sales

Could a New Channel Model Lead to Sales Amplification?

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Over the years, I have helped successful companies and start-ups improve and strengthen their Channel and Strategic Alliances programs. The results have been good, but could they have been better? Keep reading to learn about the benefits of enhanced business ecosystems.

Word cloud for strategic thinking.

Most traditional channel models support Distributors, Resellers, OEMs, and ISVs. The business mainly flows upwards to the main vendor. If that vendor has popular, widely used products (think Microsoft and Oracle), partner business can be good because the demand stays consistent. But sales pipelines suffer when that is not the case.

Sales Channel business is not the main source of revenue for most companies, but it can become the largest and most scalable revenue source for nearly any business. Just think about the money left on the table by not adopting a growth mindset and executing a new and better strategy.

In the summer of 2016, I attended the “Sage Summit” in Chicago. It was impressive to see the Sage Group’s efforts to build, strengthen, and protect their Customers and Channel Partners community. They tried to foster higher levels of collaboration between the various types of partners – implementation services, consulting, staff augmentation services, complementary product vendors, etc. They had created their own highly successful Business Ecosystem, which is an excellent proof point.

When designing a channel partner program, my focus has always been on balancing promoting and protecting partners’ business with ensuring end customers have the best possible experience (and some recourse when things do not work out as expected). I have used a variety of methods to accomplish those goals, including creating a systematic approach to seeding relationships between partners’ complementary offerings and facilitating even greater business activity.

Nearly a year ago, I began working with a management consultancy run by Robert Kim Wilson, whose business vision is based on his book, “They Will Be Giants.” Links for this book and other relevant resources are provided at the bottom of the post. Kim asserts that Entrepreneurs with a Purpose-Driven Business Ecosystem (PDBE) are more successful than those without one, and he provides examples to support his point. Having experienced Kim’s PDBE, I see how purpose fosters trust and collaboration.

As I did more research, I found that thought leaders in this space have increasingly focused on Business Ecosystems and Business Ecosystem Organizers (such as Sage in the earlier example). Those findings reinforced the PDBE approach, and external validation like this is always good.

From my perspective, it was just as important that this concept apply to businesses of any size – especially for small to midsize businesses. The fun part for me is exploring a specific business, analyzing what they do today, and quantifying the potential benefits of adopting this new strategy.

So, how does this new type of Business Ecosystem work?

  • The Business Ecosystem Organizer expands the overall network, vets new “Business Ecopartners,” and provides a framework or infrastructure for the various Business Ecopartners to get to know one another, exchange ideas, and discuss opportunities.
    • This can become an incredibly sustainable revenue source for companies willing to invest time to collaborate and share ideas in order to grow and support the Business Ecosystem.
  • Business Ecopartners will have access to trusted resources to augment existing business and take on new, bigger projects by leveraging the available expertise.
    • Suppose that you have products or services that work with commercial CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), or SCM (Supply Chain Management), and have seen a growing demand for functionality that relies on highly specialized technologies like:
      • Cryptocurrency support.
      • Blockchain for financial transactions and things like traceability in your supply chain or IoT data.
      • AI (artificial intelligence) and ML (machine learning) to detect patterns and anomalies – such as fraud detection, Deep Learning/Neural Networks for image recognition or other complex pattern recognition.
      • Graph databases to better understand a business and infer new ways to improve it.
      • Knowledge Graph/Semantic databases to create deeper meaning and understanding with data from multiple sources – assisting in deeper understanding and Transfer Learning (which also has an AI tie-in).
    • Building these practices in-house would not be practical or cost-effective for most businesses, so partnering becomes very attractive.
      • This type of business relationship can also be very attractive to a Business Ecopartner because someone else handles prospecting, sales, billing, account management, etc.
  • Other Business Ecopartners can leverage your products or services for their projects and engagements, expanding their addressable market and creating additional revenue sources for the other ecopartners.
  • By actively participating in this network, any business can now compete on imagination and innovation – providing a more comprehensive solution that could become a major source of differentiation from their competitors.

Value realized from this New Business Ecosystem model:

  1. These new sources of business and talent can become a real competitive advantage for your business.
  2. This becomes the source for Sales Amplification because each business is, directly and indirectly, expanding its reach and growth potential.
  3. The weighted (based on capabilities, capacity, responsiveness, and Ecopartner feedback) Business Ecopartner network model could lead to exponential business growth – a winning strategy for any business.

