The model for sales in a Start Up
We now have a great model for the building and growing the sales, marketing and business development of start ups. Focus on finding and validating customers and the whole cycle of testing, learning, iterating and necessary executing a pivot. When we combine the thinking of Steve Blank and Eric Ries with the lifecycle model proposed by Geoffrey Moore in Crossing the Chasm we also have a method for taking the next step and creating a large company.
Like software, hardware and user experience, business thinking has experienced great innovation in recent years. Like the technology many start ups use, these thinkers also believe that the start up movement will eventually disrupt and transform virtually every business sector. This change will also rewrite the rules for business organisation, business processes and business strategy.
B2B Sales are Ripe for Disruption
One specific area which is ripe for disruption is the B2B sales process. The key to unlocking a new approach to sales is the advent of everything as a service, most especially software as a service. Many B2B enterprises including the large established technology players have grown on a product based sales model. Shifting to selling services is more than just relabelling. It requires a whole new approach to generating value from customer relationships
Living in a Virtual World
Selling services to businesses is a complex world and often appears slow moving and obstructive. To understand why, you first need to grasp that services are not sold to businesses (or companies or corporations or whatever). Never. Services are bought by people. Not sold, bought. Not by organisations, by people. Those people are real, normal people with normal motivation and behaviours. However, they live in a virtual, unmapped world called a company. This world has its own customs and laws. if we don’t know these its occupants may appear irrational and unpredictable but they are not.
Making it easy to buy
The key to success in these virtual worlds is making it easy for your customers to buy. The traditional product model is based on creating features and benefits which make the product easy to sell. Services don’t work like this. The differences can be quite subtle but they are fundamental.
Let me illustrate by looking at some of the elements of the sales funnel:
My thanks to my good friend Carl Erickson from Beacon Worldwide for the thinking behind this model which has been proven in thousands of service sales.
A different customer experience
Some of these differences may seem quite subtle but the results are a very different experience for both seller and buyer. Notice that this affects everything right through to contracting and accounting. Start ups that are aiming to sell to the enterprise need to understand the model on the right and adopt a different business model as a result
Top 3 things to do differently
There are three clear steps to the right model:
1. Hire different people. Traditional product sales people often struggle to sell services. Look for a background in consulting, systems integration or IT services.
2. Build different incentives. This is one of the most common mistakes even in large services companies. Sales targets that are based on the signed contract value positively encourage the wrong behavior and bad business practice.
3. Rethink your CRM. Most CRM systems are actually product sales funnel based. You will need something that genuinely manages customer relationships.
Following these steps will help but it will not be enough. SaaS for the enterprise needs to resolve the conflict between simple, standard software and customer expectations of service.
The Anatomy of a Conflict
The economic model of SaaS is designed to scale by low cost, online delivery of high quality easy to use software. Enterprises are used to buying software which is highly configured, complex to install and delivered by large teams of systems integrators and consultants. The latter model is expensive and painful but it is a service tailored to business needs just as described in the right hand side of the table.
How to rock Enterprise Sales
Great SaaS brings huge benefits but these will only be realized if the business which buys changes to take advantage of the opportunity. This is the final key to successful enterprise sales. The SaaS start up must help its customer deliver business change. This means wrapping the product in an ecosystem of training, support, change management and benefits realisation – what Geoffrey Moore describes in Crossing the Chasm as “the whole product” philosophy.
Start ups don’t necessarily need to deliver these services themselves. Partners, alliances and third party software providers may well be better placed. A strategy to build a place in an ecosystem which can deliver end to end business change is essential.
Winning enterprise business needs a different approach to sales for SaaS start ups. This implies making different choices about your business model. To learn more about the tools and techniques needed to implement these choices effectively come and talk to me.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.