Value Proposition canvas- Customer needs and pains
Sales Operations for Early Stage Companies
1. 1
Sales Operations
for Early Stage Companies
Stephen C. Sweeney
March 24, 2006
2. 2
Sales
It is a tough job these days . . .
Buyers increasingly aware, knowledgeable, and
discriminating
Sales increasingly cross-functional
Sales increasingly team-based
Sales increasingly relationship-based
Sales remains solution-focused
Big competitors have and leverage both relationships
and resources
3. 3
Fundamentals of Sales & Selling
Introduction
This presentation is not about . . .
Marketing
Public Relations
Negotiation
Sales Organization
Sales Compensation Plans
This presentation is about . . .
B2B Selling Process & Opportunity Planning
. . . but general principles still apply to other products /
services
4. 4
Fundamentals of Sales & Selling
Is sales important to the life of a company?
Yes.
Is sales important to your career?
Definitely.
How many marketing cases were on sales?
One.
How many LO cases were about sales (to date)?
Nordstrom & the Q2 Exam . . . “kind-of” about sales.
Why so little coverage?
“WE ARE ALL IN SALES. PERIOD.”
- Tom Peters
5. 5
Fundamentals of Sales & Selling
Why so little coverage?
Sales is as much art as science.
Often viewed as a line responsibility, not corporate
Often viewed as a commodity skill, not sophisticated
Prejudice against sales and sales people (used car salesman)?
Moved into FY Entrepreneurship elective
???
6. 6
Fundamentals of Sales & Selling
The Reality.
Sales is the tip of the spear of your organization.
Prospects will know you (identify you) through the quality of
their interactions, which until a sales happens, occur
primarily with the sales representative.
The quality, or lack thereof, of those interactions will have a
lasting impact . . . and are sometimes impossible to shake.
Our connected world will preserve many of these negative
interactions for posterity.
You don’t want to be “that guy” or have “that guy” on your
team.
7. 7
Fundamentals of Sales & Selling
Contrast – Negotiation & Sales
Negotiation
With an interested prospect, working to agree on price
and terms. Trading concessions.
Could result in win-win
Could result in win-lose
Could result in lose-lose
8. 8
Fundamentals of Sales & Selling
Contrast – Negotiation & Sales
Sales
Process of motivating the prospect to buy your solution
on your price and terms.
Note, however:
The goal is to result in a win-win negotiation where both parties
satisfied.
Create the value. Capture the value.
Sell now, negotiate later.
9. 9
Fundamentals:
Some Sales Nomenclature
Direct
Outside Sales = in the field
Indirect
Inside Sales = over the phone, sales support, lead
generation, pooled, call center
Channel Sales = pulling product through a channel
Process, Concepts, Techniques largely universal
10. 10
Fundamentals:
The Funnel
The Sales Cycle
Prospect
Unqualified Lead
(Mendoza Line)
Qualified Lead
Value Proposition
Proposed
Verbal
Closed (won)
Other
Dead Lead
Lost
Prospect
Unqualified Lead
Qualified Lead
Value Proposition
Proposed
Verbal
WON!
Dead
Lost
Lost
Lost
Lost
11. 11
Fundamentals:
Funnel Implications . . . “Put your ops hat on.”
Not all prospects advance to the next
stage.
Understand why – post mortem.
Improve efficiency – continuously.
Not all prospects move through the
funnel at the same rate.
Understand why.
Improve flow rate; remove
bottlenecks – continuously.
Process and infrastructure should be in
place to support each stage.
Information is collected &
disseminated at each stage.
Market intelligence
Competitive intelligence!
Funnel must remain full and flowing!
Prospect
Unqualified Lead
Qualified Lead
Value Proposition
Proposed
Verbal
WON!
Dead
Lost
Lost
Lost
Lost
12. 12
Fundamentals:
The Funnel & The Sales Pipeline
Prospect
Unqualified Lead
Qualified Lead
Value Proposition
Proposed
Verbal
WON!
% Won $ Value Risk Adjusted
3% 15,000,000 450,000
5% 10,000,000 500,000
10% 5,000,000 500,000
25% 4,000,000 1,000,000
50% 2,000,000 1,000,000
95% 1,000,000 950,000
37,000,000 4,400,000
13. 13
Fundamentals :
Working backward . . . put your QA hat on
If Company A wants
to generate $5,000,000
in sales next year
instead of $4,400,000,
how many more
prospects do they
need?
Assume: average deal
size is $500k
Answer: +40 prospects
% Won Deals $ Value Risk
Adjusted
3% 30
+40
15,000k
+20,000k
450k
+600k
5% 20 10,000k 500k
10% 10 5,000k 500k
25% 8 4,000k 1,000k
50% 4 2,000k 1,000k
95% 2 1,000k 950k
74
+40
114
37,000k
+20,000k
= 57,000k
4,400k
+600k
=5,000k
14. 14
Fundamentals :
Working backward . . .
If we have 3 Sales
Reps and each can
manage 25 deals at
any given time, how
many more sales reps
do we need?
