sales operations for early stage companies
DESCRIPTION
Developed for the Entrepreneurship and Venture Capital Club at Darden School of Business, The University of Virginia.TRANSCRIPT
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Sales Operations for Early Stage Companies
Stephen C. Sweeney
March 24, 2006
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SalesIt is a tough job these days . . .
Buyers increasingly aware, knowledgeable, and discriminating
Sales increasingly cross-functional Sales increasingly team-based Sales increasingly relationship-based Sales remains solution-focused Big competitors have and leverage both relationships
and resources
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Fundamentals of Sales & SellingIntroduction
This presentation is not about . . . Marketing Public Relations Negotiation Sales Organization Sales Compensation Plans
This presentation is about . . . B2B Selling Process & Opportunity Planning . . . but general principles still apply to other products /
services
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Fundamentals of Sales & Selling Is sales important to the life of a company?
Yes.
Is sales important to your career? Definitely.
How many marketing cases were on sales? One.
How many LO cases were about sales (to date)? Nordstrom & the Q2 Exam . . . “kind-of” about sales.
Why so little coverage?
“WE ARE ALL IN SALES. PERIOD.”- Tom Peters
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Fundamentals of Sales & SellingWhy so little coverage? Sales is as much art as science.
Often viewed as a line responsibility, not corporate
Often viewed as a commodity skill, not sophisticated
Prejudice against sales and sales people (used car salesman)?
Moved into FY Entrepreneurship elective
???
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Fundamentals of Sales & SellingThe Reality. Sales is the tip of the spear of your organization.
Prospects will know you (identify you) through the quality of their interactions, which until a sales happens, occur primarily with the sales representative.
The quality, or lack thereof, of those interactions will have a lasting impact . . . and are sometimes impossible to shake.
Our connected world will preserve many of these negative interactions for posterity.
You don’t want to be “that guy” or have “that guy” on your team.
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Fundamentals of Sales & SellingContrast – Negotiation & Sales
Negotiation With an interested prospect, working to agree on price
and terms. Trading concessions.
Could result in win-win Could result in win-lose Could result in lose-lose
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Fundamentals of Sales & SellingContrast – Negotiation & Sales
Sales Process of motivating the prospect to buy your solution
on your price and terms.
Note, however: The goal is to result in a win-win negotiation where both parties
satisfied. Create the value. Capture the value. Sell now, negotiate later.
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Fundamentals:Some Sales Nomenclature
Direct Outside Sales = in the field
Indirect Inside Sales = over the phone, sales support, lead
generation, pooled, call center Channel Sales = pulling product through a channel
Process, Concepts, Techniques largely universal
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Fundamentals:The Funnel The Sales Cycle
Prospect Unqualified Lead (Mendoza Line) Qualified Lead Value Proposition Proposed Verbal Closed (won)
Other Dead Lead Lost
Unqualified Lead
Qualified Lead
Value Proposition
Proposed
Verbal
WON!
Prospect
Dead
Lost
Lost
Lost
Lost
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Fundamentals:Funnel Implications . . . “Put your ops hat on.” Not all prospects advance to the next
stage. Understand why – post mortem. Improve efficiency – continuously.
Not all prospects move through the funnel at the same rate. Understand why. Improve flow rate; remove
bottlenecks – continuously. Process and infrastructure should be in
place to support each stage. Information is collected &
disseminated at each stage. Market intelligence Competitive intelligence!
Funnel must remain full and flowing!
Unqualified Lead
Qualified Lead
Value Proposition
Proposed
Verbal
WON!
Prospect
Dead
Lost
Lost
Lost
Lost
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Fundamentals:The Funnel & The Sales Pipeline
Unqualified Lead
Qualified Lead
Value Proposition
Proposed
Verbal
WON!
Prospect
% Won $ Value Risk Adjusted
3% 15,000,000 450,000
5% 10,000,000 500,000
10% 5,000,000 500,000
25% 4,000,000 1,000,000
50% 2,000,000 1,000,000
95% 1,000,000 950,000
37,000,000 4,400,000
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Fundamentals :Working backward . . . put your QA hat on If Company A wants
to generate $5,000,000 in sales next year instead of $4,400,000, how many more prospects do they need? Assume: average deal
size is $500k Answer: +40 prospects
% Won Deals $ Value Risk Adjusted
3% 30+40
15,000k+20,000k
450k+600k
5% 20 10,000k 500k
10% 10 5,000k 500k
25% 8 4,000k 1,000k
50% 4 2,000k 1,000k
95% 2 1,000k 950k
74+40114
37,000k+20,000k
= 57,000k
4,400k+600k
=5,000k
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Fundamentals :Working backward . . .
