price, the higher likelihood of a sale
The best opportunities, a low entry price with high revenue potential
» Define your low-cost, low-risk path to getting started
What is your “Proof-of-concept” offering?
What is your “Loss Leader”? (in web parlance, “freemium”)
» Ask: What can I do uniquely today for this customer that ….
Solves a real problem
In as short a timeframe as possible
Is low cost, and does not require management budget approval
Doesn’t involve much risk
Establishes credibility in your organization
… And provides a logical starting point for doing more in the future
MIT Sales Bootcamp for Start-ups
A Few Words on Competition
» Competition comes in many forms
Alternative offerings, do nothing, different priorities, budget and schedule constraints, internal agendas/friction…
» The absence of competition, usually the absence of a deal
Greenfield sales are uncommon — most sales replace something or someone
If “Do Nothing” is the answer, what is the cost of indecision?
» Do not compete with the person you are speaking with
Try to avoid selling “increased efficiency” to the person you are displacing!
Sell at the right level in the organization
» Direct Competitors
ID competitor weaknesses, align with customer concerns and priorities
Tone matters, you are educating — not selling, not defending
MIT Sales Bootcamp for Start-ups
“It is difficult to get a man to understand something, when his job depends upon not understanding it.” -- Upton Sinclair
A Few Words on Competition
» Lose a deal to a competitor?
Always circle back to understand why
» Prospect is circumspect?
You probably have your answer
» Do not compete against yourself
I met the enemy — it is me
Do not engage opportunities on bad Mojo days
» Post-mortems
Share and study lost deals with your team!
MIT Sales Bootcamp for Start-ups
Agreements, Proposals, Statements of Work
» Collaborate with the Customer to develop a “Joint Proposal”
Uncovers any important items that you may have overlooked, that are deemed important by the customer
Demonstrates that your company is truly collaborative to work with
The proposal becomes “mutually owned” — both parties vested
» Never send a “final” proposal … always use “drafts” to solicit customer reflection and feedback
Your listening notes form the foundation of a your first draft
» Delay requests for agreements too early in the sales process
Value is not fully cemented — prospects can (and do!) overlook important items, but you do not have that luxury!
MIT Sales Bootcamp for Start-ups
Agreements, Proposals, Statements of Work
» Keep your agreements short and simple
They reflect what it will be like working with you
Agreement complexity either invites or discourages legal scrutiny
» 80% of agreements: boilerplate content with standard T&Cs
Remaining 20%: your discussion notes, written professionally
Echo your customer’s language and hot-buttons
» Always assume that someone new/important will review the agreement
Almost always a correct assumption
MIT Sales Bootcamp for Start-ups
Agreements, Proposals, Statements of Work
» Take 2 or 3 days to develop your Agreements
With overnight (sobering) pauses in-between editing sessions
» Always send a PDF, not source Word format
If a Word doc is requested, always put document in red-line mode
» Include “OK to market and reference” clause in your agreements
You have little leverage to ask for this later
» Include high Finance Charges in your payment terms
An excellent reminder that payment is overdue
Low-hanging fruit for objection and compromise
MIT Sales Bootcamp for Start-ups
Closing the Deal: Negotiations
» Making decisions with limited information
A reality of selling, not negotiating
» NO surprises — always discuss important items before sending agreement
Discuss and resolve any non-negotiable items up-front
» Provide solid business rationale behind any non-negotiable items
Complete acceptance of consequences of walking away, your only leverage
» Always expect buyers to seek concessions (Human nature)
Search for the “Elegant Negotiable” — items that are important to one party, but not as important to the other party
» Create a formal concession plan
Where you want to end up + What you are willing to give up… defines Where you need to start
» Do not make concessions quickly
MIT Sales Bootcamp for Start-ups
Closing the Deal
» A final agreement/contract is a perishable item
Degrades in value every day a decision is not made — and there is little reason to talk any further
Only send agreements after you feel that all of your success criteria is firmly established
» Ask when they expect to make a decision, and follow-up
Do not harass the customer if it takes longer, keep your cool
Most people buy in spite of a hard sell, not because of it
» Leverage customer references
Your silver bullets used to confirm a decision, not make one!
MIT Sales Bootcamp for Start-ups
Deal Closed! What’s Next?
» Get back to your pipeline, after you have ….
