The Great B2B Sales Fallacy
You are the founder, CEO, arriving each morning before 7:00, opening the office. Around 9:30 the sales team straggles in, double cinnamon lattes in hand. They sit around catching up on emails, making a few calls.
Zero sense of urgency. This is your second, going on third sales team. Nobody makes quota. The common refrain is “…not enough leads;” repeated first thing, even before “good morning.”
You are so frustrated you could scream. You are paying a base between $60,000 a year for dialing-and-smiling sales monkeys to $150,000 a year for “killer sales reps” the headhunter promised you.
Your A Funding Round is almost gone; if you do get not revenue way up, you become the diluted CTO, working from home. You were able to find, compel and close those first dozen customers. Why can’t they?
These killer sales reps cannot generate enough revenue to cover their combined sales and marketing costs. You just read the thoughts of most, almost all, current startup, B2B founder CEOs. Welcome to the Great B2B Sales Fallacy: 99 percent of all B2B sales reps cannot sell startup, disruptive technology.
Why? Because disruptive, B2B technology is sold to early adopters and innovators, 3 percent of the market.
These sales types spent careers learning and honing skills useless for selling to the early adopter/innovator. They typically sold to the majority buyer, late in a market, who bought when the technology’s benefits became obvious.
Anyone can sell to the majority. It understands a category. Its mission is to pick the optimal product. Your sales team could probably meet that challenge.
Unfortunately, that is not the hand you are holding.
Selling to the early adopter/innovator is very different. Innovators are risk takers. Thus, they are hard to find in the IT bureaucracy. As a disruptive startup, messaging does not come from “inside out” marketing. It comes from presenting your technology, in a hundred different ways, learning what phrase catalyzes the innovative-minded prospect.
Sales teams who have sold to the majority lack such skills.
There is no title in DiscoverOrg lists you bought called “innovator looking for disruptive stuff.”
Current sales teams – yours, expect to be given “battle cards” with features, benefits and differentiators. They expect a marketing machine generating leads. They cannot survive without several thousand dollars a week expenses to fly around, stay at the Westin and give sales presentations. That is what they have done for a career. They like it.
They inhabit VMware, Dell, EMC, SAP, certainly Oracle. Some can show you W-2s that look like CEO pay. They want a big equity hit from your startup.
But it never works out.
As each sales team fails, you hire another Sales VP. Your VCs tell you to spend half a million dollars on GrowthPlay training to hone your message. The message, unfortunately, is not the problem.
These sales teams do not have the skills to find the early adopter/innovator who is your buyer. Your entire A Round, followed by the B and C Round, is wasted. That is why you, Ms. CEO, feel so frustrated every morning watching your diluted equity dissipate with those lattes.
There is a better way. It is simple to explain, difficult to implement.
First, do not take early VC capital. If you take VC money, you adopt the VC model, described above, period. There is no way out.
Second, take a bit longer getting to market. You work with a few sales reps willing to work on low base/high commission or commission-only basis.
There is a little secret in the B2B world. There are great salespeople who made enough dough they neither need nor want a high base salary. They are looking for you.
You cannot find them because your VC would never know how to do things this way. Thus, skip the VC.
You also can implement “trusted advisor” selling, getting to the right person, via the network they most trust. You get a quick “yes, I am interested” or an equally fast “no, not for us.” In either case, cost of sales is almost zero.
If you feel the frustration of disengaged, expensive sales forces dissipating your equity, think about a different model. There are firms doing it and doing it quite successfully.
Reprinted from Software Executive Magazine OnLine