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What are you Really Selling? (prospecting tips included)
It is interesting to see people in Sales and Marketing still focusing on features, performance, cost, and even value without creating linkage to what that means to a company from a business perspective. Once you understand what you are really selling it is possible to connect with prospects in a meaningful way that can help you both determine the potential fit.
Sales Qualification is essential for both efficiency and effectiveness. Effectiveness is all about results, and efficiency is all about achieving those results with the least amount of time and effort. This doesn’t mean that we are looking for a lazy approach to find a win. Rather, it is about identifying repeatable patterns of doing something that circumvents unnecessary activities, time spent, and associated costs. Being good at qualification doesn’t mean that you will be good at closing, but it is tough to become a good closer without having the number of “at-bats” that good qualification leads to.
The way to help yourself understand what you are selling is to view things from your prospect’s perspective. What struggles are they likely facing? Where are the greatest opportunities for their type of business? What is the difference between your prospect company and its main competition? This analysis requires a general understanding of the vertical and more specific understanding of the prospect company and 2-3 of their main competitors.
Now that you have identified an area where you believe there is a good fit the next step is to develop your target list for that profile. Much of the information you need can be found in Corporate filings (10-K and 10-Q filings for public companies, and Form 5500 filings for companies with a 401(k) plan – especially useful for private companies), websites like Owler.com and SimilarSiteSearch.com, and from social media sites like LinkedIn.com and Facebook.com). Then search for people in areas that are most likely affected and look for titles that are likely Stakeholders or Decision Makers.
The next item to focus on is messaging. Below are a few examples from my career –
- Analytics & Big Data – The focus here is often on data volume, the currency of the data, speed of queries, cost, maintenance, and downtime. Those things become important later in the sales discussion, but initially, companies want to know what problems your product or solution will solve.
- Some of my fastest deals sold because I demonstrated ways to make better decisions faster and/or identify problems before they were had the chance to become major problems. Avoiding problems and unplanned outages were key parts of the messaging.
- In one case I was able to close a significant deal in less than three months by focusing on how a company could provide five years of transactional data for their customers to use to make purchasing decisions in less time than it took the current system to analyze six months of data. Their sales increased after implementing the revised system. Helping their customers make better buying decisions faster was the winning message.
- Embedded Products – While many companies focus on APIs, features, or cost per unit, I would focus on how the product I was selling made things better and easier for Customer Support and Customer Satisfaction. Things like stability, lack of maintenance required, data integrity, performance over time, messaging when something abnormal or concerning was observed, etc.
- I sold a $1.1 million deal in less than two months to a medical device company by focusing on the life of those devices often being 10-15 years and how their customers need to be assured that the results will be the same from machine-to-machine, even if one of those machines is much newer than the rest of the machines. Consistency over time was the winning message here.
- After being approached by a Defense Contractor for a relational database product for a new Flight Simulator system I changed the discussion to the complexity of flight control systems, the need to correlate 30+ operational systems in real-time, and the importance of taking a verbal command and translating it to specific commands for each system. That led to the sale of a NoSQL product that was ideally suited for this complex environment. The idea of letting our software handle the really complex work helped win this deal.
- Consulting Services – This is not contracting or body shop services (commodities), but true Business and Technical Consulting services that were high visibility and high impact. In these cases expertise, experience, and having a track record of success in different but demanding scenarios provided confidence. Often these were multi-phase engagements to first prove our value before making a large commitment.
- In a bid against two well-established competitors, we won a deal with a large Petroleum company that was nearly $500K. The proposal included information that we uncovered about the system and use case and later verified with the prospect, a section on our people and some past projects, and then a high-level project plan with firm-fixed pricing. We won the bid and I later found out that our cost was $50K higher than the largest competitor and more than $100K more than the other competitor. The customer told me that, “Your proposal demonstrated the understanding of who we are and what we need, and that confidence provided the justification to select your company and pay a premium to have the job done right the first time.”
