This guest post is written by Matt Bell, VP of Sales and Business Development for Azaleos. Azaleos is a company focused on putting the things in the cloud that make the most sense for large enterprise; application management. Matt offers appealing insight because he has grown sales for companies during both of the last two economic meltdowns. This post expands on Vivek Wadhwa’s post It’s All About Selling for Survival earlier this month.
Technology blogs are full of advice for startups: where to start a company, how to raise capital, what kind of culture to build, whom to hire. But we hardly ever talk about what makes strategic decisions meaningful: sales.
A company with strong sales can build a great culture, hire anyone and take the time to figure out its strategy. Without sales, nothing else matters.
There are a thousand books on how to sell everything from used cars to aluminum siding. But most never talk about the unique problem faced by startups: getting one crazy customer to spend money on a company that has a 50-50 shot at going out of business by year end.
I have run sales organizations that couldn’t sell diddly, and others that grew to $20 million. What I learned from both experiences is that even when the product works and plenty of people could use it, you can still fail if you don’t get ferocious about finding your first customers.
1. Be mutantly flexible: The biggest advantage you have when competing with giants is just giving customers exactly what they want. Promise the moon then break down your CEO’s door to make sure your customer gets it. Engineers can complain all they want after the fact, but most actually prefer rallying for a paying customer. Large competitors have to stick to rigid guidelines, satisfy dozens of constituencies in the install-base and within their own organization, and optimize for the masses. A startup’s essential promise isn’t to be like Hertz, which gets everything exactly right, but to be like Avis: we try harder.
2. Juice the comp plan: if you want capable, blood-thirsty reps, build a comp plan short on guarantees and big on incentives. High base salaries are for IBM’s order-takers, not true hunters. You know you’ve got it right when the rest of the management team is worried about a success-disaster: if we make our numbers, won’t all the sales reps all get rich? That’s a good problem to have. Verdiem’s Jim Flatley taught me this at Plumtree: he fought to get early reps 15% of every sale, but after we made our numbers for the first time ever, nobody wanted to pay them less. Even after the bubble burst and every other technology company took a blood-bath, Jim kept delivering results.
3. Value speed in everything you do: performance isn’t just a characteristic of a technology; it’s a characteristic of your entire organization, beginning with how quickly you respond to an inquiry or follow up on a presentation. If your argument is that your competitors are big, slow dinosaurs makes them look that way at every opportunity: whenever a prospect makes a request to you and your competitors, be the one who answers first.
4. Plant landmines: go first in customer presentations so you can set the terms of the debate. Prepare a list of questions for customers to ask your competitors. Customers won’t trust whatever claims you make about yourself, and they don’t like it when you attack competitors directly, but if you let them dig into competitors’ weaknesses for themselves, it works. When selling a $3-million deal to Boeing, I included the questions to ask our competitors in a hand-out. Who knows what happened to that hand-out, but we came from far behind to win.
5. Move in after the first date: your first customers are your best sales people, so after the deal closes, you as a sales-person have to move in with that customer — not move on. Every customer who took a crazy risk on your little company has to be completely vindicated in that decision, enough so that he convinces the next customer to ignore the obvious risk of doing business with you. Most customers understand that their career depends on your ability to convince new customers to make the same decision they did, and so they are usually eager to help you out. References can also limit the scope of a startup’s greatest sales enemy: proofs-of-concept. If references establish that the product generally works, you can focus the PoC on very specific concerns. At Azaleos, we have a customer who likes to brag that his team went out for drinks during a go-live rather than watching nervously from a server room.
6. Stand tall: Even if you have no right, work from the premise the customer needs you as much as you need the customer. If you don’t have confidence in your solution, who will? Half of what a sales person brings to a start up is a little swagger. As long as you aren’t obnoxious, customers like to buy from confident companies, and their procurement officers are trained to smell weakness. Riding up the elevator toward a negotiation with one of the world’s largest banks, I decided to raise our walk-away price by $1 million. Everyone argued for a lower number to avoid jeopardizing the deal, but the higher number actually increased our chances. We got the deal for 30% above our walk-away price.
7. Partner up: No one gets fired for hiring IBM, so get IBM on your side. Find out which potential partners have a vested interest in your success and sell to them before you sell to the customer. In any deal with a customer employing more than 5,000 employees, you need to find a partner the customer trusts or lower your forecast probability by 50%. Finding a partner isn’t so hard. A victory for you is almost always a victory for a larger company: Google, Amazon, Microsoft, SAP, IBM. When trying to get in the door for an enterprise deal with a major transportation company, I spent nearly a month trying to convince ‘em that a startup could handle a multi-million dollar project. Rightfully so, the customer said no way, until I reached out to Microsoft. Together, we got the deal.
8. Involve everyone: get as many of your executives, founders, engineers, product managers, and customer-service folks involved in the sales process as possible. You get better perspectives on the deal – a customer will level with an engineer in a way he might not with you – and it makes your company seem bigger to the customer. The customer develops relationships with people throughout your startup, and realizes there’s more at stake than a greedy sales-person’s commission. Focus on how much your whole startup cares about the individual customer; make your small size work for you by developing intimacy between your startup and the customer. This tactic works with large or small customers. I recommend having the CEO or another member of the executive staff make a personal phone call during the final decision process to pledge their commitment to the customer’s success.
9. Hire slow, fire fast: you’ll hire some folks who don’t work out. If you wait to fire them, you’ll run out of money, demoralize your top performers, and lose credibility. Three months after hiring a rep I asked him “how long are you going to be comfortable not selling anything”? His answer, “Don’t worry Matt, I can go several quarters without selling anything before I’d start looking for a new job.” We let him got the next day.
10. Focus the sales pitch: technology start ups are mostly driven by engineers in the early days. On hiring you, they’ll expect you to start cold-calling the whole phonebook. And the truth is, you have to love cold-calling. After all these years, I still love it. But just like Dutch in Predator before the final battle, you have to be able to answer only one question about your target before you start: where they are. A sales force needs to know what kind of companies to call on and the title of the person to call within those companies. Then he needs a pitch that a ten year-old could understand.