SALES BASIC TRAINING BOOT CAMP

January 2012
Copy of the Slide Deck: contact the VMS Office vms@MIT.EDU

Sales Bootcamp Objectives

Provide MIT entrepreneurs with block and tackle education in sales fundamentals
Basic concepts, mechanics, vocabulary, tips, tricks and traps, etc. Practical how to knowledge you can put into practice not theory How to land your first few customers

Incorporate Sales Thinking into your company culture

Sales conversant = increased likelihood of initial customer sales Acquire customers and revenue everything else a distant 3rd

Provide a solid foundation from which MIT entrepreneurs can work with experienced sales people

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Sales Boot Camp Speakers

Kent Summers
25 years software start-ups: marketing, sales and CEO roles Started, financed and sold three software companies in Boston advised on the sale of over a dozen software companies Expertise in exchanging products, services, stock, companies for a check Co-founding member W3C Technical Advisory Board (MIT 1994), past Director X Consortium and OASIS Currently Managing Partner, PCA MIT VMS Mentor (2002)

Jim Noschese
25 years: professional sales Started sales career with Eastman Kodak (10 years) VP Sales, Parametric Technology Corporation (PTC), managed 100+ sales reps and technical personnel, with $80+ million in annual sales Last ten years: start-up sales VP at Formation Systems, Emptoris, Open Ratings, CIMTEK Currently VP Global Sales with AppZer MIT VMS Mentor (2011)

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Something to Keep in Mind

When a new company starts closing sales, all the other myriad start-up issues seem manageable. When sales are not happening, all the other start-up issues really don t matter.

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Sales Boot Camp Agenda

Basic Sales Concepts Sales Mechanics Closing Deals Sales Organization

Marketing vs. Sales The Sales Role Hunting vs. Farming Direct vs. Channel Sales

The Sales Toolkit Customer Profiling The Sales Funnel How to Qualify Customers How to Work the Pipeline

Who are your Buyers? Why People Buy How People Buy Selling to the US Gov t and DoD Personalities You Will Run Into Closing Tips, Traps, and Techniques

Sales Rep Characteristics Building a Sales Culture

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Basic Sales Concepts

Marketing vs. Sales The Sales Function

Hunting vs. Farming

Direct vs. Channel Sales

VMS Sales Boot Camp

Marketing vs. Sales Functions

The Marketing role pre-sales demand generation
Tools: messaging, collateral, whitepapers, PPTs, Events: seminars, webinars, tradeshows Leads: lists, outbound campaigns, website (SEO and PPC) Air cover for Sales: advertising, PR, analysts, blogs

The Sales role

acquire new customers

Leverage marketing resources to: manage the pipeline, orchestrate team resources, close deals and generate revenue

Continuous Marketing and Sales collaboration is key

Sales knowledge of customer needs/issues MUST drive rapid changes to Marketing material (E.g. positioning, value prop, pricing, etc.)

With start-ups, the same person often wears both hats

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The Sales Function

Direct Sales = a contact sport
Develop customers thru a series of pre-defined actions/steps Demands knowledge, people skills, organization and integrity Requires a stand up and dust yourself off mentality

Manage new customer engagement activities

Qualify Educate Build Confidence/Trust Gain Commitment

Orchestrate external and internal needs

Capture, communicate and coordinate Active team participation and contribution is key to sales success Sales activity/issues must be 100% transparent to the team

Generate Revenue
Directly accountable for revenue performance and forecasting
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The Sales Function

Early-stage Selling
De-bug the offering + De-bug the sales process + De-bug people s objections to spending money

Bring market intelligence back to the team

Key enhancements, differentiators, weaknesses, gaps anything that impedes customer adoption The process of eliminating all the impediments to early-stage sales occurs incrementally Sales-Marketing adjustments must occur in real-time

Manage internal and external expectations

Internal: sales take twice as long, one-half the return (on a good day) External: offering capabilities/maturity road-map (reality + vision) Recognize (and be true to) what you don t know/don t have
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The Sales Function

