I recently sent a note to an entrepreneur friend of mine whose company is doing well, but I heard thru the grapevine that he needed some help in the sales department – that things just weren’t moving along as fast as he would like them to.  So I reached out and let him know that I had some cycles available if he wanted some help putting together a sales plan, and figuring out how to accelerate his growth.

He very quickly, and politely replied that the type of sales planning and assistance that I do at QuotaCrush really wasn’t applicable because, “his product has long sales cycles and long lasting relationships.”

I sat there confused and bewildered for a few moments and then realized that perhaps he was missing something very completely obvious.  If your sales cycles are long – then perhaps that is a result of the fact that your sales people don’t know how to shorten it.  One of the biggest differentiators between good sales people and great salespeople are those that know how to close – and especially those who know how to close quickly.  Sometimes, this means getting the customer “half-pregnant” – or hooked on your product in a small way with a small close and then following it up with a larger sale.  Have a two hundred thousand dollar product?  Find the $99 / mo sampler.  Find something that gets people to become customers and up-sell them from there.

To be satisfied with a long sales cycle means to be satisfied with mediocrity.  I challenge anyone with a long sales cycle to find the shorter sale.  It exists.  It always does.  Part of what I show companies is how to find that smaller and quicker sale.  When you resign yourself to a long sales cycle, you will try to find salespeople who can tolerate a long sales cycle.  Who are sales people who can tolerate a long sales cycle?  ”Good” sales people not great ones.  By definition, they are less hungry and less cash focused – which is what you want them to be.  The one exception to long sales cycles are those that sell exclusively to government agencies who are usually tied to large budget cycles.  EVERY other corporation has ways to spend money now to solve a critical problem – not every corporation will buy the shorter sale – but there will be some that will buy the shorter sale – and your overall sales cycle will shrink.  Unless you think like this, you are doomed to just accept the long sales cycle, get your investors to accept the longer sales cycle, and you are in a spiral downward.

What should you do?  Challenge the long sales cycle at every turn.  Challenge your sales team to shorten in.  Challenge your product team to build in ways to help the sales team get people a taste that wants them coming back for more.  This is the path to real success and building a sales engine that produces consistent and predictable results.

The second part of his sentence was also troubling to me.  He didn’t want someone short term because he needed long-term and long-lasting relationships.  A top mistake that companies believe is that people keep buying from you because there is a relationship with you.  In the “mad-men” martini days, this may have partially been the case, but it is no more.  Companies will buy from you consistently because you solve their problems.  I like to think I’m a great relationship guy and I’ve done sales for lots of companies.  What I think is great is that those customers STAY customers after I leave.  They aren’t tied to me.  Why?  Because I sell value and I sell great products that solve problems.  Its not about me.  I get that.  Its about the problems that the product solves.  If that product solves the problem that the company says it will, then those customers will outlive the product.  A salespersons relationship might be able to smooth over problems with the product based on relationship – but that isn’t why my friend needs long terms salespeople — and if you are planning for problems – then there are bigger issues at play.    You should never be worried about how long your salespeople will be around in your hiring process if you believe that you have a great product that solves a big need.

I responded to my friend with a note summarizing this blog post, and I have heard only silence since then.  My guess is that he truly believes that he has a unique situation and long sales cycles just need to be accepted.  Great sales people know this is never the case, but I suppose that is why so many companies struggle with sales – there are established beliefs that are hard to escape.

The reality is… if sales aren’t where you want them to be, if you aren’t closing fast enough, you need to question if you have the right team, the right process, the right pricing, etc.  Challenge it all and accept nothing as a fact of your sales cycle.

I wrote a while ago about how I think the value of the rolodex is gone, yet still so many people hiring sales people want to know about your Rolodex.  Who do you know at their target companies, and who do you know in a particular industry.

The more you’ve done in sales, the more you know that this is all hogwash.  I’d take a great salesperson who can network over someone who knows 15 people in an industry ANY DAY on my team.  Learning how to sell and find new people to sell to is 150 times harder than calling 15 people you already know and asking them to buy your new product.  And the fact is, even if you know 15 people, the odds are that at best 1 or 2 will want it.  Then you are back to needing someone who can reach out to new people again…  So… again… who do you want on your team?

Take this idea a little further and you know that great salespeople can learn new ideas and industries very quickly.  So, what is better?  Someone on your team who can pick up sales pitches easily, creatively creates new pitches and finds the value the customer needs or someone who is so entrenched in a single industry that they don’t have any reference to how the rest of the world works.  I have worked in so many different industries, that I clearly think that someone with a broad experience is MUCH better.  Its the core sales ability that is the most critical.

