The objective of this post is to talk about a new strategy for product managers to fill the top of the sales funnel with valuable opportunities. The harsh reality is that only a fraction of the mid-market and enterprise scale companies in today’s market will purchase and implement a major new software solution. Vendors with their sophisticated marketing and sales automation technologies and their rabid dog like sales development reps will chase any opportunity and wrestle it to the ground. In spite of all these advances in the art of software sales, I have yet to work for or run into a company that said they had too many good leads to chase. What I hear a lot of is that marketing is not generating enough good leads or that sales is not effectively prosecuting the leads that are being generated.
As Gartner has noted, buyers are completing 70% of their buying journey before contacting a sales rep. When I started in the software industry software sales reps and industry analysts were the gatekeepers to learning about a product or service. In today’s market the Internet provides free and unfettered access to that information. Software companies must ensure that there is enough solid content available for prospective customers to learn and make informed decisions about their solutions. This not only includes information like white papers, technical specifications, user stories, ROI calculators, webinars, and demos but user generated reviews and even pricing information.
One of my mentors taught me a great lesson early in my career. His key to demand generation was answering the question “Why did someone wake up this morning and decide they need to buy a piece of software?” It seems like a simple question, but many product management and product marketing team struggle to fully understand and answer it.
Research shows the odds of winning the sale are 74% when you reach decision makers at the right time and help set their buying vision. I like to use a modified funnel that has some different stages than most traditional funnels:
The reality is that most companies live in the zone of Status Quo. They are basically happy with situation as it is and have no interest in changing. The next zone is the Window of Dissatisfaction. In this zone, an organization is aware that the status quo is not working, but it is not painful enough for them to make a change yet. In the next zone, an organization has decided that they will investigate and evaluate new solutions to address their concerns. At this point contemporary marketing and sales teams would consider them to be a Marketing Qualified Lead (MQL) or a Sales Qualified Lead (SQL). The final zone is Purchase & Implement. In this zone an organization commits to purchasing and implementing a solution. This is what most teams would consider to be a sales opportunity. Typical demand generation programs focus on capturing opportunities at the last two stages of the funnel. They use techniques like keyword advertising, landing pages, webinars, and free trials to engage with prospective buyers.
The Window of Dissatisfaction is where you need to focus your energies. During this powerful selling window, a decision maker is dissatisfied with the status quo, but she’s so busy solving other problems she hasn’t gotten to this problem yet. Research by Forrester shows that when you are the first viable vendor to reach a decision maker during this buying mode and you help set the buying vision, the average close ratio is 74%.
We need to focus on the triggering events that occur which moves an organization from the Status Quo to the Window of Dissatisfaction and from The Window of Dissatisfaction into the Investigate and Evaluate zone.
There are two broad types of triggering events – positive triggers and negative triggers. Positive triggers are events that encourage an organization to evaluate new solutions for potentially new opportunities.
- New Technologies. Cloud & Managed Services offerings are new ways of addressing running applications in your own data center. A classic example of this is hosted Microsoft Exchange servers and SharePoint servers. If you ever have had to manage these services inside of your firewall you can appreciate the significant benefits os a cloud hosted option.
- New Funding. If an organization experiences a significant growth in available funding through an IPO, secondary stock offering, private equity growth capital investment, or acquisition there is an opportunity to implement new solutions that were not chased before because of lack of funding.
- Large New Customer Wins. If an organization wins a large new customer there is often an opportunity to invest to help accelerate more strategic wins
- Horizontal Business Process Evolution. Sometimes there are break through changes to underlying horizontal business processes. Horizontal business processes are those that cut across vertical domains; something every company does like Payroll, Accounts Receivable, and General Ledger. Some simple examples of horizontal business process evolution include is
- Direct deposit for payroll and Flexible healthcare spending accounts
- Just-in-Time Manufacturing, KanBan, and Lean Manufacturing
- Agile development approaches combined with DevOps. Both of these approaches represent a fundamental evolution in the process of developing, deploying, operating, and maintaining
- Vertical Business Process Evolution. Break throughs in business processes associated with a specific vertical domain like Retail, Government, Healthcare, Package Delivery, and Transportation. Some examples include:
- Uber & Lyft. Fundamentally changed transportation and dis-intermediated taxi and Limos. Eventually car ownership via Autonomous Vehicles.
- Omni Channel Retailing where the entire business management stack for retailers evolves to provide clean integrated service between brick and mortar operations and ecommerce operations.
- Paypal, Venmo, Square & Stripe for peer-to-peer payments and credit card processing.
- Tele-medicine for Healthcare
- Bad Financial Results. Missing quarterly or annual financial targets is often a trigger for change. Headcount may have to be reduced or investments cancelled or retargeted. In the early 1980s I was an IT contractor working at Ford Motor Company. After years of getting killed by Japanese car makers, Ford embarked on a program to eliminate 25% of their white collar headcount, primarily through technology adoption. I worked on a project called CCAPS – Common Corporate Accounts Payable System. At the time Ford had 1,500 clerical employees who manually matched shipment receipts to invoices to purchase order releases. We eliminated 1,200 positions by moving to Electronic Data Interchange (EDI) and Troy Bowie Check Writing machines. At the time the Troy Bowie machines were new – they allowed a company to print the magnetic ink containing routing and account numbers on the checks. Using another innovation at the time Zero Balance Accounts Ford implemented a program that maximized the float time on vendor payments. If you were a supplier of bumpers from Miami Florida, they would write your check to be drawn out of an account in the state of Washington. All the checks were printed in Dearborn. Ford generated millions in extra profit off of the extended float of those checks.
