1. SALES BOOT CAMP Kent SummersMIT Venture Mentoring Service June 2010
2. Sales Bootcamp Objectives Provide MIT entrepreneurs with āblock and tackleā education in sales fundamentals Basic concepts, mechanics, vocabulary, tips, tricks and traps, etc. Practical āhow toā knowledge and advise you can put into practice to land your first few customers ā not theory Incorporate āSales Thinkingā into your company culture Sales conversant = increased likelihood of initial customer sales Acquire customers and revenue ā everything else a distant 3rd Provide a solid foundation from which MIT entrepreneurs can learn more from and interact with experienced sales people VMS Sales Boot Camp
41. Basic Sales Concepts VMS Sales Boot Camp Marketing Vs. Sales The Sales Function Hunting vs. Farming Direct vs. Channel Sales
42. Marketing vs. Sales Functions The Marketing role ā pre-sales ādemand generationā Tools: messaging, collateral, whitepapers, PPTs, ā¦ Events: seminars, webinars, tradeshows ā¦ Leads: lists, outbound campaigns, website (SEO and PPC) ā¦ Air cover for Sales: advertising, PR, analysts, blogs ā¦ The Sales role ā acquire new customers Leverage marketing resources to: manage the pipeline + orchestrate team resources to close deals and generate revenue Continuous Marketing and Sales collaboration is key Sales knowledge of customer needs/issues MUST drive rapid changes to Marketing material (E.g. positioning, value prop, pricing, etc.) With start-ups, the same person often wears both hats VMS Sales Boot Camp
43. The Sales Function Direct Sales = a contact sport Develop customers thru a series of pre-defined actions/steps Requires knowledge, people skills, organization and integrity Requires a āstand up and dust yourself offā mentality Manage new customer engagement activities Qualify ļ Educate ļ Build Confidence/Trust ļ Gain Commitment Orchestrate external and internal needs Capture, communicate and coordinate Active team participation and contribution is key to the sales process Sales activity/issues must be 100% transparent to the team Generate Revenue Directly accountable for revenue forecasting and performance VMS Sales Boot Camp
44. The Sales Function Early-stage Selling De-bug the offering + de-bug peopleās objections to spending money (simultaneously and at the same time!) Bring market intelligence back to the team Key enhancements and differentiators + weaknesses and gaps that impede customer adoption Eliminate impediments to early-stage sales occurs incrementally Sales-Marketing adjustments must occur in real-time Manage internal and external expectations Internal: sales are twice as long, one-half the return (on a good day) External: offering capabilities/maturity road-map (reality + vision) Recognize (and be true to) what you donāt know/donāt have VMS Sales Boot Camp
45. The Sales Function #1 start-up goal: secure your āanchor customerā Huge difference between zero and 1 paying customer Anchor customer: good fit + recognizable to your target market Nurture/over-service first (few) customers, so they realize the value of your offering and are fully referenceable Give your stuff away if you must ā for a quid pro quo Sales Economics: revenue ā (cost-of-sales) = margin Align cost-of-sales with offering price point ā you can generate decent revenue, and still go out of business! Does your price-point support direct sales? Indirect sales? Web sales? Direct Sales is your most expensive investment, in terms of both real and opportunity costs VMS Sales Boot Camp
46. Hunting vs. Farming Hunting: acquiring new customers Bear hunting, deer hunting, hunting for pheasant, etc. The larger the animalā¦ the bigger the gun ā¦ the longer the sales cycle ā¦ the higher the risk/reward You can fill up the company dinner pot with enough pheasant! Equal opportunity hunting ā good for cash flow Farming: selling into existing (installed) customer base Up-selling and cross-selling (next slide) All start-ups are hunters! Balancing sales focus between hunting and farming is a good problem; an opportunity that must be earned VMS Sales Boot Camp
57. Direct vs. Channel Sales Channel Sales: engaging 3rd-parties to market and sell your offering Extends your sales reach without expensive āfeet on the streetā Works when the proper resources and incentives are in place VMS Sales Boot Camp