Transitioned customer knowledge to your team (“on-boarding”)
Educated the customer in anything they need to know about your team, your process, next steps, etc.
Introduced a new primary POC (if possible) e.g. Project Manager or Engineer
» Keep on top of customer satisfaction
Check in from time-to-time, especially for no particular reason
» Let the farming begin!
MIT Sales Bootcamp for Start-ups
Sales “Failure to Launch” Case Studies
MIT Sales Bootcamp for Start-ups
Trouble-shoot the situation and figure out what went wrong
Recommend corrective sales action / behavior
Common sales mistakes that often derail good deals
The Failed Sale — Case Study A
» You presented a prospective customer with a $150K proposal
Consisting of a $75K up-front payment, with balance payments tied to two performance milestones
» It’s a great fit
The company has confirmed that your offering is the most compelling they have seen…
They have a legitimate need, authority to purchase, budget is approved, timing is good, they trust you, etc.
» It has been four weeks since you sent a proposal
And they still haven’t signed the contract …
» Why is the deal is stalled?
MIT Sales Bootcamp for Start-ups
Case Study A — Assessment
» Potential issue — customer feels that the up-front economic risk is too great, before actual value is established
Best Practice: get in the door with a lower price, then expand after trust and confidence is established
Lesson: Aim Small, Sell Small — what is the lowest-cost thing you can sell that delivers value, establishes confidence, and leaves room for growth?
» Potential issue — your champion in Operations was “sold” (tactical need) but you (and he!) failed to get Management buy-in (strategic priorities)
Best Practice: involve the person “writing the check” as early as possible in your sales discussions
Lesson: understand the difference between influencers and decision makers
MIT Sales Bootcamp for Start-ups
The Failed Sale — Case Study B
» After several weeks of working with a prospective customer
You just wrapped-up a 2-hour detailed conversation with the entire team — operations, management and executives
The tone was very supportive to move forward
» They are a great fit, and you have covered all of the bases
So you send a thoughtful, comprehensive proposal
» It has been 3 weeks since you delivered your proposal
They still haven’t signed, and they are unresponsive…
» Why is the deal is stalled?
MIT Sales Bootcamp for Start-ups
Case Study B — Assessment
» Potential issue — your proposal overlooked several important details
Best Practice: collaborate with the customer on a “draft” proposal, incorporate their feedback until it becomes a mutually-owned and -supported piece of work
Lesson: most successful proposals are not a one-way exercise
» Potential issue — the proposal contained a “show stopper” licensing term that is being blocked by legal
Best Practice: discuss and resolve any non-negotiable items up-front
Lesson: know the difference between negotiable vs. non-negotiable items —proposals should never contain any important items that you haven’t already discussed and resolved
MIT Sales Bootcamp for Start-ups
The Failed Sale — Case Study C
» Out of the blue, you receive a phone call from the COO at a large pharmaceutical company
A 45-minute conversation reveals that her organization is an excellent fit for your new offering, and you agree to meet in person
» The following week, you spend 3 hours with the COO and have a great and very productive meeting. The chemistry was excellent.
You covered all of the bases — your company, the team, the offering, the value prop, pricing, etc. You even leave behind white papers, case studies and customer references to prove the efficacy of your offering
» It has been five weeks since your meeting, and the COO is ignoring your emails and phone calls
» Why is the deal is stalled?
MIT Sales Bootcamp for Start-ups
Case Study C — Assessment
» Potential issue — you spilled all of your candy in the lobby — the COO is convinced that he/she has everything they need from you, and is busy comparing you to alternatives
Best Practice: Trust/rapport is established through a continuous back-and forth exchange of information — not by unloading all your information in the first meeting
Lesson: People buy people first: with just one meeting, you are a just proposal, not a person they trust
» Always define the “next reason” you have to talk
Deals are won through an incremental, back-and-forth collaborative process — ideally over a period of time that affords you the opportunity to establish a personal rapport/trust with the customer
MIT Sales Bootcamp for Start-ups
The Failed Sale — Case Study D
» You routinely ignore yahoo, gmail and aol email addresses, as these are likely not from real companies
Is this a good idea?