- My first million-dollar deal was in the 1990s and was with a company that we demonstrated our ability to solve problems. They knew they needed assistance but were not exactly sure where. I created a “Pool of Days” concept that provided flexibility in the work performed (task, deliverables, and scheduling) but had minimum monthly burn rates and an expiration date to protect my company. This led to many other deals of this nature with other companies. Flexibility and the ability to accommodate changing needs without introducing significant risk or additional cost was the winning messaging here.
As you see from these examples the common theme is helping companies solve their specific business problems. Even in cases where technology was central to that message the focus was always on better results for that prospect and their customers. Value is important but the results matter even more for most purchasing decisions.
Nobody wants to be responsible for taking a chance on a new vendor and be responsible for a high-profile failure. Helping instill confidence early on makes a huge difference and following-through to successful implementation results in happy customers who become great customers and provide important referrals.
It all starts by selling what you know you can do from a business perspective for your Prospects to make their lives easier and business better, rather than selling what you know you have from a technical perspective.
Shouldn’t Sales Forecasting be Easy? What about Accuracy?
I’m sure that everyone has read articles that state some “facts” for managing your “sales pipeline” or “sales funnel.” Things like needing 10x-30x of your goal at the start of the process, down to needing 2x-3x coverage at the start of a quarter to help increase your odds of achieving your goal. Now, if it was only that easy…
First, what are you measuring? The answer to this question is something that anyone with a sales quota should be able to succinctly answer. For example, are you measuring?
- Bookings – Finalized Sales Orders
- What happens when Sales Operations, Finance or Legal pushback on a deal? You have a PO, but has the deal really been closed?
- Billings – Invoicing Completed
- This includes dependencies that have the potential to introduce delays that may be unexpected and/or outside of your control.
- Revenue – In-depth understanding of Revenue Recognition rules is key.
- How much revenue is recognized and when it is recognized varies based on a variety of factors, such as:
- Is revenue Accrued or Deferred? This is especially key for multi-year prepaid deals.
- Is revenue recognized all at once – such as for the sale of Perpetual Software Licenses? (even this is not always black and white)
- Is revenue recognized over time – such as with annual subscriptions that are ratable on a monthly basis?
- Is revenue based on work completed / percentage of completion? This is more common with Services and Construction. Combining contracts, such as selling custom consulting services with a new product license, can complicate this.
- Are there clauses in a non-standard agreement that will negatively affect revenue recognition? This is an area where your Legal team becomes an invaluable contributor to your success.
- Cash Flow – Is this really Sales forecasting?
- The answer is ‘no’ in terms of Accounting rules and guidance.
- But, if you have a start-up or small business this can be key to “keeping the lights on,” in which case the types of deals and their structure will be biased towards cash flow enhancement and/or goals.
- How much revenue is recognized and when it is recognized varies based on a variety of factors, such as:
My advice is to work closely with your CFO, Finance Team, Sales Operations Team, and Legal team to understand the goals and guidelines, and then take that one step further to create policies that are approved by those stakeholders and are then shared with the Sales team to avoid any ambiguity around process and expectations.
So, now the hard part is over, right?
It could be that easy if you only have one product that is well established, has a stable install base, has no real competitive threats, where the rate of growth or decline is on a steady and predictable path, and where pricing and average deal size is consistent. I have not seen a business like that yet but would have to believe that at least a few of them exist.
Next, what are you building into your model to maximize accuracy? Every product or service offered may be driven by independent factors, so a flat model that evenly distributes sales over time (monthly or quarterly) is just begging to be inaccurate. For example:
- One product line that sells perpetual licenses may be dependent on release cycles ever 18-36 months.
- A second product line may be driven mainly by renewals and expansion on fairly stable timelines and billings.
- A third product line may be new with no track record and in a competitive space – meaning that even the best projections will be speculative.
- And finally, there could be Services associated with each of those product lines and driven by an even greater number of dependent and independent factors (new implementations, upgrades, implementing new features, platform changes and modernization, routine engagements, training, etc.)
