Sales is a Lagging Indicator

Posted on by growarpu

Sales is a lagging indicator. That means a lot of things happen before sales hits or misses a number. Unfortunately some leaders look at sales as if it exists in isolation and should be able to grow, maneuver and execute in a vacuum.

There are many things that impact sales performance well before a sales person enters the negotiation phase or even picks up the phone. Some key ones to think about are:

  • Is my product the right fit for my target customer
  • Am I clear on who my target customer is
  • Would my target customer recommend my product to a friend
  • Are my target customers aware of my brand
  • If prospects research my brand, what perception do they attain
  • How does my sales process support my ideal customer experience
  • Is the market we are competing in lucrative and/or competitive
  • Are my competitors strategically better positioned

If there is a negative gut response to any of the questions above, then that should become the focal point of none sales leaders and not hitting higher numbers.

Certainly we can look at activity, sales cycle, close rates and retention. We have to in regards to sales performance, but let your sales leader focus on this. Everyone else needs to make sure the product, targeting, brand and messaging is perfected to positively influence sales performance. Otherwise we could be looking at a symptom vs the root of a problem.

In our hyper-growth starved, venture capital backed startup economy, we can most certainly hire a sales team and attempt to scale the business to new heights. Set goals like, let’s IPO in two years!! However, most times it is better to get back to basics and basically listen to our customers.

That’s a different story. One more focused on #customerobsession than #customeracquisition. As startup leaders, let’s reframe our thinking to the former and it will truly empower and fuel the later.

Discovery and Sales

Posted on by growarpu

As entrepreneurs, we are taught to spend time validating the market for our product or service before investing a lot of time in development. Most of the time, it involves the founders talking directly to customers or potential customers, understanding their pains, problems, and how their potential solution could help solve these problems (to learn more about this, check out Lean Startup by Eric Reis). Or sometimes, you discover that your original idea was terrible and you need to pivot to what the market is demanding. But ultimately, we create an MVP (minimum viable product) and we are off to the races.

Unfortunately, something happens after we complete our product, raise a round or two, and hire a kick-ass sales team to take over the daily responsibility of speaking to our customers: we stop listening to our customers’ needs and start pitching. Why is this?

It’s true, most sales processes loosely align to the following steps:

  1. Pitch
  2. Pitch
  3. Demo
  4. Close

But wait…those customers whose feedback we originally valued so much…what happened to them? Did they give us all their ideas? Was their original problem static and now completely solved? Most likely not.

The point at which you’ve delivered enough traction to hire a sales team, invest in marketing and focus on high growth, is where you have the opportunity to further add value to your product and potentially dramatically grow ARPU and sales velocity by continually uncovering your customers’ needs.

The foundation to enable this starts with a sales process rooted in Discovery, which I like to call “Discovery and Qualification”. Figure out what’s happening with the prospect that’s making them want to speak with you. If it’s a cold call, figure out what’s happening that is of urgent concern to the prospect and is relevant to your solution.

There are plenty of sales processes that help with Discovery and Qualification, my all time favorite being the Sandler Sales Methodology, although I modify it a bit from the traditional method. Feel free to share yours and add comments on what’s working for your team.  

 

The Value of Raw Product Data from Sales

Posted on by growarpu

While I was at Ford, a well respected technology leader suggested I see three parts of the company: Product Development, Manufacturing and Marketing. This was good advice at the time, since I was in the Ford College Graduate program and would rotate into four different business units over the next two years.

From a tech perspective, early exposure to these three worlds at a company the size of Ford was interesting because I quickly learned how difficult it is to get all of these disciplines to speak the same language.  For instance, a common complaint in the auto industry is around the divide between manufacturing and design. A perfect example of this break in communication was the Pontiac Aztek.  Pontiac’s designers, lead by Tom Peters, designed something like this:

00000001

Unfortunately, the world got this:

pontiac-aztek-gt-photo-336715-s-1280x782-e1359740045747

In building early stage software companies, I have noticed an interesting parallel occurs between sales and product. While having a sophisticated product marketing team can provide a great amount of customer perspective, it is rarely as unrefined and expansive as raw sales feedback from the customer to the product manager and dev team’s ears. Through the product marketing funnel, miscommunications happen, things get rationalized, prioritized, de-prioritized and lost. That’s what the process is designed to do.

Of course, raw data directly from the sales team can be messy and difficult to organize. For example, an AE says he lost a deal because a product feed during testing is slower than expected for a large prospective client. That’s just one data point. However, what if 10 different prospective clients expressed the same concern but in different ways? How do you consistently capture that? What if those ten instances happened in a month, a week or even a day? Would the frequency of occurrence effect the urgency of a change?

Frankly, I have not yet figured out the best way to capture and prioritize this raw data, so I would love for my readers to share their ideas on the subject. At the companies where I have worked we’ve tried a number of different tactics, including Jira, Google sheets, Excel, frequent meetings between sales and product and more, but we were never able to find the be all end all tool to help capture this valuable data.

Bridging the gap between these two channels is a difficult yet worthwhile pursuit, as their cohesion is an essential part of growing ARPU in your developing SaaS company. As such, here are some basic questions to ask yourself during your most noble endeavor:

  1. Does your sales team understand your product?
  2. Does your product team listen to sales calls?
  3. Is your sales team speaking to the right customers (it’s ok if you don’t know who is exactly the target customer yet)
  4. Are they leveraging a strong discovery based sales process (chances are, they are probably not)
  5. Are you capturing the product feedback from customers communicated to sales in some way?

Whether the team is pre-seed or a series D company seeking to grow ARPU with a new division, these are basic thought starters for emerging SaaS companies. Your company DNA can be centered around product or sales, but to sustainably grow ARPU there needs to be a synaptic level of efficiency in the communication between these two organizations.