Next Steps

If this sounds interesting and you would like to discuss how it could look for your business, contact me to schedule an exploration call.

References:

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What are you Really Selling? (Hint: Solutions)

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It is interesting to see Sales and Marketing people still focusing on features, performance, cost, and even value without linking them to what that means for a company from a business perspective. Once you understand what your prospect is buying and why they need it, you can connect with them meaningfully to increase your win rate.

Pot of Gold

A sales adage from the 1940s (source) asserts, “No one wants a drill. What they want is the hole.” Today, that basic understanding of why people and companies buy is often lost in sales and marketing messages. Sales success is all about solving problems and satisfying needs.

Several years ago, my team and I were selling a new Analytics Database that was genuinely different. Still, our message was identical to every other database vendor – “70% – 100% faster than every other product.” It is nearly impossible to differentiate your product using a non-differentiated message. Don’t treat your product or service as a commodity if it is not one.

I flipped the messaging to focus on business needs. We created a weekly webinar focused on Why Fast Matters. Query response time is important, but responsiveness to customer needs and requests is essential. What if they didn’t have to wait a week or two to create new indexes or a month to update a Star Schema? They could just run queries as-is, maybe wait a minute instead of a second or two, and have what they need then and there. That message resonated; we sold the first 50% of that product globally. When the Australian team began using our messaging, their sales also increased. Funny how that works.

Effectiveness is all about results and intended outcomes. Efficiency is about achieving those results with the least time and effort invested. It doesn’t mean that we are looking for a lazy approach to find a win. Instead, it is about identifying repeatable patterns that circumvent unnecessary activities, accelerate the sales cycle, and minimize related costs. 

To help yourself understand what you are selling, view things from your prospect’s perspective. What struggles are they likely facing? Where are the greatest opportunities to help their type of business? Are you analyzing data to attempt to assess their unmet needs? Your insight can become a huge differentiator, especially if you can teach them different and better ways to do something (ala the Challenger Sales Model).

What is the difference between your prospect company and its main competition? This analysis requires a general understanding of the problem space and a more specific understanding of the prospect company, its history, and 2-3 main competitors. It also requires an honest account of how your company and products compare to the competition so you can play up your strengths and limit investment in areas where the fit is weaker.

The next item to focus on is messaging. Below are a few examples from my career –

  1. Analytics & Big Data – The focus here is often on data volume, data currency, query speed, cost, maintenance, and downtime. Those things become essential later in the sales discussion, but initially, companies want to know what problems their product or solution will solve.
    • Some of my fastest deals sold because I showed them how to make better decisions faster and/or identify minor problems before they became major problems. Avoiding problems and unplanned outages were critical elements of the messaging.
    • In one case, I closed a significant deal in less than three months by focusing on how a company could provide customers with five years of transactional data. Those customers could use the data to make better purchasing decisions in less time than it took the current system to analyze six months of data. Their sales increased after implementing this modernized system. The winning message was helping customers make better buying decisions faster.
  2. Embedded Products – While many companies focus on APIs, features, or cost per unit, I focused on how the product made things better and easier to manage, improving customer support and Customer Satisfaction.
    • I closed a $1.1 million deal in less than two months to a medical device company by focusing on the life cycle of those devices (often 10-15 years) and how their customers needed consistency from machine to machine. 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 related system. That led to selling a NoSQL product ideally suited for this complex environment. Letting our software handle the highly complex workload helped us win this deal.
  3. Consulting Services – These were not contracting or body shop services (commodities) but actual Business and Technical Consulting services with high visibility and impact. In these cases, our expertise, experience, and track record of success in different but demanding scenarios provided confidence. These were often multi-phase engagements to prove our value before making a significant commitment.
    • In a bid against two well-established competitors, we won a deal with a large Petroleum company worth nearly $500K. The proposal included information we uncovered about the system and use case and later verified with the prospect, a section on our people and past projects, and a high-level project plan with firm-fixed pricing. We won the bid, and I later discovered that our cost was $50K higher than the largest competitor and $100K more than the other competitor. The customer told me, “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 with a company where 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. The winning messaging this time was that flexibility and the ability to accommodate changing needs without introducing significant risk or additional cost were better ways to buy consulting services. This approach led to many other similar deals with other companies.

