You Don't See This Every Day

I give this guy a solid “B” for balls. Here is a guy who walked in to Union Square Ventures, a NYC VC firm, business plan in hand, sporting a ridiculous-looking top hat, and delivered his business plan to a venture partner, while performing a solo vocal.

One of the employees taped it, and posted it on their blog.

To quote Don King: “Only in America”

E-mail Marketing

We looked at buying a few lists for an upcoming direct marketing campaigns, and on a lark, asked about procuring e-mail addresses as well.

What a shock!

Highly targeted names/phone #s/titles/companies cost in the neighborhood of $300 per 1,000 – by most accounts, a reasonable rate. E-mail, on the other hand, is an additional $1 each, with only 60% guaranteed to be deliverable.

Why so much for such an ineffective medium? The laws of supply and demand have to be in play – so are that many companies that lazy in that the best they can come up with is to spam thousands of prospects?E-mail definitely has its place in the marketing and demand generation arenas, but it belongs WAY down the road in a campaign, after rapport has been built, and then only as a follow-up vehicle.

If people really spend $1 per address, then I should be a millionaire…but alas, even a sales guy has ethics.

Right-Sizing Your Salary Structure

How much is a senior sales professional worth? Apparently my earlier post on sales capacity raised a few eyebrows from fellow execs who “wouldn’t dream of paying a six-figure base to a salesman.”

Right or wrong, the question is a good one: for startups, how can you adequately determine “market rate?” We ask ourselves about market rate all the time, and while Salary.com is a good tool, the differences in salary range between the huge, multinational corporations, startups and mid-sized companies varies greatly. When you consider factors such as stock, other equity and incentive pay, the baseline numbers can be very misleading.

Matt Blumberg of ReturnPath has a great idea. He is putting together a group of mid-sized companies to pony up $1-2k for a salary survey, with the results available to all of the participating companies. I think it’s a good call. People are the lifeblood of any business, and as the competitive landscape continues to heat up, so does the market for top talent.
If you have a company of 50-100 people, I urge you to contact Mark at comp.benchmark@gmail.com to participate.

Keiretsu - Japanese for Doing the Right Thing

This week’s Boston Business Journal featured an interesting article on the return of the keiretsu model of VCs referring favored business partners to their portfolio companies. It’s a basic principle – if a service firm does a great job for one of their companies, they are apt to recommend them to other companies when the need arises.

This principle is applicable across the business spectrum, well beyond the obvious service areas or law firms and accountants, into less defined practice areas – insurance, public relations, real estate, systems integrators, etc. It is good for a number of reasons, perhaps the biggest of which is that is gives service firms pause when treating a smaller client like, well…a small client.

We have seen this first hand. We did an absolutely bang-up job for one of our smallest clients – tripling their sales pipeline in a matter of months – and we are now actively talking with several of their VC’s portfolio companies…all on the good word and solid introduction of a key influencer and champion.

Goes to show that the golden rule is alive and well in high tech markets.

The Headcount Debacle

Back in the day I was heavily involved with an Internet startup that my company a) leased a $4M enterprise storage solution to, b) agreed to hold the paper on the lease, and c) took warrants in. Needless to say, we had a vested interest in this company’s success.

Long story short, the company couldn’t come to terms on what they were selling, and who they were selling to. The forecast was a abysmal, and reps were chasing huge Fortune 500 accounts with zero success. Their CEO had an unbelievable pedigree and had come out of retirement to lead this company to the promise land…and can you guess what his solution was? Renegotiate his lease so that he could go hire 2 more sales guys at $85k a year.

Huh?

In an earlier post I wrote about the capacity problem facing small sales organizations. Actually, capacity isn’t the problem, the problem is filling the capacity with opportunities. This company had less than $1 million in revenues, and 4 full-time sales professionals costing the company over $100k each when you factor in T&E, salary, benefits, etc. Each rep had a quota of $1 million, making their overall capacity $4 million.

