When Managing Salespeople, Stage Matters

by McCann, Erin

Does sales management really come down to pushing back on excuses? Several founders have asked me this question in response to Mark Suster’s sales management advice. As a former tech sales executive, I agree with many of his lessons -- when applied to later-stage, post-traction point startups [1]. However, I advocate a more nuanced approach for early-stage startup teams, and suggest the following exceptions when managing your earliest sales hires.

Feedback isn’t always an excuse
Early sales hires understand your clients best. While product managers often obtain direct client feedback [2], your salespeople touch far more accounts at a higher frequency, and thus frequently receive the most candid feedback. While I support Suster’s claim that clients don’t buy features, they can provide valuable information, as we saw with RentJuice’s pricing model [3]. I’m not suggesting accepting justification for missing targets – just disaggregate the feedback from the sale. Salespeople shouldn’t be off the hook for targets, but their insights from clients often prove valuable to product managers and may improve your overall product-market fit.

Equity & team dynamics matter
Cash certainly incentivizes salespeople (every sales executive I know has some commission-based pay), but given the non-sales responsibilities and risk taken on by early-stage hires, they’re likely motivated by more than cash. Talented sales executives could easily choose more mature companies with higher cash opportunities, and avoid difficult early challenges like those at RentJuice, such as navigating significant ambiguity and building sales collateral. What’s more, early-stage startups likely aren’t in a position to offer all-cash compensation. While equity and team dynamics may matter less to traditional salespeople, in my experience they factor heavily into attracting true “renaissance reps” who can balance the complex, changing dynamics of early sales.

Support requests may mean it’s time to scale
Requests for sales support may seem like excuses, but could also indicate the need to hire an account manager. Sure, sometimes reps just don’t like the grunt work – for me, creating proposals always felt like a huge waste of time compared to closing more deals. However, support requests might not be entirely driven by ego or disinterest, and can present an opportunity to drive higher revenue growth by managing and up-selling through existing relationships. Certainly managers need to ensure that they have a repeatable and scalable business model whose metrics justify adding team members and splitting roles. However, once this occurs, these perceived support excuses may in fact drive huge efficiency and monetary gains.

Ultimately, while I appreciate Suster’s experience, candor and self-admitted use of “broad generalizations,” I urge some caution before lumping all salespeople into a “class.” While founders benefit from understanding common incentives and excuses, early hires likely differ tremendously in terms of motivations, responsibilities, and requests. As a founder, what has been your experience with early hires?

1  Leslie, Mark and Charles A. Holloway. The Sales Learning Curve. Boston: Harvard Business Publishing, 2006. Print.  

2  Bussgang, Jeffrey, Thomas Eisenmann and Robert Go. The Product Manager. Boston: Harvard Business Publishing, 2011. Print.

3  Eisenmann, Thomas and Liz Kind. RentJuice. Boston: Harvard Business Publishing, 2011. Print. 

Read More

Launching a Tech Venture, One Iteration at a Time

by Rosemary Kendrick & Aleem Mawani

It’s been, well, a very rewarding semester working on Rewardly.  As we reflect on the main tools we employed this semester—merchant interviews, business model generation, generating mockups, and developing a prototype—we have a few takeaways we’d like to share.

First off, when it comes to interviewing local businesses, be prepared to throw enough darts.  Local business managers are tough to pin down with understandably ever-shifting schedules, so we found ourselves juggling a bunch of cancellations and rescheduling.  It’s helpful to remember that the customer discovery process is a sales process: you start with a lot of cold leads, eventually secure enough interviews, and then ultimately score a few letters of intent.  A corollary to the throw-enough-darts mantra is the realization that you don’t know what you don’t know.  It’s hard to predict which local businesses will be the most helpful to talk to, and it’s even harder to anticipate what insights will emerge.  This is particularly true in the diverse landscape of locally-run shops.  So don’t spend too much time calibrating who to target: just get out there, get in front of business owners, and listen.

With experience, we learned what made the best pitches and meetings.  Often, having a letter of intent signed was a particularly big barrier for local businesses.  Managers varied in their familiarity and comfort with signing what seemed like an official contract.  We tweaked our strategy accordingly and approached the letter of intent as the end goal of a long sales funnel.  Some of the most useful questions we asked were incremental, along the lines of ‘what would you need to see next in order to sign this letter of intent?’  Additionally, with our meetings—and likely any sales process—a product demo speaks louder than an idea.  This is certainly true when you’re a startup trying to tackle the initial customer acquisition hurdle (we imagine it might be different for algorithm-based tech startups).  Our initial concept-based interviews were extremely useful in generating feedback, but our most promising conversations started when we were able to put a product in front of businesses.  The prototype was very rough, with many features and mechanics ‘faked,’ but it was nonetheless an extraordinarily powerful communication and sales device.