58. Why Channels vs. Direct Sales? Does your price point doesnāt support a direct sales model? What do your margins look like after $200-250K in sales compensation? Adds instant credibility to your Start-up If itās good enough for <Big Name Here>, it must be safe for me Gives your Customer a bigger neck to throttle Expand addressable market without adding to headcount If your offering can support a direct sales model, it can support a channel model too Not Channel or Direct Sales, but Channel plus Direct Sales Many important things you need to consider before pursuing a Channel sales strategy VMS Sales Boot Camp
59. Are Channel Sales Viable for a Start-up? Hotdogs and mustard ā Are there 3rd-party products/services that provide a natural fit with your offering? Ideally, a partner that lends a great deal of credibility to your start-up? Pet Shop Boys: āI got the brains, you got the looks, letās make lots of $ā Does your product/service fill an important gap in a 3rd-party offering? More for partner to sell, fills a me-too or competitive differentiator, ā¦? Are there market opportunities outside your company resources and/or expertise? Vertical markets, a different buyer profile, different geography, ā¦ VMS Sales Boot Camp
60. Channel Sales Types Start with: where are your target customers, and from whom do they already buy? The ability to leverage another companyās location, skills, complementary products, services, existing customer relationships? Distributor ā move lots of products from point A to point B OEM ā embed product A inside product B (royalties) VAR (Value Add Reseller) ā sell vendor products + add incremental value (50% discount) SI (System Integrator) ā join products A, B and C together to form a more complete solution Web ā buying hubs, directories, partner zones, etc. VMS Sales Boot Camp
61. Sales Channels Rules-of-Thumb Best pursued after direct sales and the ārecipe to revenueā is established Viable for both product and service offerings, but service + service rarely mix Explore potential business synergies & conflicts early! Effective way to test a different business model without cannibalizing direct sales Typically developed through the āBiz Devā role Your objective: get from Biz Dev to their marketing machine, and eventually to their Sales Reps Key: how does the sale of your product/service meet their sales quota? VMS Sales Boot Camp
62. Sales Channels Rules-of-Thumb Understand the channel partnerās strengths and weaknesses How does your product / service help them sell more of their core product (a sure recipe for you to get more sales). Channel conflict: regional, market segments, direct sales If you donāt create conflict, youāre not trying hard enough! Channels: more expensive to start up, take longer to develop, but can pay off nicely over time Revenue fly-wheel with low cost of sales VMS Sales Boot Camp
63. Sales Channels Rules-of-Thumb Limit your number of sales channel partners They will not sell on their own ā they require even more training and nurturing than your in-house sales reps do Best way to develop a new channel: put a new customer in their lap Imagine that you are selling into IBM, and you request they sign the Master Services Agreement with your partner, Intuit? Huge difference between channel partners that look good for your PR and on blogs, and channels that look good in your bank account! Donāt confuse the two VMS Sales Boot Camp
64. Sales Channels Rules-of-Thumb The value of Biz Dev is over-rated 10% of the work is getting to a signed channel partner contract The real work (and where the $$ is) is gained thru channel development Channel value = getting beyond their biz dev person and getting to know actual sales reps, sales engineers and professional services staff Resist the temptation to be Stingy You did all the work, why share huge margin w/your partner? Channel sales will cost you margin, but 100% of no sale = nothing This the definition of āinvestmentā Also the definition of āPenny wise, pound foolishā Channel partner success 80% of start-ups fail at channel development VMS Sales Boot Camp
65. Channel Sales Mechanics Often begins with aligning founder and management visions, then onto biz dev, then into marketing and sales Marketing material needs to be ārepurposeableā Channel Development and Sales Training the keys to $$ Your support resources are now āTier IIā Channel partner Ts & Cs often require exclusivity ā a good thing if performance metrics are clearly established Exclusivity and discounts tied to actual revenue performance Put yourself in your channel partnerās shoesā¦ āDoes this make them more money?ā āDoes this shore up a competitive weakness?ā āDo they have the skills and knowledge to be successful?ā VMS Sales Boot Camp
66. Direct Sales Mechanics VMS Sales Boot Camp The Sales Toolkit Customer Profiling The Sales Funnel