As I debated the rolodex idea with someone recently, I explained what I thought the rolodex of the 21st century was – its your sales network – your sales reach.  When I look for a team member, there are many traits (like expensive hobbies) that I look for, but I’ve really begun to understand the value of the sales network that team members have.

Recently, a connection of mine called me for some sales advice.  They had a particular question about how to sell into an account to which I had sold millions of dollars of things.  I was able to quickly tell this salesperson exactly what the best process would be in order to get that deal.  How to navigate the organization… how their purchasing process worked…  How to circumvent the “approved vendor” requirements…  How to arm his champion with the information he would need to sell it up the chain… etc.   This person was selling a COMPLETELY different product from a COMPLETELY different industry, but my advice was able to help him close the deal.

Rolodex?  OK – yes he had me in his “rolodex” but not in the traditional sense of what a rolodex means… that you have sales contacts who you can sell to immediately.  What he had was a person in his rolodex that can help him make the sale to someone who wasn’t in his prospect rolodex.

This is the 21st century rolodex.  It is about who you are REALLY connected to within the world of sales that can help you get the information you need to make the sale.  Its about who can get you the advice for that industry, that product, and that pitch to make those sales easier and faster.

Its the sales people that have the biggest and broadest reach that you should be getting on your team.  If you are a sales person you should be finding, expanding and utilizing your sales network.

I think a lot of really great ideas and tools are coming out now to help harness and expand your network and I think that its a need whose time has come.  Now… can we please let the term “rolodex” die?

A sales person that used to work for me called me last week to get my opinion on a new position he was considering.  We chatted for a while about the position and the opportunity, and I was very excited for him.  Its a great company, a great product, a great team – and I think it will afford him quite a bit of opportunity to advance his career.

Then we started to figure out if the comp was right for him.

He explained to me the compensation plan that was presented to him.  As he spoke, I said, “wait… I have to get a pen and write this down so I understand.”  OK – the fact that I had to say this is 100% a clear indication that this is a bad compensation plan – but nonetheless I attempted to understand the plan.  The plan paid out upon a rolling average of monthly sales over a three month period and provided incentives on this and that.

After I thought about the plan for a while, I said, “OK.  I get it and from my calculations, its most likely a very generous plan – but its sort of hard to tell – and its going to be very hard to know what you will get until the end of each quarter.”

I certainly appreciate that the CEO of this company was trying to create a generous compensation plan, and I honestly think that he believes that he is encouraging the right behavior but the problem with the comp plan is two fold.

1)  It is so hard to calculate and know what you are getting paid on each deal – that the sales rep will spend too much time thinking about what he will or wont get paid instead of just focusing on closing.

2) By making the plan based on a rolling average, the “cha-ching” factor after a deal is closed is gone.  When a deal is closed, what does it mean to the rep?  Who knows until the end of the quarter so its not as exciting when a deal closes.

Here is my bottom line on comp plans.  Make them simple and easy to calculate.  Give me a cha-ching when I close that is very clear what I get and when I get it.  This will motivate me to close more and faster.  I see something I want to buy?  How do I do it?  Close a deal at this amount and I will get enough to buy it.  Want to make more money than that other salesperson.  How?  Close deals totalling X to get there.  This is how we think.

The more time I have to spend on math, the less time I spend on closing.  The more time I’m wondering about what I get paid, the less likely I am to close it.  When I don’t know what its worth to me personally – I have less drive to bring it home.

Perhaps these sound like strange concepts to non-sales types, but this is what motivates us.  The hunt.  Make it like a hunt and we will hunt it down.  Make it like a complex problem with too many goals and triggers and we will be less motivated and driven.

I think that my guy will do well in this role, and I actually think he will make quite a bit of money.  I also think he has the drive to succeed in this position regardless, but in general, I think that this comp plan should be tossed out and replaced with something simple that provides cash directly tied to an action.

One of the nicest things about being in sales is getting to travel to interesting places that you probably wouldn’t go to normally.  In my career, I’ve seen nearly the entire US and several countries.  Last week, I got the opportunity to travel to Istanbul and it was an amazing experience.  I am very intriqued by historic sites, and in particular the events that shaped the world we live in today, but actually planning a trip to Turkey wasn’t high on my list.  My family would much rather travel to more relaxed and vacation sites that require less thinking.  And… as a salesperson that travels, we are often at the mercy of where our families want to go when we do get fun travel.

I was certainly fascinated by Istanbul.  Its history.. Its beauty.. Its culture.  One of the many sites that I visited was the famous Grand Bazaar.  The Grand Bazaar is a massive market with over 1,000 shops selling everything from jewelry, clothing, food, trinkets, etc.  The trip through the Bazaar gave me a fantastic chance to view lots of different sales styles, tactics, mistakes, and successes.

