David Cummings on Startups

Category: Sales and Marketing

  • Tradeshow Wrap Up

    We just finished up the second of our two MarketingSherpa.com B2B Marketing Summit conferences yesterday in Boston. These shows are small and highly specialized with just under 200 attendees. Next month we’ll do a show with 13,000 attendees in San Francisco and another one with 30,000 attendees in Denver.

    Here are the tradeshow wrap up steps for us:

    • Create a campaign, including costs, in our marketing automation system and import the new leads as a CSV file
    • Do a quick meeting and talk about what went well and what we can do better next time
    • Ensure that any outstanding commitments for prospects, partners, and analysts are followed through on
    • Share any competitive or industry intelligence learned with the rest of the team

    Tradeshows, while expensive, still play an important role in B2B technology companies and I recommend evaluating them.

  • Sales Territories and Lead Distribution

    Sales territories are a way to define which prospects or leads are handled by specific sales reps. Territories can be a tricky issue with fast growing companies as there are morale issues with constantly changing how leads are assigned to reps, as human nature is to fear change and expect the worst.

    Here are some common ways to divide leads:

    • Geographical territories (e.g. by state, city, zip code, etc)
    • Round robin so that each lead that comes in (or list that is generated) is handed to the next rep in sequential order
    • Verticals or company type such that certain industries (e.g. energy or technology) are owned by specific reps
    • Company size based on employees or revenues

    Developing sales territories along with lead distribution strategies is critical for fast growing companies and should not be taken lightly.

  • Tabletop Tradeshow Preparation

    This week starts the beginning of the Fall tradeshow season for us. We’re doing shows in San Francisco, Boston, Denver, Milwaukee, and a second one in San Francisco. Only one of the shows allows our full-scale booth while one provides a turnkey booth and the others are tabletop shows. A tabletop show is one where you have a simple 4″ x 8″ table, and is generally smaller and more casual than a show that allows for large booths.

    For our tabletop tradeshow preparation, we like to do the following:

    • Reach out to prospects and customers in the area to invite them to the show or a breakfast/dinner
    • Contact analysts and schedule briefings
    • Rotate a new team member from our staff in to attend the show so that more people get to experience an event
    • Prepare consistent talking points for team members that are going to work the booth
    • Prepare a checklist of things for the tabletop including:
      – Table cloth with logo
      – iMac with product demo
      – Fish bowl to collect business cards for iPod Touch giveaway
      – Business cards and product slicks to hand out
      – Pop up banner stand with the message we want to emphasize

    Tradeshows are still a great way to meet several people in person in a short period of time and should be considered as part of your overall marketing mix.

  • Product Distribution Thoughts

    Whenever people ask about our sales and marketing strategy, I always tell them we focus on direct sales with a small percentage of revenue coming from indirect channels like value added resellers (VARs). Inevitably, I’ll get the question asking why we don’t do more with distribution partners. We’ve worked hard in the past at setting up reseller and OEM relationships only to never have them work out as well as both parties initially expected.

    I think distribution partnerships are a good idea but I wouldn’t bet the farm on them.

    Partnerships, like any other part of your business, take serious time and energy to cultivate well. My recommended approach is to take baby steps with distributors and build small wins over time. Once you have some simple wins under your belt, only then would I recommend taking the next step toward a deeper relationship.

  • Software Pricing Proportionate to Sales Cycle

    Two days ago I had the opportunity to meet with a local entrepreneur who’s working on a SaaS product geared towards pharmaceutical sales reps. The gentleman and his co-founder are working on the business part-time while outsourcing the engineering to a contractor in NY. After the usual chit chat, he drilled into the area that he was struggling with the most: pricing.

    His product is currently priced at $99/month/user, and has one add-on with a per usage cost. Having a medical sales background, he’s enlisted several independent, commission-only reps to help sell the product, but with no luck. I asked him about the sales cycle and he said it usually takes a couple weeks for a rep to sell the product once the prospect is in the buying cycle. What’s the problem with this situation? A product that sells for $99/month, and requires a trained sales rep, isn’t going to work unless it can be done in a call center and is a mass market application (think cell phones or cable TV). Software needs to be priced in direct, proportionate relation to the sales cycle.

