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Sales Topics

Inside Sales Direct Sales
Enterprise Sales Forecasts and Pipeline Reviews
Sales Metrics Sales (Support) Engineers (SE)
Compensation and Incentives (SPIFF) Territory Management
Sales Conflict Play Book

 

Inside Sales

The Inside Sales function is often the most scalable of all the sales models to implement. Sometimes mistakenly referred to as Telesales, Inside Sales gets most of its strength from high volume business opportunities. A typical Inside Sales model would see groups of young sales professionals working from a headquarters or regional office location, using primarily telephone, email and Web-based mechanisms to run sales campaigns. Leads come from Marketing, are fed into the Inside Sales queue and processed rapidly. A typical sales cycle would be 3-6 months (rarely more than 6 months). In many cases, Inside Sales would focus on the lower price point products (or smaller product packaging), leaving the higher priced deals to an outside sales team (e.g. Direct or Enterprise sales). Not all products are conducive to an Inside Sales model although if you approach the analysis similar to that of channel sales, the right decision is made more often than not.

When first starting an Inside Sales team, it is common to map out the 'Perfect Day' for the team members. Essentially a Perfect Day formalizes the activities and resultant goals each team member should be striving to achieve. Daily goals to focus on include -- how many calls to make, how many emails to send, how many Web presentations to schedule, etc. The theory behind successful Inside Sales teams aligns with the mathematical analysis of a successful sales cycle -- a volume game is in effect. If X calls are made per day, this will lead to Y appointments which will lead to Z Web presentations which leads to N customers at an average sales price of $$ which achieves the revenue goal for the quarter. Sounds simple -- often it can be, but there is hard work. It requires an effective sales management system with sufficient granularity to track the appropriate performance metrics of the team. Rewards for achieving the goals of the Perfect Day should also be defined so enough carrots are visible to drive the right behaviors.

If Inside Sales is but one method of selling, several interesting issues come up -- territory conflict is a key one to prepare for. The Inside rep can find themselves selling into the same organization as a field-based direct rep or a reselling partner. No surprise the conflict is all about compensation, so it can get edgy if the engagement rules are not defined and well-known in advance. It's not unusual for the CEO, CFO or sales leader to have to make compensation rulings when conflicted sales opportunities arise. Hopefully everyone is motivated by the greater needs of the Company to succeed and not solely on their compensation (rarely in the real world does this happen).

We'll look at Inside Sales in more detail including possible ways to organize, deeper into the Perfect Day and what is perhaps the most important item, how to manage career progression as great Inside Sales people often want to have upward mobility in exchange for the challenges of the role. More

Direct Sales

Direct selling is certainly the classic, and in many respects, the most common sales strategy deployed in early stage companies. Given the reach of the Internet in the business world, the approach to direct selling has changed. A key change is the reduced tendency to spend face time with prospects through all stages of a sales cycle. The most obvious example is the ability to use the Web to conduct product demonstrations, hold multi-person sales presentations, etc. Email has replaced the phone as a primary method of reaching out to contact prospective customers. The traditionalist would say all of these changes in selling tactics is bad despite reduced cost -- increased face time results in increased sales -- the verdict may remain out on this one. It largely comes down to what you can afford to do and what strengths the sales team members have in terms of how they run their sales cycles. You can also measure different sales motions to see which ones yield sales stronger, better, faster.

Direct selling can also be an expensive model to implement, especially if it requires putting people into a variety of field locations to have face time with customers or partners. Office infrastructure, demonstration centers, field sales support engineers (SE), etc. There is a cost offset through reduced travel, but that would rarely be significant. Interesting challenges occur when territory assignments need to change -- do you close small offices in favor of building regional ones -- do you give people territories where they have to use air travel (in which case, flying from HQ is a viable alternative). Critical mass plays a role in how direct selling field-based sales teams are organized -- working in isolation tends to make reps less productive than if they work in groups -- even small ones, where they can feed off each others momentum.

This section will explore the direct selling concept from a variety of angles, including how to possibly structure teams, what the relevant compensation issues might be and how it all fits together with other sales strategies -- especially Enterprise selling where conflict can ruin the day.More

Enterprise Sales

Also referred to as Large Account selling, the pursuit of opportunities where enterprise level commitments to products are at the core of the sales cycle. Selling an enterprise license tends to be an overblown focus of most young companies, often yielding few results. It's challenging to sustain long sales cycles, endless meetings and demonstrations, unfocused business negotiations and the risk of incumbents undermining the whole process. It's also not uncommon to start and restart enterprise sales cycles given it's not uncommon for the customer to change the point person responsible for making buying decisions (especially in IT roles).