The overarching style of sale here is one of haggling.  There is no set price for just about anything.  The vendors and the customers all understand that haggling is the mode of operation here.  I set about a number of purchases to investigate the sales style of some of the vendors.

Understand your prospects alternatives and willingness to walk

My first purchase was a toy gun for my son.  (Yes, yes… Its already been established that I have questionable parenting skills – and I’m sure I will get judged in the comments again.)  A beautiful replica of an Ottoman Empire Blunderbuss with a mother of pearl inlay seemed like a great purchase for a boy of 7, to me.  I asked the vendor how much the gun was.  He said it was 90 Lyra.  I said that I only wanted to pay at max 50 Lyra.  He then showed me some cheap guns at about 30 Lyra.  I said thanks and started to walk away.  He grabbed me back and said that he could do 85 Lyra for the original gun.    I said, “sorry.  I only want to pay 50 Lyra for something for my son.  If you can’t do 50, then I’ll find something else.”  He went to 75.  I said, “50.”  He said, “I keep changing my price, but you stay the same.”  So I said, “OK.. 51 Lyra”  He laughed, put the gun in a bag and said, “60 Lyra”.  I handed him 60 Lyra and went on.

I respected his tenacity, and his salesmanship, but he certainly saw that I didn’t have that much attachment to the item, and was willing to walk.  My willingness to walk was not a tactic.  It was literally that I wasn’t that attached to the item – but at 60 Lyra – approx $40 – it seemed like a decent deal.  The challenge that this vendor, and all vendors there have, is that there are 50 vendors selling very similar stuff in a very close proximity.  So his challenge was to make the deal as quickly as possible and as fairly as possible.  By keeping it a fast exchange, and quickly understanding my pain points and my willingness to pay, he was able to quickly negotiate a deal – and get me off my initial price.

When you are selling, you need to understand your prospects ability to walk, their absolute need for your product, their willingness to take alternatives – even if they aren’t perfect matches.  When you are selling your product, do you know the alternatives that they are looking at?  Do you understand why they might choose an alternative?  This vendor might have understood my hesitancy with getting a gun home on a plane or my willingness to just get anything for my son.

When you truly understand why someone will NOT buy your product – you are more likely to understand why they WILL buy your product.

Understanding generally what your customer is looking for – if anything

After I purchased the gift for my son, I started browsing around again, and was stopped by three different people asking me to “check out their uncle’s shop right around the corner”  These wandering “lead generation tools” are seeking out people on the street to pull them to their shops.   When the first person grabbed me, he asked what I was looking for and I told him that I was shopping for my wife.  He then took me around to his “uncle’s store” and when I got in the store, I was brought a delicious glass of hot tea.  I was then shown, in a private space, a series of very beautiful and amazing silk carpets.  I acknowledged that the carpets were indeed well made and beautiful (which they were… probably the most beautiful carpets I’ve ever seen or touched) and kept looking for my exit.  After I was shown about 25 carpets, the salesman finally told me that the rug I liked the best was only $10,000 – which he said was a great deal.  I actually believe this probably was a good deal given that it was a very large handwoven silk carpet with a very complex design.

I explained to him that while I thought the carpets were beautiful, I was not in the market for a carpet – and especially not a carpet for $10,000 that I then had to cart around the rest of the day and then 5,000 miles back home.  He then tried desperately to show me $5,000 and $3,000 carpets but I finally got my exit chance.  I thanked him for the tea and went on my way.

Two more times I was approached by the “lead gen” guys to go to their “Uncle’s Store”  Apparently the thing in Istanbul is to have your nephew pimp your store in the Bazaar.

What struck me as I thought about the exchange was that I wondered how often this tactic was successful.  Were there many people who when just walking thru a bazaar, just suddenly decide to drop $10,000 when they went to the bazaar not looking to?  It seems to me that if I’m going to spend $10,000, there has been some thought put into it before hand.  And, I was certainly not dressed in such a way that would have given him the impression that I was much wealthier than I am where dropping $10,000 would have been an afterthought.  (or do they think all Americans are that wealthy?)

This salesperson didn’t once try to understand me, my shopping habits, my ability to spend $10,000 on a moments notice, or any of the skills that I would expect someone to have if they are in a high priced product sale.

When you sell your product, do you think about who you are calling on and their ability to pay for your product?  If you are cold-calling, do you even know if they need or have ever thought about a product like yours.  The answer is probably that they havent, and you need to take this into account.  You need to take the time to understand the customer better.  This salesperson sat me down and gave me tea – which would have been the perfect opportunity to find out things like… what do I do for a living, do I live in a house or an apartment, do I have a co-financial decision maker (wife) at home that would change my purchase habits on large items, etc.  He didn’t ask me any of those questions and was therefore just throwing anything and everything at me in the hopes that something would stick.