125 deals / 25 = 5
5 – 3 = 2 new reps
% Won Deals $ Value Risk
Adjusted
3% 30
+40
15,000k
+20,000k
450k
+600k
5% 20 10,000k 500k
10% 10 5,000k 500k
25% 8 4,000k 1,000k
50% 4 2,000k 1,000k
95% 2 1,000k 950k
74
+40
114
37,000k
+20,000k
= 57,000k
4,400k
+600k
=5,000k
15. 15
Fundamentals :
Working backward . . .
If we have 5 Sales
Reps, what kind of
targets should we set?
Trick question.
You need each person
to carry a pipeline of
$11.5M to close $1M
each.
You would want to
set the targets higher,
however.
% Won Deals $ Value Risk
Adjusted
3% 30
+40
15,000k
+20,000k
450k
+600k
5% 20 10,000k 500k
10% 10 5,000k 500k
25% 8 4,000k 1,000k
50% 4 2,000k 1,000k
95% 2 1,000k 950k
74
+40
114
37,000k
+20,000k
= 57,000k
4,400k
+600k
=5,000k
16. 16
Fundamentals :
Working backward . . .
Given the “calls”
required to advance
the process, how
many calls (activity)
per week are required
per sales rep?
1940 calls
5 reps
50 weeks
= 7.75 calls / week
Stage Calls /
Deal
Deals Total
Prospect 20 30
+40
600
+800
Unqualified 15 20 300
Qualified 10 10 100
Value Prop 10 8 80
Proposed 10 4 40
Verbal 10 2 20
74
+40
114
1140
+800
=1940
Aha Moment!
Five reps & 1940 interactions (brand impressions) with 114 potential
customers and many more different individuals over 12 months?!!
How important is each and every sales interaction? How is your
corporate brand being perceived, your message understood? Will
marketing collateral or a website make a difference?
Opportunity – Do this right and you create competitive barriers and
build a lasting company.
Threat – Screw this up and you create huge obstacles for yourself
and/or your successors.
17. 17
Fundamentals :
Working backward . . .
Added Complexity:
Multiple Products / Services
Could mean different average deal sizes
Could mean different average sales cycles (length & steps)
New business vs. Follow-on
Geographic / cultural / country differences
Other questions that can be answered:
How many lead generation resources do we need?
How many channel partners do we need?
Where should we set plan / quota?
18. 18
Fundamentals:
Sales Processes
Methodologies abound
Siebel (Target Account Selling)* – www.siebel.com
*Most of the following concepts are from TAS
Sandler Sales Institute – www.sandler.com
Solution Selling – www.solutionselling.com
Miller Heiman – www.millerheiman.com
Dale Carnegie - www.dale-carnegie.com
And many many others . . .
“If you don’t LOVE SALES … find another life.
(Don’t pretend you’re a “leader.”)” - Tom Peters
19. 19
Fundamentals:
Why a Sales Process?
Add structure to a process that is often unstructured and
performed by “gut” or “feel”
People go into sales for two reasons: the freedom and the earnings
potential
Repeatability & standardization across an organization
Consistent message, consistent service level
But ultimately to . . .
Minimize negotiation concessions, maximize profits ($$)
Increase sales efficiency (close ratio)
Reduce selling cycles (time)
Lose early (productivity)
20. 20
Fundamentals:
Sales Stages
Open
Prospecting
Uncovering Needs
Middle
Qualification
Value Proposition
All three are required to generate a sale.
Close
Competing /
Proposing
Closing
“PUT THAT COFFEE DOWN! Coffee is for closers.”
– Glengarry Glen Ross
21. 21
Fundamentals:
Opening – uncovering opportunities
Prospecting
Cold Calling
Networking
Referrals
Relationship Equity
Uncovering needs
Ear to the street
Asking questions
Plugged in
Open
Prospecting
Uncovering Needs
Skills Required:
No fear / issues with rejection. Disarming.
Persistent.
Up-front Contracts.
Builds lasting relationships.
Enjoys meeting new people; sociable.
Inquisitive. Likes to learn. Knows how to ask questions.
Trustworthy – can be a confidant. Not always out for self.
22. 22
Fundamentals:
Middle – finding the $$
Qualification
Is there an opportunity?
Can we compete?
Can we win?
The value and cost of winning
Value Proposition
Stakeholders
Business Needs
Our Solution
Unique Business Value
Middle
Qualification
Value Proposition
Skills Required:
Understands customer needs.
Understands an organization – 3 x 3.
Recognizes influence / decision-makers.
Inquisitive – asks the tough (& dumb) questions.
Assume, Validate, Triangulate, Obtains Proof – why, why, why? More questions, less talking.
Likes to lose early. Values time.
Good at marshalling resources.
23. 23
Fundamentals
Qualification
To be qualified you must know:
There is a need we can meet – “Solution Fit”
There is a decision-maker – “Economic Buyer”
There is a reason to act – “Compelling Event”
There is money to spend – “Access to Funds”
Take Aways:
Lose early. It is very expensive to lose late.
No qualification = No opportunity
No opportunity = No Proposal.
“Just say no.” – Nancy Reagan
Close Date implies Compelling Event
24. 24
Fundamentals:
Opportunity Assessment (us & competition)
Is there an opportunity?
Project defined?
