The best (some would say “only”) way for your organization to accurately predict the future is through your pipeline. In order to be remotely accurate, it is imperative to include four things: Total Deal Value (typically 12-month deal value for SaaS or services companies); Sales Stage; Probability; and Close Date. In order to refine accuracy, sales stages should be set, tied to probability, and marked by specific gates and rigorously enforced. Ethan Zoubek recently wrote a really good article on the topic. I strongly recommend it.
You can take a deeper look at my selling methodology here. Of course, this is customized for each company I support.
Also, check out this article on qualifying Opportunities.
Check out this great post from Tom Zbaren on Inbound Marketing and Social Selling.
That is such a great question on so many levels… In this case, I’m, thinking about how long is too long for an Opportunity to sit in the pipeline before raising red flags. The truth is the answer varies depending on the solution and market you are selling into. Most of my experience has been leading teams that sell complex technical solutions into major enterprise accounts. I’ll give you my too simple rule of thumb: Ninety days.
If I don’t see momentum in an Opportunity after ninety days in the pipeline, I begin to become concerned that the Opportunity is not real. Perhaps the Prospect is not ready; the solution isn’t the right fit; the Account Executive is padding their pipeline; or any number of other reasons. That’s not to say that this is a hard and fast rule. I recently had a deal with ABC resurface after two years of inactivity. Out of the blue. But that is by far the exception. All I’m suggesting is that you, as a sales leader, take a look at stagnant deals and ask tough questions about their progress:
- When was the Prospect last contacted?
- Have we identified and engaged all of the stakeholders (not just an executive sponsor)?
- What are the competing priorities?
- Has budget been allocated for the project?
- Has the Prospect settled on a solution to their challenge – is it your solution?
- What is the next step, and what is the timeline for that?
- What is the purchasing process and whois involved?
- Where are you in that process?
Your Account Executives may feel defensive when you ask these questions. This isn’t about you trusting them to properly manage a sales cycle, it’s more about you normalizing the overall pipeline (some AEs are more optimistic than others) and providing the valuable service of an outsider’s view of progress. It has been my experience that after a few rounds of these types of questions, the pipeline begins to self-correct and become more accurate.
[Check out this sample pipeline report to get a sense of the metrics I track and review]
My buddy Nick Ris turned me onto this great post on LinkedIn from Jim Herbold, CRO at Infer. Jim gained great experience at Box and other startups that experienced the hyper growth we all hope for. These are great lessons for anyone at a startup or wanting to launch something of your own.
I have had the privilege of working for a number of young companies selling complex technical solutions into major enterprise accounts. I love the pace of startups and the challenge of delivering these types of solutions to big companies. It seems the first concern (voiced or not) I run into when approaching a large prospect is viability. Will the company be around in a year to service the solution? Are there resources to properly implement and launch the solution? If the company folds, what happens to the code and implementation? These are all fear-based responses from your prospect that, with a little effort, can be overcome.
The first and best response to concerns regarding viability is to point to other prime logos that have already made the decision to buy from you. See this post on getting your first sale. Getting your first prime clients may not be enough to overcome the viability objection – here are a couple of other ideas:
- Many startups refuse to share financial information with prospects – whether or not an NDA is in place. Not only do you not want that information getting into the hands of your competitors, frankly they are often not very impressive and won’t inspire confidence. In lieu of financials, you can provide a letter from your prime investors (assuming you have Angel or VC backing) stating their commitment and support to your company.
- Consider partnering with a more established industry player that can bring credibility before you have established yours. Note that you may need to contract through the partner as opposed directly with the client to provide the sense of security the client is looking for.
- If you have a traditional software product, you can offer to put the code in escrow, reverting to the client if the company folds. Be careful with how this agreement is worded and what triggers the reversion.
- Ask your prospect to become an investor. Doing so allows them to more directly control the product roadmap, gives them insider knowledge (if they are on the board) and puts them in prime position pick up the pieces if the company begins to fail. Be careful about offering clients too much control over the company. Your company needs to remain independent – able to move with the market whether or not your client is moving in that same direction. Remember, you are (probably) not a custom dev shop and need to focus on creating a product that scales into the market.
Even if you ask all the right questions (“Now that it looks like we have a solution that addresses your challenge, what are your top three concerns about working with us?”) you may not hear the viability objection. If your Spidey senses are activated around this concern, I encourage you to ask directly (“Do you have any concerns working with a young company like ours?”). At least this allows you to uncover and address the objection if it exists.
I recently spent nine months helping a 30-person startup shift from selling complex SaaS solutions into SMBs to selling them to major enterprise accounts. I enjoy the pace of startups and the impact that I can have on leadership of the business. Over the course of the last fifteen years I have had the privilege of doing the same for a number of young companies. The target profile of prospects for my last company was senior leaders in the Marketing organization – typically C-level. I found unique challenges selling into marketing, many of which I experienced selling in to HR.
Every major enterprise account allocates budgets at the beginning of the year, including budgets for HR and marketing spending. One would like to think that once the budget is set, the leaders of those teams would have the roadmap necessary to prioritize projects and allocate spend. My experience has been that the leaders of these teams feel empowered to prioritize and make decisions, but often need to go back to the well to rationalize significant purchasing decisions against the overall list of priorities and budget. As part of that process, those budgets are balanced against other enterprise-wide priorities and progress against the revenue and profit target. HR and marketing budgets seem to be the first to be reduced when profit targets are at risk.