It was a very curious exchange and one that I’d love to see stats on how often this works for them.

Speaking the same language

My third exchange was purchasing food.   This exchange didn’t actually happen inside the bazaar, but near it.   As I tried to order food and wine, the waiter just looked very confused – obviously not understanding anything we were saying – and it took quite a while pointing at menus and pictures before we got our order.

This was certainly not the waiters fault as it was me who was in the foreign country and should have been able to communicate, but it helped to illustrate something to me.  Are you and your prospect speaking the same “language?”  Are you talking in your native tounge and using the buzz words and phrases that make perfect sense to you – but when your prospect looks at you – they have no idea what you are talking about?

Too often I see salespeople who are so close to their product that they don’t realize that everyone outside of their company has NO idea what they are talking about.  You should always make sure that you are speaking in the native tongue of your prospect if you want an easier sale.

I have to say that my trip to Istanbul was educational, successful, and informative, and as usual… I found great sales lessons in the trip.

Sales is hard.

Anyone who has done sales in a start-up can attest to that fact.  Great salespeople make it look easy – or at least hide the struggle well from non-salespeople.   Once a great salesperson builds their pipeline, gets down their pitch and starts rolling with it, they can easily bring companies on the pipeline, and move them through, and can often do it with, what looks like, ease and finesse – and often with amazing predictability.

For people and managers who have never been the person on the firing line, especially in a start-up, this predictability and finesse look like a hands down victory.   And in many ways it is a victory.  The ability to get your startup to this point means that you have a product that people want, that people will pay for.  You have identified a good sales team, and they have developed the pitch and the product offerings and pricing that allow sales to happen.  It seems as if sales will just happen now – regardless of who or what is in the sales role.  I’ve seen too many non-sales startup founders think that the product must be speaking for itself, and that the sales will happen regardless of  who or what is in front of them.  But in a start-up, it is often the case that these great salespeople are masking the actual difficulty that is going into this sales machine.  In many instances, the sales team is still pushing the truck up-hill, even though the truck appears to be coasting just fine.  These sales people deal with rejection all the time, and focus on the positive, so the message to the outside team is that everything is going well – even if it isn’t.  And if numbers are getting hit – or near to being hit – then it appears that it is time for a victory lap.

This is most often very, very far from the truth.  The predictability that you see is often completely dependent on the people making it happen, and when you take these people out of the equation, the bottom can fall out.  If you are a start-up manager, you need to resist the urge to change something that is working – even if it is costing you money – ESPECIALLY if its costing you money.  Since the process looks smooth and easy, the natural reaction will be, “OK, this is easy now, so I shouldn’t have to pay as much in commissions.”

WRONG…. WRONG… WRONG!!

Pay away and smile.  Why?  Because you’ve found a team that is bringing in revenue – and revenue is good.  The more you are paying in commissions, the more this process is working.

True… it is possible that there are things you are paying more commission than you should – but until you know for SURE that this is the case, I would argue vehemently that you will lose more revenue than you will pay out in extra commissions.  I can name significantly more companies that overpaid salespeople and succeeded than ones that cheaped out and succeeded.  And, if you succeed and paid a little more to your salespeople no one will care.  And if you fail and overpaid your salespeople, its highly unlikely that the commissions were the reason (after all paying commissions implies some degree of success).

One start-up I worked with tried at every turn to figure out when sales were “working” and they could scale back on what and how things were paid out.   Sales were happening… but they were never automatic, and they were never easy.   I was always amazed at how they would look to save a few thousand dollars in commissions, when if the salesperson left…. it would have cost them potentially HUNDREDS of thousands of dollars.

Cheaping out on a working sales team – even if parts of it feel bad – is never a good strategy in startup mode.

So… given this, when CAN you scale back and change your compensation plan.   Well… if you built the plan so poorly in the beginning, that you are actually losing money – then I certainly would change the compensation package.  If the compensation package isn’t working to bring about the goals that you need to set for revenue – then I would certainly change the package.    Once you have a large sales team that consistently makes goals – even the weakest and newest of salespeople, and it is VERY obvious that there is no large effort, then perhaps it is time to scale it back (although again I might argue if you make your revenue and profit goals – keep it).

But unless any of that is true and if you are making money, then don’t change it!  This is the sign that your plan is working!  NOT that you are overpaying, and not that sales have suddenly gotten easy.

Too many start-up sales managers are quick to declare victory…”mission accomplished”, and to try to scale back what and how they pay on things in an effort to save precious cash – but I warn that this is very often penny-wise because a disgruntled or demotivated sales team will not take you where you want them to take you.  And very often the reason you are paying a lot – is because they are doing exactly what you motivated them to do.

Don’t punish them now that they are doing it.