If we have 3 Sales Reps and each can manage 25 deals at any given time, how many more sales reps do we need? 125 deals / 25 = 5 5 – 3 = 2 new reps
% Won Deals $ Value Risk Adjusted
3% 30+40
15,000k+20,000k
450k+600k
5% 20 10,000k 500k
10% 10 5,000k 500k
25% 8 4,000k 1,000k
50% 4 2,000k 1,000k
95% 2 1,000k 950k
74+40114
37,000k+20,000k
= 57,000k
4,400k+600k
=5,000k
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Fundamentals :Working backward . . . If we have 5 Sales
Reps, what kind of targets should we set? Trick question. You need each person
to carry a pipeline of $11.5M to close $1M each.
You would want to set the targets higher, however.
% Won Deals $ Value Risk Adjusted
3% 30+40
15,000k+20,000k
450k+600k
5% 20 10,000k 500k
10% 10 5,000k 500k
25% 8 4,000k 1,000k
50% 4 2,000k 1,000k
95% 2 1,000k 950k
74+40114
37,000k+20,000k
= 57,000k
4,400k+600k
=5,000k
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Fundamentals :Working backward . . .
Given the “calls” required to advance the process, how many calls (activity) per week are required per sales rep? 1940 calls 5 reps 50 weeks = 7.75 calls / week
Stage Calls / Deal
Deals Total
Prospect 20 30+40
600+800
Unqualified 15 20 300
Qualified 10 10 100
Value Prop 10 8 80
Proposed 10 4 40
Verbal 10 2 20
74+40114
1140+800
=1940
Aha Moment!Five reps & 1940 interactions (brand impressions) with 114 potential customers and many more different individuals over 12 months?!!
How important is each and every sales interaction? How is your corporate brand being perceived, your message understood? Will marketing collateral or a website make a difference?
Opportunity – Do this right and you create competitive barriers and build a lasting company.
Threat – Screw this up and you create huge obstacles for yourself and/or your successors.
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Fundamentals :Working backward . . . Added Complexity:
Multiple Products / Services Could mean different average deal sizes Could mean different average sales cycles (length & steps)
New business vs. Follow-on Geographic / cultural / country differences
Other questions that can be answered: How many lead generation resources do we need? How many channel partners do we need? Where should we set plan / quota?
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Fundamentals:Sales Processes
Methodologies abound Siebel (Target Account Selling)* – www.siebel.com
*Most of the following concepts are from TAS
Sandler Sales Institute – www.sandler.com Solution Selling – www.solutionselling.com Miller Heiman – www.millerheiman.com Dale Carnegie - www.dale-carnegie.com
And many many others . . .
“If you don’t LOVE SALES … find another life. (Don’t pretend you’re a “leader.”)” - Tom Peters
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Fundamentals:Why a Sales Process? Add structure to a process that is often unstructured and
performed by “gut” or “feel” People go into sales for two reasons: the freedom and the earnings
potential
Repeatability & standardization across an organization Consistent message, consistent service level
But ultimately to . . . Minimize negotiation concessions, maximize profits ($$) Increase sales efficiency (close ratio) Reduce selling cycles (time) Lose early (productivity)
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Fundamentals:Sales Stages
All three are required to generate a sale.
Open
Prospecting
Uncovering Needs
Middle
Qualification
Value Proposition
Close
Competing / Proposing
Closing
“PUT THAT COFFEE DOWN! Coffee is for closers.” – Glengarry Glen Ross
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Fundamentals:Opening – uncovering opportunities
Prospecting Cold Calling Networking Referrals Relationship Equity
Uncovering needs Ear to the street Asking questions Plugged in
Open
Prospecting
Uncovering Needs
Skills Required:No fear / issues with rejection. Disarming.Persistent.Up-front Contracts.Builds lasting relationships.Enjoys meeting new people; sociable.Inquisitive. Likes to learn. Knows how to ask questions.Trustworthy – can be a confidant. Not always out for self.
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Fundamentals:Middle – finding the $$
Qualification Is there an opportunity? Can we compete? Can we win? The value and cost of winning
Value Proposition Stakeholders Business Needs Our Solution Unique Business Value
Middle
Qualification
Value Proposition
Skills Required:Understands customer needs.Understands an organization – 3 x 3.Recognizes influence / decision-makers.Inquisitive – asks the tough (& dumb) questions.Assume, Validate, Triangulate, Obtains Proof – why, why, why? More questions, less talking.Likes to lose early. Values time.Good at marshalling resources.
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FundamentalsQualification To be qualified you must know:
There is a need we can meet – “Solution Fit” There is a decision-maker – “Economic Buyer” There is a reason to act – “Compelling Event” There is money to spend – “Access to Funds”
Take Aways: Lose early. It is very expensive to lose late. No qualification = No opportunity No opportunity = No Proposal.
