Situation: A CEO’s company has built an admirable suite of products. The next step in company growth is to create a more structured marketing pipeline. They have experienced salespeople, but these people have come to the end of their rolodexes. A new approach is needed. How do you boost your sales and marketing?
Advice from the CEOs:
Create a profile of the ideal customer. This is the customer who can create the greatest leverage using the company’s suite of product. Aim for the top management of this customer.
Incentivize the sales reps to target high value accounts. To create targeting incentives, graduate the commission base.
Set initial commission based on the size of the customer.
Differentiate commission by product – pay the highest commission for highest gross profit products or the company’s highest priority products.
Salespeople need to be able to close sales by themselves.
Currently, salespeople are acting as lead generators and are counting on the CEO to close the sale.
Create a different set of expectations, including thresholds to limit the CEO’s direct involvement in the sales process – for example, limit CEO involvement to accounts with a revenue value over $500K.
Train the salespeople to communicate the value proposition for initial conversations as they qualify a new client. Create a set of resources to assist them along the way.
Is it a good idea to pay ongoing commissions forever?
Another CEO used to do this but has moved to X% for the first period/project and X/2% on follow-on-periods/projects. This keeps them hungry for new customers who will pay the higher commissions.
Don’t create a perpetual annuity – the way insurance brokers are paid. Reduce commissions on existing accounts so that they decline over time – keep salespeople focused on bringing in new accounts to maintain their income levels.
Decide on an acceptable level of total compensation for salespeople. Plan the commission structure to allow them to reach this level, but they have to keep selling to maintain this level. Keep them hungry.
Situation: A CEO perceives that the company has a conflict between performance and planned timelines. Of concern is performance against key metrics like pipeline performance and closing new business. A sense of urgency isn’t present. How do you create and communicate urgency?
Advice from the CEOs:
Management knowledge of company financial status and performance against key metrics – particularly key drivers like pipeline performance – is critical to their being able to assist the company.
A company decision to focus on project profitability may have the unintended consequence of exacerbating the lack of urgency. If revenue growth lags, the only option for managers who are tasked to hit a profitability target is to cut expenses. This delays projects and can negatively impact morale.
Accountability comes from meetings. Not 1-on-1 meetings but team meetings. Peer pressure is an important component of accountability. Nobody wants to be the individual who is consistently behind on projects or initiatives.
The challenge may be more external than internal. When business closes more slowly then everything else slows down: hiring, new development, investment and profits. All of these are driven by new business acquisition.
Another CEO has same issue with her contracts. All contracts include a timeline. If work or deliverables slip, the customer wants to slow down delivery and billings. Her solution is to include stop work and delivery delay fees in the contracts.
What actions would others take to address this?
Institute progress payments. For example, instead of charging 50% up front and 50% on contract completion, shift to, for example, 50/30/20 with the 30% due on completion of project framework. This way, only 20% can be delayed due of customer timing issues.
Built financing into total pricing. The customer is free to delay projects, or aspects of projects, but there is a charge calculated into delayed delivery which covers the cost of money and additional management.
Situation: The head of a small service company wants to become more strategic – more like a CEO. Ideally, he wants to create a small samurai team to help him expand. He prefers working with a range of clients to develop creative, out of the box solutions. How do you transition from boss to CEO?
Advice from the CEOs:
The eMyth Revisited by Michael Gerber is a valuable primer on how to bring in more clients and revenue. The critical question that this book helps to answer is “what do I want to build?”
The book walks you through the critical questions that will help to answer whether your true ambition is to be a Picasso with helpers or a company. The answer may be either, but how you build each is different.
The more that skills can tied to a tangible outcome the easier it is for clients to hire a company. Quantify past successes. Make it easy to justify hiring your team.
To add to your pipeline:
Help friends help you. Make it easy for them to refer you. This can be simple: YouTube videos or improving the company website to highlight past successes.
The company web site can’t be just OK – it must be the all-important credibility builder that the company needs. Recreate the site to wow the visitor and tell the company’s story. Make it fun and compelling.
Participate in groups or forums that your targets attend. Create presentations, webinars, etc. Establish the company as an expert with the answer and as a trusted resource.
Also present to professional organizations to establish expertise and credibility.
Testimonials are powerful – particularly if backed by metrics.
Collaborate with people with similar depth of experience who can help develop the pipeline. Offer them a cut of total job revenue.
Interview with Ishveen Anand, CEO, OpenSponsorship.com
Situation: Emerging stage companies that get early traction must maintain momentum and strong growth. This is particularly true if the company is competing in an established industry where innovative and new solutions are not the norm. Early adopters fall back into old, comfortable habits. Filling the pipeline with new prospects takes a lot of energy. How do you maintain momentum as you grow?
Find a familiar, respected example of an existing service that is similar to yours. Match.com is widely recognized. We use Match.com to describe how we connect athletes with potential sponsors. Our service is free in the early stages and focuses on introductions. It costs nothing unless the parties decide on a deal. It’s up to the parties to decide whether to go out, form a relationship, and later end up together.
