Situation: A company is rapidly ramping sales of standard products. However, the rep network that sells the company’s products has had more difficulty selling higher dollar / higher margin custom products. How do you sell both standard and custom products?
Advice from the CEOs:
Make the custom products look more like spec products with adaptability. Create a grid that allows the customer to easily spec the specific product that they need and quickly determine the price of the product. This price can be overestimated at first blush, or scaled depending on the number of units wanted. Consider using a laptop or PDA spreadsheet.
Consider the combination specialist / generalist approach that companies have used successfully for highly technical sales. Put a significantly higher commission on the higher price / margin custom product, and have your own “specialist” reps do joint calls with the distributor reps who have relationships with the customer. With the incentive of higher commissions, a percentage of the distributor reps will take the initiative to learn from your inside reps how to sell the custom product to boost their sales and commission income.
For your distributor reps, separate and optimize lead generation and deal closing from a compensation standpoint to encourage both.
Reps with consultative sales experience, for example selling intangibles such as insurance, may be the best candidates to sell your custom offering.
Offer quarterly training of your reps and distributors to encourage them to sell the custom products.
Consider telemarketing. Support your telemarketers with a well-prepared script to assist them in qualifying prospects and setting appointments for your own reps.
Situation: An early stage company is preparing for an IPO. The founder and Board have selected a new CEO with experience taking companies public. How do you facilitate a CEO transition, and how can the founder best position himself to support the new CEO?
Advice from the CEOs:
Get clear on your own strengths and desired primary responsibilities, but prepare to be flexible in negotiating responsibilities with the new CEO. For example, if the founder’s strengths are marketing, IP and early stage fund raising, see how these compliment the strengths of the new CEO. Then select a title which will allow you to leverage your strengths without impinging on the focus of the new individual. Don’t pigeon-hole yourself with your new title; keep it as broad as possible, for example Executive Vice President.
If you, as the founder, have a good long-term relationship with your VCs and the Board this will be one of your strengths. Be prepared to counsel the new CEO on individual personalities and objectives of this group. The CEO will form him own relationship with the VCs and Board over time.
Chemistry between the founder and new CEO will be very important. The job of the new CEO is to captain the ship. Your new job is to be a superior first mate.
It appears that you have an excellent learning opportunity. Learn as much as possible from the new CEO as well as the experience of the IPO process.
To smooth the transition personally between the two of you, take the opportunity to tell the CEO that you believe that the Board made the best choice and that you look forward to the opportunity to learn from him. This might be best done outside of the office, for example taking the new CEO to dinner.
Maintain your relationship with the key VCs on the Board. Let them know about your future ambitions and that if the right opportunity opens up in one of their portfolio companies, you could be interested.
Situation: A company has developed and shipped equipment that puts it into a new market. They can continue to pursue this direction or make a significant shift that will open up a larger opportunity. What are the most important considerations to this decision?
Advice from the CEOs:
There are a number of points that you need to clarify before making this decision:
What is the magnitude of difference between the two opportunities?
How much of a shift in technology is required to make the jump to the larger segment?
How much of the expertise to make this shift do you have in-house, and how much must you bring in, acquire or develop through partnerships?
What is your most likely exit strategy and how will each opportunity impact it?
Are you being realistic in your ability to meet development timelines?
If you don’t have deep expertise in the area that you want to develop, the answer is most likely yes. If you do you can often beat your initial estimates.
If the shift includes both there is risk that you will underestimate the time required to develop both the prototype and to turn the prototype into production quality technology.
If your ultimate objective is to sell the company, be aware that selling any company can be tricky, and you may not be able to sell the company for the value that you need to support yourself after the sale.
Study other companies in your geography and market, and determine both the price that they received for their companies and how they positioned their companies for sale.
As an alternative to selling, consider hiring a general manager to run the company. This can free you to concentrate on your passion and also increase the value of the company if you decide to sell at a future date.