Posts Tagged ‘Sales Learning Curve’

Six Steps to Choosing the Right Target Audience and Increasing Sales

Tuesday, October 7th, 2014

Choosing the right target audience may seem obvious, but many companies rush through it because “everyone can use the product” or the focus becomes the equally generic “CEO’s in Financial Services”. However, taking a more detailed approach and doing the research is probably the critical step in a successful sales campaign. We suggest considering the following:

1. Look at your current customers. By seeing which customers bring in the most profit, are easy to work with and are actually using the product, you can see patterns and the key criteria that makes them the right target to narrow your market.

2. Consider who has the need for your product. Examine industry verticals, key positions in the company, number of employees, company culture, geography, etc. Remember that not only should they have a need for your product or service, but also the budget to purchase it.

3. Who are your competitors targeting? Are they missing a market you can take advantage of? This of course begs the next question of who/what is your real competition? What are they doing today to solve the problem your product or service addresses?

4. Research! Find out what current surveys, studies or blogs are saying about your product, service or industry and who is interested in it. Better still, identify a couple of different segments and talk to a handful of prospects in each of those segments. They will tell you if you have anything that is compelling to them. If you can’t get them on the phone, go to segment conferences and events.

5. Be selective. Narrow down your target audience so that you have only those who would benefit today from your product or service. Remember, you can have more than one target audience, but be critical to assess if you have all the necessary resources to win in each.

6. Measure your results. Once you have chosen your target market, track your sales funnel to keep track of your success rate or lack thereof. You might need to make changes to your target audience if you are not getting the results planned.

Your goal is to narrow down your audience so you are addressing only those customers who are interested and have a current need for your product or service. If you cannot easily identify who is NOT your target audience, then go back and get more specific. Once you choose the right audience, you can then choose the right sales strategy to drive revenue from that group. If you want a cost effective and scalable sales process, make sure you are focusing your sales efforts on the right audience.

9 Steps to a Successful First CRM

Tuesday, August 21st, 2012

Sooner or later, any group selling a product is going to need to adopt tools to consolidate the data and track/manage the sales process. This usually means a CRM system. When to implement a CRM system really depends on a number of factors, like the number of prospects and customers, the number of sales people, and the complexity of the sale. When the time comes, how you go about adoption will enormously affect the value you get from the tool.

We are not going to review tools and provide recommendations here, because other than obvious differences like cloud vs. local/server based tools, most CRM systems have similar feature sets. But before you chose the tool, it is vital that you understand how the tool will be used, and what each of the stakeholders in the organization is going to require from the tool.

The process MUST start with the sales team; each salesperson can (and will) use a rich feature set differently, so it is critically important to plan how the tool will be used before adoption. Without planning, you may end up with as many use models as you have salespeople.

Just like a finance department would not fire up a new set of accounting tools without carefully mapping the tool into existing accounting operations, a sales team should do the same before adopting a CRM system.

A structured approach to implementation is critical to success, and, in our view, more important than the choice of tool. Many sales managers, CEOs, and IT departments focus on the what, not the why and how of implementation, and then are less than happy with the results.

So what is the problem?

Small ventures may have only a few customers, their sales processes may not be complex and involve just a few touch points within the customer organization. For these ventures, managing the sales process amongst a few individuals using spreadsheets may be more than sufficient.

As the number of customers grows, and the number of sales people increases within a new venture, management is confronted with the problem of how to consolidate and interpret all the information that is being tracked by individuals on the team—to derive forecasts, metrics, and opportunity tracking to run the business.

For this to work, the implementation has to drive consistency in data capture and individual behavior – it has to provide an objective lens to monitor the business. This implies consistent and continuous use by the sales team. Adoption by all team members is essential to success. In turn, this means that each person on the sales team has to feel the tool is valuable to them.

Uses of CRM by constituent.

From the individual salesperson perspective, a new CRM system can be a painful requirement that management imposes on their daily activity. After all, for the individual contributor (and smaller ventures) a spreadsheet with good notes is often sufficient. If the CRM tool has too many options, is complex, slow, and difficult to use, isn’t this eating into valuable selling time? Management is going to ask a bunch of questions anyway about the forecast, so why spend time on a cumbersome tool?

CRM implementations driven by IT or by senior management naturally focuses on the summary data as the prime objective, so their needs are often what drive implementation. This top down approach can ignore the criticality of adoption by the sales team.

So how do you in implement a system that gives sales and corporate management the summary data they need to manage the team and the business, and the individuals something that helps them organize and sell?

Understanding the uses and needs of the constituents in the diagram, and the quality of the data entered by the salespeople is the key to CRM success.