This leads to an even larger takeaway about the entrepreneurial process.  Throughout HBS, we often hear that cash is king, but we propose that in some tech startups product is king.  For a startup at Rewardly’s stage, pitching to investors (at least to non-seed investors) was not the best use of time.  Most meetings became coffee chats and yielded few concrete next steps -- the time would have been better spent just building and refining the product.  This is especially true for a startup with first-time founders.  It may be that entrepreneurs with deep domain expertise, an all-star team, or a strong track record can gain much more traction with investors early on in the concept stage. 

As we learned more from our customers and our product, we spent a lot of time refining the business model.  Like so many other steps in the startup process, we found that business model generation was an exercise in prototyping: expect a lot of iterations.  But perhaps more interestingly, we realized that we first needed to reframe our goal.  Given our wide range of potential customers, one size didn’t fit all.  Providing a suite of different payment options was key to meeting the wide array of small business needs.  More established businesses often preferred the regularity of a budgeted monthly flat-fee, whereas newer and scrappier business wanted a pay-as-you-go, performance-based plan.  All local businesses, given their relatively small size and budgets, insisted on a risk-free introductory option.

Building the product is the next step for Rewardly.  We were able, though, to complete wireframing and product prototyping this semester, and we learned a lot in the process.  Our wireframe evolved from a low-fidelity product (paper sketch) to a higher-fidelity rendering (a professionally designed mockup).  When it came to our first interaction with the designer, we discovered that it was important to be specific about the goals and agnostic about the exact details.  The professional designer had a toolset of specific methods; what they needed from us was a clear articulation of the goal of each page and the type of work we wanted completed (e.g. user interface exploration versus graphic design).  Once we had a first cut of the designed wireframe in hand, we could then go back and forth with the designer, incorporating feedback and tweaks through several iterations.

All the steps we took with Rewardly this semester—through interviewing, business modeling, product prototyping, and wireframing—reminded us of the power of iteration.  As hackneyed as that may sound given lean startup mania, it is important to reemphasize as it is distinct from much of what we learn at HBS.  Business school often focuses on the end-points, the funding pitch, the polishing, the analyzing.  But with Rewardly, we learned that the first step in starting a startup is often, well, just taking a ton of steps, and seeing where the customers, product, and business lead you.

Read More

Selling Ice to Eskimos: Learning from Selling

by Iris Guerra and Lorin Pace


We’d all love to employ a salesman who could sell ice to Eskimos, but unless Steve Jobs starts offering a webinar called “Jedi Mind Tricks: How to distort reality until the payment clears,” I doubt most of us will ever have this luxury. In the meantime, here are some of the most valuable lessons we’ve learned in developing a sales pitch for early adopters:

• Make sure you are speaking the same language as the customer. It varies more than you might expect.
• With early adopters, the lines are blurred between the sales pitch, customer discovery interviews, and usability testing. If you take a siloed perspective to these tasks, you will miss out on key insights and sales opportunities.
• In established companies, time to devote to a trial is the greatest hurdle.
• In newer companies, the budget is the greatest hurdle.
• Providing a free trial and eventually upselling to a paid service is one way to address these challenges. Also, service expectations are much lower so customers will be less annoyed at your requests for feedback.

Read More

Overcoming the Concern Barrier

by Brett Gibson

 “This is the most useful class at Harvard Business School.”

As I sat back during David Skok’s remarks during #hbsltv, I turned to my neighbor and said, “this is the most useful class at Harvard Business School.”  Skok laid out a helpful description of the customer acquisition process and outlined each step of the sales funnel.  He shared tips on measuring and testing marketing strategies and driving the effectiveness of sales.  He gave us practical advice and recommendations for useful websites (Hubspot, Sysomos and Posterous) and shared best practices for bridging the relationship between marketing and sales teams.  What stood out most to me was his conviction that to win a customer, you need to know what the customer wants, and more importantly, break through their “concern barrier.”

“You want your customers to do something they didn’t think they wanted to do.”

