David Cummings on Startups

Category: Sales and Marketing

  • User Feedback

    One of the most profound changes the Internet has brought to the world of software companies, besides software-as-a-service, is that of user feedback. When I say user feedback, I don’t mean just getting emails with feedback on the product, rather I mean all the different ways people talk about the product with you, with others, and on their own. Think about some of the common ways people provide feedback now:

    • Email
    • Phone
    • Twitter
    • Facebook
    • Message boards
    • Idea exchanges
    • Blogs

    The list goes on and on. Generally, the key isn’t to try and be all things to all people. My favorite strategy is to keep track of feedback in a structured fashion (e.g. inside a CRM or Google Spreadsheet) and then once a change has been made that addresses one of those ideas, reach out to the person or all the people that submitted it, and tell them we listened to their request and made the change in the product. You’ve just won a customer for life.

  • New Company Top Priority

    When starting a new company, one of the top priorities should be to get a simple website up and to start publishing new content on a daily basis. Why? This is so important because there’s a lag time from when you submit a site to Google to get indexed and when it’ll finally appear in search results. There’s an even longer lag time to get a PageRank from Google, resulting in less traffic and awareness in the interim.

    Once you have a site up with content, you should do the following:

    Of course, all of this is predicated on the desire to drive leads to your business and build brand awareness using the web. It is well worth the wait.

  • Employee Hiring Tips

    Hiring is one of the hardest things an entrepreneur does on a regular basis. The actual act of hiring isn’t hard, rather, it is the difficulty of hiring the right people for your team. Building a great team is the number one priority of an entrepreneur. Here are a few tips that we’ve found to be successful for us during the hiring process:

    • Have an essay portion of the hiring process whereby the candidate has to answer five short answer questions that are specific to your industry
    • If you’re a software company, have an exercise for the candidate to complete certain tasks in the application and demonstrate technical proficiency
    • If it is a very senior position, go out to dinner with the candidate and his/her spouse so that you can see how they interact with their significant other
    • If anyone on your team objects to the candidate, immediately discontinue the process and move on — everyone needs to be on board 100%

    Hiring the right people is incredibly difficult. I hope these tips help.

  • Sales Data Augmentation

    Sales data augmentation, where information from third-party sources is used to better qualify prospects by sales reps, is invaluable. As you might have guessed, the latest generation of web applications provide even higher quality data with which to make sales teams more effective compared to legacy services. Some of the more popular ways to get additional data on leads include:

    • LinkedIn – the number one professional social networking site
    • Jigsaw – the number one user generated content site to buy business card information
    • ZoomInfo – crawls the web looking for lead information and making it readily accessible

    If your sales team isn’t using services like those listed above, they are missing out on effective data. I recommend they start using them.

  • Startups as Deer Hunters

    Mark Suster published the blog post Most Startups Should be Deer Hunters last month. It is, without a doubt, one of the five most important startup blog posts of the year. Every entrepreneur needs to read it.

    Here’s the general idea: startups need to focus their energies on deals that are big enough to be worthwhile but not so big that they overwhelm the company. Think of it this way:

    • Rabbits – Not much meat and they can be get away quickly
    • Deer – Enough meat to be worthwhile and once knocked down, aren’t going to get away
    • Elephants – Difficult and expensive to capture, and if you are lucky enough to get one, might be too much for the team to handle

    Go read Mark’s post right away.

  • Resetting Revenues and Growth

    One of the hardest lessons to learn, and one that isn’t talked about much, is that as an entrepreneur of most types of businesses, your revenues reset each year. What I mean is that you have to sell a certain amount of your products or services the following year just get to the previous year’s revenues, and then some amount more to grow. Resetting revenues make growth difficult in tough economic climates.

    This is also one of the reasons why business models with subscriptions, like software as a service or required maintenance and support contracts, are so desirable. Assuming a high retention rate (90%+), each deal sold in a new year represents growth as your revenue base is already the revenue from the previous year, if not higher due to more recurring revenue at the end of the year compared to the beginning of the year.