Historical trends are one important factor to consider, especially because they tend to be the thing that you have the greatest control over. This starts with high-level sales conversion rates and goes down to average sales cycle, seasonal trends, organic growth rates, churn rates, and more. Having accurate data over time that can be accurately correlated is extremely helpful. But, factors such as Product SKU changes, licensing model changes, new product bundles, etc. increase the complexity of that effort and potentially decrease the accuracy of your results.
Correlating those trends to external factors, such as overall growth of the market, relative growth of competitors, economic indicators, corporate indicators (profits, earns per share, distributions, various ratios, ratings, etc.), commodity and futures prices (especially if you install base tends to skew towards something like the Petroleum Industry), specific events, and so forth can be a great sanity check.
The best case is that those correlations increase your forecasting accuracy for the entire year. In all likelihood what they really do is provide valuable inputs that allow you to dynamically adjust sales plans as needed to ensure overall success. But, making those changes should not be done in a vacuum, and communicating the potential need for changes like that should be done at the earliest point where you have a fair degree of confidence that change is needed.
There will always be unexpected events that negatively impact your plans. Changes to staffing or the competitive landscape, reputational changes, economic changes, etc. can all occur quickly and with “little notice.” That is especially true if you are not actively looking for those subtle indicators (leading and trailing) and nuances that place a spotlight potential problems and give you time to do as much as possible to proactively address them. Be prepared and have a contingency plan!
Forecasting accuracy drives confidence, and that confidence leads to having the ability to do things like getting funding for new campaigns or initiatives. Surprises, even positive ones, are generally disliked simply because the results were different than the expectations and that begins to fuel other doubts and concerns.
Confidence comes from understanding, good planning, helping everyone with a quota and the teams supporting them to do what is needed when it is needed to optimize the process, and then to have an effective approach to determine whether deals really are on-track or not so that you can provide guidance and assistance before it is too late.
It may not be easy, but it is the thing that helps drive companies to that next level on a sustainable growth trajectory. In the end, that is what matters the most to the stakeholders of any business.
As an aside, there are myriad of rules, regulations, and guidance statements provided by a variety of sources that apply to each business scenario. I am neither an Accountant nor an Attorney, so be sure to consult with the appropriate people within your organization or industry as part of your routine due diligence.
IoT and Vendor Lock-in
I was researching an idea last weekend and stumbled across something unexpected. My personal view on IoT has been that it provides a framework to support a rich ecosystem of hardware and software products. That flexibility and extensibility foster innovation, which in turn fosters greater use and ultimately adoption of the best products. It was quite a surprise to discover that IoT was being used to do just the opposite.
My initial finding was a YouTube video about “Tractor Hacking” to allow farmers to make their own repairs. That seemed like an odd video to appear in my search results, but midway or so through the video it made sense. There is a discussion about not having access to software, replacement components not working because they are not registered with that tractor’s serial number and that the only alternative is costly transportation of the equipment to a Dealership to have a costly component installed.
My initial thoughts were that there had to be more to the story, as I found it hard to believe that a major vendor in any industry would intentionally do something like this. That led me to an article from nearly two years earlier that contained the following:
“IoT to completely transform their business model” and
“John Deere was looking for ways to change their business model and extend their products and service offering, allowing for a more constant flow of revenue from a single customer. The IoT allows them to do just that.”
That article closed with the assertion:
“Moreover, only allowing John Deere products access to the ecosystem creates a buyer lock-in for the farmers. Once they own John Deere equipment and make use of their services, it will be very expensive to switch to another supplier, thus strengthening John Deere’s strategic position.”
While any technology – especially platforms, has the potential for vendor lock-in, the majority of vendors offer some form of openness, such as:
- Supporting open standards, APIs and processes that support portability and third-party product access.
- Providing simple ways to unload your own data in at least one of several commonly used non-proprietary formats.