As humans, we resist “being sold”.  We like to feel in charge, act on our own impulses and avoid falling into the trap of a good marketing or coupon scheme.  In truth, the internet exposes our vulnerabilities.  The internet puts a menu of options in front of us at all times that is custom tailored for us.  However, as soon as we see the product that we’ve always wanted that’s a click-of-the-mouse away, our mental governor says, “hey wait, you don’t have enough time to buy this,” or “hey, I don’t like spam emails so I won’t buy online.”  We avoid buying because the process is too clumsy or it feels too similar to a cold call during primetime television at home.  We don’t like giving away control, whether in the form of our email address or our urge to not buy.

“Think about how your customers get approval internally.”

Skok calls this the “concern barrier” and advises entrepreneurs to bridge it by understanding how customers like to buy.  Entrepreneurs must think about how customers get approval internally and analyze their concerns and motivations.   It’s an exercise in psychology, empathy and emotional intelligence for the entrepreneur.  The entrepreneur must think like an internet consumer and get inside the head of customers.  People don’t like wasting time (Skok urges allowing one-click purchasing or home delivery services), people also don’t like giving away their personal information (show positive customer testimonials, give free trials or offer lowest price guarantees).  All of these techniques build trust with the site and allow users to give themselves approval to buy and build a relationship with your site

#HBSLTV

All students at HBS should take this class.  After listening to David, I have an understanding of how companies should sell products and services online and overcome the concern barrier.  In a world where the internet and social network are the global marketplace, this information is gold.  During my career, David’s advice will be top of mind.

Read More

The Hunter vs. The Farmer: Making the Right Sales Hires

by Private

It can be dangerous to take an overly simple view of salespeople. The simple view goes something like this: All sales people are coin operated, put the right number of coins in and push the appropriate buttons, and soon you'll have what you want come out the other end.  When extended to the decision of whether or not to bring on a salesperson, this view oftentimes results in a focus primarily on whether the company has enough coins to hire a salesperson, with cursory thought given to the type of salesperson being hired.  As obvious as it may sound, hiring someone experienced in selling a product with a similar sales cycle as your product is key.

There are two broad types of salespeople, hunters, who seek the quick catch, and, farmers, who have the aptitude and patience to nurture a raw seed over time.  Hiring a hunter to do a farmer's job has the potential to not only frustrate the salesperson seeking a quick hit but to alienate customers seeking a consultative and nurturing approach, and internal resources who are apt to hear the catcalls of a frustrated salesperson who is the victim of bad products and marketing.  At the same time, hiring a farmer to to do job of a hunter can lead to overly complex processes and a hesitation to ask for the sale.

Here is a non-exhaustive list of questions to ask in determining whether to utilize a hunter or farmer in software sales:

PRODUCT CONSIDERATIONS

• Is the software being sold mission critical and/or costly?  If it is, chances are that the customer is not going make a decision quickly. Hire a farmer.
• How often is this type of software refreshed? Something that is refreshed every 5-7 years, like enterprise resource planning software, is apt to require a lot of time to evaluate, requiring a farmer.
• How much integration with existing solutions is required?  Integration is by its very nature typically messy. If this system being replaced or the system being put in will require a lot of complex integration, the customer is apt to want to forecast how those integrations will play out.
• Is the solution a small part of a bigger system or the whole system?  Smaller parts of bigger systems, oftentimes called point solutions, are easier to digest, and a typical way for companies to evaluate a software vendor before buying an entire system. A hunter can oftentimes persuade even the most process intensive customer to quickly purchase a point solution. But be careful, if the followup sale requires selling the whole system you a farmer may be needed, one who looks at the point solution as one step in a longer sales cycle.
• Does the product purchase require a credit card for monthly billing or an invoice(and/or one time payment)?  As strange as this may sound, a product that can be bought with a swipe of a card can avoid centralized decision making within an organization, oftentimes enabling a hunter to succeed in a company where overall processes dictate a long sales cycle nurtured by a farmer.

CUSTOMER CONSIDERATIONS

• Is there are a procurement desk involved? Procurement desks are often proxies for long and arduous decision making, signaling the need for a farmer.
• Who has budget authority? If access to the budget authority is several steps away from where the salesperson currently has access, a farmer is typically needed to gain trust, and, in turn, access.
• Is this a purchase being made by the IT department or a business function?  IT departments are typically apt to not only evaluate a solution relative to business needs, but also against overall IT infrastructure and IT priorities across divisions while business function leads making software decisions(like a VP of sales) are apt to avoid as much of this as possible, making it easier for a hunter to operate.

Read More