Month: October 2014

Selling Against Goliath

By Dave Stein, CEO, ES Research

If you sell for a smaller software company that competes against the big guys, I’ll bet you think about the age-old story of David and Goliath. However, more often than not in today’s hypercompetitive enterprise application software world, it’s Goliath that often trounces David. If that’s what happens to you, read on.

When a sales team loses, whether they sell for the small company or the larger one, for that matter, it’s for one of two reasons: They didn’t properly qualify the opportunity, or they we outsold by the competition. There is no third alternative.

Let’s take a look at these two outcomes and explore specifically how to improve your effectiveness when selling against a much larger competitor.

Qualification

Qualification (sharing the same root as the word quality) is the process through which we determine if it is worth our time and effort to continue to pursue a sales opportunity. Yes, qualification is a process, not an event. That means you don’t qualify your sales prospect once, when initial contact is made. You’ll need to qualify vigilantly and unendingly. The reason? There are a lot of them. Buyers have been known to mislead sellers when they are losing. Things change during the course of the evaluation. In fact, these days, things change a lot, often. Budgets disappear. Influencers take on other responsibilities. Buyers who say they’ll buy from a smaller company—no problem—feel differently tomorrow.

Every company must have a set of appropriate qualification criteria by which they determine (1) whether or not to pursue business and (2) how to pursue it. For most companies, these criteria will differ somewhat for each product they offer as well by geography, competition and market.

When you are qualifying your prospect, you are asking them and yourself the many of the same questions again and again, such as:

  • Who is the real buyer, the person who is going to make the final decision?
  • When are they going to buy?
  • What are they going to buy?
  • Why are they going to buy?
  • Where in their company is the order going to get signed?
  • Does our product fit their requirements?
  • What is the decision process?
  • Who is the competition?
  • How will they pay for what it is that I am selling?
  • What is my unique value?
  • Why are they going to buy from me?

There are many, many more.

Qualification criteria for smaller companies who compete against the big guys must contain questions about the prospect’s buying preferences. For example, you need to ask yourself, “What evidence do I have that the prospect will do, or even more importantly, has already done business with a company of our size?” Also you’ll need to know what guidelines they must follow in terms of suppliers’ company size, revenues or financial viability. (You may think your company is in great shape, since you have a team of savvy VCs who not only have invested in your company, but also sit on your board of directors. That may not be of any value to the CFO of a conservative manufacturing company. In fact it may hurt your cause.)

Does Size Matter?

It’s hard to ask these questions, but it is irresponsible not to. I want to be certain that if I meet or exceed all the prospect’s requirements, that size—for size’s sake—does not matter. You may have the greatest product, innovative implementation services, committed people, stellar customer satisfaction levels, top product quality, most respected investors or anything else that you consider of value, but if size matters, little else will measure up. And if size does matter, and I can’t convince my prospect fairly quickly that it shouldn’t, I’m out of there—and quickly on to another opportunity.

You’ll need to be careful here. Sometimes the size issue is less obvious. For example, your prospect may have a requirement that a vendor install and implement demand chain management system in twenty-five plants within a year’s time. They may have no specific issue with vendor size, but do have a legitimate business requirement that is directly related to size. And if you are a smaller supplier, without pre-established partnerships with service firms who are capable of delivering the service levels required for that size deal, your chances of winning are remote.

What all this means is that there are certain opportunities for which you should not compete, because you can’t win them. Sorry, but that’s a fact. And if you do spend time trying to win business that you can’t win because your company is too small, you are squandering time and resources from those opportunities you can and deserve to win.

They Are Qualified, Now What Do You Do?

Here is where competitive selling comes into play.

You’re going to need to influence your prospect’s decision criteria, so that the perceived value of your competitor’s size as well as other size-related capabilities are diluted, neutralized or, in the best case, seen as a disadvantage. Many salespeople are accustomed to highlighting a competitor’s weaknesses. In the situations where you are competing against a bigger company, you will (professionally and subtly) attack their strength.

Here is a simple, well-used example. Let’s say I sell for a smaller enterprise software company and I am up against a major player. Based upon preferences and needs of the buyers, I may decide to use the “small-fish-in-a-big-pond” approach.