- Service Outages. If an organization has a production or service outage it can spur them to address long simmering systemic problems. In 2004 I ran worldwide customer support for a large EDI Value Added Network and Managed Services provider. For a while I was also the acting director of network operations when the incumbent left the company for a new job. We experienced a 48 hour network slowdown that resulted in disrupted operations at several assembly plants for a Japanese car maker. As a result of that experience the company embarked on a yearlong plan to eliminate single points of failure throughout our operations. Significant new investments were made in systems management and customer service technology.
- Y2K, Sarbanes Oxley, GDPR Compliance. Many organizations have lost sales opportunities or experienced other issues when they were not compliant with Y2K, Sarbanes Oxley, or GDPR.
- SSAE 16, SOC 1, SOC 2, & SOC 3 Online app providers and Managed Services providers often need to provide proof of industry certifications like SSAE 16 SOC 3. This replaced the old SAS 70 Type II certifications in 2016. Certification processes often expose holes in an organization’s technical operations that required new investment to remediate.
- Employee Retirements. For some companies, the retirement of employees with special skills triggers the need to new solutions. Two examples of this are COBOL and EDI. About 95 percent of ATM swipes use COBOL code, Reuters reported in April, and the 58-year-old language even powers 80 percent of in-person transactions. In fact, Reuters calculates that there’s still 220 billion lines of COBOL code currently being used in production today, and that every day, COBOL systems handle $3 trillion in commerce. When an organization’s COBOL programmers retire it creates a huge opportunity for either COBOL remediation or application replacement. EDI is another legacy skillset. EDI traces its root back to the Berlin Airlift of 1948 and gained wide scale adoption in the 1970s. Today most retail, financial, insurance, transportation, and supply chain inter-company communications are accomplished using EDI. EDI skills are a dying breed and rather than trying to invest in developing new EDI capable employees, most companies aare turning to EDI Managed Services providers to outsource this legacy, but critical skill set.
- Newly Hired Executives. 80% of prospects new to their position who are spending $1M+ on new initiatives do so in their first 90 days (Craig Elias)
Every software company faces their own unique set of positive and negative triggers in the markets they target. You need to identify, define, and validate these triggers. To learn more about a process to identify, define, and validate your firm’s triggering events click here.
There are a number of techniques you can use to identify the sales triggers that are relevant to your business:
Brainstorm List of Triggers. Gather a group of your product managers and product marketers. You should easily be able to identify and define the key triggers that are relevant in your marketplace. If you have difficulty doing this it is all the more reason why to embark on a more formal analysis.
Interview Sales Execs. Gather a list of 100 – 200 recent sales transactions – customer name, vertical, products/services, deal size, and closing month. Interview each rep to determine what they felt the main trigger was that started the customer on the process of buying a solution. Do not share with them your brainstormed list of triggers, let them describe the situation in their own words.
Conduct Customer Win/Loss Analysis. There are always a lot of good reasons to periodically talk with both prospects that did or did not purchase your solution. A formal Win/Loss Analysis project is a simple, quick way to get unadulterated feedback. To learn more about Win/Loss projects check out the Win/Loss Agency (full disclosure I am a board advisor to the firm)
Sponsor Academic Get Together. In the city where your firm is headquartered there are probably one or more colleges or universities with MBA programs. Organize an afternoon discussion with a few professors or post-docs who study the vertical or horizontal market segments your firm targets. Ask each professor to prepare a brief overview of the state of thought leadership in their area of expertise. Let them present their findings and have an open discussion. Follow the meeting with an informal dinner. You are not looking for the professors to endorse what your firm is doing; rather you are looking to get their insights into your target markets. A couple of $500 honorariums and a nice meal could bring you big insights.
Sponsor Customer Functional Seminars. Sponsor one day seminars where customers and prospects share their best practices for the functional area your solutions target. Do not make this seminar about your products or solutions. Instead the focus should be on the attendees’ experiences. You could sponsor local societies like American Production and Inventory Control Society, Council of Supply Chain Management Professionals, Society for Human Resource Management, AFCOM, The Uptime Institute, or the Society of Manufacturing Engineers. A side benefit is that having customers interact with non-customers is perhaps the most effective demand generation source you have. Customer referrals convert to qualified leads 24% of the time, and% of those leads end up closing.
Understanding what starts a prospect on their journey to purchase a solution is critical. Armed with that knowledge marketing teams can develop the content and resources a prospect truly needs to become attracted to your offerings. Understanding triggers demonstrates your firm’s thought leadership. Being recognized as a thought leader can have dramatic impacts on your sales efforts. An Edelman and LinkedIn study found:
- 80% of business decision makers say thought leadership increases trust in a vendor
- 48% of c-suite execs claim thought leadership has directly led them to award business to a company
- 90% of c-suite execs claim respect & admiration increases for a vendor after engaging with thought leadership