Here is a suggestion based on our experience from numerous Altus client engagements:

  1. Understand and document your typical or idealized sales process. Draw it in a diagram, and review with the key sales people. Will the process as drawn and all the deals in process mapped to this diagram facilitate them getting the job done with low overhead for the tool? Will it help the individual salesperson to organize and follow the process? Use the KISS principle here.
  • What are the important stages in transition from a contact above the funnel, through qualification, development, and closure? Keep the number of stages to a minimum; 5-7 stages should be your target.
  • Keep the terminology simple.
  • Think about process and gates. What has to happen (process) to move an opportunity to the next milestone (gate)? You should be able to answer simple yes/no questions for the gates. Is this lead qualified? Have we delivered a proposal? Do we have the PO?
  1. Then, and only then, pick the tool you are going to use. Choose one with room to grow, but also make sure that features can be turned off or hidden by the administrator. The first implementation should be simple, so make sure you can scale the product back. When making your selection, think about the process from the perspective of the individual sales user:
  • What is the information needed for them to track and close each opportunity?
  • What is the information needed to track contacts and accounts?
  • What correspondence and history is needed to record progress?
  1. Are there critical pieces of information missing? If so, go back and add them to what the sales team needs to input and work with. Will it then provide the metrics management needs to run the business? If the answer is no, then what additions do you have to make to Step 1 to get the data needed? Remember the balance between sales adoption and desire for greater management visibility. If you add too much, you actually may end up with less meaningful data.
  2. Consider operations. Usually it is best to use manual interfaces to start with; figure out where the interfaces between sales and operations are needed (for example, scheduling and provisioning a live demo). Work these systems and workflows manually until you really understand how they operate and what expectations, checks, balances, and approvals are needed. Then automate the process within CRM and other software components used by operations.
  3. Finally, look at executive management. Can they get the data they need from dashboards and summary reports? If they are really missing critical information, then consider going back to Step 1, but always look at alternatives for getting the same information first. The more you make compulsory to the sales team, the harder it becomes to achieve 100% adoption.
  4. Take the sales process and map it to the tool. This may mean working on drop-downs and disabling features. Salespeople can and will design their own way of doing things if you don’t establish standards. Similarly, leaving many features open will confuse the users and make it difficult to drive consistency. You need to make sure the tool is being used consistently, so take away the options—otherwise, summary data will be impossible to extract and interpret.
  • Decide what fields are compulsory vs. optional for an opportunity to move through the stages. Remember, focus on the minimum data set you need for the salesperson to do an effective job. Email address for a qualified contact might be a good example.
  • If you have decided that you only want to see percentages like 10, 25, 50, 75, 90, and 100, because they mean something in the process you documented, you have to prevent values like 49% from being used. Set the field up to only accept the entries you have decided are valid options.
  • For important summary data like lead source and lost business reason it is imperative to keep the number of choices restricted so the system does not accumulate data that is less than valuable. Discourage free text input for fields you may want to search on or gather data. “Trade Show,” ” tradeshow,” and “Trad show” will summarize into different data columns. Decide on the categories for these fields and use drop downs, where the user can only pick from a set of fixed values. Free text is appropriate for descriptions and notes.
  1. Run a pilot in parallel with your existing system (spreadsheet). For the individuals in the pilot, is it simple and easy to use for them? Is the consolidated data meaningful for management? Are there areas that you have not thought of that are being questioned by the pilot team? Take their feedback seriously and be prepared to act on it. Are there additional controls you need to construct or process steps that you need to clarify?
  2. Train and go live with the rest of the team. This needs to be a smooth process, and you may want to think about incentives during the start-up phase to get everyone onboard quickly.
  3. Monitor results and be prepared to modify the process and the tool as the organization grows.

Careful planning and implementation is critical to the early stages of CRM in a new venture. Focus on the primary user, the salesperson. The process they have to go through is key to CRM success. As the organization grows and scales, you can add features and have the tool grow with you.

Ten Laws for SaaS Sales & Marketing Success

Tuesday, November 17th, 2009

Altus partner Dave Chase collaborated with Matt Heinz to produce a complement to the oft-cited Bessemer Top 10 Laws for being “SaaS-y” that was recently updated (see link below). The introduction is pasted below.  For the entire article, go to Sandhill.com’s site that has the full Ten Laws for SaaS Sales & Marketing Success.