It goes like this: “Ms. Prospect. There are few people who would not be impressed by my competitor’s size, global reach and financial as well has human resources. I’m sure they proudly reference some very prominent customers. However, you might consider that a project such as yours, although highly critical for you, might very well not have the same level of importance for them and therefore may not generate the ongoing attention within executive levels of their company that their premier customers’ projects would. It’s only natural…”

From that point, you would discuss how you would meet their technical requirements and establish a business relationship going forward, stressing attention that would be paid to the progress by your executives. You’d convince them that your company’s success would depend directly on their success, not the other way around. You’ll be portraying them as big fish in a small pond—how important their business is to you.

If you are effective with this approach, you will have moved down in importance the size and impressiveness of their customer list and up in importance the attention paid to them by you’re your executives as well as your company’s interest in their success.

Here are some ways that a larger competitor might attempt to exploit your size and potential considerations for handling those objections with your coaches and allies in the account:

Challenge: The competition questions your viability to the prospect. “What would happen to you, Mr. Prospect, if they were to go out of business or be acquired?”

Your strategy: Don’t wait for this to happen, as it most likely will. This is the first card most salesreps who sell for large companies play against the smaller guys. You need a solid story, prepared in advance—concise and compelling—which must be credibly and sincerely delivered first by you, then echoed by your most senior executives. Mitigating perceived risk is on the critical path to success when competing against a much larger rival. Don’t wait. Immunize.

It is so important to know your prospect’s history regarding doing business with smaller companies. It may mean nothing to them, since they do it all the time. On the other hand, you may be the first and may have a long, bumpy road ahead.

Challenge: The competition attempts to expand the scope of the evaluation into areas where you don’t have a solution.

Your strategy: Again, pretty standard practice for the big guys. Alert your prospect in advance that this may happen. Praise their efforts in defining their requirements as well as they have. Ask if they are prepared to have the scope of their initiative, project or investment substantially expanded. If they say no, alert them that other vendors may employ this “sales” strategy to differentiate themselves as well as to increase the size of their contracts.

Please understand that I don’t advocate negative selling, mud slinging or “slamming the competition.” On the other hand, when you have built relationships in your accounts with influential people who are willing to help you, you’ll need to provide them with the messages—the sound bites—to position your company in an advantageous position.

Challenge: The competition attempts to impress your prospect with hordes of resources to demonstrate their prowess and convey a “safety in numbers” message.

Your strategy: Again, prepare your prospect in advance that this may happen. Suggest that these bigger companies have extra resources on board just to impress prospects to make a sale. If you know your competitor’s bid will come in considerably higher than yours, you may want to subtly suggest that using resources to win business may be a reason that their overhead is so high. And, remind the prospect that if they do go with your competitor, nothing will be free anymore.

This approach is mandatory when you compete against companies who lavish prospects with toys, gifts, free trips and other goodies to try to influence their decision. It’s amazing how those trips stop, as do the gifts once the prospect becomes a customer.

Challenge: The competition, because they are bigger, is willing to guarantee results in a way that you cannot.

Your strategy: They may be able to guarantee that their software will get installed and implemented within a certain time, but what if they don’t? The customer may not have to pay the vendor any more cash, but what about lost business opportunities, reduced customer satisfaction levels and employee morale if things go wrong?

“Fire a Prospect” and Raise Your Competitive IQ

In the scenarios I portrayed above, you might have wondered how you could possibly know in advance what your competition is going to do? I call it raising your competitive IQ. That will require “firing” one or more unqualified prospects and investing the time you would have wasted on them to collect, then analyze information about past wins and losses against a few key competitors. When you do, you’ll start to see patterns of behavior that those companies and the people who sell for them use against you. Big companies often develop a default strategy they use against all smaller competitors.

I agreed that it’s hard to find the time to gather information like that. But you really don’t have a choice. If you don’t, you’ll constantly be surprised by what your competition does and therefore be in a defensive position. Tap into other sales reps in your company, your customers and business partners to find out how those one or two big competitions position against you and how the individual reps manage their sales campaigns.

Learning to build sales strategies based upon accurate, up-to-date competitive information will enable you to begin to qualify out of deals you can’t win and to outsell your competitors on a consistent basis in those you can.

Remember the Two Components. You’ll Be Glad You Did.