Close Date implies Compelling Event
“Just say no.” – Nancy Reagan
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Fundamentals:Opportunity Assessment (us & competition)
Is there an opportunity? Project defined? Business profile strong? Financial condition strong? Access to funds? Compelling event?
Can we compete? Formal decision criteria defined? Solution fit good? Sales resource requirements low? Current relationships strong? Unique business value strong?
Can we win? Inside support strong? Executive credibility strong? Cultural compatibility good? Informal decision criteria
defined? Political alignment strong?
The value and cost of winning Short-term revenue high? Future revenue high? Profitability high? Degree of risk low? Strategic Value high?
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Fundamentals:Relationship Strategy
Starts with the org chart What is each person’s “buying role”? What is their adaptability to change? What is our status? What is our coverage? Where do they fit politically?
Influential? To whom? Influenced? By whom?
What are we doing (tactics) to improve our position with each?
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Sales Process:Opportunity Planning Identify Tactics
The steps we will take to build relationships, gather information, and move the opportunity toward closure. Proving value. Retrieving information. Insulating against competition. Minimizing weaknesses. Emphasizing strengths.
What, by whom, and when?
Manage to the plan.
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Fundamentals:Closing – asking for the business
Competing / Proposing Formal decision criteria Informal decision criteria Competitive Strategy Compelling Event
Closing Steps to close Asking for the business Uncovering objections Being creative
Closing
Competing / Proposing
Closing
Skills Required:Recognizes how decisions get made.Builds consensus.Gets creative.Persistent.Inquisitive – asks the tough questions.Not afraid to lose.Not afraid to ask for the business.
“A-B-C. A-Always, B-Be, C-Closing. Always be closing, always be closing.” – Glengarry Glen Ross
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Fundamentals:Competitive Strategy If you have a compelling event
and have inside support: Offensive
Frontal Flanking Fragment
If you do not have a compelling event or do not have inside support: Defensive
Develop Defend
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Sales Process:Five Deal Vulnerabilities Articulating Unique Business Value Decision-Making Criteria
(Formal and Informal) Budgeting and Funds Availability Date of Closure (Compelling Event) Steps to Close
Plus . . . Self-delusion
"Face reality as it is, not as it was or as you wish it to be . . You have to see the world in the purest, clearest way possible, or you can't make decisions on a
rational basis.“ – Jack Welch
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Sales OperationsAreas of note . . . Customer Intelligence
Understand what data should be collected at each stage Understand where that data should live (spreadsheet,
CRM, forms) Pipeline, Forecasting, Management Reports Sales Support
Collateral Templates Scripts / Presentations
Sales Training Practice, practice, practice
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Hiring for Sales Tips:
Maintain high standards Team orientation Personality Assessments “Pitch Me” Interview Customer References Probationary period with specific goals
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Skills for Sales Success
1. Prospecting2. Qualification3. Account Planning4. Pipeline Management5. Opportunity Management
6. Call Planning
7. Relationship Building
8. Forecasting
9. Closing
10. Negotiating
Many of these skills can be learned.But can you teach them?
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Qualities for Sales Success Work Ethic Sense of Urgency Listening – Understanding
Pains and Value Positive Attitude /
Possibility Thinking Teamwork Leadership Knowledge of Solutions and
Value Proposition
Creating Business Value for Prospects / Customers
Communication & Articulation
Intense Customer Focus -Creating Satisfaction
Articulating Business Value of Solutions
Responsibility and Ownership
And having fun WINNING!
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Managing Sales People Hands on is best . . . Weekly focus, not quarterly or annually. “What are we going
to accomplish or even close this week?” Be demanding. Establish & maintain high standards. Coach / mentor / ride shotgun Focus on planning
Account Planning Opportunity Planning Weekly planning / prioritization Call planning
Insist on documentation, reporting, and forecasting Facilitate within the organization. Eliminate distractions. Step in to fill the gaps - Help with middle or close, not open!
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Motivating Sales People Cash / Commission Plan – “Feed your eagles.” Accurate & timely commissions – minimize “noise”. Commission Plan Upside – Encourage momentum,
discourage sandbagging. Recognition – Feed their ego. Contests – Great for motivating for short-term, closing a gap,
inspiring healthy competition. Infrastructure & Support – minimize distractions, maximize
selling time. High standards.
“We're adding a little something to this month's sales contest. As you all know, first prize is a Cadillac El Dorado . . . Second prize is a set of steak knives.
Third prize is you're fired.” – Glengarry Glen Ross
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Thanks! Stephen C. Sweeney
Entrepreneur & Venture Capital ClubThe Darden School of Business [email protected] 832-647-3453