The essential but horrible sounding named murder board.  Every time I bring it up with a new person, I get confused stares – yet I think its an essential tool for both salespeople and entrepreneurs.

What exactly is a murder board?  Murder Board is a term that was originally coined by the U.S. military and referred to the practice of preparing people for oral exams – particularly for oral exams related to becoming an instructor.  A panel of several people would be convened to hear the presentation of  the candidate, and to become the worst set of students that this instructor would ever face – and to see how they would handle the frustration. humiliation, and the general situation.  The thought process was that if they could handle that panel of people, then there would be no student that could topple them.  At the end of the murder board, the instructor would get a thumbs up or down, and in the case of a thumbs down… subjected to another murder board.  This ritual was part training / part hazing, but actually probably quite effective at weeding out bad instructors and preparing good ones.

So what does this have to do with sales and entrepreneurship?    When we talk about murder board as it relates to sales, it is not a hazing technique, but rather an essential tool to arm the salesperson with responses to all of the tough questions that a customer can ask.  It has the same roots, but can truly be critical in making sure that you don’t blow that meeting that you worked so hard to get.

I recommend murderboarding early and often.  It is very easy in the early stages of a company, or in a tight knit sales team to get into “group think” where you start to actually believe everything that you say in your pitch and about your product without taking a very hard and critical look at it with outside eyes.

A murderboard should be conducted with one person taking the role of salesperson, and the other people taking the role of hyper-critical clients that have a problem with anything and everything.  This should NOT be a hazing experiment to see if you can throw this person off their game just for the fun of it, but it should be difficult.  The point is to prepare yourself, to learn about your product, and to get better and better pitches (and perhaps learn something more about your product in relation to your competition, the world in general.”   The people serving as the clients need to object to any and every part of the product and pitch that is presented:

I already use one of your competitors

Its too much money

That claim can’t be true

My company already has a solution like that

I don’t need this

Cloud solutions will never get past my CIO.  We NEVER host data outside our company.

I have more important priorities

This is a “nice to have”

Your competition is cheaper

and on and on…  If you have heard the argument, or think about the argument, you should bring it up.  The person in the line of fire should be able to respond to each and every question in a proper way.  Don’t be afraid to get specific about your product and its features – because your potential customers wont.

When you stump the person presenting, you should stop and think about the question.  Why did that particular objection or response throw you?  Is it an overlooked product feature?  Or a place where your competition trumps you?  Or is it just something for which you haven’t thought of a proper response.  No matter… if you get stumped… THIS IS GOOD! Its means you are learning something about your product, your pitch, or your ability to pitch.   Work on and practice better responses to each objection and incorporate them into the arsenal you use in your selling.

The sales team should take turns on this, and iterate the pitch over and over again.

How often should you murder board?  Often… especially in the early stages of a product.  It should help bring out deficiencies in the product and how to deal with them in the sales pitch.   If you get a new objection in the field or lose a sale, bring it back into the next murder board and use the experience to determine if there were ways to better handle the objection, or deal with the competitive threat.

Murder board when you get new salespeople.  Don’t subject them first, but let them be the “bad client” first.  Chances are their outside view will bring up something you haven’t dealt with before and help the experienced people pitch better.  Then, once they have heard the pitch a few times, they can role play themselves and have the experience of battling overly-critical prospects.

I’m not sure how I would get better or how to train my teams better without the murder board, yet I’m always amazed when people in sales and start-ups say that they aren’t murder boarding.  Sure… there are a lot of people claiming to role-play, but that is not completely the same thing.  In role-play, there is not necessarily a concentration on raising all the possible objections.  I’d love to hear in the comments other ways people are training themselves, their sales staff, and just sanity checking their pitch/product other than murder boarding.

Up-selling, despite what some people believe, is not a sneaky or dishonest sales strategy.  In fact is is an essential strategy for start-ups.  I do, however, understand, how many people can see it this way.

At the bagel store near my house, a bagel costs $0.49.  Yet, order that bagel with $0.03 worth of butter, and the bagel is suddenly $1.69.  Why does the store do this?  Because its great to advertise bagels that cost only $0.49, but who comes into the store and only orders 1 bagel with nothing on it?  The upsell is the critical method of driving profit into the store.

It’s not a dishonest strategy, but if you sat there and really thought about what is going on, its kind of maddening.  And if you listen to the entire process of people walking in and out of the store (which as a person who looks for sales techniques in anything, I do), you will hear the constant upsell.  “Can I interest you in a coffee too?  Perhaps some cheese with that taylor ham sandwich?  Can I interest you in home fries?”  The entire sales process is hinged on the upsell.

Think about every infomercial you have ever seen.. “but wait… act now and get a second for only $19.95 plus shipping and handling”

So, I can see how people think of the upsell as a technique that lies on the border of sleazy in terms of sales tactics.

