Here we go again!

I just can’t stay away from the thrill of a Start-up. As much as I enjoy working with entrepreneurs and senior management of other companies, there is nothing like the thrill of preparing a new venture strategy and then making it happen.

emAPPetizer is dedicated to helping professionals (lawyers, doctors, dentists, engineers, accountants, …) to publish their Mobile APP ideas on multiple platforms: iPhone, iPad, Android, Blackberry and more. These folks who are otherwise busy with their own careers, can work with us to specify their APPs. We handle the entire backend including development, publishing and revenue collection. We’ve tried to take lessons learned to date in the hightech world to implement a very unique risk and reward based business partnership. I am excited about this business domain and the future of this company.

So far we have discussed selling hardware, software and information. One of my colleagues suggested we should address the selling challenges of the Software as a Services business model.

Hi Bruce,

These are the type of considerations one of the software company I am working with used in shifting their business model by 180 degrees 3 years ago. They got rid of their sales department scattered around the US and started to focus on an aggressive web marketing campaign. Anyone can download their software, no license charge (ever) but a revenue model based on an “optional” subscription annual fee. The software is world-class and has been adopted by many major organisations: Xerox, Lockheed Martin, Motorola, US Army….

Open Source:

The open source model I am referring to follows the “Microsoft Public License” (MsPL) strategy. Here are a few arguments behind this strategy and some of its benefits:

No License cost:

These are the major benefits for customers:

• The very first money a customer spends is already focused towards solving a problem and is not burnt in expensive evaluation cycles
• SOX, US-GAAP and revenue recognition policies for public companies have led to pushing more risk to the customer with traditional license contracts in the recent years. At the same time it puts a lot of pressure on a Sales Force of software solutions to make license deals as big as possible. With a lot of money involved customer are pressured to engage in long evaluations before making a buying decision. The open source model has eliminated these hurdles altogether
• Thus software providers and business partners can provide added value from day one without pushing the sales of software but setting focus on services and quick results
• Implementation projects do not need be made big and global from the start to justify high license investments and they do not need to feign high business value (only earned in later phases). They can start small and grow global, earning business value phase by phase
• To pilot a solution using such a model does not necessarily require CIO (IT) approval. Proof-of-concepts can be done at departmental level giving a business-champion all back up to demonstrate the potential improvements and business value

Regards  Daniel Gelinas

I can think of several new issues and dilemmas that this model presents for the sales process:

1. Is there a point in which we can consider the customer closed or committed to our  product?
2. Does the sales function evolve into a customer care function?
3. How must the “sales” compensation plan be altered to take this revenue model into account?
4. How do we manage sales activity?

After reading Bob’s blog post… Why Online Product Launches are Different, Better, Cheaper…I thought I would chip in with my own experience.

Sales and Marketing Internal Agreements

New product or service offer launches are, to say the least, challenging both from a market competition perspective and an internal coordination perspective.   Internally there are several potential points of failure that, with a little formality can be reduced. One of the tricks I learned is to create formal agreements between teams involved in the launch.

As an example, let’s use sales and marketing teams. The idea is to describe on one or two pages the commitments these teams make to each other related to the launch. Once the Internal Agreement is finalized, we get the team leadership to sign off and ensure adhesion.

In this case, the agreement should cover:

1. Marketing Message
   1. What benefits does the offering deliver
   2. How does it compete
   3. Timing of promotion
   4. Purchasing details
2. Result Metrics for example
   1. Number of sales ready leads expected from promotion in a specified time frame
   2. Number of sales follow-ups expected
   3. Number of demos or meetings expected
   4. Revenue anticipated
3. A description of the” Ideal Prospect” for example
   1. Company Size
   2. Industry
   3. Ideal contact level
   4. Location
4. A definition of a “Sales Ready Lead” for example
   1. Expression of interest
   2. Request for demo
   3. Request for meeting
5. Composition of Sales Team for example
   1. Dedicated resources?
   2. Resource selection
6. Sales Feedback (my favorite)
   1. Timing of follow-ups
   2. Format of Sales Call Reports
   3. Is the benefits statement getting traction
   4. Positioning  recommendations based on field experience
7. Agreement Follow up
   1. How often should the teams meet to review results
   2. What type and format of progress reporting should be used
   3. Ongoing communication mechanism
   4. Recommendations for post launch phase

The internal agreement can refer to additional documents but the idea is to have one master agreement that captures the essence of the commitments the marketing and sales teams are making to the success of the new product or service.

Employer:    “In this job we need someone who is responsible.”

Applicant::   “I’m the one you want.  On my last job, every time anything went wrong, they said I was responsible.”