So, if you are running at 25% of your capacity, is the answer to add more capacity (read: headcount)? Regrettably, that’s the institutionalized thinking that is so pervasive among CEOs and VPs of Sales in startups.

By taking the same lean, six-sigma approach to sales, marketing and demand generation as they do product development and engineering, smart executives in all industries can identify the bottlenecks to filling their capacity, eliminate wait states (six-figure reps sitting on their thumbs), and drive the critical path toward revenue attainment.

From the World's Most Admired Company to Telemarketing Leads: "Drop Dead"

The problem with leads is, well, they are rubbish. And your sales team knows it.

So if you think it’s tough getting your direct sales force to follow up on outsourced leads, imagine the difficulty that GE Access faced getting their VARs to follow up. That’s the focus of an insightful case study on MarketingSherpa.

Companies that throw money into ‘lead gen’ programs and only metric quantity are not only missing the boat in terms of lost revenue, but if they are throwing dead leads at their channel partners, they risk becoming the boy who cried wolf, as evidenced by the fact that only 60% of the leads that GE Access were furnishing to their partners were even being claimed.

At the end of the day, that’s the biggest problem with leads: sales professionals don’t have confidence in them. Solving this problem requires a fundamental shift in terms of what constitutes an opportunity worth engaging field sales. Smart marketing organizations are putting programs in place to tackle this task, and do much of the up-front qualification work (read: asking the tough questions) before getting a rep on the line.

Ultimately, the marketing manager for GE Access saw the light, and implemented two major changes:

First, she tackled the poor lead quality issue head-on by conducting post-mortems on B.S. leads and jettisoning the worst-performing lead gen companies.

Second, she got on the phone with her sales force (in this case: channel partners) and started holding them accountable for running with her new-and-improved leads, driving communication through her inside sales team, and scaling from there.

To me, it’s eye-popping that one of the most sophisticated companies in the world was running into the same challenges that we consult with early-stage startups every day…who knows, maybe we are finally seeing a revolt against garbage leads.

You Gotta Love This Guy

Matthew Younkle is my hero. Maybe you’ve never heard of him, but by now you’ve heard of his invention: Turbo Tap. In case you’ve been in a cave for the last few months, young Matt Younkle was an engineering student at the University of Wisconsin when he answered that age-old question: why does a keg always pour so s-l-o-w-l-y? Enter the Turbo Tap. It pours beer 4x as fast as a traditional tap.

Originally sold (with huge success) to bars and concessionaires where time = money, earlier this month they came out with a $200 home edition. Matthew – do yourself a favor and put this on QVC. You’ll move 10,000 units in an hour.

So far Matthew has avoided the banana peels that trip up so many entrepreneurs. He avoided the quick cash-out and kept his company, he brought on a professional management team, and most of all: these guys know how to market. They’ve shown up in WSJ, Time, Yahoo!, Popular Science and even on The Tonight Show. Their website is slick, with a great video demonstrating how effective the Turbo Tap is versus conventional taps. Best of all, no advertising – it’s all dirt cheap.

It’s not the cure for cancer, but you have to admire a young entrepreneur with the gusto to take an innovative new product to market so quickly, efficiently and cost-effectively. Go Turbo, go.

Leads Suck

Tying marketing activities to leads and sales is all the rage these days. Marketing and PR departments are increasingly being asked to prove their value, especially as the fees for a decent PR firm can eclipse $15k per month. Invariably, the answer is that PR, advertising, marketing, etc. all generate leads.

Well, my friends; as a guy who’s been around the block a time or two in sales, I can tell you that leads suck.

Leads are expensive. Either you are paying $100k+ per year for a PR firm, or investing over $20k for a trade show appearance, or six-figures on advertising – whichever course you take, your company is spending very good money on ‘leads.’

And since your company is spending so much money finding these leads, the pressure is on the sales force to make them pay.

