Context of this Post

This post was originally written and published on Code Sport in September 2015. It was specifically written for the co-founder of a 2-year old Silicon Valley-based start-up. My goal was to provide her with unique and practical business inights as she endeavored to create and grow her company!

The irony is that I never got around to sharing this post with her. But I’m confident it will be of benefit to other entrepreneurs — to those of us who live to create new things and dream big!

A Word of Heartfelt Thanks

Suggestions 5 and 7 in this post (i.e., Branding Sand and Multisided Markets ) have an enduring and special place in my heart. Without going into details, I want to thank Anne and Frank for their kindness, mentorship, and encouragement when I first began my career in consulting.

Their kindness and encouragement has had an indelible and positive impact on my life. Anne and Frank took the initiative to lead, teach, and encourage me when I started my career. Frank was like the dad and father I never had! Anne was very much like an older sister I never had.

Now that I am a successful entrepreneur, it is my sincere hope that I can carry their torch forward. To pass along their values, kindness and good will to my employees, partners, and colleagues – my family.

I found these articles and blog posts incredibly useful when running a startup and learning to sell! You’re probably aware of these concepts already, so just use what you need. However, if anything is new please take the time to read them, take notes, and share with your employees. Most importantly, absorb and apply what you can to improve your business.

So without further ado…

Have customers answer this question after spending time using your product and interacting with your sales and customer support personnel:

Rate from 1 through 10 the likelihood that you would recommend our product to a trusted friend, colleague or family member.

The NPS measures how satisfied your customers are and how well you deliver a positive customer experience. It was created by Harvard Professor Fred Reichheld, Bain & Company, and Satmetrix. Reichheld’s research on the method was first published in the December 2003 issue of the Harvard Business Review.

The NPS obliges companies to be proactive in empowering their employees and addressing customer issues.

The takeaways are:

Net Promoter System℠ requires—and inspires—an entire organization to do right by its customers and employees. It is the business equivalent of the Golden Rule: treat others as you yourself would want to be treated. — Bain & Company
  1. Constantly monitor and focus on improving employee and customer satisfaction
  2. Never be too comfortable with short-term success
  3. Constantly iterate and improve your product and service

Having processes for capturing and implementing employee and customer feedback is a sure-fire way to meet these goals!

Here is a sample of customer feedback on your start-up. These comments were sourced from Quora. Hopefully you have a formal process of capturing and analyzing feedback through it’s customer care/Customer Relationship Management (CRM) system.

Migrate an experiment directly from dev to prod.Tapan Patel

…bring analytics to the forefront which can be useful to organizations that don’t have sophisticated analytics elsewhereMani Fazeli

Create a more flexible UI editor, better experiment goal definitions, fast and thorough responses to support requestsMani Fazeli

…their Customer Success team is very engaged and making sure you make the most of their tool to reach your goals – we have a bi-weekly catch-up that’s really been instrumental in setting our experiments for success.Antoine Sakho

Google SERP Observation

This feedback was found by typing your company’s name into Google. Also, you have your competitors very nervous. Typing your company’s name into Google brings up ads for at least two of your competitors!

The Challenger sales rep has strong interpersonal and communication skills. This means he proactively listens and is articulate in giving answers. With these communication skills he is able to:

  1. Teach: Offers the customer a unique perspective
  2. Tailor: Knows customer value drivers and identifies economic drivers of customers business. Then customizes sales message to these attributes
  3. Take Control: Is comfortable discussing money. Comfortable with pressuring customer to move out his comfort zone

How to Sell The Challenger Way is the culmination of a rigorous and extensive survey of ~6,000 performing enterprise sales reps. The authors used their findings to create a profile personality traits and selling tactics used by top performers to sell into enterprise channels. They’ve coined this technique the “Challenger Sales” approach.

Based on an exhaustive study of thousands of sales reps across multiple industries and geographies, The Challenger Sale argues that classic relationship building is a losing approach, especially when it comes to selling complex, large-scale business-to-business solutions.
when buyers have an abundance of information about vendors products and solutions at their fingertips, any salesperson that brings insight to the table that can create new opportunities for the buying organization can have a relationship based on that value. Buyers simply have no time or need of relationships with salespeople who do not create value.

The below insights are from J. F. Malcolm’s review on Amazon:

  1. Sales Experience accounted for 53% of the contribution to customer loyalty, more than company and brand impact, product and service delivery, and value-to-price ratio combined!
  2. Customers value a rep who teaches them something, who challenges their insights and their view of the world. These reps are the Challengers and they comprise the largest component of top performers. Unlike relationship builders who focus on resolving tension and keeping everyone happy, challengers like to produce constructive tension, because major sales are about creating change and change generally requires discomfort.
    • The key is not in discovering the customer’s needs and being able to express them, it’s in being able to create the need that they didn’t even have by getting them to look at their world in a way they had not before. As they say, if your customer’s reaction to your pitch is, “That’s exactly what’s keeping me up at night. You really understand our needs”, you’ve actually failed. What you want them to say is, “Huh, I never thought of it that way before.”
    • “Why should our customers buy from us over all competitors?” The thought process then becomes:
      • What are our strengths?
      • How do those strengths give the customer the capability to solve a problem or take advantage of an opportunity they don’t know they have?
      • What do we need to teach the customer so they will value that capability?
    • “The sweet spot of customer loyalty is outperforming your competitors on those things you’ve taught your customers are important.” In order to achieve this sweet spot, Challengers do three things very well: teach, tailor, and take control.