    My advice to him was to either make the web application more self-service with a price point that is in the $10 – $30/month range, or to go much more up-market and sell a $1,000/month product to departments. At $99/month, his product is too expensive to sell without an inside sales team, and not expensive enough to compensate trained sales reps. It requires selling, not order taking.

    Pricing is difficult and should not be under estimated. For more software pricing thoughts, please visit Joel Spolsky’s post from 2004.

  • Channel Billy Mays for Your Sales Demo

    This afternoon I had the opportunity to talk with a gentleman who co-founded a company that is now publicly traded on the New York Stock Exchange. Two of his major strengths are strategy and marketing, which became readily apparent when I asked for feedback about our site and Flash demo. He didn’t hesitate at all to provide solid critiques of what we were doing well and what we could improve upon.

    As for the meeting, one of the most insightful takeways I received from him was to redo our Flash demo and make it more punchy. We need to channel Billy Mays. He said I should watch the show Pitchmen on Discovery and really pay attention to how they construct and deliver the material. Here are some of the specific points he relayed:

    • Set the demo up like a story
    • Be passionate and enthusiastic throughout
    • Emphasize the benefits first and set up a hook for the watcher to need more
    • Highlight any superlatives, like #1 in a certain market
    • Provide a call-to-action at the end for a direct response

    We’re going to re-do our Flash demos and channel our inner Billy Mays.

  • Preparing for a Scheduled Demo

    Yesterday, after talking about preparing for a sales call, the next part of our workshop was focused on preparing for a scheduled demo. A scheduled demo is the first real phase in our sales process, usually takes an hour, and is conducted with the phone and GoToMeeting for screen sharing. Depending on the product line being sold, my sales people came up with the following items to do in preparation for a scheduled product demo:

    • Send a demo confirmation email 24 hours in advance
    • Read the Wikipedia page on the organization, if present
    • Read the three most recent press releases on the organization’s website
    • Research everyone who will be present on the call, their job titles, roles, and responsibilities
    • Develop a list of questions to ask to understand pain points and BANT (budget, authority, need, and timeline)
    • Find a reference customer in the same industry or geographic region to mention

    These items are generally common sense but they are an important part of the sales process. Web demos with a screen sharing program have significantly reduced the cost of sales for many companies and I’m a big advocate of them.

  • Preparing for a Sales Call

    During our weekly sales training workshops, we pick two topics and go around the room sharing our experiences and personal best practices on the topic. The goal is for sales managers, cold callers, and sales reps to learn from each other in a collaborative, peer-to-peer environment.

    Today, one of the discussion topics was how to prepare for a sales call.  We broke it down into two sub-categories: cold calls and scheduled demos. The following best practices emerged for cold calling:

    • Look up the person in LinkedIn and record relevant pieces of information in your CRM (we use Salesforce.com)
    • Google the person’s name and spend no more than two minutes looking for additional information
    • If possible, stand up when making the call
    • Smile when talking
    • Think positive thoughts about how the call is going to be a success once the phone starts ringing

    Of course, this amount of preparation is for selectively calling companies that fit your ideal customer profile; it is overkill for trying to make 80 calls per day.

    Preparation makes all the difference between success and failure, assuming you put yourself out there. Making a sales call is already a challenge and going into it with these tips will increase your odds of success. Stay tuned for part two – talking about preparation for a scheduled demo.

  • Iterating in a Startup – Part Five

    With a few sales under our belt, we saw our first sign of a trend with higher education. It was the one vertical where we were able to generate several leads using PPC ads. Additionally, the types of challenges higher ed was looking to solve was uniquely suited to our application.

    Our product’s special sauce is the ability to manage multiple websites, that live on multiple servers and use different operating systems, from one single product instance. It’s a hard problem. In addition, we had a simple per-CPU pricing model with unlimited sites, users, groups, and content combined with a focus on XML — before XML really hit the mainstream.

    Colleges and universities typically have a collection of independent websites with little or no consistency. As you might imagine, the development of these sites happened organically and in piecemeal fashion. Different technologies like PHP, Classic ASP, ASP.NET, and ColdFusion were used to power the dynamic portions while plain HTML was used for more static section. Our software can handle each of those situations and publish files as well as to remote databases. Our product flexibility was a key differentiator.