» Ignoring “retail email” is rarely a good idea
“Cloaked” email addresses are common — especially in larger organizations — e.g. [email protected] turns into [email protected]
They want to see how you treat every customer, not just the red carpet variety
Some people are reluctant to “go on the record” until they learn more about you, and you gain their trust
Best Practice: follow-up with everyone, you never know
MIT Sales Bootcamp for Start-ups
The Failed Sale — Case Study E
» After 2 months of conversations, discovery, etc., you send a thoughtful, collaborate proposal (version 3) by request to a prospective Client
» Your contact leaves you a phone message that he/she is “very concerned” about the price tag, and doesn’t think it will gain support from his/her colleagues
» What do you do?
MIT Sales Bootcamp for Start-ups
Case Study E — Assessment
» Congratulations: objections over price is usually the final step in a successful sale!
Best Practice: always establish price expectations before sending a proposal
Lesson: proposals should never contain any important items that you haven’t already discussed
» Do not undermine offering value by lowering the price
Best Practice: explore ways to add more product or services to the proposal, as a means to preserve the price
Lesson: it is difficult to add more product if you are selling the farm on the initial sale (always “sell small” on the initial sale)
» As a final measure, offer a discount, but do not lower the price (a subtle, but important difference)
» When is it OK to offer free services to get a deal?
» Answer: when your opportunity cost is non-existent!
MIT Sales Bootcamp for Start-ups
The Failed Sale — Case Study F
» After 4 months working closely with a prospective customer — and multiple meetings with their entire team — all of your success criteria is firmly established
» They request a proposal for a decision they expect to make in the next two weeks
» Following a one-week delay (3 weeks) you receive a phone message from your primary contact:
“I have some bad news; we decided to go with another company”
» What do you do?
MIT Sales Bootcamp for Start-ups
Case Study F — Assessment
» View the loss as an opportunity to learn
Best Practice: understand why they went in a different direction, and share the details with your team
Your contact is circumspect? Trust was never established.
Lesson: win some, lose some… brush yourself off and get back to your pipeline
» Do not attempt to renegotiate
A decision has been made; this will be perceived as desperate
Best Practice: thank them for their time and consideration, and request they keep you in mind for future needs
MIT Sales Bootcamp for Start-ups
The Failed Sale — Case Study G
» You spent the last three months going back and forth with the operations team at a prospective customer…
… gathering requirements and priorities, demonstrating your offering, addressing key questions and concerns, etc. — all with full management and executive visibility
» You collaborated with your contact in operations to develop a winning proposal that covers everything they need
Business growth is flat, and everyone is convinced that your offering will make their organization much more efficient
» They requested a proposal — it has been 5 weeks! and your contact is not returning your emails or calls …
» Why is the deal is stalled?
MIT Sales Bootcamp for Start-ups
Case Study G — Assessment
» Potential issue — the Ops Manager is convinced that your solution will likely result in downsizing his/her team, and is blocking the deal
Best Practice: sell at the right level in the organization, establish contact with all stakeholders early in the engagement
MIT Sales Bootcamp for Start-ups
Failed Sales Case Studies
» There are hundreds of reasons why sales efforts can (and do!) fail
Some are within your influence; others completely outside of your control
» Define a sales process that works for you
Which you will learn through failure, and good observation skills
» Stick with your process, refine as you learn, avoid short-cuts
Avoid competing against yourself
» Sales that fail due to your own shortcomings
Are expected early on, while you are defining/fine-tuning your sales process
Are a CLM* later on, when you are expected to hit your sales forecasts
MIT Sales Bootcamp for Start-ups
*Career Limiting Maneuver
Building Sales in a Start-up
» The Founder is always the first sales person
Intimate knowledge of the offering, the customer and the value
The requisite passion and naiveté to grind it out
Must understand, first hand, all the issues that block customer adoption
» Many start-ups fail to get out of the blocks
Founder suffers from “build it and they will come” attitude
Lack of founder focus / discipline around the sales function
» The first sales hire in a start-up often fails
Too early… founder yet to discover the recipe to revenue
Too busy… founder under-appreciates importance of sales education and support
Too rigid… founder fails to listen, adapt offering to market feedback
Too ambitious… founder sets unrealistic sales goals
MIT Sales Bootcamp for Start-ups
“Cardinal Rules” for Founders
» Never hire for a role you haven’t already performed yourself
Difficult/risky to define job responsibilities and priorities
Especially the sales function
» Hire for Pain, not for Opportunity
When diminishing returns on a role you are performing becomes obvious
Especially if you have investors
» Sales Goal Setting
Arbitrary sales goals often unrealistic — set expectations for failure, not success
6 months of experience often needed to reveal what can be achieved
Ask the sales rep “What can they do?” Don’t negotiate against yourself!