Some buyers may deliberately make the decision to implement systems that support non-standard technology and extensions because they believe the long-term benefits of a tightly coupled system outweigh the risks of being locked-into a vendor’s proprietary stack. But, there are almost always several competitive options available so it is a fully informed decision.
Less technology-savvy buyers may never even consider asking questions like this when making a purchasing decision. Even technologically savvy people may not consider IoT as a key component of some everyday items, failing to recognize the implications of a closed system for their purchase. It will be interesting to see if this type of deliberate business strategy changes due to competitive pressure, social pressure, or legislation over the coming few years.
In the meantime, the principle of caveat emptor may be truer than ever in this age of connected everything and the Internet of Things.
The Value Created by a Strong Team
One of the best team-building exercises that I have participated in was as a Board Member for the Children’s Hospital Foundation of Wisconsin. We were going down a path that led to a decision on whether or not to invest $150M in a new addition. The CEO at the time, Jon Vice, wisely determined that strong teams were needed for each committee in order to thoroughly vet the idea from every possible perspective.
The process started by being given a book to read (“Now, Discover Your Strengths” by Marcus Buckingham & Donald O. Clifton, Ph.D.), and then completing the “Strengthsfinder” assessment using a code provided in the book. The goal was to understand gaps in perception (how you view yourself vs. how others view you) so that you could truly understand your own strengths and weaknesses. Then, teams were created with people having complementary skills to help eliminate weaknesses from the overall team perspective. The results were impressive.
Over my career, I have been involved in many team-building exercises and events – some of which provide useful insights, but most failed to pull the findings together in a way that was concrete, had context, and offered actionable recommendations. Key areas that consistently omitted were around Organizational Culture, Organizational Politics, and Leadership. Those three areas have a significant impact on value creation vis-à-vis team effectiveness and commitment.
When I had my consulting company we had a small core team of business and technology consultants and would leverage subcontractors and an outsourcing company to allow us to take on more concurrent projects as well as larger, more complex projects. This approach worked for three reasons:
- We had developed a High-Performance Culture that was based on:
- Purpose: A common vision of success, and understanding of why that mattered, and an understanding of specifically how that was defined and measured.
- Ownership: Taking responsibility for something and being accountable for the outcome. This included responsibility for the extended team of contractors. Standardized procedures helped ensure consistency and make it easier for each person to accept responsibility for “their team.”
- Trust: Everyone understood that they not only needed to trust and support each other but in order to be effective and responsive the others would need to trust their judgment. If there was a concern we would focus on the context and process improvements to understand what happened and implement changes based on lessons learned. Personal attacks were avoided for the good of the entire team.
- Empowerment: Everyone understood that there was risk associated with decision making, while at the same time realizing that delaying an important decision could be costly and create more risk. Therefore, it was incumbent upon each member to make good decisions as needed and then communicate changes to the rest of the team.
- Clear and Open Communication: People on the team were very transparent and honest. When there was an issue they would attempt to resolve it first with that person, and then escalating if the two people could not reach an agreement and decided to seek the consensus of the team. Everything was out in the open and done in the spirit of being constructive and collaborating. Divisiveness is the antithesis of this tenet.
People who were not a good fit would quickly wash out, so our core team consisted of trusted experts. There was a friendly competition that helped raise the bar for the entire team, but when needed the other team members became a safety net for each other.
We were all focused on the same goal, and everyone realized that the only way to be successful was to work together for the success of the team. Win or lose, we did it together. The strength of our team created tremendous value – internally and for our customers that we sustained for several years. That value included innovation, higher levels of profitability, and an extremely high success rate.
This approach can work at a Business Unit or Department level but is most effective when it starts at the top. When employees see the leaders of their company behaving in this manner it provides the model and sets expectations for everyone under them. If there is dysfunction within an organization it often starts at the top – by promoting or accepting behaviors that do not benefit the whole of the organization. But, with a strong and positive organizational culture, the value of strong teams is multiplied and becomes an incredible competitive advantage.
Good Article on Why AI Projects Fail
Today I ran across this article that was very good as it focused on lessons learned, which potentially helps everyone interested in these topics. It contained a good mix of problems at a non-technical level.