67. The Sales Toolkit Marketing Collateral Brochures, whitepapers, competitive matrix, ROI calculator, ā¦ Laptop, demo/prototype, cell phone and breath mints CRM application (the pipeline) Salesforce, Act!, Goldmine, SugarCRM, Excel spreadsheet! GoToMeeting account Internet resources Google, LinkedIn, Zoominfo, Jigsaw, Facebook, Yahoo Financials, ā¦ VMS Sales Boot Camp
68. The Sales Toolkit Sales communication templates = consistency + efficiency Emails: introductory, meetings, demos, etc. Objection handlers: standard responses to common concerns Agreement templates: boilerplate + customer-specific Keep communication brief and to the point Leads: Lists Event attendees, professional org members, etc. Leads: Website SEO and PPC The nature of Inbound vs. Outbound leads VMS Sales Boot Camp
69. Target Customer Profiling All new companies need to start somewhere Knowing what āsomewhereā is matters a great deal Avoid boil the ocean strategies Establish your ācustomer profileā ā a narrowly-defined vertical market + geography + company type E.g. Research labs, with 50+ staff, at Universities with significant R&D budgets, within 25 miles of Boston Establish your target ābuyer profileā ā a job title + responsibilities + needs/concerns E.g. Professor or Principal Investigator, with a need to collaborate with other labs, and/or has been burned (or has a concern) with turnover and knowledge retention VMS Sales Boot Camp
70. Target Customer Profiling āFail Fastā is most effective for start-ups āAim, Fire, Correctā works better than āReady, Aim, Fireā Trust your Instincts, but Verify with Results Persistence vs. a change of course always a tough call Key sales responsibility: challenge the offering based upon feedback from the marketplace Whiteboards canāt talk You will learn far more from peopleās feedback and reactions than you will from strategy sessions Donāt muddy the waters Start with small targets, or existing trusted relationships if available Save the best targets until after you have de-bugged your pitch VMS Sales Boot Camp
72. Working the Pipeline Discrete, sequential, named steps of your sales process VMS Sales Boot Camp Suspects Prospects Opportunities Customers Leads Pure Contacts Company + Title, Email & Phone Filtered Leads that fit your target customer profile e.g. geog., marketsegment, companysize, etc. Qualified SuspectsInitial contactconfirms need Does the basichigh-level buyercriteria exist? Prospects who areactively engagedin your salesprocess Opportunities thathave signed on thedotted line What is your criteriathat separates realopportunities vs.a confirmed needthat is likely to gonowhere? What is yourtarget profile?
73. Working the Pipeline Define gating criteria for each step in the sales process Terms matter (name it and frame it!) ā your company lingua franca Is company-specific and āfine tunedā over time A tool for sales time and priority management Move āem along, or move āem out! Determine where best to spend your time Help make best use of everyone elseās time Communicate pipeline to the rest of the team Sales is āneed to knowā ā¦ everyone on your team needs to know! All hands pipeline meeting at least once/week Weighted pipeline: the basis for revenue forecasting VMS Sales Boot Camp
74. Weighted Pipeline: A Revenue Forecasting Tool The difference between potential value and current value Weight distribution varies, depending upon the product or service being sold, the customer ā¦ other factors Think thru the stages, arrive at a model that is practical and useful to you, and validate! VMS Sales Boot Camp
76. Qualifying Prospective Customers Are the buying signals present? Need (vs. Want), immediacy, budget, management buy-in Most every sale replaces something or someone! Green field sales are uncommon What are your prospectās alternatives? Understand them ā and get them on the table early The best option: are they convincing you, or are you convincing them? Always pre-empt customerās alternatives, lest they revisit you! Qualifying: a process of developing a mutual plan for success Whatās in it for your customerā¦ whatās in it for you? VMS Sales Boot Camp
77. Qualifying Prospective Customers Qualifying new customers never stopsā¦ Theprocess of determining if there is a āgood fitā occurs incrementallyā¦ throughout each step of the sale process (ABQ!) What is the prospective customerās criteria for āYesā? You donāt know unless you ask Is the Prospect qualified to buy?ā¦ Use proxiesā¦ they are less threatening Option 1: āHey, do you have the authority to make a decision and spend your companyās money, or are you wasting my time?ā Option 2: āWhat is your decision process, and how are you involved?ā VMS Sales Boot Camp