#1 start-up goal: secure your anchor, reference customer
Good fit + recognizable to your target market Nurture/over-service first (few) customers, so they realize the value of your offering and are fully referenceable No-cost Beta programs can be very effective at pulling in the first few customers define your quid pro quo

Sales Economics: revenue (cost-of-sales) = profit margin

Credibility Anchor ID

Align cost-of-sales with offering price point it is quite possible to generate good revenue, and still go out of business! Does your price-point support direct sales? Indirect sales? Web sales? Direct Sales is your most expensive investment, in terms of both real costs and opportunity costs

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Hunting vs. Farming

Hunting: acquiring new customers
Bear hunting, deer hunting, hunting for pheasant, etc. The larger the animal the bigger the gun the longer the sales cycle the higher the risk/reward You can fill up the company dinner pot with enough pheasant! Equal opportunity hunting good for cash flow

Farming: selling into your existing customer base

Up-selling and cross-selling (next slide)

Once customers are established, important to balance sales focus between hunting and farming All start-ups are hunters!

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Hunter Support
Lone Sales
Cashflow Cashflow

Team Sales

Sales finds the lead Sales closes the deal Sales manages / oversees delivery / implementation Sales supports the customer

Marketing finds the lead Sales closes the deal Engineering delivers and implements Services support the customer

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Farming: Up-selling and Cross-selling

Existing customers are your best buyers
Confidence and trust already established You are already in their accounts payables system!

Up-selling
Following an initial sale, selling complementary offerings to the same buyer e.g. additional licenses, new modules, value-add services Key to up-selling: What is the minimum capabilities you can package to get Yes on the initial deal but still leave room for upselling?

Cross-selling
Selling the same offering to a different buyer in the same organization aka going sideways Key to cross-selling: Is your value-prop well established? What is your internal referral incentive?
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Direct vs. Channel Sales

Channel Sales: securing partners to sell your offering Extends your sales reach without expensive sales feet on the street Channels work well after direct sales is established, with the proper fit, and when the appropriate support and incentives are in place
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Why Channels vs. Direct Sales?

Does your offering support a direct sales model?
What do your margins look like after $200-250K in sales compensation? What do margins look like after giving 50% of the sale to a partner?

If your business can support a direct sales model, it can support a channel model too
The reverse is not always true

Partners can add instant credibility to your Start-up

If it s good enough for <Big Name Here>, it must be safe for me

Gives the Customer a bigger neck to throttle Expand addressable market without adding to headcount Channel sales best pursued after direct sales and the recipe to revenue is established
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Are Channel Sales Viable for a Start-up?

Are there 3rd-party products/services that provide a natural fit with your offering?
Ideally, a partner that lends a great deal of credibility to your start-up?

Does your product/service fill an important gap in a 3rd-party offering?

More for partner to sell, fills a me-too or competitive differentiator, ?

Are there market opportunities outside your company focus, reach and/or expertise?
Vertical markets, a different buyer profile, different geography,

Most effective way to secure channel sales partners

Put a paying customer in their lap!

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Direct Sales Mechanics

The Sales Toolkit

Customer Profiling

The Sales Funnel

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The Sales Toolkit

Marketing Collateral
Brochures, whitepapers, competitive matrix, ROI calculator,

Laptop, demo/prototype, cell phone, breath mints CRM application (tool to manage the pipeline)
Salesforce, Act!, Goldmine, SugarCRM, Excel spreadsheet!

GoToMeeting account Internet resources

Google, LinkedIn, Zoominfo, Jigsaw, Facebook, Yahoo Financials,

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The Sales Toolkit

Sales communication templates = consistency + efficiency
Emails: introductory, meetings, demos, etc. Objection handlers: standard responses to common concerns Agreement templates: boilerplate + customer-specific

Keep communication brief and to the point Leads: Lists

Event attendees, professional org members, etc.

