Jeff Szczepanski
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Jeff Szczepanski
- 1. Developer’s Guide to Running Sales Teams…
- 2. Jeff Szczepanski Chief Operating Officer http://developingsales.com
- 3. Offices in Denver, New York & London • 70 Sales Reps across 9 Teams • 6 Sales Managers • 2 Sales Executives • 6 Marketing People
- 4. Common Startup Plan 1.Idea! 2.Technical Co-Founders 3.Raise Money 4.Build Great Product 5.Hire VP of Sales ie: ‘Needz Sales’ 6.Profit!!
- 5. Common Startup Outcome 1.Idea! 2.Technical Co-Founders 3.Raise Money 4.Build Product 5.While( Cash Remains ) Hire VP of Sales <some stuff happens> Wait 12 to 18 months Fire VP of Sales 6. FAIL!
- 6. Common Startup Outcome 1.Idea! 2.Technical Co-Founders 3.Raise Money 4.Build Product 5.While( Cash Remains ) Hire VP of Sales <stuff happens> Wait 12 to 18 months Fire VP of Sales 6. FAIL!
- 7. Add More Features!!? Best Way to Increase Sales???
- 8. Add More Features!!? Best Way to Increase Sales??? No, it’s cheating because it expands your addressable market, it doesn’t increase actual rate of penetration.
- 9. Good sales execution is what sits between your Product and a Great Business Product Sales Execution Great Business
- 10. Building Sales Orgs in 3 Phases Proving Product Value Understanding your Pitch Scaling the organization
- 11. Essence of Phase 1 Proving a Market Exists for your Product and that people will pay money for it.
- 12. Phase 1 Goal Several paid customers who are getting value out of the product
- 13. Phase 1 -> Challenge Your Product Really, Really Stinks
- 14. Phase 1 -> Implication Customers are buying into your vision more than your product
- 15. Phase 1 -> Activities • Product is rapidly evolving • Founders need to be out there selling and proving the vision Key Point: Professional Sales People Not Needed (nor desired) in this phase
- 16. Phase 1 Best Practices • Lean Startup Concepts – Getting to Minimum Viable Product • Founder selling of the vision • Tight Feedback Loops without Filters • Talk to BUYERS, not just Users – all the personas in the value chain • No Free Stuff: Prove Value • Test your Pricing
- 17. Phase 2 Proving Product Value Understanding your Pitch Scaling the organization
- 18. Phase 2 Entry Foundations • A product that is proving useful – Doesn’t completely suck anymore – Graduating from beta phases • Multiple Paying Customers – People Have paid real money • Lists of Possible Future Customers • Good sense of a Workable Price Point
- 19. Goal of Phase 2 Multiple Sales Reps Closing Deals on their Own
- 20. Phase 2: Sales Rep Hiring Profile • Not their first Sales Job – Proven ability to sell something – At least modestly consciously competent – Smart, Hungary, buy into your vision – Genuinely like solving problems • BUT Avoid Very Experienced Reps – Expect to make tons of money immediately – Expect too much from the product – Preconceived notions on how to sell product
- 21. Common Phase 2 Problem FOUNDER: “I can close customers myself without any problem, but the reps I’ve hired can’t close the deals on their own”
- 22. Common Phase 2 Problem SALES REP: “I can’t close customer X without feature Y” and SALES REP: “If I had Feature A, then I could sell way more”
- 23. Phase 2 Best Practices • You product will always suck to some extent – Admit it to yourself, Admit it to the Sales Reps – Sell what you have • Get to at least 3 Sales Reps as fast as possible – You want multiple petri dishes • Aggressive Compensation Plan – Want successful reps making a ton of money • Fight all urges to use discounts to close deals • Sales Manager not Needed yet – But a good idea to be looking!!
