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Recently, we hosted Daniel Barber, VP of Revenue @ Node.io, and a very experienced VP of Sales on our monthly webinar series to deep dive into Sales Strategy. Catch the recap here:
Sales Process & Sales Strategy are like chalk and cheese. They’re both different. Yet, most people end up confusing the two, which can be detrimental to a company’s progress. This post is dedicated to understanding the fundamentals of sales strategy, based on an interview with Daniel Barber, VP at Node.io, who shares some invaluable insights on this topic. So let’s get right into it!
What exactly is a go to market sales strategy?
A sales strategy sees to find the best possible way to distribute a product or service to the market. On the other hand, a sales process is about setting up systems & processes and hiring the people you need to execute on your sales strategy.
With a go to market strategy, the 3 key questions to ask are:
1. Are you selling your product/service directly to a business?
2. Are you selling your product/service directly to a consumer?
3. Are you selling your product/service through an indirect channel?
Once you know exactly who your target audience is, your go to market strategy entirely depends on your business model. The 4 types of business models in a tech business are:
a. Charge Per User: Your revenue depends on the number of users using your product. The benefit of using this approach is that it’s simple and logical. The more people that use your product, the higher your revenue. But this model may not be good from a customer advocacy perspective. In the early stages of your company, you want as many people as possible to talk positively about your product and spread awareness about how awesome your product really is. A charge per user may limit your ‘word of mouth’ marketing.
b. Usage: Your revenue depends on the extent of usage of your product/service. This approach can be great due to it’s simplicity, but again, may limit user adoption on a large scale.
c. Revenue Share Model: This is when you charge your customers a percentage of the revenue your product/service generates for them. With this approach, it’s possible to make a lot of money, if your product generates a large profit for your customers. The only disadvantage of using this approach is that it’s hard to track how much revenue is directly attributable to your product or service. So you’ll need to make sure you have experienced analytics and data experts on board who’re helping you track the exact amounts of revenue generated and your resulting earnings.
d. Flat Price Model: This is when you charge a flat price for your product. It’s simple and straightforward, but you need to be confident that your customers would be willing to pay the price you’re charging.
Once you know which one of the above business models you’re adopting, it’s a lot easier to identify the right sales strategy (and process). By evaluating the costs and revenues associated with each sales approach, you can work out your cost of customer acquisition, decide which route to take and create a sales process around it!
What should you include in a go to market sales pitch deck?
Daniel recommends a book called “Get Backed” which has pitch decks of over 25 different companies that have raised capital to fund their ventures. He also recommends having a look at Reid Hoffman’s pitch deck for raising series B funding from Greylock partners for scaling his venture, LinkedIn. These pitch decks contain all the important details you need to include when pitching!
What exactly is a sales process?
A sales process consists of 3 main aspects. Inbound Sales, Outbound Sales & Closing Sales. It seeks to address questions around these 3 aspects, such as:
a. How many direct sales reps are needed?
b. What should the frequency of sales calls be?
c. What is the process of closing sales?
In the early stages of a company, it’s important for founders to be able to sell their product and close the first few deals, as they’re usually the ones who can communicate their product’s value in the best possible way. Moving on to later stages of a company’s development, Daniel recommends that the first people you hire should always be ‘sales closers’. They’re the ones who make calls, set up appointments and close deals (in an enterprise software or SaaS business).
An inbound marketing rep is responsible for generating and qualifying leads with inbound marketing. It’s easy to submit to inertia if there are many inbound leads being generated, so it’s best not to wait to do outbound sales, or rely too much on inbound. An inbound marketing rep shouldn’t be the first person you hire from a go to market standpoint.
Treat hiring sales professionals the same way you’d treat qualifying customer leads. You need to go through a few profiles, have a couple of interviews before you narrow down on the best person for your business. You’ve got to have a rigorous hiring process to attract the best talent!
How can you identify a good Sales Closer as your first hire?
You need to be able to have an ‘ideal candidate profile’ to know exactly the type of person you’re looking for! Without this, you’ll be lost.
Look for people who have experience in selling the products your company sells. If you’re in the enterprise software business, hiring a sales professional who’s sold widgets in the past would be terrible hiring decision. High end enterprise software sales requires a highly sophisticated sales professional who’s adept at managing relationships and comfortable with multiple rounds of negotiation. So make sure you know what qualities you’re looking for in your first few hires.
What would you do in a scenario where you’re in a sales meeting with a prospect who has recently bought another similar product?
In the enterprise sales domain, you can only lead with differentiation, not cost. It’s about creating the maximum value for the customer. In such a scenario, it would good to demonstrate how your product can be more valuable to your prospect. Rather than doing all the explaining yourself, it’s best to let customer testimonials do the talking, and show your customer how your product has added value to companies that are similar to theirs.
An experienced sales professional would find out who the decision makers are in the prospect’s company, and try and get them involved in the product demonstration process. Understand where their pains are, so you can truly demonstrate value to them.
How do you maintain engagement with customers, when the customer contacts leave the company? Do you have to resell the product to the new people who replace them?
If you’ve got a great relationship with a contact at your customer’s company, it can be tricky when they leave. It’s important to track where they’re going, so you can continue the relationship, and hopefully sell your product to them at their new company.
To re-engage with the people who replace customer champions at your client’s company, identifying ‘Value Moments’ can be the key to success. These ‘value moments’ are when your product demonstrates immense value for your customers, so it’s important to communicate them regularly with your existing and new customer contacts. People love receiving good news, and will begin to associate you with value!
How should a SaaS sales team work with the customer success team at a company? Who should be responsible for customer upsells/renewals?
A lot of companies have account executives win new customer deals, and customer success reps manage the relationship with customers as well as renew their contracts. The ‘customer success model’ is now evolving.
Daniel recommends bringing in a customer success rep long before the deal actually closes, and working in conjunction with the account executive to understand the prospect’s needs in detail, to set the foundation for the contextual value the product would generate if the prospect was to buy. This goes a long way in being able to track the right metrics, when a prospect actually becomes a customer.
With renewals, it’s best to think about who’s actually good at sales? Is it the account executive or the customer success rep? Having the customer success rep do renewals may be a conflict of interest, as it adulterates the genuineness of service a customer success rep is meant to provide! Therefore, the ideal approach is to have account execs own the customer relationship and do the selling, while having the customer success rep being purely responsible for the customer’s success.
What’s the right hiring strategy for sales reps? Is it good to hire in pairs or batches?
Don’t hire in pairs. It’s best to hire sequentially, when you have one sales prep start on one day, and the others start on a future date. The reason is because the ones who start first would be in a position to help the ones who start later, thereby reinforcing their knowledge through teaching and collaborating with newer sales reps. This has proven to be a very successful hiring and training approach, based on how people learn!
It’s also recommended that you set up office in a location that’s close to the talent pool you’d like to hire. For instance, if you’re looking to hire talented engineers, it’s best you’re located close to top tier engineering colleges where you can easily source great talent!
Wrapping it Up
Base your sales strategy, depending on your business model. Create a sales process once you’ve determined the right business model and sales strategy, to set the foundation for sales success. Evaluate what stage your company is at, in order to make the best sales strategy decisions.
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