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early stage sales

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larry schlang: the human element

Thank you very much.  My name is Larry Schlang, President and CEO of Bantu, a provider of industry-leading, secure, enterprise, instant messaging (IM), primarily to the government market, which Esther mentioned.  We focus on the government market, although we also have commercial customers.  Sprint, for example, is a commercial customer, but we've signed up the Army, the Navy, and the Air Force, and we have an early stage engagement with FEMA, Homeland Security, and others as well. 

          From a technology perspective, we focus on providing the functionality that people associate with consumer IM, making it business-critical technology that is secure, scalable, and embedding it to enhance other applications that organizations have already invested in, that they already are working with, and that their people use every day to get their jobs done.  We make those business applications real-time, and, as a result, make their people more productive.

          That's important not just because I want to pitch my company, but it's important from a sales perspective, and I think it's something to think about generally when selling your products into your customers.  We have a two-step ROI proposition for our customers.  Our application not only increases their users' performance and productivity, it also contributes to the ROI that they get from the applications that they've already spent millions of dollars on.  That's a two-step process, and it's something that we find customers are looking for these days when they have limited IT budgets.  They want to improve the things that they've already invested in, and that's how we fit in.

          Today, I'm going to focus on the United States Army as our customer.  They were our first government customer, and the perspective I want to bring to it is maybe a little bit higher level than Jeff's excellent talk.  As you're going through the process that Jeff described so well, what can you learn about your company as a result of the sale?  What can your customer teach you, and what can the process teach you about your company and your sales proposition?

          During the last few years, it goes without saying that there's been a tremendous amount of transformation in the economy.  Everyone in this room has had to transform their businesses and their sales propositions, as well.  We've had to do that, too.  What we did was that we listened to what our market and our customers were telling us, and that is very much what the Army deal was all about.  We were able to take the opportunity, close the sale, make it a success, and then leverage that opportunity to sell additionally into that customer, as well as to have that customer take us to additional business.  It's that process that, to a great degree, defined where we are as a business today, so let me tell you a little bit about the story.

          It all began long ago, in Q2 or Q3 of 2001.  We were out selling to the education and commercial markets.  We had a number of customers there, but what we were seeing was that the sales cycles were stretching out, customers were going out of business, they were pulling their IT budgets off the table, et cetera.  Around this time, when things were getting extremely bleak, we received a call out of the blue from what used to be TRW.  They were located in California, and they were working on a large initiative for the Army called Army Knowledge Online, the enterprise-wide knowledge management portal for the United States Army.  Unbeknownst to us, they had already defined the requirements, which included IM and presence as an embedded, enhancing technology for the portal.  A number of Jeff’s steps were already out of the way, and we didn't even know about it.  They said that they were far along in the project, evaluating a number of different tools, and what could we tell them about Bantu?

          Coincidentally, we had two young guys who were on vacation in California, a software engineer and an account manager.  I wasn't there, but I have these visions of these guys with their cutoffs on the beach with their surfboards and beers in hand.  We called them on their cell phones and said, “You've got to get over to this office at TRW.”  They said, “Sure.  Cowabunga, dude!” And they raced off to TRW.  I see them saying, “Hey, man, here's a beer.  Let's talk about this.”  Whether they did that or not, it was a critical step for us, and it is one of my key messages for you today.  It demonstrated to them our commitment.  They knew we were a small company, but we were there the next day.  I would like to think that our technology is extremely compelling, robust, secure, all those words, but it was actually the human element that I think helped ultimately close the deal.  They were out there that day.

          The critical thing that followed was we maintained that commitment level.  We were feeding them all the documentation they needed about the product, and we gave them all the information about the competitive landscape, which is a great thing to be able to do.  If your customer asks for the competition, tell them what the competition is.  If you believe in your product, your product will stand out.  It was a great strategic position for us to be in with that customer.

          To make a long story short, they were building a thousand-point matrix against which they judged all the competitive products, of which there were over 20 which touched messaging in any way.  At the end of the day, we got 975 points; the next closest competitor got 625.  The deal was closed within a week or two after that.  One key thing that we did was building a demo site out of pocket for them and integrating it.  Even though we are pretty loathe to do that without money, especially now, it was another key decision for us and a key part of the win for the customer.  You have to pick your spots and do what it takes for the customer.

          We've maintained that commitment after the sale, and that is extremely important.  Execution for your customer is essential during the sale, in presales process, and, even more importantly, after the sale. If you win their trust and you keep their trust, they will start doing things for you.  Our customer, the Army, has been an extremely strong reference for us in the media.  They've continued to buy products and services, and they've introduced us to all those other customers that I mentioned to you a minute ago.  The post-sales process is as important, or more important, for your sales effort.

          Lessons learned:  Everybody knows that  the customer is king.  Also, as in Jeff's talk, one of the things we've learned from our customer, the Army, is that you've got to pick your spots, pick who you're going to spend resources on, and what you're going to focus on.  The story I just told you has basically become the centerpiece for our company.  We listened to what they were telling us, what their business problems were, and their communication issues.  We took it to heart, and basically, we're building the entire company on top of it.  Thanks.