Business profile strong?
Financial condition strong?
Access to funds?
Compelling event?
Can we compete?
Formal decision criteria defined?
Solution fit good?
Sales resource requirements low?
Current relationships strong?
Unique business value strong?
Can we win?
Inside support strong?
Executive credibility strong?
Cultural compatibility good?
Informal decision criteria
defined?
Political alignment strong?
The value and cost of winning
Short-term revenue high?
Future revenue high?
Profitability high?
Degree of risk low?
Strategic Value high?
25. 25
Fundamentals:
Relationship Strategy
Starts with the org chart
What is each person’s “buying role”?
What is their adaptability to change?
What is our status?
What is our coverage?
Where do they fit politically?
Influential? To whom?
Influenced? By whom?
What are we doing (tactics) to improve our position
with each?
26. 26
Sales Process:
Opportunity Planning
Identify Tactics
The steps we will take to build relationships, gather
information, and move the opportunity toward closure.
Proving value.
Retrieving information.
Insulating against competition.
Minimizing weaknesses.
Emphasizing strengths.
What, by whom, and when?
Manage to the plan.
27. 27
Fundamentals:
Closing – asking for the business
Competing / Proposing
Formal decision criteria
Informal decision criteria
Competitive Strategy
Compelling Event
Closing
Steps to close
Asking for the business
Uncovering objections
Being creative
Closing
Competing /
Proposing
Closing
Skills Required:
Recognizes how decisions get made.
Builds consensus.
Gets creative.
Persistent.
Inquisitive – asks the tough questions.
Not afraid to lose.
Not afraid to ask for the business.
“A-B-C. A-Always, B-Be, C-Closing. Always be
closing, always be closing.” – Glengarry Glen Ross
28. 28
Fundamentals:
Competitive Strategy
If you have a compelling event
and have inside support:
Offensive
Frontal
Flanking
Fragment
If you do not have a compelling event
or do not have inside support:
Defensive
Develop
Defend
29. 29
Sales Process:
Five Deal Vulnerabilities
Articulating Unique Business Value
Decision-Making Criteria
(Formal and Informal)
Budgeting and Funds Availability
Date of Closure (Compelling Event)
Steps to Close
Plus . . . Self-delusion
"Face reality as it is, not as it was or as you wish it to be . . You have to see
the world in the purest, clearest way possible, or you can't make decisions on a
rational basis.“ – Jack Welch
30. 30
Sales Operations
Areas of note . . .
Customer Intelligence
Understand what data should be collected at each stage
Understand where that data should live (spreadsheet,
CRM, forms)
Pipeline, Forecasting, Management Reports
Sales Support
Collateral
Templates
Scripts / Presentations
Sales Training
Practice, practice, practice
31. 35
Hiring for Sales
Tips:
Maintain high standards
Team orientation
Personality Assessments
“Pitch Me” Interview
Customer References
Probationary period with specific goals
32. 36
Skills for Sales Success
1. Prospecting
2. Qualification
3. Account Planning
4. Pipeline Management
5. Opportunity
Management
6. Call Planning
7. Relationship Building
8. Forecasting
9. Closing
10. Negotiating
Many of these skills can be learned.
But can you teach them?
33. 37
Qualities for Sales Success
Work Ethic
Sense of Urgency
Listening – Understanding
Pains and Value
Positive Attitude /
Possibility Thinking
Teamwork
Leadership
Knowledge of Solutions and
Value Proposition
Creating Business Value
for Prospects / Customers
Communication &
Articulation
Intense Customer Focus
-Creating Satisfaction
Articulating Business
Value of Solutions
Responsibility and
Ownership
And having fun WINNING!
34. 38
Managing Sales People
Hands on is best . . .
Weekly focus, not quarterly or annually. “What are we going
to accomplish or even close this week?”
Be demanding. Establish & maintain high standards.
Coach / mentor / ride shotgun
Focus on planning
Account Planning
Opportunity Planning
Weekly planning / prioritization
Call planning
Insist on documentation, reporting, and forecasting
Facilitate within the organization. Eliminate distractions.
Step in to fill the gaps - Help with middle or close, not open!
35. 39
Motivating Sales People
Cash / Commission Plan – “Feed your eagles.”
Accurate & timely commissions – minimize “noise”.
Commission Plan Upside – Encourage momentum,
discourage sandbagging.
Recognition – Feed their ego.
Contests – Great for motivating for short-term, closing a gap,
inspiring healthy competition.
Infrastructure & Support – minimize distractions, maximize
selling time.
High standards.
“We're adding a little something to this month's sales contest. As you all know,
first prize is a Cadillac El Dorado . . . Second prize is a set of steak knives.
Third prize is you're fired.” – Glengarry Glen Ross
36. 40
Thanks!
Stephen C. Sweeney
Entrepreneur & Venture Capital Club
The Darden School of Business
SweeneyS07@darden.virginia.edu
832-647-3453
Notes de l'éditeur
Note: You would rarely if ever value your unqualified leads, much less your prospects, in a solution sales process. Maybe if you were mass marketing a product, but in that case a funnel wouldn’t apply. These are not realistic numbers. This is just an example.