    My advice for entrepreneurs is to look for businesses with a recurring revenue component.

  • SaaS Hidden Problem: On-Boarding Costs

    Software-as-a-Service (SaaS) really is an amazing delivery model for software in that it better aligns interests of vendors and customers compared with installed software that requires a large, up-front fee. In reality, the monthly or annual fees for SaaS make it so that the vendor is financing the customer due to the fact that the customer needs to hang around long enough to become profitable. If you sell a large enterprise installed product and the customer isn’t happy, it can still be profitable (though isn’t good business practice). With SaaS, if you have difficulty on-boarding the customer and making them successful, they can walk away.

    A hidden problem with SaaS is the on-boarding and switching costs relative to the cost of the solution don’t usually match up.

    Think about it: if you charge $1,000/month for a SaaS product, you need to be able to make customers successful with almost no effort, otherwise you need to have additional implementation fees for thousands of dollars, driving up the pain of switching, increasing the sales cycle, and increasing the non-scalable labor aspect of the business. Many SaaS companies don’t adequately account for the on-boarding costs to their business model as well as how it impacts the amount of time it takes for a customer to become profitable. SaaS is a more capital intensive model for entrepreneurs compared to installed software.

    My challenge for entrepreneurs is to incorporate the on-boarding costs into their model and really think about how they can remove the enormous friction that comes with switching over to their system.

  • Ideas for Sales Proposals

    At today’s EO Accelerator Monthly Accountability Group we had a good conversation about doing sales proposals. As an entrepreneur or sales person, proposals can be one of the least fun things to do due to being time consuming and not always producing revenue. Here are some tactics we discussed:

    • Deliver a pre-proposal which is essentially a bullet point list of what you believe the client needs and let them know you’d like their feedback before fleshing it out into the full proposal
    • Never send a proposal over without being on the phone or in person while it is being read for the first time so that you can address any issues or concerns in real time
    • If it is an RFP, submit two proposals with one being exactly what they asked for and one being what you think is best so that the procurement person has to take them back to the stakeholder for feedback and input, increasing your odds of winning the deal

    Proposals are an important part of business and these tactics should help you win more deals. Good luck!

  • Mapping the Sales Process

    Another big idea from yesterday’s EO Accelerator sales education day was to visually map the sales process. Jim Ryerson said that mapping the sales process was the first thing he does when he engages with a new client, and that it’s a simple process most companies never do. Here’s what he recommended:

    • Get a stack of post-it notes and a white board
    • Make a list of all the stakeholders involved in the process like prospect, prospect’s manager, sales rep., sales engineer, consultant, etc
    • List the stakeholders vertically on the white board
    • Write each step in the process on a post-it note and put the note on the same row as the stakeholder that’s responsible for it, putting each post-it on a new column from left to right
    • Draw a line from each post-it note to the possible outcomes and keep adding more post-it notes

    We haven’t tried this yet in my company but I’m looking forward to going through the process and learning the benefits.

  • EO Accelerator Sales Day

    Today we had our quarterly EO Accelerator education event on sales and marketing. It was an all-day session from 7:30am – 4:30pm held at my office in Buckhead. Our expert instructor was Jim Ryerson of salesOctane, and he did a fantastic job.

    One part of the class was about persuasion and communication techniques to aid in the selling process. Here are a few takeaways:

    • Don’t talk — spend more time listening
    • Use short questions
    • Start questions with who, what, why, where, when, and how
    • Don’t ask yes/no questions
    • Offer alternate choices (e.g. do you want to start sooner or later?)
    • Always set an agenda for the next meeting at the end of a call, make sure both sides have homework, and promptly follow-up with an email reiterating everything

    In my experience, sales is the number one area entrepreneurs fail to do as well as things that come more naturally like product development and team building. I highly recommend making sales a top priority for entrepreneurs and really understanding how to create a repeatable process.