The common theme across these examples is helping companies solve their specific business problems. Even when technology was central to the message, focusing on better outcomes for that prospect and their customers was essential. Value matters, but positive results and better outcomes matter even more for purchasing decisions.

Nobody wants to take a chance on a new vendor and be responsible for a high-profile failure. Instilling confidence early makes a huge difference, and following through to successful implementation results in happy customers who become loyal customers who provide references and referrals.

Success starts with selling what you can do for your prospects from a business perspective. You solve their problems with the solutions they need and avoid getting lost in the noise of unfocused messaging from most of your competition.

Good Selling!

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It’s not Rocket Science – What you Measure Defines how People Behave

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I previously wrote a post titled “To Measure is to Know.”  

Picture showing an astronaut floating in space above Earth

The other side of the coin is that what you measure defines how people behave. This is an often forgotten aspect of Business Intelligence, Compensation Plans, Performance reviews, and other key areas in business. While many people view this topic as “common sense,” based on the numerous incentive plans you run across as a consultant and compensation plans you submit as a Manager, that is not the case.

Is it wrong to have people respond by focusing on specific aspects of their job that they are being measured on? That is a tricky question. This simple answer is “sometimes.” This is ultimately the desired outcome of implementing specific KPIs (key performance indicators), OKRs (objectives and key results), MBOs (Management by Objectives), and CSAT (Customer Satisfaction), but it doesn’t always work. Let’s dig into this a bit deeper.

One prime example is something seemingly easy, yet often anything but: compensation plans. When properly implemented, these plans drive organic business growth through increased sales, revenue, and profits (three related items that should be measured). This can also drive steady cash flow by closing deals faster and within specific periods (usually months or quarters) and focusing on models that create the desired revenue stream (e.g., perpetual license sales versus subscription license sales versus SaaS subscription sales). What could be better than that?

Successful salespeople focus on the areas of their comp plan where they have the greatest opportunity to make money. Presumably, they are selling the products or services that you want them to based on that plan. MBO and OKR goals can be incorporated into plans to drive positive outcomes that matter to the business, such as bringing on new reference accounts. Those are forward-looking goals that increase future (as opposed to immediate) revenue. In a perfect world, with perfect comp plans, these business goals are codified and supported by motivational financial incentives.

Some of the most successful salespeople are the ones who primarily care only about themselves (although not at the expense of their company or customers). They are in the game for one reason—to make money. Give them a well-constructed plan that lets them win, and they will do so predictably. Paying large commission checks should be a goal for every business because properly constructed compensation plans mean their own business is prospering. It needs to be a win-win design.

However, suppose a salesperson has a poorly constructed plan. In that case, they will likely find ways to personally win with deals that don’t align with company growth goals (e.g., paying a commission based on deal size but not factoring in profitability and discounts). Even worse, give them a plan that doesn’t provide a chance to win, and the results will be uncertain at best.

Just as most tasks tend to expand to use all the time available, salespeople tend to book most of their deals at the end of whatever period is used. With quarterly payment cycles, most of the business tends to book in the final week or two of the quarter, which is not ideal for cash flow. Using shorter monthly periods may increase business overhead. Still, the potential to level out the flow of booked deals (and associated cash flow) from salespeople working harder for that immediate benefit will likely be a worthwhile tradeoff. I pushed for this change while running a business unit, and we began seeing positive results within the first two months.

What about motivating Services teams? What I did with my company was to provide quarterly bonuses based on overall company profitability and each individual’s contribution to our success that quarter. Most of our projects used task-oriented billing, where we billed 50% up-front and 50% at the time of the final deliverables. You needed to both start and complete a task within a quarter to maximize your personal financial contribution, so there was plenty of incentive to deliver and quickly move to the next task. As long as quality remains high, this is a good thing.

We also factored in salary costs (i.e., if you make more than you should, you’re bringing more value to the company), the cost of rework, and non-financial items that benefited the company. For example, writing a white paper, giving a presentation, helping others, or even providing formal documentation on lessons learned added business value and would be rewarded.  Everyone was motivated to deliver quality work products on time, help each other, and do things that promoted the company’s growth. My company prospered, and my team made good money to make that happen. Another win-win scenario.