Tough qualification combined with strategic competitive selling does work. After confirming that size did not matter in a face-to-face meeting with a division president of a $5 billion corporation, my client, the CEO of a small enterprise software company commanded that his team pursue a $2 million contract competing against a $750 million rival. Now there is a David and Goliath scenario.

I coached that sales team during the nine month sales cycle. Among other things, we diluted the competition’s apparent strengths and portrayed their large size as a liability, which in this case it really was.

My client’s team outsold the competition and won the business. And earned a lot more business after that, because they delivered what they promised to their customer. As the CEO related to me, elated with a contract five times larger than anything his team had secured up to that time, “the most important thing for me is that this process is repeatable.”

 

 

Listen Large: 9 Tips for Matching Your Selling Steps to the Buyer’s Mindset

By Dianna Booher, CEO, Booher Consultants

Selling time is too short to waste butting your head against the wall – trying to present options when the buyer has no awareness of need. Instead, you’ll both be happier if you can get in step. The following tips may help match your selling activities to the buying cycle.

Listen for Leapfrog Opportunities
During your discussion, listen for comments from your buyers signaling that they’re looking for ways to grow their business or improve their operations. Some individual buyers and leading-edge organizations sit poised waiting for the next opportunity to leapfrog over their competition with the next big idea. They never think in small incremental steps. They’re impatient with the typical 10 to 15 percent growth rates that many other organizations would be happy to report each year.

You’ll hear comments such as:

  • “We’re different around here.”
  • “We find out what everybody else is doing – and we don’t do it.”
  • “You’ve got an idea? I’ll get you to the right people.”
  • “We need to talk. Let me get the right players in the room.”
  • “Let’s brainstorm.”
  • “All of those ideas sound good. Let’s explore a little before we narrow things down to a proposal.”
  • “Don’t worry. If they like it around here, we can find the money.”

Listen to such signals from your buyers so you understand when they’re ready to make a huge investment in your offering and leapfrog to the next level.

Listen for Plug-the-Drain Opportunities
“Aren’t all buyers interested in improving and growing themselves or their business?” you may wonder. Not on your life. Because sales professionals are a self-motivated group; it’s hard to believe the rest of the world can remain stagnant. Nevertheless, that’s often the case. Some businesses are in mature stages and do not intend to invest further to grow market share or expand. Their goal is to make their profit and loss statements look good and sell quickly. Other businesses and other consumers have any number of reasons to maintain the status quo.

Their focus is to plug the drain on current problems. Listen for phrases such as:

  • “Let’s get real.”
  • “One thing at a time. Let’s get this approved first.”
  • “Look, this is our number one priority this year.”
  • “Our customers want this corrected. What do you have to help us with this situation?”
  • “First things first.”
  • “How much does it cost?”
  • “Where’s the breakeven on the investment?”
  • “What’s the guarantee?”

Take your cue and follow their lead. They can think of only one leaking drain at a time. Focus on the first drain before you try to get them to re-plumb the whole building.

Listen for Keep-Me-Informed Opportunities
Listen for buyers who tell you they’re satisfied with the current situation, but not convincingly. Change takes effort, and buyers tend to take the path of least resistance. They may say they’re “happy with our current supplier,” but they may actually mean, “My boss likes them, but I don’t think they do a good job. And when I have enough time to fight the political battle, I’m going to do something about it.”

Listen for comments such as:

  • “We always like to keep up to date with what’s out there.”
  • “You never know when our situation may change. Please stay in touch.”
  • “I’m not at liberty to tell you what’s going on. Just keep me on your mailing list.”
  • “Things may change after October 10. Give me a call then.”
  • “I wish I could make a change, but my hands are tied. I may be in a better position to do something later.”

Of course, these phrases sound like the typical “Don’t call me, I’ll call you” put-offs from a buyer who just doesn’t know how to be direct. It’ll be up to you to read between the lines with other information you’ve collected on the account, in the industry, and from competitor situations.

Refrain from Presenting Solutions Too Quickly
First, lead your buyers to clarify the cost of problems or the value of growth or improvements. Examples: “In what way does this affect how your drivers get the deliveries to your customers?” “How does this slow down your invoicing process?” “Are you concerned about the quality of the printed page?” “Is it important to you that. …?” “What is your opinion about X?” “How satisfied are you with the way X is handled currently?” “How critical is it to you that Z happens consistently each time?” “How helpful would it be to you if you could find a way to do Y?” “How serious is this issue?” “This doesn’t seem like a critical issue to you – am I right or wrong?” “How much is this costing you currently?” “How would it benefit you if this decision were made?” “Would a product like this make your life easier?” “What gains would you have to have to make this worthwhile?”