MIT Sales Bootcamp for Start-ups
“Cardinal Rules” for Founders
» Previous sales success is no guarantee
Different offering, target market, economic climate, drivers, etc.
» Sales compensation
Most common compensation mix for the sales function — higher on cash, lower on stock
What is the minimal salary he/she needs to survive? This is the base salary.
If base salary still too high, treat a portion as pre-pay against commissions
Commissions vary, depending upon what the product/service can support
Commissions should increment, after the target sales goal is reached
Sales gets paid, only after you get paid
» When you are ready to hire your first sales person…
The shift in company culture from “building” to “selling” can be dramatic!
MIT Sales Bootcamp for Start-ups
Hire Sales Athletes / Hunters
» Sales Athletes …
Know the value of training, the value of teamwork, and how to prepare
Have cut their teeth on losing
Know how to be coached, and WANT to be coached
» Sales Hunters …
Skilled at tracking and acquiring elusive targets
Achieve success by experimenting with different techniques
A successful hunt is the primary reward — the commission is extra
» Discipline is a daily nutritional requirement for sales success
Pipeline development, deals in progress, product updates, account education, team planning and coordination
MIT Sales Bootcamp for Start-ups
Hire Sales Athletes / Hunters
» Effective Sales Person’s DNA
Competitiveness + Confidence + Integrity + Teamwork all required to succeed
» Character, need and drive (motivation), persistence
More important than domain knowledge
» Hunting and Farming require vastly different sales personalities and disciplines
In a start-up, don’t confuse the two
» Start-ups Sales — a self-starter, highly resourceful… not needy
Very different than demonstrated sales success in a mature company, with lots of resources and support
MIT Sales Bootcamp for Start-ups
Building A Sales Culture
» Sales can’t sell what they don’t believe in
Sales people are the easiest buyers — they want to believe, they need to believe, they don’t want to BS customers
Passion cannot come across without authentic knowledge
» Show sales the landmines in your offering
They will steer around them
» Continuous and committed education of the sales team
Stoke their passions and inherent personality traits that make them good at what they do
» Burning trust with Sales has a ripple effect
You lose their trust + they lose the trust of the buyer…
Waters down sales passion and enthusiasm
MIT Sales Bootcamp for Start-ups
Good Sales Cultures Have the Following Traits
» Sales and Development regularly communicate
The need to know is satisfied, right down to the numbers
» Management fosters a tight relationship
‘Success interdependency’ established between the efforts/rewards of engineers and sales people
» Engineers work “on the edge” of the business as opposed to cloistered and protected
Engineers learn from sales and vice versa — and share in the success of all wins and losses
With increased customer visibility, engineers tend to build more relevant product with a greater sense of urgency — build for the needs of the customer and the market majority
MIT Sales Bootcamp for Start-ups
Good Sales Cultures Have the Following Traits
» Engineers must know (and feel) customer requirements
Best accomplished through direct customer interaction
» Business success tied to team coordination and execution
Customer needs, sales execution, impediments, not a mystery to anyone
» Sales and engineers learn from one another
Develop critical business skills outside their core competency — a HUGE factor in employee retention
Customer contact is where the cross-pollination of business skills occur!
» 80% of a sales person’s success
Attributable to his/her relationship with engineering, not management
MIT Sales Bootcamp for Start-ups
MIT Sales Bootcamp for Start-Ups
» Every start-up — a hunt for the first customer
Make sure they are a good fit… prepare, collaborate, persist!
» Know your target profile + why and how they buy
Always know who you are talking to
» The toughest part is getting started — the initial sale
Always start small, sell small
» Establish the tools and discipline to work the pipeline
Sales is a team contact sport: activity/obstacles must be 100% transparent
» Founders: invest your time in the sales function
Do not hire a salesperson until your offering is ready to sell, and you really understand your target market and customer value
» Individual customer deals do not scale, but a sales culture does!!
MIT Sales Bootcamp for Start-ups
Sales… it’s not Rocket Science!
(MIT caveat: unless of course it is)