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Copyright © Kent Summers 2008 2014 All rights reserved. MIT Venture SERVICE Mentoring SALES BOOT CAMP FOR START-UPS
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MIT Sales Bootcamp for Start-ups v25

Aug 23, 2014

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Sales

Kent Summers

Kent Summers is the author of the Sales Bootcamp for Start-ups, and has been offering the workshop at MIT since 2008 to support entrepreneurial activity among MIT students, faculty and alumni involved with the MIT Venture Mentoring Services (VMS) program and Independent Activities Period (IAP). More recently, Mr. Summers has presented the Sales Bootcamp for Start-ups for students enrolled in the MIT Sloan School and Harvard MBA programs, as well as several international business incubators, economic development consortia and academic entrepreneurial programs. The Sales Bootcamp for Start-ups is consistently received by attendees with a great deal of enthusiasm and support—as practical knowledge of "how to sell" is not available within traditional academic curricula.
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Page 1: MIT Sales Bootcamp for Start-ups v25

Copyright © Kent Summers 2008 – 2014

All rights reserved.

MIT Venture

SERVICE Mentoring

SALES BOOT CAMP

FOR START-UPS

Page 2: MIT Sales Bootcamp for Start-ups v25

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

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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

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» 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

[email protected]

Page 5: MIT Sales Bootcamp for Start-ups v25

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

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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

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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

Page 8: MIT Sales Bootcamp for Start-ups v25

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

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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

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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

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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

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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

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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

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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

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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!

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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

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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

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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

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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

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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

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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

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The Sales Funnel Customer Profiling

The Sales Toolkit The Sales Personality

Sales People and Tools

MIT Sales Bootcamp for Start-ups

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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

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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

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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?”

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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

Page 27: MIT Sales Bootcamp for Start-ups v25

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

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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

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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

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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

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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?

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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

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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

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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

Page 35: MIT Sales Bootcamp for Start-ups v25

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%

Page 36: MIT Sales Bootcamp for Start-ups v25

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

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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

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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

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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

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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

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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?

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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

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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

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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

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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

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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

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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

Page 48: MIT Sales Bootcamp for Start-ups v25

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

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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

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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

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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

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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

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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

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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

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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

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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!

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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

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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

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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”

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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

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» 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

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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

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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

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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 …

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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

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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

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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

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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?

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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

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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

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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

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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

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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?

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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?

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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…

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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

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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?”

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Opportunity Engagement Tips

MIT Sales Bootcamp for Start-ups

$$$$$ Prospect

Sales Rep

Recipe for Sales Failure

$$ Prospect

Sales Rep

Recipe for Sales Success

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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

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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

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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

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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

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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

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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

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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!

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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!

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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

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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

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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

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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!

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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!

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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

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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?

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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

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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?

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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

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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?

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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

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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

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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?

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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!

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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?

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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

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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?

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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

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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

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Building Sales and a Sales Culture in a Start-up

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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

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“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!

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“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!

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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

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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

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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

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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

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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

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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)

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Thank you.

[email protected]