However, I think it is an honest and essential tool for start-ups that sell to enterprises.  As I wrote in my post on Easier to buy, easier to sell one of the major keys to seeing breakthrough sales processes in start-ups is to make the decision to buy an easier one.

For most start-ups, especially for those in technology, buying from you takes a major leap of faith.  They have to trust that:

• You will survive until next year
• That all of your claims of success to date are repeatable… after all, you are basing your past successes (assuming you have some so far) on a very small and stastically insignificant base
• Your product even does what you say
• That you have the ability to scale
• That you won’t embarrass them to their boss, their investors, wall street, their customers, etc.
• That you won’t disappear with their money
• That your visionary new way of doing something will even work
• and dozens of other dears around working with an unknown entity.

All of their fears will surround ideas like these.  Therefore, the larger the leap that they have to make, the harder it will be for you to get the deal done.

How do you solve this problem?  The intentional and explicit up-sell.  You need to create a snack-size version of your product, and get these people “half-pregnant.”  Once you get them hooked, if your product is as good as you say and provides them value, then they will happily upgrade to the larger package.  Buying anything from you is a massive leap, so you need to figure out the best ways to make the leap smaller.   You should avoid the free trial if at all possible – because you want to establish the relationship of customer-vendor as quickly as possible rather than customer-prospect.  Its too easy for a prospect to say yes to a free trial, when he/she really has no intention of buying.

Lots of companies have embraced the upsell with the freemium models that are so common now in SaaS products, and that’s a great thing!  In fact, its the entire beauty behind the SaaS model.   By allowing someone to buy in smaller chunks, and with an upgrade/upsell path to a larger commitment, you make getting on board significantly easier.

The tricky part here is to make sure that you provide enough value in the lowest version, and enough differentiation and value to get people to move up to the  more expensive options.  I can’t generically speak to what must be included in the minimal package since all products are different, but it should be enough to have the company understand the value that they will get and then also make them feel comfortable with your company enough to write a large check.  There are entire discussions about what and how you should position your packages, and in this post, I don’t intend to dive into that much detail about those issues – just how critical the upsell availability is, and how it affects the sales process for a start-up.

Assuming you’ve embraced my logic behind the up-sell, you need to really think about how it affects the sales process particularly in how your prospects buy.  Do you really understand how the buying happens in their company:  Do you know what the threshold is where the decision maker can buy without major approvals?  Do you know what the budget process is?  Do you know what the fiscal year is?  Do you know how add-ons (up-sells) are treated?  You may offer something at $2,000 / mo with an opportunity to cancel at any time, but the person buying your service may need to budget for the full $24,000 just in case they use it for the full year, so, once again, you need to realize the size of the leap that the prospect needs to make in order to buy.  Is your minimum level, when multiplied out for a year, still too much pain for the prospect? And, while you think you are only asking them for $2,000 – they are making a $24,000 decision – and that is a very different decision.  Can they make a $24,000 decision without needing to bring the decision to a C level person OR can they make a $10,000 decision on their own?  If so, perhaps your initial offering is $10,000 with an up-sell from there.

There is no generic correct answer because every product / offering / value prop / prospect mix is different – but I strongly believe that the start-ups that spend the time to figure out the correct up-sell strategy will have better results with selling to larger enterprises.

Its worth repeating my post from last December about the December Sales Problem.

December is a hard sales month for companies for several reasons:  The month is really only 2.5 weeks long before your prospects shut down.  Budgets are often used up.  Vacations make it hard to get deals done.  Prospects are more focused on their Holiday party then they are on your solution, etc.  The list is long, and very intuitive why its hard to get sales done.  However, as I’ve posted before, December can actually be an amazing month for sales.

But very often the biggest December sales problem is inside your own company…  Its the sandbagging sales team.  Get into the mind of a salesperson for a minute…  Sales plans typically reset in January, and each salesperson is in one of two camps.

The first camp has already made quota, and wants to make quota next year – and even though they are probably in accelerated commissions right now – want to make sure they hit quota two years in a row – and set themselves up for accelerated commissions next year as well as any challenges and bonuses that may come along.  In other words, they’ve already impressed you this year and in the “what have you done for me lately” mentality – they are already thinking about next year.

The second camp hasn’t made quota, and probably doesn’t see a way TO make quota in this hard month.  So, they sandbag the deals until next year.  These sales will be recorded and then their quota will re-set in January.  Since they were below quota this year, they know that they have to crush next year or risk their jobs – so they too, will be thinking about next year.

What this means is that NOBODY is thinking about December.  None of your sales team really cares about December.  They have moved on to the next year.

