I attended Software Sales Camp seminar organized by Tekes (the Finnish Funding Agency for Technology) earlier this week. The event was a two-day “bootcamp” aimed for improving Finnish software firms’ business-to-business sales and marketing skills. Going forward, I will summarize a few interesting tips and experiences shared by the seasoned speakers at the event. One main theme throughout the event was also the U.S. market entry and issues related – I will get back to that later.
Something which resonated accross the presentations was that you should not look to hire a sales person in the very early days of a startup. As Jussi Harvela put it, until you have the feature specs and customer benefits of your product clearly laid down on a paper (verified to work), the founders or principals should make the initial sales calls and deals. Only they have the passion that the first early adoptor customers need to see to get convinced. Some seasoned business development professionals with vision selling competencies might come into question , but Jussi has noticed it is often the CTO who is the best evangelist/deal maker. The CTO can typically combine technology, understanding of market dynamics, and ability to sell a vision.
Jussi continued that in the U.S. typical approach with a tech-oriented team is fill Product Marketing position with a MBA person who has also an engineering degree and knowledge of the respective industry. This person will then translate the technology into customer benefits that can then be tested with real customers. The actual sales organization is built only after a proven market has been found.
However, before starting the sales, you need to determine the size of deals you will (can) go after. As Jussi explained, it requires a totally different approach for the whole organization if you are shooting for one $5 million deal a year vs. 5 million times $1 deals. As a rule of thumb often offered, if the typical sales size is less than $50.000, you should focus on inside sales and customer self service rather than direct (personal) selling. For example, SalesForce.com has done most of their European sales from Ireland – it is very cost efficient to centralize operations in one location. Of course, the more transaction focused the business is, the more web automation should be used.
One common problem Jussi has seen happening with many Finnish firms is that the ideal target customer vertical (segment) is not defined clearly and strictly enough. Then due to varying subsequent customer requests the firm’s technical platform is torn into too many different directions, losing focus. That will cause severe problems, as when selling to a certain industry vertical, it is important to focus on clear, compelling benefits that matter in that segment. You should not start your value proposition or pitch by mentioning you have a “platform” which can do “everything” the customer might want it to. It is crucial to focus, and it also pays off in the form of new customer references. Jussi argued that after you pass 10-15 million in sales you could start looking for other verticals.
Geoffrey Moore‘s Crossing the Chasm model is really good to comprehend, as you will need to change the sales approach and organization over time to match the target customers. Once the business starts taking off with bigger group of early adopters and early majority, vision sellers should step off and make room for clearly defined processes and sales management.