Leads: Website SEO and PPC

The nature of Inbound vs. Outbound leads

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Target Customer Profiling

All new companies need to start somewhere
Knowing what somewhere is matters a great deal Get focused avoid boil the ocean strategies, ID your beachhead

Establish your target customer profile a narrowly-defined vertical market + geography + company type
E.g. Research labs, with 50+ staff, at Universities with significant R&D budgets, within 25 miles of Boston

Establish your target buyer profile a job title + responsibilities + needs/concerns

E.g. Professor or Principal Investigator, with a need to collaborate with other labs, and/or has been burned (or has a concern) with lab personnel turnover and knowledge retention

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Target Customer Profiling

Fail Fast is most effective for start-ups
Aim, Fire, Correct works better than Ready, Ready, Ready, Aim, Fire

Trust your instincts, but verify with results

Key sales responsibility: challenge the offering based upon feedback from the marketplace, and drive change!

Whiteboards can t talk

You will learn far more from people s reactions than you will from internal strategy sessions

Don t muddy the waters

Start with small targets, or existing trusted relationships if available Save your best opportunities until after you have de-bugged your offering and approach
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The Sales Funnel aka The Pipeline

Qualify

Engage

Develop & Close

Sales Cycle

Leads

Suspects

Prospects

Opportunities

Customers

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Working the Pipeline

Discrete, sequential, named steps of your sales process Helps you organize, focus and balance your sales activity
Leads Suspects Prospects Opportunities Customers

Pure Contacts Company + Title, Email & Phone

Filtered Leads that fit your target customer profile e.g. geog., market segment, company size, etc.

Qualified Suspects Initial contact confirms need

Prospects who are actively engaged in your sales process

Opportunities that have signed on the dotted line

What is your target profile?

Does the basic high-level buyer criteria exist?

What is your criteria that separates real opportunities vs. a confirmed need that is likely to go nowhere?

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Working the Pipeline

Define gating criteria (go no-go) for each step in the funnel
Terms matter (name it and frame it!) your company lingua franca Pipelines are always company-specific, and fine tuned over time

A tool for sales time and priority management

Move em along, or move em out! Determine where best to spend your time Helps make best use of everyone else s time and priorities

Communicate pipeline to the rest of the team

Sales is a need to know function everyone needs to know! All hands pipeline meeting at least once/week

Weighted pipeline: the basis for revenue forecasting

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Weighted Pipeline: A Revenue Forecasting Tool

The difference between potential value and current value
Sales Stage Lead Qualified Need Budget Buyer/timing Proposal Payment Weight 0 5% 25% 50% 75% 90% 100% Current Value $0 $500.$2,500.$5,000.$7,500.$9,000 $10,000

Weight distribution varies, depending upon the product or service being sold, the customer other factors Think thru the stages, arrive at a model that is practical and useful to you, and validate!
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Sample Weighted Pipeline: $10K Offering

Meets Profile Company A Company B Company C Company D Company E Company F Interest Expressed Need is Validated Budget Validated Buyer(s) ID d Sent Proposal Weighted Value

     

     

    

   

 

$7,500.-

$9,000.$2,500.$5,000.$1,500.$5,000.-

Potential Value = $60,000 Current Weighted Value = $30,500

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Qualifying Prospective Customers

Are real buying signals present?
Need (vs. Want), immediacy, budget, management buy-in

Most every sale replaces something or someone!

Green field sales are uncommon

What are your prospect s alternatives?

WMT

Understand them and get them on the table early Are you convincing them, or are they convincing you? Always pre-empt customer s alternatives, lest they will revisit you! What s in it for your customer what s in it for you?

Qualifying: a process of developing a mutual plan for success

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Qualifying Prospective Customers

Qualifying new customers never stops
The process of determining if there is a good fit occurs incrementally throughout each step of the sale process (ABQ!)

What is the prospective customer s criteria for Yes ?

