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Startup Therapy: Ten questions to ask yourself every month
One of my favorite blogs, A Smart Bear, has a great post today about the ten questions that you should be asking yourself every month. They all deal with how to most effectively run a small business, but, of course, my favorite is this one:
3.) What one thing is most responsible for preventing sales? e.g. people not knowing you exist, pricing, not enough product features, unorganized sales strategy, look-and-feel of website, haven't identified pain points, Most little companies aren't honest about this, yet it's possibly the most important question you could ask. For example, I'm an engineer, so my first answer to "Why don't you have more customers?" is almost always: "Because we need this feature." You hear some potential customer say "we will buy if you do XYZ" so you conclude that if you implemented XYZ people would start breaking your door down.But is that really the case? If you added one feature and maybe satisfied that one customer assuming they wouldn't ask for a second thing, and in my experience they usually do, would that get you 100 more sales? For those hundreds of people who downloaded your software and never bought — is the reason "not enough features?"For the hundreds of thousands of people who never came to your website in the first place, or hit the front page and left after three seconds, is the solution "more features?"When you honestly ask yourself this question, it will naturally lead into things you can do right away to get more people to the site, into a trial, and/or into a sale. Don't just rest on what comes easiest.
via Startup Therapy: Ten questions to ask yourself every month.
Social Media ROI: Socialnomics
Great video on the value of social networking.
YouTube - Social Media ROI: Socialnomics.
Will SaaS / Enterprise 2.0 Migrate to Value Based Pricing?
Back in my day, there was a company called PeopleSoft. You old timers might remember them. Acquired by Oracle back in ought-four. They sold their product not by list price, but by value-pricing. For little companies, this was a great thing and for big companies, it probably wasn't too bad either. What it was, though, was difficult to predict, budget early on, or budget consistently (or so I'm told by my customers).
Which is why I was so intrigued by the post from Ian Hendry citing the comments of Laurent Lachal of Ovum. The general premise is that Salesforce has some much information about what you're doing with the data (number of leads coming in, conversion rate, close rate) that they can easily see how much value your getting from the system and could potentially price their platform in a way that relates to that value. From the post:
Salesforce.com, again as an example, holds a lot of back-end data on how many contacts each of their customers hold in their CRM systems; how many leads they have; what proportion of those convert to opportunities; and then statistics on revenue generated from those opportunities. Salesforce.com has the data to prove its system is helping to close leads and generate business; to shorten sales cycles. Why doesn’t SFDC bill based on the tangible difference it has brought to the performance of a customer sales team? Another example: email marketing applications from Vertical Response or Constant Contact bill you for emails sent, but they also hold data on who clicks through, so why not bill on traffic sent to your website instead?It is a really legitimate argument, until you think about the quality of the people behind the platform. For example, if you take 100 sales reps on a team, only 10 of them will be stellar when it comes to the use of your SFA system. The rest will use it as a glorified contact management system. I think that I'm an above average Salesforce user and I'd only give myself a C+ when it comes to taking advantage of what the system offers. I think that most sales reps would be hard pressed to say that they get $65 a month in value from their SFA tool. This is obviously not something that Salesforce wants to hear, but lets face it, 99% of sales reps can get by with Excel and a phone. I think that, in this case, Laurent puts far too much value on the tool and far too little on the carpenter. Salesforce, for all of it's cool bells and whistles, doesn't close business for you. If I close a $1M deal, there is no way on earth that Salesforce contributed even one tenth of one percent to that. With that in mind, if you tie the price of Salesforce back to actual revenue generated, a bad quarter for a customer could sink a sales rep at Salesforce. A bad quarter for a vertical sector or region or global catastrophe could dramatically impact the entire company. There is a huge lack of predictability both on the vendors behalf as well as the customers. A great quarter and all of a sudden a company is looking at a 10X bill for their SFA. As a sales rep, selling value-pricing is an even bigger pain in the ass because you have to convince your customers that the tool is going to transform their people into something that they aren't. I tend to agree with Markus Buckingham that people don't change that much, so stop trying to get them to do so. When you try to sell a product based on value-pricing, you not only have to sell on the merits and the value of the product (already hard), but you also have to convince your potential customer that they are going to be able to change the way that they do business so dramatically, so immediately, that they will want to pay a premium for this potential transformation. This is a really, really tough sell for limited upside to the vendor. A similar example can be made for the email marketing system that Laurent points out. Again, the email marketing platform is a tool. If I put shit content into it, I'll get zero click through, but the vendor shouldn't be penalized based on a customer not being able to create good content. In the end, I think that if value-based pricing worked, you'd see it being adopted by a gaggle of companies instead of the Oracleized PeopleSoft (BTW, I don't think that they do this any more. Can anyone confirm?). The problem is that as a vendor, you need to defer your revenue for a long time - until you and your customer agree that value has been seen. As a sales rep, you have to sell twice as hard. And as a customer, you need to predict the future and expect that people will change. Combine all this and you have three strikes to value-based pricing never catching on. What do you think? Am I crazy? Am I missing the value based pricing sales model? Let me know in a comment. Photo: ValueKing by Ilja
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Michael Jordan’s Rules (Adapted for Sales) – Have Total Confidence
This is the second in a series of 10 posts based on the Golf Digest article in which Michael Jordan discusses how to be more competitive.
His second rule is 'Have Total Confidence In What You Can Do'.
A few weeks ago, I tweeted that I was totally convinced that if a company didn't use our software that they would be out of business in 3-months (of course I can't find it, but here is the RT). I recognize that this isn't true, but I go into every deal with the conviction that this is the case.
I'm so convinced that my product is the best thing for my customers. I'm convinced that I'll win every deal that I go into. I'm convinced that companies that don't choose our software will be toast.
This conviction carries over in your voice, your mannerisms and your decisions that you make for your customers. It's easy to say that you have their best interest in mind, but do you really? When you are totally and utterly convinced that you have the right thing for your customers, that will come out and you'll win more deals.
On the flip side, be honest with yourself and your customers. If you work for a company with a shit product, leave. If you work for a company that is unethical, get out of there. If you don't believe you have a good fit, walk away from the deal and recommend a competitor that would be a better fit (believe me, nothing builds future credibility like this).
If you don't believe, who is going to believe for you?
Pride...
This past quarter, I did pretty well.
I've got a bunch of these awards, but I'm really proud of this accomplishment. This one was almost 2 years of really hard work. Of tons of cold calls and relationship building and massive amounts of rejection. Fortunately, it paid off.
I've been at Socialtext almost 2 years. It has been a great ride and I'm really looking forward to a bunch more awards and quarters like this past one.