- 24. Phase 3 Proving Product Value Understanding your Pitch Scaling the organization
- 25. Phase 3 Entry Foundations • Multiple Self Sufficient Reps Closing Deals • Happy Reps Making good money • Lots of Positive Testimonials – Product doesn’t totally stink anymore • Lots of Paying Customers – Repeat business • Lots of Identifiable Prospects to Attack
- 26. Phase 3 Goal Jetting to your vacation home in Aspen, Colorado
- 27. Phase 3 Goal Predictable Revenue that is Scaling
- 28. Phase 3 Concepts Must Read Book!! (But ignore half of it)
- 29. Phase 3 Bad News • Nature of Sales is Changing Rapidly • Classic Management Methods Failing • Experience != Expertise • Poor at Predictions of Outcomes • Seemingly More Art than Science • No Magical Processes to Follow
- 30. Phase 3 Bad News • Nature of Sales is Changing Rapidly • Classic Management Methods Failing • Experience != Expertise • Poor at Predictions of Outcomes • Seemingly More Art than Science • No Magical Processes to Follow
- 31. Phase 3 Scaling Solution What if we put an experienced CTO/VP of Engineering in charge of Sales!!??
- 33. WTF – Does that really help?
- 34. Phase 3 Insight Good Sales Management approaches parallel Good Software Development approaches!!
- 35. Properties of Successful Software Development
- 36. Smart and Gets Things Done Empowered Autonomous Individual Contributors
- 37. Understand Performance != Results Software Development • Discovering, Developing and Finalizing Requirements • System Architecture, Design and Code Construction • Quality Control including effective testing and validation • Task Estimation and Project Management • Deployment and Ongoing Maintenance A bunch of Separable Skills that individuals and the team must be process capable of
- 38. Phase 3: Skills Development Software Development • Discovering, Developing and Finalizing Requirements • System Architecture, Design and Code Construction • Quality Control including effective testing and validation • Task Estimation and Project Management • Deployment and Ongoing Maintenance • Team Morale and Cadence Sales Development • Prospecting • Questioning • Proposal Development and Pitching • Objection Handling • Closing Skills • Negotiation • Time and Pipeline Management • Team Morale and Cadence
- 39. Team Morale and Cadence • Bottom Up Schedule Estimates • Strive for Continuous and Steady Output – Team Goals but No death marches • Using Peer and Social Pressure vs. Edicts – Setting Cultural Norms and Expectations • Compensation Fairness • Merit not tenure based Advancement
- 40. Phase 3 Sales Rep Role Same as Phase 2 Rep!! ….but you can loosen up the constraints a little …this is just like on your dev team as it grows.
- 41. Phase 3 Sales Rep Each Rep runs their Own Small Business: • End to End ownership of the relationships • Sets their Own Forecasts • Picks their Own Accounts • No scripts, No quotas • Works under shared best practices • Supported by Team Leader and Sales Manager
- 42. Phase 3 Sales Manager • This is the Line Manager of the Sales Reps – Parallel to the Engineering Manager • Primary Responsibility is Skills Development • Removes Operational Barriers – Helps define and build common infrastructure • Works with a Longer Term Horizon – More Quarter to Quarter than Day to Day • Tends to Specialize as you Grow – Splits into Operational Aspects and Skills Development Aspects
- 43. Phase 3 Team Lead • Drives Cadence and Morale of the Team • Parallel to the Technical Team Dev Leads • Walking Personification of Ideal Sales Rep • Natural Leaders that enjoy Mentoring • Player and a Coach -> Carries full account load • Eyes and Ears for Sales Management – Spot treatments not skills development
- 44. Phase 3 Role Separation Team Leaders => Track Racing Pit Crew Sales Management => Garage Mechanics
- 45. Phase 3 Tools and Process
- 46. Phase 3 Tools and Process SCRUM Sprint Based Process • Team Based & driven by the Team Leads • Operated as Joint Retrospective and Standup • Breaks Monthly or Quarter Forecasting Cycles into Week Long Sprints • Reinforces Team Work and Shared Best Practices • Friendly competition between Teams and Offices
- 47. Phase 3 Tools and Process
- 48. Phase 3 Tools and Process
- 49. Phase 3 Tools And Process
- 50. Phase 3 Tools and Process
- 51. Phase 3 Goal Predictable Revenue that is Scaling
- 54. Phase 3 Best Practices • First Phase with Professional Sales Manager(s) • Separate Performance from Results • Developing Suites of Skills in Each Rep • Empower the Reps and Teams to Self Manage • Each rep is running their own little business • Real Time information: No Static Reporting • PS: All Current CRM Systems Suck!!! • Autonomy and empowerment is the name of the game REMEMBER: Compensation System is a way to Reward people. It is NOT a Management Tool.