Below is the link to the article, as well as commentary on the Top 3 items listed from my perspective.
https://www.cio.com/article/3429177/6-reasons-why-ai-projects-fail.html
Item #1:
The article starts by discussing how the “problem” being evaluated was misstated using technical terms. It led me to believe that at least some of these efforts are conducted “in a vacuum.” That was a surprise given the cost and strategic importance of getting these early-adopter AI projects right.
In Sales and Marketing you start the question, “What problem are we trying to solve?” and evolve that to, “How would customers or prospects describe this problem in their own words?” Without that understanding, you can neither initially vet the solution nor quickly qualify the need for your solution when speaking with those customers or prospects. That leaves a lot of room for error when transitioning from strategy to execution.
Increased collaboration with Business would likely have helped. This was touched on at the end of the article under “Cultural challenges,” but the importance seemed to be downplayed. Lessons learned are valuable – especially when you are able to learn from the mistakes of others. To me, this should have been called out early as a major lesson learned.
Item #2:
This second area had to do with the perspective of the data, whether that was the angle of the subject in photographs (overhead from a drone vs horizontal from the shoreline) or the type of customer data evaluated (such as from a single source) used to train the ML algorithm.
That was interesting because it appears that assumptions may have played a part in overlooking other aspects of the problem, or that the teams may have been overly confident about obtaining the correct results using the data available. In the examples cited those teams did figure those problems out and took corrective action. A follow-on article describing the process used to make their root cause determination in each case would be very interesting.
As an aside, from my perspective, this is why Explainable AI is so important. There are times that you just don’t know what you don’t know (the unknown unknowns). Being able to understand why and on what the AI is basing its decisions should help with providing better quality curated data up-front, as well as being able to identify potential drifts in the wrong direction while it is still early enough to make corrections without impacting deadlines or deliverables.
Item #3:
This didn’t surprise me but should be a cause for concern as advances are made at faster rates and potentially less validation is made as organizations race to be first to market with some AI-based competitive advantage. The last paragraph under ‘Training data bias’ stated that based on a PWC survey, “only 25 percent of respondents said they would prioritize the ethical implications of an AI solution before implementing it.”
Bonus Item:
The discussion about the value of unstructured data was very interesting, especially when you consider:
- The potential for NLU (natural language understanding) products in conjunction with ML and AI.
- This is a great NLU-pipeline diagram from North Side Inc. in Canada, one of the pioneers in this space.
- The importance of semantic data analysis relative to any ML effort.
- The incredible value that products like MarkLogic’s database or Franz’s AllegroGraph provide over standard Analytics Database products.
- I personally believe that the biggest exception to assertion this will be from GPU databases (like OmniSci) that easily handle streaming data, can accomplish extreme computational feats well beyond those of traditional CPU based products, and have geospatial capabilities that provide an additional dimension of insight to the problem being solved.
Update: This is a link to a related article that discusses trends in areas of implementation, important considerations, and the potential ROI of AI projects: https://www.fastcompany.com/90387050/reduce-the-hype-and-find-a-plan-how-to-adopt-an-ai-strategy
This is definitely an exciting space that will experience significant growth over the next 3-5 years. The more information, experiences, and lessons learned shared the better it will be for everyone.
Apollo 11 50th Anniversary – Interesting photos & article link
I still remember my parents allowing me to stay up late to watch the first moonwalk. It was 9:30 pm, I was 5 years old, and we were huddled around an old “black and white” television that had a circular viewing area. My parents tried to convey how important and monumental that moment was – telling me that I would be telling this story to my children someday.
What I remember most was being amazed seeing the astronauts hop around with ease 
and not understating how that could be. We had watched the launch on TV and were getting updates nightly from Walter Cronkite on the evening news. Normally my dad would sit at a TV table to eat dinner and watch the news as my mom sat with my sister and me at our kitchen table, but this week was different.
