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Landing a Huge--Wrong--Customer
 

The effects of a wrong-headed sales strategy, and what to do differently.

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Sales guys are always chasing great white whales. But what happens when you finally do sign your coveted customer – and it’s a disaster?

Angus Davis, the founder of Tellme, learned the answer to that question the hard way. When he first started his company in the late 90s, there wasn’t a sexier customer out there than Amazon.com. So when Tellme finally signed Amazon after five months of wooing, Davis and his team were thrilled. But pretty soon, Davis realized he had just spent five crucial months chasing the wrong customer.

Here’s what Davis has learned – and how you can craft a better sales strategy than he did in the early days.

You Can’t Value What you Don’t Measure

You need to quantify the value of every prospect. Angus realized that his team “was reacting to [Amazon’s] perceived customer value rather than its quantifiable value. The perception was that Amazon would look great in a press release; that TechCrunch would write a bigger story about us getting Amazon as a customer than they ever would about other prospects like E*TRADE. But In fact, clients like E*TRADE would prove critical to us reaching profitability.” What made E*TRADE a better customer than Amazon, and why didn’t Angus realize it at the time?

Tellme’s business was in integrating speech recognition software into corporate customer service telephone systems. And, says Davis, “If you’re in the business of optimizing telephone systems to improve customer service, what you really want in a customer is someone who receives a lot of telephone calls. Unfortunately, nobody really calls Amazon. In fact, customers would probably have a pretty hard time even finding a telephone number for the company if they tried.”

Because Amazon handled customer interactions almost exclusively through email, the company was probably one of the least valuable customers Tellme could have wasted five months pursuing, says Davis. In contrast, E*TRADE was a much better fit, because it was “more tele-focused, receiving thousands of calls a day from folks check[ing] in on their 401k’s.”

Davis learned his lesson. He developed a scoring system for every single company in the Fortune 500. Companies were scored on, among other things, the volume of calls they received, their demonstrated history of embracing innovative technologies, and which carrier they used (Tellme’s technology wasn’t universally compatible at the time). He told the sales team that, “Unless you’re talking to a top-scoring prospect, you shouldn’t be talking to them at all.” Angus believes this was the key to turning around the company.

In a way, not all that much has changed since the 90’s. The McRib is back on the menu, Seinfeld’s in reruns and many of us still confuse public relations with business strategy. But as Angus gamely jokes, in the end, “No business model, no soup for you.” Seinfeld would be proud.

 

Last updated: Mar 8, 2012

SCHUYLER BROWN is the host of Founders@Fail. He currently works at High Peaks Venture Partners, where he sources and evaluates potential investments. Brown holds a B.A. from Columbia University and an M.B.A. from Columbia Business School.




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