Buyers need to feel the pain before they’re motivated to invest the time, energy, and money necessary for improving the situation.

Ask What Your Buyers Know Rather than Tell What You Know
“What do you know about my organization?” allows your buyers to give their perceptions. You then can fill in the gaps, clarifying and correcting, if necessary. When you lead with, “Let me tell you a little about our organization,” you’re at a distinct disadvantage for several reasons: You’re doing all the talking and setting yourself up in lecture mode as the person with all the answers. You may be providing already known information; you may be elaborating on what the buyer doesn’t care about knowing; and you have no way of knowing if the customer really understands what you’ve said – and most important – what your organization offers.

Make Sure All Conversations Benefit the Buyer, Not Just You
Picture yourself in your workplace all day long, being approached by callers or visitors who have only one interest – “What can you do for me today?” That’s the experience of many of your own buyers. No wonder they resist taking “just one more call” from someone they perceive to be selling them something.

So take a different tack from your competitors. Approach the buyer to give them something – an interesting new angle on handling an industry problem; an intriguing insight from an expert; new research; a new set of guidelines for judging a process; a job aid or reference tool; or personal concern and well wishes.

When you plan your calls and appointments, consider adding to your sales objective: What can I leave with them of value?

Never Make Buyers Feel Interrogated
Avoid run-on questions – multiples that buyers can’t answer or that make them feel as though they’re being cross-examined. With a sensitive question particularly, explain why you’re asking it with a lead-in that lets them know the benefit of having an answer.

Not: “Do you know what percentages of your files in this department are never referred to again?”

But: “Most document managers report that 85 percent of their documents are never referenced again once filed. If we could identify those unnecessary files, that would represent a huge savings of floor space. What’s your estimate on the percentage of such files in this department?”

Question and answers should be insightful, not threatening.

Don’t Ask Self-Serving Questions
Leading and one-up questions make a sharp buyer resistant. Example: “Were you not aware that we guaranteed on-time delivery, and had you maintained your contract with us during the past three years the problems with the current vendor would never have led to the complaints from your own customer base?”

Although questions often lead to your point during a consultative dialogue, they should not be the point. The buyer will feel trapped and will resent – rather than appreciate – your insightful dialogue.

Ask “How Did You” Rather than “Why Did You” Questions
“Why” questions often sound challenging and put the buyer on the defensive: “Why did you decide to do X?” “Why do you think an upgrade isn’t warranted at the present time?” “Why was the décor done in navy?”

“How” questions, on the other hand, often get at the same information, but in a less challenging tone: “How did you make the decision to do X?” “How do you decide when to make an upgrade?” “How was the color navy selected for décor in this building?”

Phrasing makes a huge difference in reception.

Bruce Lee and the Tao of Hiring Software Sales Executives

By Angel Mehta, Managing Director, Sterling-Hoffman Management Consultants

“Sales people are RANDOM,” says a friend of mine whenever I discuss my firm’s area of expertise. Like most engineers, he views sales people as highly irrational, emotionally unstable beings who’s only real value consists of cold calling and building PowerPoint presentations. I patiently explain that without sales people, there would be no customers, no revenue, no profits. Without sales people, there would be no one to tell the world about why your algorithm is better than someone else’s.

“Random,” he scoffs. My friend, of course, studied mathematics at one of the world’s top technical schools. He is always giving me books on ‘pi’ (as in 3.14, not ‘apple’) and I am beginning to think that ‘Random’ is his shorthand for ‘stupid’.

Random, however, is an apt term – both for describing sales executives and the process used to hire them. In essence, random means ‘hard to predict’, and identifying quality sales people remains one of the most challenging hiring tasks for software companies. Most CEOs and venture partners that I’ve spoken with will concede (either immediately or after some debate) that despite all efforts to extract patterns from the chaos, there is no one formula that works all the time. Many are adamantly against hiring templates of any kind and believe firmly that it’s all about ‘gut instinct’.