Map the stages of a sale for your offering, and select progressive KPIs that represent these stages. For example, early on it may be users. Later it becomes messages between users. A sale is closed when messages produce deals. Once you have progressive KPIs you can focus on tipping points between the stages and facilitating movement from user to message to deal. Set metrics and timeline objectives at each stage of the transaction.
Closely monitor conversation rates between users, messages and deals. Watch the momentum of conversion between the stages and test interventions that positively impact this momentum.
Match social media channels to the personalities of each of your stages. Twitter is a great metric of sales success and LinkedIn helps us to understand the reach of OpenSponsorship. Instagram is a great tool for those selling products, so slightly less relevant to us, but still necessary. Use the appropriate channel that will best bring potential users into your sales stream. An advantage of social media channels is that these provide additional insight into your transaction stream and what users are saying about you.
Understand what’s right for your users. Early on you look for elements that will create buzz and feed viral growth. Target special events and opportunities which offer high visibility. For us, a big event will be the 2016 Olympics in Rio de Janeiro. For another company it may be a large convention like CES or SxSW. Plan in advance and make the most of these opportunities.
Know your users’ seasonality. What are their peak purchase seasons? Do they have special seasons? What are their off-seasons? How can you take advantage of this knowledge to offer them new opportunities? Populate your web site with the right pages and social media marketing efforts linking to these pages to drive usage and business year-round.
Important pieces of momentum are staffing and investment. Early on, these seem almost like distractions to a CEO. The CEO is more engaged in the product or service being provided. However, personnel and fundraising decisions critically impact the future of the venture and must be taken seriously. Success will depend upon the CEO’s being able to move seamlessly between conversations about product and service, staffing and fundraising.
Interview with Mari Anne Vanella, CEO, The Vanella Group
Situation: High tech companies need a more effective, higher level approach to prospect accounts. This means capturing sales intelligence more meaningfully, and aligning marketing approaches with customer needs based on prospects’ experience. Traditional transactional lead generation methods must be replaced by a deeper methodology that enables salespeople to speak to the personality of the business buyer. If all of this is true, how do you revamp your lead generation process?
Advice from Mari Anne Vanella:
Executives are so busy that their schedules are overloaded. If you want to reach them, you must engage them at a meaningful, more situationally fluent level.
Executives aren’t disinterested in new vendors and opportunities to gain efficiency or save money; they’re just hard to reach. Therefore, it is critical to develop sufficient knowledge prior to initial contact so that you can quickly engage the prospect, and equally quickly re-engage them on follow-up calls as they progress through your sales pipeline.
Companies must mature beyond volume-based marketing and sales. The traditional model calls for up to three or so telemarketing center contact attempts to a large number of leads.
Current research indicates that 80% of leads are matured into prospects after 5 or more contact attempts. More effective approaches call for 7 to 10+ contact attempts to reach busy executives and managers. This requires greater skill and persistence than the traditional approach.
Re-engineer the process through which you contact leads and follow-up on prospects. Most deals fall out of the pipeline through mismanagement.
The focus of sales and marketing transformation should be on new metrics to boost success rates, as well as communication skills and pipeline management.
It is critical to understand the individual buyer’s purchase process. Sales close at varying rates. This requires listening closely to the prospect’s timeline and the next steps in his or her consideration process. If you agree on a follow-up date, honor it. Attend to the smallest details.
A lost deal calls for a deeper de-brief than a simple note of “sale lost” or “lack of prospect interest.” Marketing needs to understand why deals don’t happen to optimize processes.
The implication of these observations is broad. Most sales and marketing teams are held strictly to results, expressed as numbers that can be taken to management and the Board. This serves a function, but if it dominates sales and marketing processes it may undermine results. Understanding the realities facing prospects calls for a more technical marketing organization and an empathetic customer approach based on an intense understanding of the prospect and their needs.
Situation: A founder of a company also heads business development. This person had no prior experience in business development, and no other skills to offer the business. Over the last two years he has generated only a fraction of his salary in new or additional business. The CEO has concluded that it is time to hire a business development professional; however, the Board is reluctant to act. What are the steps that you would take to let a founder go?
Advice from the CEOs:
Because the individual in question is an owner, the situation is delicate. Staff relationships are involved as well as morale. Therefore, it is essential that you create a convincing case for replacing the individual and show that this is the best for the business. Don’t rush the process. However, once you’ve built a solid case for what needs to be done, act expeditiously.
Start by evaluating and documenting what the individual is doing to develop new business.
Count customer connects per day. Set a baseline expectation and measure against this.
Look at the pipeline. Historically what does your new business funnel look like – contacts, presentations, evaluations, closes. How does this individual’s pipeline stack up?
What are his business advancement and close ratios? How do these compare with industry standards?
For the individual: Demonstrate that his performance is penalizing his own return as an owner. Create a spreadsheet that shows:
The current situation, and his return as a shareholder from current results, versus
Hiring two effective business development people, and how this could change his return.
Show the individual a graceful way out – one that works for him.
For the Board: if the current direction is negative, create a model that shows your current direction and the break even implications. Present this analysis to the Board to show that the company needs a change.