78. Working the Pipeline Establish sales activity metrics, and track # of phone calls, meetings, proposals, etc. Balance sales activity throughout each stage of the funnel Unbalanced activity results in choppy deal flow (roller coaster) Choppy deal flow results in choppy cash flow Use pipeline to focus and throttle your sales activity Opportunity storage: the countertop, refrigerator, or freezer? Balance and pace your sales focus / efforts appropriately Establish your own Sales discipline, rhythm and tempo Positive value will accumulate over time, for harvesting VMS Sales Boot Camp
86. Pipeline Decision Making: the Dead Squirrel You are driving down the highway and see a squirrel squished on the side of the road Is your decision: āThe squirrel is deadā Or, āShould we pull over and investigate further?ā VMS Sales Boot Camp
87. Pipeline Decision Making: the Dead Squirrel In sales, you must always make decisions with an incomplete set of information Especially in a Start-Up environment Understand what is important and act Too much analysis will cause paralyses Keep moving sales opportunities through the funnel Donāt belabor incomplete knowledge; trust your instincts and move on The deal youāve been working hard on is dead? Donāt belabor dead dealsā¦ RIP, amen, move on VMS Sales Boot Camp
104. Why People Buy People tend to buy when the following are established: Recognition of an unsolved problem or unmet need ROI value of a solution is understood (vs. alternatives) Confidence in your team experience + company viability Offering direction/road-map Trust is established with the Sales rep Budget availability + company priority are aligned Appeal to basic human instincts FUD: what are the bad things that can/will occur if āDo Nothingā is the answer (what is the cost of indecision?) Fear or greed: what is the primary motivator? VMS Sales Boot Camp Short-cuts arerarely helpful ā each is an important component of the sale !
105. How People Buy Gather āhow they buyā intelligenceā¦ and develop a synergy Capital vs. Expense spending policy? FY budget planning, allocation and replenishment cycles? Coordinate your selling cycle with their buying cycle What is considered a discretionary expense? Requires no formal approval process Niche vendor check-marksā¦ Minority-owned, transgender, HUB Zone, ā¦ Can you āfinanceā the deal? Accrued and deferred payment? Ski lift tickets or cheese? VMS Sales Boot Camp
106. Personalities You Will Run Into When Selling Calvin the Cowboy Jumps at the opportunity to tell you how big they areā¦ shoots milk in his coffee every morning from his hipā¦ works in a small cube Peter the Planner All bark no biteā¦ will research new technology until the cows come homeā¦ never made a decision in his life Amy the Admin Following ordersā¦ is completely clueless what is driving the dealā¦ primary job is to collect information, not understand it Barry the Baiter Give me a good dealā¦ we have lots more work for you in the futureā¦ will grind you down, then disappear VMS Sales Boot Camp
107. Personalities You Will Run Into When Selling Otto the Autocrat Runs the place or thinks he doesā¦ You work for himā¦ Will buy from you but won't attend your funeral. Paul the Politician Whatās in it for me? Talks Power, careers, and resultsā¦ Known to stretch the truth. Scratch that...he's a born liar. Norman the Nay-Sayer Compensates his lack of knowledge with an overly pessimistic attitudeā¦ his life sucksā¦ his mission is to make yours suck too Christina the Collaborator Win/Win mentality... professional, polished, respected internally. Knows the game, plays it wellā¦ Prepared and dangerous to your margins. VMS Sales Boot Camp
108. Closing Tips, Traps and Techniques Know who you are talking to! Research the company/person, prior to engaging (Google, website, Linked In, Facebook, Jigsaw, etc.) Perceptions often developed in the first 30 seconds! Be wary of setting price expectations too early The first number that comes out of your mouth tends to stick (very difficult to un-ring this bell!) If āthe numberā is unknown, then the cost of getting to a reliable price/fee is the first thing you are selling! VMS Sales Boot Camp