Last week, Byron Deeter and his colleagues at Bessemer Venture Partners wrote a terrific piece entitled “Bessemer’s Top 10 Laws for Cloud Computing and SaaS. “ The article laid out why it is critical for SaaS-based businesses to abandon many of the long-held tenets of historic software business models and adhere to a new set of laws. Where Deeter did a nice job of laying out “why” managing a Cloud/SaaS software business must be done differently, we have created a set of ten laws to explain “how” to succeed at SaaS Sales and Marketing.

Our SaaS Sales and Marketing Laws are based on success stories that span many sectors – from higher education to online advertising to HR solutions to energy efficiency to vertical markets, such as the dental industry. Our experience implementing these ten laws at dozens of companies has been a consistent 50 percent-or-greater reduction of customer acquisition costs combined with a dramatic increase in revenues.

One great example of the laws in action involved a SaaS company that had an expensive field sales model. Over the course of six months, the field sales force was replaced by an inside sales team and a structured sales process was put in place. The result: A 16-fold increase in Contracted Monthly Recurring Revenues. The combination of lowering costs and increasing revenues led the company to achieving its first profits. It went from a $400,000-per month loss to its current status as one of the high fliers of the Seattle tech scene with a very bright future.

As Mark Leslie of Veritas fame stated in his seminal “Sales Learning Curve” paper in the Harvard Business Review, the risk for technology startups has shifted from technology execution to go-to-market strategy. Sales and Marketing is one of the pivotal aspects of go-to-market strategies. Leslie’s Sales Learning Curve principles permeate the philosophy of the laws outlined below and leads to a much lower sales burn than what is typically experienced.

Click to see the full Ten Laws for SaaS Sales & Marketing Success article.

Top 10 Laws for Cloud Computing

Tuesday, November 17th, 2009

Byron Deeter of Bessemer Ventures has an update to his well-regarded Top Ten Laws for Being “SaaS-y”. Since we launched Altus’ Sales Process Optimization practice a few years ago, we have worked with a couple dozen SaaS clients. It was coincidental to see that Bessemer also has a connection with Mark Leslie who pioneered the Sales Learning Curve concept that permeates all of the Altus practices thanks to Mark graciously spending time with us a handful of years ago.

With SaaS models most of the time the revenue per customer is less than $100,000 per year making it difficult to pencil out a traditional shoe leather sales model. Consequently, we have gained extensive experience with low cost customer acquisition models. Deeter does a great job of laying out the “why”. In a follow-on piece, we’ll address the “how”.

Here’s the opener for Byron’s piece.

At Bessemer Venture Partners we fundamentally believe that the emergence of Cloud Computing – and the three core components of Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS) – is going to completely change the economics of the multi-billion dollar software industry. We have been fortunate to be investors in many of the early Cloud winners (such as Postini, Netli, Trigo, and Cyota), and continue to invest actively behind one of the largest Cloud portfolios in the venture capital industry. Periods of tremendous transformation create tremendous opportunity, and we consider ourselves privileged to be working with many of the great entrepreneurs who are currently creating the next giants of the “software” industry.

When we first published Bessemer’s Top 10 Laws for Being “SaaS-y “ on Sandhill.com almost two years ago in conjunction with our annual Cloud/SaaS CEO Summit, we were overwhelmed with the positive response and feedback we received. We have heavily modified many of the best elements that we believe are still relevant, and have added several entirely new concepts for this update publication on Cloud Computing and SaaS.

Sales Learning Curve: Why Smart Grid vendors must go slow to grow fast

Monday, March 23rd, 2009

Internationally known technology and business analyst, Jesse Berst, publishes Smart Grid News reporting on the latest insights on the Smart Grid sector. This sector is one of the few growth sectors in today’s economy.  Altus partner, Dave Chase, wrote a guest piece entitled Sales Learning Curve: Why Smart Grid vendors must go slow to grow fast. Jesse moderated the Voyager Capital-hosted session that had Mark Leslie speak about the Sales Learning Curve which is where Dave Jones, Doug Schulze and Dave Chase originally met Mark Leslie.

Mark was instrumental in helping Altus form a practice around Leslie’s Sales Learning Curve framework. Altus Alliance remains the first and only consultancy to develop a practice around this now well-regarded framework that was subsequently published in the Harvard Business Review.

Chase opens the Smart Grid News piece with the question:

“Why does it always take longer and cost more to build a technology company than anyone expects?”

And then expands on that common refrain.

That lament is true for all high-tech firms, but nowhere so true as in the energy technology sector, which has all the usual challenges plus a target market (utilities) that is one of the most conservative on earth. Yet a simple fact defines every successful company — it figures out how to bring in more money than it spends. The Sales Learning Curve may be the best way to solve this fundamental equation. What’s more, it is not a “soft” technique with vague parameters. Rather, it is a concept that can be measured and monitored with the same rigor as the Manufacturing Learning Curve (MLC), which determines how long it takes to reduce manufacturing costs.