Notes de l'éditeur
- This presentation for developers and technical co-founders. In effect, is about taking the scariness and mystery out of running sales teams. And just to make sure this presentation doesn’t get too slick and sales like, it has been prepared solely in Courier typeface. And, only using VI and nroff. Additionally, no graphics designers or marketing people were used or harmed in it’s preparation. Except maybe if we let see some of these slides.
- Before we dig in, I should introduce myself I’m Jeff Szczepanski, Chief Operating Officer at Stack Exchange. Stack Exchange, as you may know is home to Stack Overflow, our best known community and then like 120 other question and answer sites. My role at Stack Exchange, as COO, is basically running “the business side” of the network. That is, there is the free service Q&A part of the company. Building out the Q&A platform itself and all the associated communities. That is headed up by Joel and several other really smart people at Stack. My half of business is all about assuming that healthy robust network exists, what do we do to make money? So sales, marketing, and products and services that we sell all falls under me. Relative to my own background, I’m Electrical Engineer by training, but spent most of my career as a developers, co-founder, CTO/VP of Engineering type stuff. My specialty is really in embedded real time systems development on real time operating systems. Doing hard core device drivers and network protocol stack type stuff all in C/C++. On Stack Overflow and within the company in particular, I am know as “Tall Jeff”. Here is my Stack Overflow flair showing my very recent milestone of hitting 6,000 reputation on Stack Overflow. No where close to a page 1 user of course, but still higher than many of the developers in the company, which I’m am fond of pointing out to them on occasion. One caveat you should know here is that I’m am not a professional presenter, don’t really present much, didn’t write any books or anything, and while I did recently start a blog on talking about some of the stuff here in this presentation, I not quite sure how I ended up in front of all of you here today. I do have two theories however. I have been to basically every business of software event so far, as an attendee sitting out where you guys are sitting. I think that is like the 6th one or something normally sitting out there where you are. Have you any of you out there been to all of them as well? Maybe after every 5 consecutive events, you get one talking slot? The second theory is that Mark in planning the event, wrote a note to Wendi about getting “JS” at Stack Exchange to talk here at the first BoS UK. She took it to mean Jeff Szczepanski, but in actuality he meant Joel Spolsky. That seems like the most likely explanation to me. In any case, no matter the reason, hopefully that the end of the presentation, all of you are not still wondering why I got the opportunity to talk here today.
- One more quick thing about us at Stack Exchange. Lots of what I’m going to talk about is based on the work over the last 4 years of building out the Careers 2.0 business around Stack Overflow. This is the products and services we sell that gives employers and recruiters of programmers access to the tens of millions of people that use Stack Overflow every month. It is becoming a sizable business now operating in several markets around the world based out of offices in Denver Colorado, New York City, and nearby here in London. <SLIDE BULLETS> This is all just in the Careers business, the overall company now is around 150 people.
- What is this presentation really about? It’s about avoiding this sort of startup company plan and thinking. Ever since founding a couple of my own businesses and having a reasonably successful exit, I get asked quite a bit to advise and consult with entrepreneurs and product people, technical co-founders, etc. There is a very common theme out there of a strategy that goes something like this <SLIDE BULLETS>
- In actuality here is more like what happens. <SLIDE BULLET 5> I get to see lots of these companies around here in these stage. Hopefully not too late into this. The thinking is always oscillating around how the sales team and employed sales management is doing and whether or not they are getting traction as a business.