Landing an enterprise account often brings a mixed blessing of benefits -- revenues (perhaps long term revenues), key account references, valuable product feedback, etc -- it can also bring a disproportionate amount of pressure to focus product development on the needs of a few customers versus the requirements of the market at large. Finding quality enterprise sales reps is also a challenge, they tend to come with a defined rolodex of contacts to sell into (which helps get in the door) but don't necessarily have better sales skills than reps cold calling large accounts.

All in all, selling at the enterprise level is a bit of a mixed bag -- you need to go into these types of sales activities with your eyes wide open, prepared for lots of hard work, awareness that many custom things may need to be done (pricing, features, sales process, contracting). Landing an enterprise account is considered a win, but it can also ruin the company if not managed properly. We'll examine the pros and cons of enterprise selling in more detail and contrast it with other sales models that, in combination, might be the appropriate approach for your situation.More

Forecasts and Pipeline Reviews

The bane of existence for everyone involved in managing sales, including the CFO -- how do you know if the Company will achieve the revenue goals set out? It may be one of the two most important questions a Company can answer about itself, the other is whether or not the product is on time and on specification. There are many reasons why forecast accuracy is poor in most young companies and only a few reasons why it is accurate -- a great understanding of the appropriate sales model combined with accurate and predictive data about the sales cycle.

When first starting a business, forecasting is often guesswork. A few hand-picked leads with a new, largely unevaluated product -- you know what you know through personal involvement in the accounts. Once the sales activity starts to scale, personal involvement can't scale with it, so a proper forecasting system with review of pipeline has to be instituted.

The best teams understand and are open about the details of the sales cycle -- they know how to walk away from bad deals and be honest about the stage of great deals. The best teams work many opportunities, enough to compensate for each other if a few delay past predicted dates. The best teams build confidence in their ability to sell and the method by which it works. The best teams regularly review and critique themselves. The best sales teams can sometimes overcome product issues, although not over the long term. The best teams operate with the best compensation systems which motivates them to succeed. You want to have the best team -- we'll explore approaches to how you can set one up and how forecasting and pipeline reviews plays a key role. More

Sales Metrics

As the saying goes, "You can't manage what you don't understand". There are many things to understand about the sales process, in many respects, the more you understand, the more you can manage sales activities towards defined goals. Sales metrics come in many flavors -- the quantitative measures like how many leads occur in each territory, what stage they are in, how long they remain in each stage, etc. The qualitative measures like impact of demos on close times, which reps are better than others, etc. Managing by sales metrics is not a bad strategy, although you have to add qualitative assessments as well to round out the methodology of being successful. In this section we'll look at a series of metrics to keep track of, how they impact sales and what you might want to do based on how the metric changes over time. More

Sales (Support) Engineers (SE)

The SE, along with the Product Manager (PM), is often considered one of the two most important roles in the Company. It's not uncommon for the PM role to be a career path for the SE role, often producing the strongest role contribution during critical stages of company growth. Interesting debates occur around where the SE role reports to -- being a technical role, and how much sales activity the SE should be able to handle.

Many quality SEs come from the technical side of the team, a software developer with excellent communication skills (and the ability to travel a lot). The deep technical background tends to allow the SE to bond better with the prospect, especially in early stage markets where the prospect is looking for a trusted individual to introduce them to new technology and not get burned (not lose their job making a bad bet). SE's can also come from the industries you sell into - bringing relevance, insight and trust to the relationships the Company is trying to build with the prospective client.

SE compensation is somewhat related to rep compensation. It is common to provide a variable compensation component based on territory target achievement. Keep in mind that most SE's feel they could sell software without the rep so often feel discouraged if their compensation drops because the rep did not meet the target. The SE does most of the grunt work in closing a deal, so it may be a good idea to provide separate incentives that are earned regardless of overall territory achievement. Replacement SE's are very costly to the organization, often more than the cost of introducing replacement reps.

In this section we'll look at the details of the SE role, how they work hand-in-hand with the sales organization, possible organizational scenarios to consider, career path management and more. It's a critical role and worth the additional time and money investment to help build a Sales team delivering excellence to the organization. More

Compensation and Incentives (SPIFF)

These are really two separate topics but can be (and perhaps should be) integrated to maintain fairness in an overall Sales compensation plan structure.