So… what are you to do?  Take this thought process into consideration and be creative about how to solve it.  In last year’s post I offered some suggestions that I’m going to repeat:

• Sales challenge for December.  Put a big carrot out there for achieving a particular goal in December. Cash is best since you are combating the thought of cash for next year but a trip or other prize can work as well.
• Increased commission rate.  This is a simple but effective one.  Bump all commission rates up in December in order to negate the sandbagging.
• Quota Relief for the following year.  Another idea which can be successful is to offer quota relief for the following year based on sales in December.   So, perhaps you drop a person’s next year quota by $0.25 for every dollar they sell in December.  This makes it easier for them to hit their accelerators in the next year.
• Immediate payment.  Typically salespeople have to wait to get commissions.  I’ve heard of some companies offering to pay immediately on December sales as an incentive because in January they will wait on the payment scale.  (This can create issues for customers that don’t eventually pay – which is why I’ve never done it – but I figured it was worth a mention because it was mentioned to me)

The challenge of avoiding sandbagging salespeople in December is a very tough one.  As business leaders and entrepreneurs, we want the best numbers we can get in December, and for the year.  As salespeople, we want to bring in sales in a way that can maximize our personal income.  Marrying these two ideas is always the compensation challenge and in December this is a bigger problem.  I’m certainly curious to hear about how other people have solved the problem.

You can draw sales lessons from everywhere in life.  The reason for this is that most of sales is about the interaction of human beings with each other – about the acts of persuasion and communication.  I write constantly about how everyday life teaches me valuable lessons about how to become a better salesperson and sales manager.  First, I wrote about Sales Lessons in a chick flick.  Then I wrote about Sales Lessons from my 7 year old.  Then, sales lessons from my 2 year old.  I also wrote recently about sales lessons from my colorblind brother.

My latest sales lesson came from my 6 year  old son (which fantastically has provided me at least one post-worthy sales lesson from each of my children).  My son is playing flag football this year, and while he told me all spring and summer that he was really looking forward to playing flag football again this year, once it came time to play, he was less than interested.  He whined and complained for the first two weeks of practice, and not surprisingly gave a less than stellar performance on the field during the first game.  After the first game, I tried to remind him how great he did last year.  I made sure he got the proper rest, and the right breakfast before his second game.  Yet, he was a goofball on the field, and in many ways really provided an embarrassing display of antics on the field.  The fact that many of the moms were telling me how cute and funny he was did matter.  It was getting me very angry that he wasn’t trying his best and doing what I knew he could do well.

My reaction was to get angry at him and to punish him for his display on the field.  The next week?  He provided a similar display of antics.  I was infuriated.  But… by this point, I realized that there was a lesson here.  (Indeed – its coming back to a sales lesson).  I realized that I wasn’t providing the correct motivation to get the behavior that I wanted.

After his third game, I sat him down and explained to him about what would make me proud.  I explained to him that I always expected him to try his best at everything he did, and that I expected the same of myself.  If I wasn’t trying my best at QuotaCrush, then the company would not survive, and that would have repercussions on all of us in the family.  In the same way, he needed to always try his best.  I told him that I didn’t care if he got a flag or a touchdown, but that I wanted to see him do his best.  Then after the pep talk, I modified his “comp plan” and told him that he would receive $1 for each flag that he got, and $5 for every touchdown that he made.

The next football game cost me $20.

I’m not sure which part motivated him more, the pep talk or the comp plan, but it worked.  (Ok, he is my son.  I know it was all about the cash.)

So what’s the sales lesson here?  Proper motivation and the deploying the right compensation plan is the best way to get the results that you want from your sales team.

Just like my son, salespeople are wired to perform.  They want to succeed and close more deals:  just as much as management does and sometimes more.  However, since start-up sales is one of those jobs where the daily tasks are squishy, the proper compensation plan makes sure that the salesperson stays focused on what is important.  The salesperson’s drive for closing as many deals as possible in the shortest timespan, is directly related to the compensation that she/he expects to receive.  If your expectations are unrealistic – or comp plan too hard to calculate, you won’t get the results that you want.

When people ask me about building compensation plans, I typically recommend starting with a very simple plan so that it is easy for a salesperson to figure out what they will make with each sale.  I’ve got several half written posts on start-up compensation packages which I plan to finish, but the concept I’m talking about here is not about the mechanics of any particular compensation package, but about the fact that business owners need to understand what moves the salespeople in your organization.

When I needed my son to perform, I gave him two small goals:  Get flags and get touchdowns.  He went onto the field with those objectives in the forefront of his brain and his every move kept him on those two goals.  In your business, you should find those small goals that your salespeople can achieve and have them attack it, and they should feel the immediate results.  (cash in the bank).