Credit: digitaldreamdoor.com

I know a few business owners that pride themselves in closing business “all online” without expending time and money meeting their customers. We had a sales situation last week that I thought I would throw out here and take a poll on how you would handle it from a business owner perspective.

In 2009 our customer had generated roughly half a million dollars in revenue for us. We had performed well and the customer is looking to renew for 2010. An initial order had been issued and we had received an” invitation to quote” letter offering to increase their spend with us if we could offer tiered pricing discounts. After a phone conference to make sure we understood the intention, we prepared our proposal. A t that point we made a 4 person/day–$1500 decision. 

We could have easily submitted the proposal by e-mail remotely and I am quite sure increased our revenues for 2010 because there were  compelling   discounts. This customer does conduct most of its business over the phone and online/via virtual communication. Instead we offered to present the proposal face to face to be able to review the content in detail. They welcomed the offer. Although time was at a premium, the client gave us 60 minutes which we maximized with an agenda, proposal, handouts and even lunch (that always helps sweeten the mood)..” 

Through the course of the meeting we created a bond with two directors we had never met before. Although not stated, we could “see” that they were  new to setting up a “strategic supplier relationship” and really weren’t quite sure how to go about negotiating the agreement.  We could “see” they were uncomfortable with body language, shifting, facial expressions, glances at each other, even smiles after specific questions. As a result of being face to face we agreed to build this contract together. This resulted in a “partnership”and I believe probably increased the spend level for 2010 by 25%. 

I would like to know how you or your business owners would have reacted to this situation? In our case, I believe this was a very worthwhile investment although we would have had business anyway. 

What would your company have done?

The following short quiz consists of 4 questions and will tell you whether you are qualified to be a “professional”.

Scroll down for each answer.  The questions are NOT that difficult.

1.  How do you put a giraffe into a refrigerator?

The correct answer is:  Open the refrigerator put in the giraffe and close the door.  This question tests whether you tend to do simple things in an overly complicated way.

2.  How do you put an elephant into a refrigerator?

Open the refrigerator put in the elephant and close the refrigerator.  Wrong Answer!

Correct Answer:  Open the refrigerator, take out the giraffe, put in the elephant and close the door.  This tests your ability to think through the repercussions of your previous actions.

3. The Lion King is hosting an animal conference.  All the animals attend except one.  Which animal does not attend?

Correct Answer: The Elephant.  The elephant is in the refrigerator.  This tests your memory.

OK, even if you did not answer the first three questions correctly, you still have one more chance to show your true abilities.

4. There is a river you must cross. But its inhabited by crocodiles. How do you manage it?

Correct Answer: You swim across.  All the crocodiles are attending the Animal Meeting.  This tests whether you learn quickly from your mistakes.

According to Anderson Consulting Worldwide, around 90% of the professionals they tested got all questions wrong. But many preschoolers got several correct answers. Anderson Consulting says this conclusively disproves the theory that most professionals have the brains of a four year old.

Credit: basicjokes.com

Nobody dast blame this man. For a salesman, there is no rock bottom to the life. He don’t put a bolt to a nut, he don’t tell you the law or give you medicine. He’s a man way out there in the blue, riding on a smile and a shoeshine.

Credit: Death of a Salesman, Arthur Miller

I’ve been lucky enough in my career to have been exposed to selling all three fundamental products in computer technology. Namely hardware as in OEM graphics and imaging components, software as in major complex applications and information as in tracking on line corporate software buyer requirements , trend reports and detecting new technology acquisition projects (Demand Generation).

Here are a few fundamental observations from this experience:

1. By far the easiest to sell and manage delivery is hardware. Even though the product content may be complicated, either the hardware supports the customer requirements or not. It either works or it does not. It is very much a binary sale relative to software and information.
2. To me, software applications are the hardest to sell and to manage deliveries, especially in the early adoption phases. The problem is that given enough time and money, almost any functionality can be included in a scope of work. Most companies fall into the unlimited scope sales trap and others are very good at avoiding it. I’ve gotten myself in this trap several times and with the best intentions.
3. Selling information is the most interesting to me for one reason. The Value Proposition. “One man’s trash is another man’s treasure”. Managing delivery is no problem. The issue is what is the info worth? In the domain of Demand Generation, a single opportunity contact can be worth millions to the right recipient and a thousand contacts could be worth nothing to the next. The cost of acquisition for the supplier can be very low or very high but is not really related to the marketable value.

This post is turning out much heavier than I originally planned so I guess I will turn this into an independent category so that we can dig deeper into these sales observations.