Why is it that 10 different companies can deploy the exact same sales strategy, execute it the exact same way, yet some of the companies thrive whereas the others fail?
As CEO of QuotaDeck, I have had to think about what we sell and who we sell to, before crafting our sales strategy and organization of our selling roles. Steve and I talked this through giving each other advice and leveraging our past experiences to learn from. But what do we mean when we say what you sell and who you sell to? Let's break it down.
What You Sell
Have you thought about what you sell from the eyes of your buyer? Variables like your average deal size, one time vs. renewing revenue, and demand type all dictate your sales strategy.
- Deal sizes range from not very considered purchase--think swiping a credit card for $1,000 for 15Five--all the way to large enterprise solutions purchases for millions of dollars. The decision makers involved change dramatically based on what you are selling because the risk of making a bad decision is higher. Think about this in a B2C context. I don't need to consult with my wife before buying a new cell phone but you better believe she is going to be involved before I build a shed in the backyard. Most companies have spending thresholds for executives at various levels. Some execs can sign off on sub $10k purchases without approval. Others can sign off up to $100k. Others still want to run the decision past a few of their colleagues even though they can pull the trigger and buy anytime they like. Over time people are becoming more risk averse. As the result the number of decision makers is going up. This means a different sales strategy if you sell something that is $25k ARR compared with $250k ARR.
- One time vs renewing revenue decisions are also considered differently by buyers. Having to fund a one-time capital improvement may require a very different buying process (and hence sales strategy) than if the buyer is approving a line item that has been on the budget for years. This aligns to the roles of hunters who close new business and farmers who maintain and try to upsell existing accounts. Both are very different and require different sales strategies that may involve additional roles like Sales Development, Customer Success, and Renewal Specialists.
- Demand type is a very interesting concept brought to bear by SiriusDecisions & refined by my friend Mike Damphousse at Green Leads. There are four demand types: same old, same old; evangelical; better mouse trap; and government regulation. The demand type for your product or service has a huge impact on which sales strategy you choose.
- Same old, same old--think photocopiers, technical training, business insurance, and roofing supplies. These are all perceived as being commoditized by buyers. Research shows that at any point in time 3% of the marketplace is in an active buying cycle for these types of products and services. The name of the game is nurturing existing leads and opportunities until change happens in their company and they enter an active buying cycle. Relationships and trust matter even more here than the other demand types. A good sales strategy is to have a large group of Account Executives who farm existing accounts for up-sale/cross-sell opportunities as well as bring on a little bit of new business every year. Also have a smaller group of pure play hunters that are adept at navigating the blood filled waters of a highly competitive, commoditized marketplace. Differentiation and patience are key for same old, same old.
- Evangelical - think Evernote, MobileDay, ExecVision. These solve problems that buyers didn't even know they had. The name of the game here is to educate buyers about the problem and why they need a solution. Buyers will be thinking, "Wow. I didn't know that I could do that!" Salespeople have to be adept at painting a vision of a new world in the mind of the buyer. Selling in an evangelical marketplace is almost like skiing fresh powder. It's a heck of a lot of fun to make the first tracks and go in any direction you choose. But as any powder skier will tell you, it's also harder work than skiing on groomers all day. Having a strong Sales Development team who can separate the tire kickers from the real buyers is critical for this type of sale. And closers need to "ruthlessly qualify" their pipelines in an evangelical sale.
- Better Mouse Trap - think SalesLoft, join.me, CircleBack. These re-tool an existing process / way of doing things. Buyers of better mouse traps are always thinking, "My existing solution, though sub optimal, works and has been in place for years. If it ain't broke, don't fix it." CEOs of better mouse trap companies frequently turn to disruptive pricing as the mechanism to get buyers to throw out those old mouse traps quicker. Sellers need to find places where buyers have old mouse traps, then determine what change in the organization will cause the buyer to re-think the old mouse trap as inadequate. The key word here is change--changes in leadership, people who operate the old mouse trap leaving, funding, new product launches, strategic direction, expectations of their customers, etc. are the reason that a company would throw out the old mouse trap and bring in a new one. Research shows that 3% of these marketplaces are in an active buying cycle at any given time. But 40% are susceptible to starting an active buying cycle. Sales people need to know how to get the 40% into an active buying process while not wasting time on the 56% who are not poised to begin a buying process. The sales team should consist of sales development, hunters, customer success, and renewals people in relatively even numbers.
- Government Regulation - this is my favorite one because the buyer is required by law to do something. It's the ultimate FUD sale--fear, uncertainty, doubt. "How are you handling the XYZ act? What are you doing about the new ABC regulation?" Speed to market here is critical because your competitors are also trying to capitalize on the new regulation. In this case sales teams need to be credible on why the regulation impacts the buyer and why they need to take action now. With this demand type sales forces have the ability to move 100% of the marketplace into an active buying cycle. Skew these sales teams toward hunters to land the business and account managers to stay really close to the customers and keep them away from competitors.
As a final point many companies will have product/service offerings that have different demand types. For example a printing company might have same old, same old for basic printing but they may offer new software that streamlines the process for buyers to submit a printing order which has a better mouse trap demand. In these cases CEOs need to develop different sales strategies and sales comp plans for the different demand types. As Derek Gatehouse tells us in his book The Perfect Sales Force, some sales reps who are great at selling into established demand (same old, same old) are terrible at selling into created demand (better mouse trap or evangelical).
How is your company sales strategy dictated by these three factors? What demand type(s) are your products/services?