I’ve changed opinions several times over the years regarding the value of gut instinct when making a hiring decision. Years ago, I was decidedly against relying on intuition – primarily because my research on the subject revealed that most ‘gut feelings’ are the product of subconscious processes, which in turn are the result of personal early life experiences. In other words, when I have a positive gut feeling about someone in an interview, it could very well be due to the fact that the person reminds me of my father, or myself, or even a comic book character I enjoyed reading about as a child.

In fact, the same concept applies to romantic relationships. That feeling of butterflies that we have all believe represents the sign of true love and having found one’s soul mate? It is actually the result of key buttons being pushed in our fragile psyche by the object of our affection. Most psychologists will readily admit that it is entirely possible to make someone fall in love with you – for the sake of romance, or for the sake of getting an offer letter. This is why Executive Recruiters will prepare their candidates for interviews by providing crucial data about the personal lives (favorite movies, books, music, family background) of hiring managers or investors that will be evaluating the candidate for a position. This is also why I recommend to clients that they spend extensive time with candidates on the PHONE before meeting the candidate in person (more on this in another article.)

Not that I am discarding ‘gut’ as a tool in decision making – it would be hypocritical to do so given how I’ve made hiring decisions at Sterling-Hoffman in the past. My only purpose here is to point out that one’s ‘gut’ can be unreliable, and therefore gut feelings should be carefully scrutinized.

Which brings us to the topic of hiring templates. With regards to Sales Reps, most top tier ISV’s nowadays have resorted to defining a strict set of criteria that candidates are required to meet before they are considered for an interview. Commonly, they include something along the following lines:

  • W2’s over $200k for last 3 years
  • No more than 3 jobs within the last 10 years
  • Closed at least 3 deals valued at $1m+
  • Achieved or Beat Quota consistently for last 5 years

While the specific details may vary from company to company (perhaps including details of a specific vertical the candidate must have a rolodex in), the gist of it remains the same. Candidates get exasperated when told they do not qualify for a position because they’ve ‘job hopped’, or failed to make quota at a startup. “Is it my fault that they ran out of capital 3 months after I started?” Internal recruiters or HR people are rarely interested in the stories behind the resume, however. Most are simply acting on clear directives from the line managers – having been scolded one too many times for submitting low-quality resumes that do not pass muster. And of course, such directives are then passed from the internal recruiters to external headhunters, and the message is cascaded once again.

The problem with such narrowly focused templates, however, is that the stories behind the resume are actually what count the most. 90% of all startups will fail in their first 5 years of existence. By definition, then, the vast majority of people that accept a position with a high risk startup will end up with a very clear failure on their resume. Does this mean that such candidates are incapable of performing at a company that is further along in it’s lifecycle? Hardly. If anything, I believe the willingness to have gambled one’s career on a high risk venture displays a measure of courage that is to be commended. Most hiring managers recognize this, of course, but do not trust their internal recruiting staff to properly assess a sales executive’s strengths and weaknesses beyond the very strict criteria noted above. And unfortunately, our research at Sterling-Hoffman indicates that candidates are increasingly being hired based on their paperwork, and less and less because they demonstrate real competency. (Please note: I am not speaking here of candidates that have changed jobs six times over the past 5 years. There is a distinction to be drawn, I think, between courage / entrepreneurial spirit on one hand and job hopping driven by dotcom-era greed on the other).

In any case, we are left with a dilemma. What are hiring managers to do? Millions (if not billions) of dollars of value are created or lost due to key hiring decisions. While there is no shortage of literature on hiring strategies, I will attempt to add a few (possibly contrarian) ideas that hiring managers & investors may find useful. Given that our firm’s core competency is recruiting the VP Sales for enterprise software companies, I have been privy over the years not only to insights from CEO’s and Venture Partners on how to hire the company’s chief sales officer, but also to various opinions from our candidates regarding how to evaluate software field sales reps aka individual contributors.

1) Accept Chaos

Several years ago, I was introduced to the philosophies of Bruce Lee, who theorized that the majority of martial arts were impractical specifically because the variables in a combat scenario were infinite and ever changing. In other words, a martial art designed to help deal with large, powerful opponents would be ineffective when used against a small, quick opponent. In response, he created a new martial art: Jeet Kune Do (‘The Way of the Intercepting Fist’) – and his philosophy holds much relevance to high tech business strategy. Specifically, the qualities that made a sales rep successful in the bubble are NOT the same that would make a sales rep successful today. Geoff Moore recognizes the same principle in his Chasm/Tornado books, indicating that what is often the ‘right’ strategy given one set of market conditions is the absolute wrong strategy in another. It follows, then, that the ‘right’ talent in one scenario becomes the ‘wrong’ talent in another; smart companies will recognize this fact and re-evaluate their hiring templates accordingly.