109. People have 25 different ways of saying āNoā 24 of which are ambiguous: learn to interpret proxies for āNoā āNoā is always your second best answer (āNoā¦ Butā is better) Sometimes, āNoā is the best answerā¦ beware of the āSlow Noā Closing Tips, Traps and Techniques VMS Sales Boot Camp And my lack of visibilityinto what mgmt reallythinks continues toastound me. āManagement hasdecided to reassessour priorities...ā āPlease send meyour Literature...ā I remain somewherebetween confusedand unconvinced. ā¦ my garbagecan needs a meal. āI really like whatyou have to say, but(take your pick)...ā
110. Closing Tips, Traps and Techniques Put a price tag on everything of value Common mistake is to overlook the value of ancillary services E.g. consulting, set-up, legacy conversion, training, etc. You can always waive or discount service fees if necessary There is no perceived value in anything you give away And if there isā¦ you are setting a poor precedent! Sales āprice discretionā Ability to deviate from expected pricing is a necessity Especially in a start-up! VMS Sales Boot Camp
111. Closing Tips, Traps and Techniques Any legitimate concern your prospect has that goes unaddressed A potential landmine waiting to explode Ferret out concerns, lest they revisit you later! Any legitimate concern you may have that goes unaddressed A potential landmine waiting to explode Be candid with your concerns ā candor builds trust Donāt be afraid to probe and challenge Get comfortable with āwe donāt do thatā (yet) A little credibility goes a long way Appropriate use of email vs. phone vs. face-to-face Knowing the buyerās preference can make the difference VMS Sales Boot Camp
112. Closing Tips, Traps and Techniques Appear bigger and more professional than you are! Use āweā every time, not āIā ā and make sure everyone on your team does too! Professional website: they rarely close deals, but they are great at stopping deals from happening Professional correspondence: emails, PPTs, letterhead Donāt spill all of your candy in the lobby Trust and confidence is established through a continuous back-and forth exchange of information ā not by unloading all your information in the first meeting or two Always define the ānext reasonā you have to talk VMS Sales Boot Camp
113. Closing Tips, Traps and Techniques If āincreased efficiencyā is part of your value prop, try to avoid selling to the person whom you are displacing! āIt is difficult to get a man to understand something when his job depends on not understanding it.ā -- Upton Sinclair Sell at the right level in the organization Establish contact with all stakeholders early in the engagement Be wary of hidden agendas Prevalent in highly regulated / bureaucratic markets E.g. Stalking Horse RFPs, NIH Syndrome, 3 bids, moreā¦ Post-mortems: share and study lost deals with your team! If people were dropping dead on your front lawn, youād probably want to know what was killing them, right? VMS Sales Boot Camp
114. Closing Tips, Traps and Techniques Stick to your knitting ā¦ More than anything else, your company will be defined by the customers you have, the problems you solve, the needs you fulfill A bad fit is painful to both parties ā be careful what you ask for Selling works both ways: establish your own criteria for āYesā Turning away a prospective customer for the right reasons is good business ā and it feels good! When you catch yourself āsellingā you probably already lost Most people buy in spite of a hard sell, not because of it VMS Sales Boot Camp
115. Closing the Deal Strategic vs. Tactical priorities A personal need, departmental need, or company imperative? Any initiative that is below the top 2 priorities rarely happens Start small!! (How do you eat an elephant?) What is your low-risk āProof-of-conceptā? What is your āLoss Leaderā? Ask: What can I uniquely do today for this customer that ā¦. Solves a real problem Doesnāt involve much risk Doesnāt require management budget approval, and Provides a logical starting point for doing more things for this customer in the future? VMS Sales Boot Camp
116. Closing the Deal Agreements/contracts Keep them short & simple (they reflect what itās like working with you) Negotiable vs. non-negotiable items: know the difference, and resolve non-negotiable items up-front Include āOK to marketā clause in your agreement An agreement/contract is a perishable item Degrades in value every day a decision is not made Leverage customer references Your silver bullets: use to confirm a decision, not make one! Know thyself Positive mojo days ā make those important calls! There will be those days you should not be talking with anyone VMS Sales Boot Camp