This approach worked very well for me and was continually validated over several years. It also fostered innovation because the team was always looking for ways to increase their value and earn more money. Many tools, processes, and procedures emerged from what would otherwise be routine engagements. Those tools and procedures increased efficiency, consistency, and quality. They also made it easier to onboard new employees and incorporate an outsourced team for larger projects.

Mistakes with comp plans can be costly – due to excessive payouts and/or because they are not generating the expected results. Backtesting is one form of validation as you build a plan. Short-term incentive programs are another. Remember, without some risk, there is usually little reward, so accept that some risk must be taken to find the point where optimal behavior is fostered, and then adjust the plan accordingly.

It can be challenging and time-consuming to identify the right things to measure, the right number of things (measuring too many or too few will likely fall short of goals), and the incentives that motivate people to do what you want and need. Anything worth doing is worth doing well. Hopefully this post provided ideas on how to make that happen.

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Doing it like Mike

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My son is playing basketball this year (he previously played football and soccer), and we recently went shopping for new shoes. Each store had pictures of Michael Jordan. I used to love watching MJ play with the Chicago Bulls. He was the epitome of skill and professionalism. To this day, he inspires me.

"The Chart" - from Chris Lytle's MAX Sales Training program
“The Chart” – from Chris Lytle’s MAX Sales Training program

Some people are naturally talented but must still work hard to achieve their full potential. Hard work is an important aspect of being the best at anything, but it takes more than that. It takes doing things in a way that allows you to continuously improve, along with a positive mindset and a commitment to success. Once people reach that high-performance level, their jobs look easy, and they may even appear to be a “natural” – just like Mike. But that is just the tip of the iceberg.

Most of my career changes have been unplanned. For example, in 2010, our VP of Sales was fired, and the guy intended to fill the slot quit to go work for Salesforce.com. We had our sales kickoff less than five days away, and nothing was planned yet. The SVP of Sales told me that if I wanted the job, he would give me six months. But if I didn’t cut it at the end of six months, no other job would be waiting for me.

Opportunities presented themselves, the job seemed interesting, and before I knew it, I was fully immersed in something related but different. The potential reward outweighed the real risk.

Many of these things have not come naturally to me. Each time, I focused on understanding the requirements for doing the job well, then looked for examples of exceptional performance, and finally created a systematic approach that let me measure performance and identify areas for improvement on an ongoing basis. From then on, I analyzed my results, thought daily about even the smallest improvements I could make, and tried to do even better the next day.

Good enough was never good enough. Introspection can be challenging, so one thing that I have done is to take time to celebrate wins and intentionally focus on remembering how that feels. Those memories can be motivational in times of stress or frustration and help you get back on track quickly.

Sales has been a major part of my consulting and management jobs since the mid-1990s, but it wasn’t until I owned my own company that it became a true priority.  I ran across a good book, The Accidental Salesperson, by Chris Lytle. Back then, Chris Lytle had “MAX Training,” and a large part of their focus was on increasing your “level” in prospect and client relationships. The training was good and complemented systems like Miller Heiman.

Each of these systems helps you prepare, plan, and execute to the best of your ability. And just like basketball, it takes practice to master. With mastery comes success and the illusion that something is easy (or you are lucky). The Seneca quote, “Luck is what happens when preparation meets opportunity,” is so true.

Regardless of the system you use, what matters most is that you try to be the best at examining both positive and negative examples to learn from them.  There are lessons to be learned everywhere – especially when you make mistakes! Understanding what makes it good or bad helps you improve as part of an ongoing improvement process.

Incorporating new tools and techniques into what has already been proven to work will help you improve your game. Returning to the sports analogy, this could be part of what made Michael Jordon so good. He would see something interesting, improve it, and then make it his own.

For example, I get many horrible sales calls and emails. The people have obviously not done any preparation, do not know anything about the company I work for or about me, and often remind me why I stopped listening to them by citing how many times they have tried to contact me.

On the other hand, some talented sales professionals have done their homework, understand their products and the competition, and understand why what they are selling should matter to me – and can articulate that quickly and confidently.  I will speak with them and occasionally buy from them. And in either case, I provide my team with real-life examples of good and bad sales techniques.

So, focus on becoming the best example of whatever it is you do, learn from others, and never stop improving. This isn’t about imitation; it’s about uncovering the secrets of their success and learning from them. And if you are lucky, you will have some fun doing it!

Mind of a Champion – Michael Jordan training for success!

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