2) Figure out why you’re winning BEFORE building a sales organization.

I credit a friend (who also happens to be one of the most highly respected software sales executives in the world) with enlightening me on this very critical point:

It was common in the bubble for software companies to conceive of their sales strategy in territorial terms. The most important task of a VP Sales was to hire enough high quality sales reps to cover every major geographic territory, so that no potential marquis customer would fall through the cracks. “We can’t risk our competitor getting there before us!” Understandable sentiment. And this certainly correlates to Geoff Moore’s ‘landgrab’ strategy for tornado economics. However:

Jim Maikranz, former SVP of Sales at SAP America, (the same software sales deity referenced above) convinced me that this strategy is intrinsically flawed – particularly for startups. “How many sales reps does it take to make a software company profitable?” he once asked me rhetorically. Answer: ONE. At the time, out of respect for headhunters everywhere, I politely asked him to keep his opinions on this matter to himself. But the logic cannot be denied. Jim was not merely recanting the overused silicon valley cliché: ‘Hire only A players’. Rather, he was questioning the wisdom of software companies that choose to add the cost of a direct field sales organization before they understand the nature of the battle they are engaged in. It makes no sense to hire multiple sales professionals in the field before you’ve quantified (as much as possible) the messaging, qualification process, actual customer segment, etc. Sales is still about process; you need one (a repeatable process) before you can grow revenue.

I would also suggest that sales managers who seem overly tied to a business plan calling for immediate and aggressive expansion of headcount may be more concerned with their personal careers than the company’s well being. Put bluntly, a VP of Sales may very well be worried about explaining precisely what he/she ‘achieved’ at your company when interviewing for their next position, and therefore push an aggressive hiring plan so that they can lay claim to having ‘built’ something later on. Executive Recruiters in particular are intensely focused on ‘growth’ numbers – often screening candidates out if they cannot lay claim to having grown an organization by revenue, headcount, profitability, etc. Shrewd sales executives will know this, of course, and attempt to tailor their resumes accordingly. (Of course, the very best recruiters will dig beneath the surface – seeking the stories behind the numbers – but they are few and far in between.)

The fact remains that CEO’s should be weary of sales managers who seem driven to expand the field sales organization ahead of gaining solid customer traction.

3) Domain Expertise matters. (A lot.)

I recently visited the CEO of a supply chain software startup to discuss a VP Sales search. After some discussion, he commented that I was making too big a deal out of the need for ‘domain expertise’ because between him and and the VP Services, the company had all the domain expertise necessary. Yes, I agreed, his existing team were clearly experts in supply chain.

But, I thought privately, WHO will be doing the selling?? In the case of early stage software companies, the VP Sales is rarely being recruited for his ability to manage a worldwide sales organization. The immediate priority is to acquire customers. And while the economy may be recovering, all anecdotes I have been privy to indicate that the current selling environment is still incredibly difficult for enterprise software companies. Gone are the days of being able to cold call a CIO, rhyme off a series of buzz words starting with ‘e’ and successfully book a meeting. Gaining priority on the CXO’s agenda in today’s market requires an intimate understanding of his/her personal universe, not to mention the organization’s business problems as a whole. Once again, this applies especially to early stage software companies, who face paranoid customers’ fears (often rightly so) that this newest visionary vendor may not be alive in 12 months.

Bottom line: When hiring a Sales Executive in today’s environment, domain expertise is critical. (The more senior the position, the more fundamental this point).

4) Pedigree is overrated.

It is common knowledge amongst recruiters that the quickest way to peak the interest of a hiring manager is to quote the names of ‘pedigree’ companies when discussing a candidate. By ‘pedigree’ companies, recruiters are generally referring to the ‘gorillas’ – market leaders that have a recognized brand not just in their particular category, but in general. For example, applications companies will generally look for candidates that have come from Siebel, SAP, Peoplesoft, etc. Infrastructure companies may prefer candidates from the likes of BEA Systems, IBM-Tivoli, BMC, Veritas, and so on. The reasoning here is not entirely flawed. Market leaders offer superb product and process training, and particularly for smaller companies desperate to show immediate progress, it makes sense to hire sales reps that can hit the ground running. Further, at the executive level, ‘pedigree’ candidates add credibility to a corporate story and can be a factor in raising additional financing.