He draws the parallel with the MLC and highlights the curve in a sales context.

The Manufacturing Learning Curve shows how cost declines as volume increases. The Sales Learning Curve shows how the Sales Yield increases as learning increases. As illustrated nearby, the Sales Yield is simply the average production per full-time salesperson. Until salespeople sell more than they cost, they are a drain on cash flow and hiring more only makes that worse. Yet, according to Leslie, salespeople can’t sell more until the entire company has undergone some “organizational learning.”

Sales Learning Curve

The exact shape of the curve is different for every company and sector but the central tenet remains constant — during the “go-to-market” phase companies should “Go Slow to Grow Fast.” Just as athletes and musicians practice very slowly until they master a movement, companies must spend and hire slowly until they truly know what customers want and need.

Key message:

You can’t speed up the process by hiring more people or throwing more money at the problem. Organizational learning takes time. Customers must spend time with the beta product; reps must spend time with customers, and then spend time with the company’s engineers and marketers to translate customer preferences into better products and better marketing. The gating factor is not the ability to add new features or pump out new marketing brochures. The limitation is the time for the entire organization to truly understand and internalize customer needs.

We have worked successfully in the Energy Efficiency sector and seen that the organization that “measures twice and cuts once” can both reduce the sales cycle and increase the quantity and quality of their sales pipeline. For example, one company saw their pipeline go from a low-quality $3MM pipeline to a well-qualified $22MM pipeline.

Five Fatal Flaws Killing Local Internet Media

Tuesday, January 6th, 2009

Altus partner, Dave Chase, had an article he wrote entitled Five Fatal Flaws that are killing local Internet plays published on the NewsInnovation.com site that was put together as a result of the New Business Models for News Summit that David Cohn & Jeff Jarvis put together. The post touches on elements of Altus’ Sales Process Optimization practice that borrows heavily from Bill Lawler’s experience running the Gold Standard of low cost customer acquisition models — Dell.

In the post, he goes into detail on each of the 5 fatal flaws listed below:

1. Farming Hunters.
2. Expensive sales people and processes for low dollar advertisers
3. Inability to quantify the value of your audience and articulate a return-on-investment to a prospect.
4. Cluttered sites with postage stamp sized ads
5. Rate card as after thought vs. a strategic selling tool

Successful exit built on the strength of Sales Process Optimization

Friday, September 26th, 2008

This week another Altus Alliance client had a successful exit that was reported on Forbes.com. The following is an excerpt from the beginning of the article.

Media Recovery, a leading Datacenter products and services company, has acquired ISSI Data (www.issidata.com), a privately held company headquartered in the Seattle, Wash., area. ISSI Data is a recognized national reseller and direct marketer of information security and storage infrastructure solutions.

The acquisition of ISSI Data will enable Media Recovery to harness the power of a strong inside sales operation and an expanded online catalog sales business.

From the time that Altus partner Bill Lawler joined the firm we saw the opportunity to build a practice we refer to as our Sales Process Optimization practice that has a major effect on Inside Sales operations. ISSI was one of the first clients where we saw the impact of optimizing the sales process from lead generation through acquisition, development and retention of clients’ sales organization. As the examples at the aforementioned link demonstrate, optimizing the sales process can have a dramatic effect on revenue and profitability. We are thrilled that ISSI has had a successful exit particularly in the midst of a tougher climate for exits.

ISSI was a great example of how Altus engages with a client to tap into the breadth of Altus’ expertise. Dave Jones was the original partner helping with business development. During that time, he brought in Dave Chase for a day to tap his knowledge around Internet marketing and lead generation and again when Chase helped on a 6-week Sales Learning Curve Assessment project. Later the baton was handed off to Bill Lawler to address the areas identified in the assessment which manifested itself as one of the first Sales Process Optimization projects.

Originally, we thought of the Sales Process Optimization practice as strictly a complement to our Sales Learning Curve and Outsourced Business Development practices that would apply later in a company’s lifecycle as was the case with ISSI. Instead, we have found that startups at a much earlier stage in their development are interested in ensuring their end to end sales process is optimized from day one. For example, NextNewsNet is a digital media startup in the local Internet media arena that is applying the Sales Process Optimization methodology as it prepares to make its first sales call. NextNewsNet’s team and advisors are some of the most seasoned and well known people in the Internet media business who know driving down the cost of customer acquisition is vital from Day One. It’s much cheaper to get it right from the early days than reengineering later.