Traditional compensation plans reward mostly for achievement of revenue targets. Plans should be designed to drive sales behavior and should always be aligned and realigned regularly with Company sales strategy. Plans can include certain minor achievements related to key business metrics such as forecast accuracy, increasing average sale price (ASP) or specific product volume targets if selling a multi-product portfolio. It is common to leave 10 to 20% of the target salary in the plan for these types of objectives as well as certain sales behaviour goals such as proper use of sales management tools and increasing product knowledge, especially for a young sales team or individual.

The SPIFF (one meaning -- "Special Pay Incentives For Fast Sales") is a common approach for special sales achievement rewards. SPIFFs are most often aligned with short term business goals and target the achievement of any performer (or team of performers). Common practice is to pay out SPIFFs immediately upon achievement and in front of the sales team to spur on others to perform equally or better (sales people like to be challenged). SPIFFs can be material prizes (watches, TVs, etc) or cash. If cash, great fun is to present the cash directly to the rep making as big a deal as you can while counting out a pile of small bills or a few big ones (keep security near by for the fun of it)..

For young companies, it can be problematic to provide plans that lock targets for 12 months (which is more traditional once some sales history is established). Staying on top of quarterly goals may be an alternative as it provides more flexibility to adjust targets as the business opportunity emerges. In the latter case, make sure the sales team is buying into the 'uncertainty' of the next target and that they stay focused on developing a sufficient pipeline of opportunities so that the subsequent quarter can be a growth quarter.

On balance, Sales compensation is probably the most important compensation plan in the Company. Sales DNA is very reward-oriented, especially for young up-and-coming reps. It's easy with bad compensation plans (and actually very common) to find yourself in a scenario where the Company achieved its overall results but somehow nobody on the team is deemed to have reached 100% of their compensation targets. This can affect morale which brings down sales excellence.

Let's examine the details of sales compensation and reveal some of the pitfalls to avoid so that you can create a plan that drives excellence in sales behaviour and ultimately the growth of your business. More

Territory Management

Assigning territories requires constant attention to the volume of leads and opportunities available. Whether geographic or segment in nature, the best assignment maps attempt to distribute the available leads equally (or at least aligned with individual sales capacity). If you can stabilize territory assignment over long periods of time, you allow territory momentum to be something you can leverage, which can boost sales in the long term. If you find yourself having to remap territories frequently, you are likely starting from a standstill after each shuffle. Reps change the set of leads they work with loosing the familiarity with customers, partners and other territory nuances they could take advantage of. There is no need to divide territories based on physical equality as it is likely the lead demographics follow different trends that any geographic breakdown.

Product marketing plays a key role in helping to manage territory assignment by directing relevant marketing activities to help build the territories where raw leads are falling behind desired company metrics. Targeting campaigns to fill lead gaps (and measuring the results) is an integral part of sales success overall. You may also need some sort of weighting scale to assess where the lead gaps occur, using purely a quantitative count of leads leaves out some additional useful dimensions like ASP, age of lead, etc.

Always make sure the details of all leads are well documented in a sales tracking system (e.g. salesforce.com being a great example). Without proper sales documentation disciplines, changing territories becomes a nightmare as reps are given leads without any well-documented history.More

Sales Conflict

Conflict is not a good characteristic of excellence in any organization, extraordinarily detrimental in sales. Conflict in sales is most often related to how compensation is structured and is heightened by gaps between what the sales representatives thinks they have accomplished versus what sales leadership thinks. If compensation plans are well structured, taking into account as much ambiguity as possible, sales conflict can be minimized.

Sales leadership has to protect the essence of the compensation plan so giving in to conflict too often can undermine the validity of the sales plan itself. What most sales leaders are trying to balance is the cost of sales (including rep compensation) and the gross margins achieved. If compensation gets too high as a result of soft conflict management, great gross margins erode by the time the bottom line is determined. Sales leadership compensation is often measured at the bottom line (as are overall team bonuses), so managing cost of sale and therefore conflict is important to keep an eye on.

We'll look at a variety of classic conflict situations and possible ways to handle them. We'll also look a bit at how compensation plans fits into the success equation so excellence is achieved. More

Play Book

The Sales Play Book is essential your version of "How to Sell for Dummies" in your Company. It should contain the guidelines of how sales reps run a sales cycle. It contains many critical components brought together from all over the Company such as pricing guidelines from product marketing, silver bullets (competitive differentiation) from product management, stage management from sales leadership, etc. It can literally be a publication that is handed to each sales rep, ideally updated quarterly. We'll look at the contents of a play book in more detail and examine how it contributes to sales excellence when you have one versus how it can reduce sales effectiveness without it. More