- This presentation is about not getting into this trap. And thinking about your business a little differently. To be fair, lots of the lean startup work, agile processes, minimum viable product thinking is helping with this a little, but the problem is all that is focused on product market fit issues and not on the scalability of the sales organization. Although, conversely this is put an increased emphasis on product and product design. Delighting customers, making users feel awesome. Want to see more??? Add More Features!!
- Joel actually wrote a blog post or maybe it was an Inc. Magazine article about this at one point: The single best way Fog Creek ever increased sales of FogBugz was always to add more features. It’s not that this is wrong or bad thinking, it’s just at can’t be the sole focus either. It also tells you something about the capability of the sales team and approach there. In other words, the sales team never figured out how to scale into the addressable market faster or better.
- Note that while adding features can absolutely increase your sales, and I’m clearly NOT saying ignore product, it’s just that increasing revenue by adding features is cheating because what you are really doining is expanding your addressable marketing not increasing the actual reate of penetration in to the market you are already serving.
- In the end, I want to state it this way: Good sales execution is what sits between your product and a great business. The sales execution is the force multiplier on whatever your product is. As an organization, you have to put equal or perhaps even greater emphasis on sales execution than product. Every great company out there, Microsoft, Salesforce.com, Oracle…..all the 800 pound gorillas in any space, they are not usually known as even the best products and the common theme to all of them is that they were great at Sales execution and scaling. In my previous life at Allworx, where I was co-founder and CTO…we built some great products. Arguably some great products and perhaps even the best products, but back then, we struggled with building the channel out and the sales execution part of the business going head to head with Cisco, Nortel, etc. In the end, even though the business was successful and good for all the stock holders. For me, it was the difference between a $25 million product and team technology type acquisition vs. the $500 million operating business acquisition it should have been. So us all as developers and product people, this presentation is about navigating this space and thinking about what you spend your time on every day a little different. It’s about the $500 million dollar business vs. the $25 million acquihire or even crash and burn scenario.
- So, time to gets our hands dirty. How does this work…building our and scaling your sales organization? We’re going to walk through 3 phases of how to think about this. They are not discrete, but overlapping to some extent in time as phases….even though for sake of simplicity we’ll talk about them like they are 3 distinct things. <READ THREE ITEMS> Let’s dive into Phase 1: Proving Product Value.
- Essence of Phase 1: Proving a Market Exists for your Product and that people will pay money for it. Again, this is all the minimum viable product stuff, lean startup and fast interation. All of that thinking does apply. What we want to think about here is the implications to the selling and the sales organization.
- Essence of Phase 1: Proving a Market Exists for your Product and that people will pay money for it. Again, this is all the minimum viable product stuff, lean startup and fast interation. All of that thinking does apply. What we want to think about here is the implications to the selling and the sales organization.
- Come to terms with it and admit it. You product sucks here. Hardly anybody really wants to buy it. This is OK. You have to start somewhere and again this is what MVP and product market fit is all about. You are finding yourself and converting the core of what is hopefully a really good idea into a product people hopefully want to buy. But there is important implications to selling here. (And yes, you should be selling!!)
- Understand that people buying in Phase 1 are not buying your product. They are buying your vision of the product. This is the essence of the early adopters. They are along for the ride on your potential shooting star of a business. They care more new and different than utility, except in a very narrowly defined area that is your current crappy product. The only people that can sell in this stage effectively is the founders. The people with the vision.
- <READ THE SLIDE> Do not hire a VP of Sales during Phase 1. Everything is still changing too fast. You don’t even want individual sales reps yet.
- <READ THE SLIDE>
- Phase Two I call, Understanding Your pitch. This phase is about translating the vision into a series of pitch angles that resonate with your prospects and tell story that paints your products in a favorable and desirable light. Thing of it a customer’s “choose your own adventure” where all paths ideally lead to a purchase.