117. Closing the Deal The āROI calculatorā People usually tend to place more value on revenue generating and competitive advantage capabilities, more so than cost-saving capabilities What is your better-faster-cheaper value proposition? Isaac Newtonās 2nd Law: how powerful is your force for changing the status quo (incremental vs. obvious)? Objections over Price? Congratulations, youāre getting close Do not undermine offering value, you can always discount If you see a deal slipping awayā¦ Probe and challenge! Throw the blocker under the bus VMS Sales Boot Camp
118. Closing the Deal: Negotiations āNo, butā is buying behaviorā¦ āYes, butā is selling behavior Donāt mix the two Making decisions with limited information is a reality of selling, not Negotiating Understand your customers āBATNAā Best Alternative To No Agreement Create a formal concession plan: āW3ā Where you want to end up + What you are willing to give up, definesā¦ Where you need to start Search for the āElegant Negotiableā Items that are important to one party but not as important to the other party = Value VMS Sales Boot Camp
119. Deal Closed! Whatās Next? Signed agreement in-hand, what is next? Facilitate new customer āon boardingā process Get back to your funnel, after you have ā¦. Transitioned all customer knowledge to your team (āon-boardingā) Educated the customer in anything they need to know about your people, process, support, etc. Identified and introduced a new POC (if possible) Keep atop customer satisfaction Check in from time-to-time, especially for no particular reason Let the farming begin! VMS Sales Boot Camp
121. Hire Sales Athletes Sales DNA Competitiveness + Confidence + Discipline + Teamwork Need and Drive more important than knowledge Sales Athletes ā¦ 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 Discipline is a daily nutritional requirement for sales success Pipeline development, Deals in progress, Product updates, Account education, territory planning All equal ā āWhere do I spend my time?ā Whether incredibly busy, or hearing an echo ā sales must knowhow to focus VMS Sales Boot Camp
122. Sales Profiles: Performance vs. Values VMS Sales Boot Camp High Performance but Low Values High Performanceand High Values We wish all our sales people were in this space Spend the most time with these people, they need you This is the most damaging quadrant for your team Performance Low Performanceand Low Values Low Performance but High Values Easy, get rid of them Do not spend time with these people These people need help, training or reassignment to a job they can handle Values
123. Building A Sales Culture Sales canāt sell what they donāt believe in Sales people are the easiest buyers ā they want to believe, they need to believe, they donāt want to BS customers Passion cannot come across without 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 thatmake them good at what they do Burning trust with Sales has a ripple effect You lose their trust + they lose the trust of the buyerā¦ Waters down sales passion and enthusiasm VMS Sales Boot Camp
124. Sales Cultures Have the Following Traits Sales and Development regularly communicate Management fosters a tight relationship and āsuccess interdependencyā between the efforts/rewards of the engineers and those of sales Engineers work āon the edgeā of the business as opposed to ācloistered and protectedā Engineers learn from sales and vice versa ā and share in the success of all wins and losses Engineers build more relevant product with a greater sense of urgency ā build for the needs of the Customer and the Market majority VMS Sales Boot Camp
125. Sales Cultures Have the Following Traits Engineers know (and feel) customer requirements Business success tied to team coordination and execution Customer needs and sales execution not a mystery Sales and engineers learn from one another ā able to develop critical business skills outside their core competency 80% of a sales personās success is attributable to his/her relationship with engineering, not management VMS Sales Boot Camp
126. VMS Sales Bootcamp Every start-up ā a hunt for the first customer Prepare, Iterate, and Persist! Establish the tools and discipline to work the pipeline Sales is a team sport Donāt get fancyā¦ get focused, and establish a sales routine Know your target profile + why and how they buy Always know who you are talking to Always start small, sell small Individual customer deals do not scale, a Sales Culture does!! Salesā¦ itās not Rocket Science! (MIT caveat: unless of course it is) VMS Sales Boot Camp
127. Questions, Comments, Concerns? VMS Sales Boot Camp SALES BOOT CAMP Copy of the Slide Deck: contact Roberta McCarthy vms@MIT.EDU