    I wish I could say we planned it that way, but we didn’t. The reason we could publish to different servers and support all the major programming languages was because of the goal we had set out with in our first, failed SaaS CMS: support all small business shared hosting accounts. With our SaaS CMS focused on small businesses, the only way to get content to their server was through FTP or SFTP. There weren’t any other options.

    With our new mid-market CMS, we set out to provide all the benefits of a dynamic, database driven website with the performance and flexibility of publishing flat files. It turned out, unbeknownst to us for a couple years, that that was perfect for higher education. We now had a robust product with reference customers in a specific vertical and it was time to grow a serious business. I had now been running the business on my own for over four years, barely scraping by, but it was at that point where I knew we were onto something special. It was the start of 2005.

    The new strategy was pretty simple — cold call all 4,160 two year, four year, public, and private colleges and universities in the U.S. and Canada. We focused on calling people with the following job titles:

    • Webmaster
    • Director/VP of IT
    • Director of University Relations
    • Web Manager
    • Communications Director

    I had three full-time sales people at the time and they would call and set up web demos for me. My role on the call was to be both the sales engineer and the passionate product manager that gave the demo. It worked beautifully. Sales tripled in 2005 and more than doubled in 2006. We had finally hit our stride.

    Now, in 2009, we’re still growing and have over 120 colleges and universities as clients, making us one of the top higher education CMS vendors in the world. At the end of the day, it came down to the following:

    • Neverending determination to succeed
    • Making decisions quickly and figuring out what works and doesn’t work
    • Being passionate about the product and the market opportunity

    Building a company is an amazing journey and is worth every minute. In addition, being able to iterate and learn quickly is one of the most important traits of the management team. Good luck!

  • Iterating in a Startup – Part Four

    With a good product and several years of domain experience, we embarked on the next major iteration of the business: sales and marketing. I knew the technology aspects of the business inside and out, but my knowledge of B2B sales and marketing was severely lacking. Using Google, I identified three areas to focus on:

    • Cold calling
    • Partnerships
    • Pay-per-click ads

    Cold Calling

    The first idea for cold calling was to buy a list of all the CIOs in the Southeast with revenues between $100 million and $1 billion, which is often defined as mid-sized companies. We cold called 1,000 organizations and generated a measly four appointments. Our cold calling, while valiant, suffered from a lack of the following:

    • Compelling value proposition
    • Referenceable customers we could name drop
    • Product or company name recognition in the market

    Cold calling would eventually become one of our most effective strategies, but it took us 12 months to figure out where to focus our efforts.

    Partners

    Finding implementation partners and resellers was always viewed as a logical strategy for the business. It never worked. Potential partners, like interactive agencies and ISVs, would provide the services and we’d provide the product. Ideally it would be a win-win situation.

    We worked hard and over the course of several years we developed partnerships with 10 companies. Those 10 company relationships resulted in five total sales. That’s right, very few partners would sign on officially, and even fewer would result in actual revenue. It took me a long time to understand that introducing a mid-market CMS to a client would then reduce the amount of money the agency could bill for fees.

    Agencies operate in a time and materials model, and tens of thousands of dollars in CMS costs would come right out of the same client budget as hourly fees. As an agency, building a custom client solution, even if it was more expensive and did less than an off-the-shelf CMS, was the right thing to do for their business model. It was a hard lesson for us to learn.

    Pay-Per-Click Ads

    Pay-per-click (PPC) ads are the sponsored ads that show up alongside search results in Google and other search engines. When we did our first PPC campaign in late 2003, it was much more affordable and cost effective compared to today. Fortuitously, PPC ads, combined with landing pages, allowed us to generate leads in a variety of industries. We would then methodically follow-up and move the prospect through the sales process. By the end of 2004, we had signed at least one client representing each of the following verticals:

    • Management consulting (1, from cold call)
    • Healthcare (1, from cold call)
    • Utilities (1, from partner)
    • Hospitality (1, from partner)
    • Technology (1, from PPC)
    • Higher education (2, from PPC)

    Stay tuned for part five to learn how we took the one industry we’re we’d had slightly more success and became a market leader.