The best strategy I have identified to combat this is to gain cross-functional support for the proposed project early in the sales process – hopefully during the front-end of the needs analysis process. See this post on gaining cross-functional support.
Your first sale will be the hardest. That will likely be made to an early adopter or “true believer” (see Crossing the Chasm by Geoffrey Moore for a great read and a good definition). One successful strategy I have employed is to identify a group of likely prospects early in the concept and development process and use them as a sounding board for the idea as you move forward. Questions like “I have identified a problem in companies like yours with [describe problem]. Do you have the same challenge?” If they do, you can begin. If not, explore what related problems they DO have.
Assuming your prospect has a similar problem, you can ask them about impact and what it would mean to them if they could solve it. Once value is established, you can generally describe your concept and ask if they think that would help. If they don’t think it would help, ask them about what, specifically, doesn’t work (be VERY careful to not be defensive) and if they have any thoughts on what might be helpful. It won’t take too many of these discussions to begin to identify themes, or maybe even specific solutions that you can begin to build out.
As you move into design and product development, these early prospects can serve as a client advisory committee to help keep your product on track and ensure you are solving an actual problem. You can reward them with early views into design, early access to a beta program, and discounted product once you launch. Once you have them onboard as paying clients, swing those logos around like a dead cat (thanks Jay Emmett for the stunning visual). Nothing makes prospects more comfortable than existing clients, references and big logos. That’s why no-one gets fired for hiring IBM or Accenture. So, unless you think your target market is very small, it may be worth your while to steeply discount your product for client advisors in exchange for their agreement for written testimonials and references. Those things will be worth more than their weight in gold.
I’ve been in customer facing roles going on 25 years now. Apparently I’m a slow learner. I recently completed more of a player/coach sales leader role than I have had in some time. Prior to my last role, I spent several years running relatively mature (and larger) sales organizations that needed more of a strategist and coach. I really enjoy direct customer contact and have recently been deeply involved in managing several key accounts. I also took the lead in selling into new key accounts.
This was my first opportunity to sell directly (almost exclusively) into marketing organizations – mostly at the C-level. A couple of notable things surprised me. First, there is tremendous turnover at the senior level of marketing organizations. Over the course of nine months and across, say thirty late stage deals (negotiating stage or later) at least four were significantly delayed or de-prioritized as the result of a CMO moving on and the new CMO wanting to re-evaluate the strategy from the ground up.
As a solution selling coach, I advise my teams to identify and engage all cross functional stakeholders. Doing a good job of this in the four Opportunities described above could have prevented the delays and project cancellations. When the outgoing CMO was preparing to leave, we could have simply shifted our focus to other stakeholders to keep the project on track. Without the cross-functional support, we were left to start from the beginning to educate the new CMO – after they were hired and onboarded, often a long cycle. Which brings me to my next point…
In the SaaS world, closing a deal is just the beginning. Depending on the solution and your market, it’s often the easy part. Getting the solution implemented can be hard and time consuming, which can delay revenue depending on how your contract is constructed. Having cross functional support that includes the finance office, IT, marketing, legal, and the executive suite can streamline implementation timelines dramatically. If this is done correctly, all stakeholders understand and support the vision, objective, and benefits of your project. They are as anxious to launch as you are and have all necessary resources lined up before the ink dries on the contract.
When I run into resistance working with a prospect to identify all stakeholders I explain that in my experience it takes a village to plan, integrate, and launch any complex technical solution. I truly want to set my executive sponsor up for success during and after the sales process and gaining cross function support is key to that.
I read a great article on LinkedIn this morning by Steve Blank on the separation of responsibilities between Marketing and Sales in tech companies. Steve benefits from a harsh lesson learned early and carried with him through his career.
The article is worth a read, but the ultra high level summary is that marketing creates awareness and the front-end of interest and sales increases interest, educates, ensures fit for the solution, and negotiates the commercial terms.
Thank you, Steve.
I enjoy supporting and mentoring entrepreneurs and job seekers. One of the first things I advise is for them to grow and maintain their networks. It’s good advice I need to learn to take.
It’s not like I don’t recognize a pattern of throwing myself into a new job to the detriment, almost exclusion, of nurturing my network. In fact, following my last job search, I vowed not to fall into the same trap. I told everyone I knew I would stay in touch. Now that I have exited my latest company following an acquisition, I find myself in the same boat – wanting to reconnect with the network I built over the last several years but let go stale in the excitement of establishing my sales system with a new company.
I tell myself that learning the new role, straightening things out, and training the team are the most important priorities. Perhaps. However, those objectives need to be balanced with helping others outside of your new employer and ensuring you stay relevant to your business network. Doing so will feed the ecosystem and return value to you personally and to your new employer – especially if you are in sales or business development.
Once in my new role, my intent is to schedule one or two hours a week in advance to meet with contacts made during this upcoming search. No agenda, just a checkin regarding whatever is topical at the moment – it seems there is always something important to chat about. If you experience this same challenge, you might give yourself permission to do the same.
Take the advice of a multi-time offender. Make building and supporting your network a high priority whether you are looking for a job or already have one you love. You and your employer will reap the rewards of doing so.