More often than not, however, I believe that ‘pedigree’ is valued out of fear, rather than logic. In other words, it is easier to deflect blame for poor hiring decisions if the hiring manager or recruiter can say, tongue in cheek, ‘Well he was a star at Siebel!’ Once again, I am reminded of Bruce Lee. The skills required to succeed at Siebel (or any other market leader) may be significantly different from the skills required to succeed within your organization. Further, it should be common sense that selling software for a market leader is EASY – relative to selling on behalf of a # 2 or # 3 player, never mind a startup in a new category. A market leader’s position gives it immediate access to every RFP, and places it atop every shortlist. So is it wise to hire a candidate that was trained in an environment where customers were easy to come by?

For this reason, I am beginning to suspect that sales executives who have climbed the ranks at smaller software companies are more likely to perform when the economy is suffering. They tend to be comfortable ‘street fighting’ for customers, and aren’t easily deflated when a prospect says ‘no’. Further, they are used to coping in an environment that lacks an intricate support infrastructure, and generally accept lower base salaries than their pedigreed counterparts.

5) Million dollar deal sizes are NOT mandatory.

Primarily because most companies aren’t pushing forward with projects of that scope right now. The norm is for most CIO’s to go with smaller initial rollouts, refine the processes, and then examine the value of purchasing additional licenses. (There are exceptions of course – but most market watchers would agree that the trend has been towards smaller rollouts). The central point here is that candidates should not be eliminated from consideration purely because they have failed to close deals at a minimum level. Repeat: the stories behind the resume are what matter. (Of course, a tele-sales rep used to selling shrink wrapped tools at $5k per deal would not be considered for a high end enterprise sale.)

It may also help here to comment on the assumption behind a hiring template that requires a sales rep to have closed million dollar deals before being considered for a position. The theory is that deals of $1m+ are highly consultative in nature, require navigation and evangelization across multiple departments and functions, and usually involve selling at the C-level. Once again, this assumption is not without merit. That said, I would much rather hire a sales executive that has had to struggle to sell $500k deals for a startup, than a sales executive who closed $1m deals for Siebel in 1998. I would wager that orchestrating a smaller deal for the startup required as much of a consultative process (if not more) as the larger deal for a gorilla.

6) Standardize the process.

This point may appear contradictory to the majority of my comments above, but rest assured it is not. Hiring templates do not always work, but as always we must be careful not to throw the baby out with the bathwater. Every software company should have a standardized template for hiring sales professionals if for no other reason than such templates help in identifying patterns over time. Far too many hiring decisions are made informally, with offers being extended because the hiring manager and candidate discover good ‘chemistry’. Especially when sales professionals are involved (I imagine technical readers are snickering right about now).

My own preference insofar as a template for sales reps is concerned is to initially screen for three quantifiable items: domain expertise, multiple customer references (at the level you plan to sell to), and at least one successful stint with a company that was # 3 or # 4 in it’s category. The balance of the decision will be based on a set of particulars that will vary from company to company. No doubt that readers will have their own ideas and preferences regarding which top level criteria matter most. Please send me your opinions on this topic – I’m eager to hear your stories. Or, for advice on how to build a template for your company, try www.selectingwinners.com – the founder, Barry Shamis, has a special competency at helping software companies figure out how to screen for the very best sales professionals and has come highly recommended to me several times.

Conclusion

As a final comment, I would urge all readers to be cognizant of the fact that there are no easy answers. The industry is littered with consultants who attempt to quantify best practices in an attempt to find the one true success formula. Saavy executives recognize that there is none; which is why freshly minted MBA’s will so often admit that the first thing they had to learn upon entering the real world is to forget what they were taught in school. I too have suffered frustration at my own inability to arrive at a perfect evaluation process over the years; I’m a search guy, I thought. Isn’t this what I do? How do I know if we hire this guy or not?!

I voiced this last question recently to another close friend, himself a former superstar VP of Sales with Siebel. His answer? “Follow your gut …”