You don t know unless you ask

Is the Prospect qualified to buy? Use proxies they are less threatening
Option 1: Hey, do you have the authority to make a decision and spend your company s money, or are you just wasting my time? Option 2: What is your decision process, how are you involved, and how can I support you?

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Working the Pipeline

Establish sales activity metrics, and track
# of phone calls, meetings, proposals, etc. Early on, sales activity is the only thing you can measure After some time, sales results is the only thing worth measuring

Balance sales activity throughout each stage of the funnel

Unbalanced activity results in choppy deal flow (roller coaster) Choppy deal flow results in choppy cash flow

Use pipeline to focus and throttle your sales activity

Opportunity storage: the countertop, refrigerator, or freezer? Balance and pace your sales focus / efforts appropriately Establish your own Sales discipline, rhythm and tempo Positive value will accumulate over time, for harvesting
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Sales Pipeline Focus

Top Deal Focus
Cashflow

Balanced Pipeline Focus

Cashflow

Sales focus exclusively on the top 2-3 deals likely to close Ignore new leads Ignore developing leads into opportunities Ignore existing customers

Sales focus is 50% on the top 2-3 deals, 50% on developing the funnel Continual efforts to qualify and develop new leads Continue to explore opportunities within your customer base

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Working the Pipeline: Important Items to Track

Measure and Modify

Initial contact date length of sales cycle People players and their respective roles Need / Problem specific hot buttons and priorities Revenue Type what are they paying for: product, services Revenue opportunity initial sale $$ vs. follow-on $$ potential Customer Pace moving slow/fast, decision timing Next Step ball is in who s court Buyer(s) who is responsible for making the decision Engagement Notes can you/someone else understand

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Pipeline Decision Making: the Dead Squirrel

You are driving down the highway and see a squirrel squished on the side of the road
Is your decision: The squirrel is dead Or, Should we pull over and investigate further?

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Pipeline Decision Making: the Dead Squirrel

In sales, you must always make decisions with an incomplete set of information
Especially in a Start-Up environment Understand what is important and act

Too much analysis will cause paralyses

Keep moving sales opportunities through the funnel Don t belabor incomplete knowledge; trust your instincts and take action

The deal you ve been working on for a long time, is dead?

Don t dwell upon dead deals RIP, amen, move on Nothing to move onto? You must have put all your eggs in one basket!

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Closing Deals
Who are your Buyers? Why People Buy How People Buy Selling to Gov t and DoD Buyer Personalities Closing Tips, Traps and Techniques

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Who Are Your Buyers?

Economic Imperatives

  

Strategic Business Initiatives



CEO, CTO, VP Engineering

Access to funds Accepts responsibility Drives solution

Executive

Management

   

NOT: 1st level management

Globalization of R&D or Manufacturing Time-to-Revenue Quality or Yield initiatives Cost Reduction NOT: product features

Operations
  

Tactical Business Needs

Centered on need / problem Better, cheaper, faster value NOT: a strategic initiative

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Who Are Your Buyers?

Occasionally, a single buyer is all you need
Evaluate the offering + make the decision + write the check

In most cases, purchasing decisions require team buy-in

And your job is to drive the process and build consensus

Recognize the difference between influencers vs. buyers

Influencers are key to building consensus, but they don t write checks

Operational responsibility vs. decision making authority

Frequently they are in different places!

Know who you are talking to, and what motivates them
Get to the right people, and drive consensus Do not assume they are talking with one other!

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Why People Buy

75% of successful selling employs your ears and your brain, not your mouth
Listen carefully to customer s key needs, concerns, hot-buttons, potholes, and business priorities Resist the temptation to solve the problem too early in the discussion Invest your time to listen carefully probe, challenge, empathize If you listen and probe carefully enough (and take good notes), the customer will write a winning proposal for you!

Fear, Uncertainty and Doubt (FUD)

Identify the bad things that are expected to happen What is the cost of indecision? E.g. if Do Nothing is the answer

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