With all of the news this past week on the 50th 
Anniversary of the first moonwalk it triggered a couple of memories. One of them was that I had a collectible item that I purchased in 2005 at the annual Children’s Circle of Care leadership conference in San Diego, CA. There was a luncheon held on the deck of the USS Midway Museum and afterward, I took a tour. It is an incredible place to visit if you are ever near San Diego.
Before leaving that day I went to the gift shop to get a few trinkets for my wife and children. What I found was a beautiful display, which I immediately purchased and had shipped home. This display was taken to school a couple of times for “show and tell.” It hung on my office wall for 3 years or so and then went into storage with other artwork. It then sat for the past decade and I almost forgot that I had it.
To me, this display is both beautiful to see and very inspirational as well. Human creativity is an incredible thing! As an aside, I have never seen anything like this display so I thought I would share it with you.
Today I also ran across a good article regarding this event that provided information that I had not seen before. It is very interesting and can be found here: https://go.usa.gov/xyVGh
Edit: This was another good article that discusses the advanced flight control computer used at the time – https://www.linkedin.com/pulse/apollo-11-moon-landings-fourth-crew-member-computer-far-fishman/
This anniversary is a great reminder of the power of individuals, teams, and partnerships when they are mission-focused. I find people like the men and women of NASA to be extremely motivational, and the few that I have met have all been very friendly people as well. They are the Humble Heros!
Commentary on an HBR article about Start-ups & Entrepreneurship
A friend posted this article on LinkedIn.com. Due to character limitations for comments, I decided to post my response here. Below is a link to the article referenced: https://hbr.org/2019/07/building-a-startup-that-will-last
The article is interesting, but the emphasis on “second and third acts” assumes that the start-up will successfully navigate the first act. Even with addressing what the author views as key points this is still a very big assumption. The reasons for Longevity and Success are far more complex and multi-dimensional, but it does place a spotlight on some of the more important areas of focus.
Long-term success requires several things: The right combination of having a unique goal that has the potential to make a big impact (think “No software” from Salesforce.com); Innovative ideas to achieve that goal; A diverse team to build the product (a mix of visionaries, insightful “translators,” technical experts, designers, planners, adept doers, etc.); Very good sales / business development / marketing to describe a better way of doing things and converting that to new business; and ultimately a management team focused on sustainable and scalable growth.
The point made about the need to, “Articulate a value framework oriented toward societal impact, not just financial achievement” seems a bit superficial and too tactical in nature.
First, there are unintended consequences to most new technologies. Social Media is a recent example, but Genetic Editing and AI are two areas that are likely to provide more examples over the next decade. Not every societal impact will be positive, and having a negative impact could very well lead to the untimely demise of that company.
Second, the two ideas (societal impact and financial achievement) are not mutually exclusive. When I owned my consulting company we had a goal of funding $1M worth of medical research that would find a cure for Arthritis. We allocated half of our net profits for this goal. Every employee was on-board with this because there was a tangible example of why it mattered (my daughter). We invested $500K, helped launch a few careers for some brilliant MD/Ph.Ds and at least one national protocol came out of their research.
Mission and Vision are so important to a company, yet so many companies fail to view this as anything more than a marketing effort. Those companies fail to realize that this is as much to motivate and inspire their employees, as it is to grab the attention of a prospective customer. These should be both inspirational and aspirational, such as the “BHAG” (Big Hairy Audacious Goals) that Collins and Porras wrote about 25 years ago.
Regarding Endurance and the assertion that “…the best businesses are intrinsically 
aligned with the long-term interests of society,” my take is slightly different. The best businesses are always looking for trends and opportunities in an ever-changing global competitive landscape – as opposed to looking to their competitors and trying to ride on their coattails. Companies with a culture of fostering innovation as a way to learn and grow (Amazon and Google are two great examples) are able to find that intersection of “good business” and “positive societal impact.” It is much more complex than a simple one-dimensional outlook.
But, it was a good article to help reframe ideas and assumptions around growth.