- Graduating to Phase 2 operating mode requires specific things to be in place as Phase 1 is winding down in emphasis. <WORK THROUGH SLIDE>
- Phase 2 is when you are allowed to start hiring sales reps. The goal here is to end up with multiple sales reps selling your product and successfully closing deals on their own. Note that I have said nothing here about sales management yet. Phase 2 is not yet about professional sales management. It’s about giving the reps their own autonomy, and tooled with the ability to sell effectively.
- Onto the Sales Rep hiring profile: This is really important. To be clear, I am not saying here “hire great reps” what I am saying here is “hire the right kind of reps”. What you are looking for here is scrappy people but not to the point of being reckless. Marines. You are looking for Marines. These people are also the opposite of being prima donnas. They are problem solvers and they want to help people. <Work through the slide> Let’s talk about what goes wrong in Phase 2
- Let’s talk about what goes wrong in Phase 2 <READ SLIDE> This is one I hear ALL THE TIME. This is the thing that leads to VP of Sales being repetitively fired. Founder’s don’t understand that this is typically their fault. They perceive their great product selling itself. They have no problem selling it themselves. The problem is that the founders have the ability to sell the vision. The sales people are trying to learn how to consistently sell the product. Connecting the two views is the core of what phase 2 is all about. Success in Phase 1 is what give you the confidence that people will buy the product…when they are appropriately pitched. Usually, if the reps are selling it probably not because the reps can’t sell, it’s that they have not yet been appropriately enabled to position and message around the product. <TELL STORY ABOUT JOEL CUSTOMER VISITS>
- Second major issue: <READ THE SLIDE> This is classic. Could be a slight hint that you hired the wrong kind of sales rep, but it’s only human nature. Customers want everything possible and they want it for free, ideally. You product doesn’t have everything and ideally, it is not free. There will always be a mismatch here. If it is consistently problematic and can’t be overcome, then the sales people are targeting the wrong kind(s) of customers. There is a self selecting thing going on here that is very important. POP QUIZ: When you are selling a product and you want to sell more of your product. Given a choice of only one: Do you talk to the prospects that didn’t buy your product to find out why? Or, do you talk to the ones who did buy your product and ask them how they would like it more? ANSWER: It’s always the latter. The customers who are not buying are not in your market segment. The ones that do buy, by definition are part of your target market…at least statistically speaking. The goal is always to go deeper and own segments before expanding into new one. Phase 2 sales development is about rate of penetration into your addressable market, not losing focus and expand who you are going after.
- <READ AND WORK THROUGH THE SLIDE>
- Onto the third and final phase: Scaling the organization. This is where the real action is at. This is when it gets interesting. The previous phases was just kids stuff. When are you ready for Phase 3 activities?
- <WORK THROUGH THE SLIDE> In phase 2, multiple reps selling effectively on their own was the goal. What is the goal of phase 3?
- Jetting to your second vacation home in Aspen Colorado. Which, is really awesome….but unfortunately not a super actionable goal.
- Predictable Revenue that is scaling. The emphasis here is on the predictability and consistency, not unlike what you would want to see your software development team doing.
- Read good book. Read it front to back and understand it all. Ignore perhaps half of it. Take a few things too far.
- This sounds a lot like software development. Yes, due to this changing nature of sales, I’m arguing that the creative process of developing sales with clients isn’t a lot different from a process perspective at the creative process of developing software. This raises a somewhat provocative question….
- what if instead of going out to hire a VP of Sales, you hired a second experienced VP of Engineering, with a good track record of developing software and put them in charge of sales???? Is that crazy talk? Who would do that?
- Joel Spolsky did….That is one of the reasons I ended up as COO at Stack Exchange, so maybe it is not too crazy of an idea. I knew very little about sales and sale management when I started the job.