As the weeks progress, I may add incentives for other goals like proper blocking, passing, fair play, etc. and likewise, you can start to add other incentives around the goals that you need to achieve, but make sure that the goals you seek aren’t too far out, and that they are achievable.  Recently, I spoke with a very early stage start-up that has an enterprise sale that will probably take several months before any sales are made, and the CEO was frustrated because he just couldn’t feel like he had anything big to motivate his salespeople.  It was clear that the salespeople would probably not make commission for 4-6 months because of the sales cycle plus when it would take to get paid.  I gave him the idea to start by setting aside $5,000 in commissions.  I told him to tell his two salespeople to go and get secured meetings with confirmed decision makers and have him pay $500 for each meeting to the salepeople and tell them that once the $5,000 was used up, it was used up.  The result was that he spent the $5,000 in a little over a month and successfully kick-started his sales effort.  And.. it only cost him $5,000.  He got motivated salespeople, and delivered a win-win.  The lesson here is that rather than just telling salespeople that they would make the money when they made the sale, he got into their head, and gave them an incentive that matched the incentive of the company.  Would the company have paid $5,000+ to get good leads elsewhere?  probably – so why not use it for sales motivation.

If it seems simple… it really is.  Salespeople want to make money – and they will deliver in the easiest and fastest way for them to make money.   So.. make sure your compensation plan allows salespeople to make money in the ways that grow your business in the way you want it to grow.

I gave my “Sales 101 for entrepreneurs” lecture to the entrepreneurs at DreamIT Ventures in Philadelphia last week.  If you aren’t familiar with them, its a TechStars / Y-Combinator style incubator that helps launch great companies on a shoe-string.  It does so by providing a great environment and access to top notch mentors and experienced VC’s and entrepreneurs.  I was honored to be one of their speakers this year.

During my presentation, one of the entreprenuers asked me a great question:  What should I look for when I’m hiring a sales candidate?

My immediate response was, “The first and most important quality that I look for in a salesperson is that they have expensive hobbies.”  Of course, this evoked quite a bit of laughter, but then I started to explain my rationale.

Most people will tell you that when you hire a salesperson, you should look for confidence, persuasiveness, an extensive rolodex, the persistence of a 2 year old , and intelligence.  I say, yes all of those things are great (although I am not a believer in the rolodex-theory), but you are talking to salespeople.  We are not normal.  By nature, we are trained at the core to manipulate conversations, control the direction of conversations, get you to feel good about what we are saying, and convince you that the things you are looking for are not what you are looking for – but you are instead looking for the things that are good in us.  Our job is to close you – to get the deal done.

OK – so how do you find a good person, knowing that every person you talk to is trained to make you think they are a good salesperson even if they really aren’t.

I look for two basic qualifiers if I’m going to be thinking about this person further:

First, I look for expensive LEGAL hobbies.  (Obviously, I do not mean an expensive cocaine or heronie habit.)   I mean skiing, scuba, spa, golf, biking, expensive watch collections, expensive purse collections, etc.  These are things you can usually find out in the banter that happens even before the interview starts.  Expensive hobbies speak to two things:

1. They have had some success before that allowed them to even partake in these hobbies
2. They have motivation to repeat that success in order to continue with those hobbies.

You need to sense a passion for that hobby.  I don’t mean just skiing, but someone that has decided that they need to ski every mountain around Lake Tahoe more than once, and at least once on every continent that has skiing.  I don’t mean someone that enjoys biking, I mean someone that describes the bike they own (or REALLY want to own)  as having automatic transmission, disc brakes and made of titanium.  Its that type of passion for the hobby, that typically tells me that this someone who is driven, focused, and squarely thinking about cash in their pocket at nearly every turn.  The more this salesperson wants to do that hobby, the more she/he going to be thinking about closing.  This is of course, good for you.  The more your sales person makes… the more your company makes... the higher your valuation is… the closer you are to a great exit or break-even.

Second, a great salesperson will start building his/her pitch in the interview.   They may not get your product or the product direction correctly, but as they hear you talk about the product, they should come back at you with suggestions on how to pitch the product, or “have you tried this approach” questions.  These suggestions may be WAY off your corporate mission but that’s OK.  What you should take from this is that you have someone that knows how to listen, and is willing to take what he/she hears and be creative to find a solution.  The salesperson that is building his/her pitch the minute he starts hearing about the product is already thinking about how he/she can close deals.  This is the key to the entire thought process.  A salesperson that is thinking about a solution that leads to a close is the salesperson you want on your sales force.

As simplistic and as unconventional as these suggestions are, they are typically methods that have worked for me in finding great salespeople.  Of course, you should continue to look deeper into their background, sales tactic, etc. to see if its a match for your company culture, etc. but I follow these two simple rules to at least do a first pass at them.

Now to go plan that Tahoe trip….