An Enterprise Customer’s Opinion of the Challenger Sales Technique

The below insights are from Dave Kinnear’s review on Amazon. He takes a counter-view of the aggressive, in-your-face challenger sales approach. As a corporate buyer, he asserts the best sales people:

  1. Build a trusting relationship by demonstrating that they have the customer’s best interest at heart
  2. help their customer better serve the end customer
  3. Use a sales model that makes the consumer to want to buy
  4. Earn the right to share insights rather than simply build credibility from a position authority. They listen, educate, and sell
  5. Challenge customer’s thinking by educating customer on things about their industry/customers that they didn’t know
  6. Adds value by:
    • Providing valuable market, end-customer, and competitor intelligence:
      • Better serve their end customers by providing unique insights into end-customer: needs, demographic profiles, etc
    • Helping customer reduce risk of making bad purchase decisions
    • Helping customer increases sales by gaining more end-customers and selling more to existing customers (increasing Lifetime Customer Value)
    • Saving customer money by reducing end Customer Acquisition Costs (CAC) and internal overhead

The best purchasing model for multibillion dollar transnational companies is to hire an independent consultant with expertise in the software product and vendors. Additional insights on this approach from Dave Kinnear’s review on Amazon are:

  1. Independent consultant firms (Accenture, Bain, BCG, Booz Allen, etc) rather than a vendor’s own direct sales employee are the best Salespeople because the embody objectivity and are incentivized to provide the best solution for the customer
    • Ensures that products are only sold to customers who are served by using them
  2. Independent consultants and the customer review the large complex software offerings, determine the most suitable fit, and the selection is made by the customer based on the consultants recommendation. There is only “arm’s length” influence by the vendor.
  3. Vendors and Customers are now forced to recognize that the consulting firm is as knowledgeable as or perhaps even more knowledgeable than they are
  4. Vendors recognize the true customer is the independent consulting firm

Challenger Use Case: Selling Enterprise Resource Planning (ERP) Software

Selling ERP software to multinational corporations is example where the Challenger sales approach excels.

According to Oracle:

ERP systems tie together a multitude of business processes and enable the flow of data between them. Activities and processes such as accounting, procurement, project management, risk management and compliance, human resources, and supply chain operations.

A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results. By collecting an organization’s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a single source of truth.

ERP is as indispensable as the electricity that keeps the lights on.

Vin65 (now known as WineDirect), a Canadian software and web design shop, commissioned Hal Helms to write this report. With their permission, Hal released it to the public in May 2011. As an aside, Hal Helms is a coding and startup guru. In fact, I learned to build my first master-detail MySQL web-app by reading one of his tutorials in 2004! Ok, Here are the key takeaways:

a. Overview

As headcount and code complexity grows, a more formalized process for producing software and hiring developers is needed. However, of more importance is having a “system” in place that facilitates the production of robust and bug-free code. Well designed “systems” can turn average developers into great developers.

Too often, managers misunderstand their role: they think [their] job is to manage the developers when actually, the job they need to do is manage the system. — Hal Helms

System = All the components required to produce quality, bug-free software!

b. How to Hire Software Developers

These suggestions help you evaluate a developer’s strengths and weaknesses and determine how comfortable they are with the basics of a language.

  • Have them write a simple program on their own during the interview. He suggests a basic FizzBuzz question
  • Do a pair-coding session with them. This allows you to assess there communication skills and how they work with others
  • Have them debug code that has errors in it

On Project Management and Deploying Bug-free Code

  • Use Agile development techniques which includes mechanisms for capturing requirements, releasing code, and breaking development responsibilities into discrete units such as UI, data persistence, algorithmic coding, architecture, etc
  • Use subversion (i.e., SVN/version control) in all aspects of your development
  • Do unit testing to prevent bugs from overwhelming the “system”
  • Offer in-house training for your developers
  • Facilitate formalized communication (i.e., knowledge sharing) among your developers by encouraging them to lead or participate in lunch and learn sessions

This article was extremely useful when I was selling phone cards to ethnic restaurants and small businesses owners.

“Branding Sand” explores the dilemma of how to differentiate (and brand) a highly commoditized product. It’s a must read for those operating in highly competitive markets. To illustrate, instead of competing on price, companies should bundle their products with hard to duplicate differentiators, services, and “value-adds”. Examples include post-sales product integration, education, and consulting services.

And as Amazon long-ago learned, differentiation does not need to be complicated. Simply offering superior customer service is not only a differentiator, but a competitive advantage that few online marketplaces have been able to replicate.

The is a great article and forces you to look at your business more tactically. In a nutshell look for ways to monetize underutilized or previous deployed products and services (i.e., assets) of your business.

This is optional reading as this strategy may not apply to your business. Nevertheless, it is something to be aware of.

Multisided markets are characterized when businesses serve as intermediaries and middlemen for two or more groups of customers. Businesses can exploit different pricing strategies based on which customer groups are willing to pay (or pay more). Some examples of multisided markets include:

  1. Credit Cards: Connects merchants to buyers. The cardholder may or may not pay an annual fee for the privilege of using the card, while the merchant always pays a litany of transaction and network processing fees
  2. Ebay: Connects merchants to buyers. Merchants pay a listing fee in addition to a PayPal transaction fee
  3. Bloomberg Terminals: Connects subscribers to data providers. Data providers provide Bloomberg with their data for free and while Bloomberg users (subscribers) pay a monthly fee for the Terminal
  4. Online Dating/Matchmaking Services: Quite self explanatory. Even though singles can connect and meet one another for free at the grocery store, gym, and community events they choose (and prefer) to waste an unprecedented amount of hours and money trying (often unsuccessfully) to meet their match trough a plethora of online dating sites.