- Ok, but that doesn’t really help??? As we’ve already established, software too is a bit of chaotic thing with a bad track record. Really good CTO’s and VP’s of Engineering are really hard to find too. Probably no easier than finding a really good VP of Sales. I think the observation is important for THREE reasons: It’s another really good argument for the technical founders to be completely hands on in owning and building the sales engine At some level it widely expands the possible talent pool for people you might consider to head up your sales engine. Third and mostly importantly is the following insight:
- <THE SLIDE>
- Ok, we’re saying modern software development and modern sales development have a parallel nature. What are the practical and actionable implications of this? For that, we have to explore a bit of what makes good software development.
- First it comes down to the type of programmers you hire. You can’t hire just coder who code what you tell them to code. The analogy here to sales people is people who read off scripts. You need empowered, smart, autonomous individual contributors in both disciplines.
- From a management and leadership perspective, you have to understand that Performance and Results are not the same thing. You can’t just look at the desired outcomes and drive it by those numbers. For software you can’t look at things like “lines of code generated per day” or even “bugs found per day” as useful management metrics. In sales, this is a huge pitfall because things like phone calls made, emails sent and revenue generated are very easy to measure, but it doesn’t really mean you know what is going into the those activities and the difference between quality and quantity. You have to be looking at the underlying skills. <WORK THROUGH SLIDE>
- The parallel in sales to all those software skills, is these selling skills. <WORK THROUGH THE SLIDE> The people on the team have to be equipped with tools and skills to do these things autonomously.
- The human side of the equation is also really important. To a large extent both sales and coding is a repetitive process….rebuilding or leverage pre-existing techniques. Therefore, morale and cadence issues is huge piece of the equation. <WORK THROUGH SLIDE>
- As we already said, the rep profile here in Phase 3, just like Phase 2 is ‘smart and gets thing done’ mantra’ All the stuff we outlined in Phase 2 holds, but as the team grows the lattitude here expands a bit just like it would on a software development team.
- Breaking it down further and applying the software developer role model to the sale rep role mode, you have to think about it like each rep is managing their own business, just like a coder develops and maintains their own code modules.
- The sales managers. These are extremely important role. In many ways the ideal sales manager is more of coach and psychologist that a manager. Their core function should be skills development. Again, with tools and skills, getting each rep to be self-sufficient at managing their pipelines. <SLIDE>
- <SLIDE>
- How does this get all pulled together. What does the process look like for operating this? This is where the software development really comes into play and we already talked about how Agile thinking came into play in Phase 1, it becomes even more literal in Phase 3.
- The teams and their day to day operations and pipeline management is run based directly off the SCRUM software development methodologies. <WORK THROUGH THE SLIDE>
- This is one of the SCRUM boards in the New York Office, we have one of these per team.
- This is one of the SCRUM boards in the New York Office, we have one of these per team. < TALK ABOUT THE PICTURE>
- Here is the burndown that drives the sprint. We have dashboards that allow real time viewing of this and it can be viewed for any person or rolled up version of team, office, and even world wide. Even the website has it’s own monthly burndown. Discussions for each respective and stand up are driven from this and the scrum board itself and the burndown in particular helps each and every team member know exactly how their own numbers and their team numbers are pacing. This is direct live data right off the Salesforce database.
- Social pressure and friendly competition. Each office has several wall boards that give real time feedback of progress against goal. This are big screen monitors plastered all around the offices and it’s available at every computer via their browsers. <EXPLAIN THE STATUS BOARD> People want to get to GREEN. People like being at the top of the list. No team likes being at the bottom. Teams and offices hate being in red, especially if most other are not.
- Remember here, our goal of all this is predictable Revenue that is scaling. The bottom up and team driven approach to scaling revenue. Using all these tools and technique over the last four years, we’ve seen amazingly consistent growth of predictable revenue.
- This is a chart of Stack Overflow Careers revenue that is modelled and forecasted based on our staffing levels 3 to 6 months in advance of the actual sales month. As you can see in the chart we’re regularly predicting to within 5% months in advance and it’s not like the business or revenue is static.
- Those tolerances in forecasting were held given this revenue growth graph.