99 times out of 100 (literally), leads are DOA.

The problem with leads is not just that they suck, but the opportunity cost that they are associated with. In almost any sales and marketing organization, the onus is on sales to make something out of a lead (once the lead comes in, it is immediately flipped to sales – right?).

It is mind-boggling that sales departments allow their outside sales professionals –often making a six-figure base- to waste time qualifying tradeshow leads, in-bound inquiries, or meetings from a telemarketing firm…but it happens all the time, and ultimately, that high-paid sales force becomes so disenchanted (usually after the 166th B.S. lead from that trade show) that they give up, only to find that the business they should have been chasing has been neglected.

If a good sales professional is spending his time qualifying leads, the company is facing an opportunity cost equal to double his current forecast.

Leads come in from marketing-related activities – great. But the job does not end there. Marketing needs to find a way to ask the right questions – budget, timeframe, need, competition and economic buyer- and then and only then get sales engaged.

A lot of companies talk about quantifying their value, but who is really running the ball into the proverbial red zone?

Finding VITO

V-I-T-O is an acronym for Very Important Top Officer – the CEO, COO, CFO or other virtually-impossible-to-reach decision maker who calls the shots on a given project or initiative. Gaining executive sponsorship from this person can make your sales campaign, but the obvious challenge is reaching this heavily-insulated person, and engaging them in a buying cycle.

In the current issue of Fortune Magazine there is an article detailing an ingenious approach. It tells the story of Embraer Air, a down-and-out Brazilian aircraft manufacturer, and their resurrection through smart sales and marketing. They knew that in order to engage the CEO of a major airline into a buying cycle, they would have to do something dramatic – after all, their competitors are 800-pound-gorillas Air Bus, Boeing and Bombardier.

To break through the noise, they took a prototype of their newest plane on tour across the globe. But how to put (the right) butts in the seats?

Genius struck: send a FedEx package to the CEOs of major airlines with a DVD containing a personalized message from Embraer’s chief executive with a VIP invitation to view a prototype of their latest aircraft, which they would bring to his door. Said the CEO of Air Canada (who ultimately placed a $3.5 billion order): "It was the smartest sales approach of any product I've been pitched in my life."

If you can microsegment your prospect base to identify the prospects that have the strongest potential, and identify the right decision makers within these organizations (if it’s a big ticket item, it’s invariably VITO), taking a focused and creative direct marketing approach can break down barriers, and separate you from the legions of cold callers and spammers out there.

What's Your Capacity?

A lot of sales managers know they have a problem. Trouble is, very few know what the real problem is. At the end of the day, not knowing is the real problem.

Conventional Wisdom:
Forecast stinks? Hire more reps to pound on more doors.
Reps not hitting their number? Find better (read: more expensive) reps.
Opportunities stuck in the pipeline? Drill into your reps with twice-weekly forecast meetings.

Finding the root cause of poor sales performance requires asking yourself some really tough questions – and no, it does not always mean spending big bucks to add headcount. Often, when a sales organization looks inside, they find that the problem is not capacity…so what sense does adding another high-priced sales resource make? Allow me to explain:

The firm that I work for recently decided to bring on a salesperson to drive incremental revenues by prospecting and carrying opportunities to close. Obvious solution: hire a top-performing sales professional with a services background. Right? Wrong.

A salesperson of that caliber commands a big nut: six-figure base, bonus, commission, benefits, etc. After looking at a number of great candidates, we were forced to look inside at the real problem that we were trying to solve.

Our conclusion was striking. Between our CEO, Sr. Client Partner and me, we were pretty confident that we can take any real opportunity and move it forward to a close…the challenge was simply finding the opportunities.

SO – long story short, instead of finding a guy who was looking for a quarter of a million dollars a year with a sales capacity of a single person, we found a young, smart hotshot who can bang the phones, network with colleagues, find opportunities and flip them to us.

For half the price, we have triple the sales capacity.