Ms. Smith:  Thanks, Larry.  Next is Doug Clark from Métier, who started the company with Sandra in 1997, I believe, and is one of the survivors from that wonderful early stage.

doug clark: the numbers game

Thanks, Esther.  You know, we also had an experience of selling on vacation.  We sold to a bank in Bermuda at the end of a vacation and tried to expense it.  The accountants wouldn't let us.

          Just a brief word on our company.  We provide project portfolio management software for large enterprises and large government programs.  We integrate with existing tools, like instant messaging, help desk software, and project management tools, and we analyze and forecast the work within these enterprises with accuracy that's well up in the high 90s for accuracy of modeling work. 

          It's funny.  You read in the newspaper that enterprise software is dead.  Well, you're looking at three enterprise software companies here, so, clearly, it's a little early to say that. I think we're doing pretty well.

          I will be very honest that we didn't have a lot of selling experience in the early days of the company.  We had a really, really great idea, we got a good jumpstart on developing the product with Lockheed Martin on the Year 2000 Census, but we were pretty lean on sales experience early on.  The school of hard knocks and experience sits before you now.

          We planned this out.  We planned to have Jeff go first and give you the good details so that the rest of us on the panel could be philosophical and high level.  We'll take the easy part.  Eating the elephant in small bites and everything that Jeff talked about, is so critical, but I would like to talk a little bit about some philosophical points that we have learned and live by.  Then I'll talk about one of our customers, BMW.  I could explain BMW using Dante-esque kind of language, or I could do it like Gary Larson’s Far Side comics, but I think I'll take something halfway in between.

          I hate to tell everybody this, but there are a lot more people out there who don't want to buy your product than who do want to buy your product.  We found that out, and so the first part of the philosophy is get the “no” as fast as possible, then move on.  It's a game of numbers.  It's certainly about relationship and strategy and things like that, but, in the end, it truly is a game of numbers.

          Secondly, exactly as Jeff was talking about, you don't have control.  Especially as a small company, it's hard for you to control the process, but do everything you can to control it because it's going to be in your best interest.  The fact that you have a strategy, whether it's good or bad, and that you follow it and try to control that sales process is critical.  Jeff alluded to it, and I should stand up and yell it: Get the close to be as soon as possible.  It's always going to try to elongate on you.  BMW was a monster close that took a long time, but the point is that you evolve.  You can't make money until they sign that contract, so you've got to have the strategies to get the close as soon as possible.

          BMW was doing the dreaded “trade study,” which already says that you're not in control.  They had a plan.  They were on the tail-end of the trade study when we were introduced and did a demo.  We have another saying at Métier, that the worst demos always result in a client.  Once again, we somehow stepped all over our fingers and did a very bad showing.  They loved it.  The next thing you know, we're on a plane down to South Carolina to the plant where all of the IT is, and we're doing demos.  We're getting to be friends with our customer, we've found our white knight, we're working our strategy.  At first, they said that the presentation would be in a briefing room near the entrance.  We had decided to take a fairly experienced person with us who had a bum foot, but we thought it would be okay.  As we get there, they said, “Oh, no, it's been moved to the IT center, which is all the way across the factory.  By the way, you have zero setup time.  Here are two full-figured men during the summer, sweating, one is hobbling.  We finally flagged down a BMW golf cart—really, it's a golf cart with a BMW logo on it driven by a frustrated ex-Autobahn racer.  We're trying to get the demo laptop all fired up and, at the same time, he's wildly driving us past the X5s and the Z3s coming off the plant floor.

          We do the presentation.  We have one German and all he cares about is, “How does it work?”  We have the folks from South Carolina with their wonderful accents who are trying to establish relationships with us.  We have the CFO asking, “How much does it cost?”  We have South Africans in there who we just could never figure out what they were all about.  It’s all part of the control thing.

          We do the demo, and, now, we're three months into the sales cycle.  We finally close them  about 14 months later after several fits and starts.  Actually, Sandra has a meeting with them today, and that's part of the farming or harvesting the fruits of your labor with our Outlook Integration piece.  We're rolling out the next piece.  We're fully in North American IT—all of their projects and programs use our tool—and the Holy Grail for us is the global roll-out.  We continue to sell to that.

          Let me go to the lessons learned.  Again, “get the no” means that you're trying to do it as fast as possible.  It's difficult for salespeople to do this, because you've got to be optimistic.  You're out there, you've got a great product, but what you really have to do is look for that “no.”

          When it comes to the process, one of the things we do is what we call “25:5:1.”  That means for every 25 qualified prospects, you want to do no more than five proposals for one win.  Certainly, the metrics are key.  Figure out your own metric, but you need to have those metrics.  We evaluate ourselves on our ability to get control, and a key metric for us is to look at how many proposals we're doing.  My experience has been that if we can get into that 25 to 5 to 1, you guys are going to be reading about us constantly in the paper. What we're really trying to do is get the control.

          Lastly, get the close as soon as possible.  There are so many different approaches, but, if you're getting control up front and you have a fully qualified customer, it transitions over to the relationship. Know the white knight.  Cultivate your white knight.  By the way, a white knight is not “Lenny, the server guy.”  It's someone at the right level, like the CIO, who can ink the checks.  If you've done a good job, the white knight in your relationship is right where he or she needs to be, so that when you're ready to give him the sticker shock, that the relationship is strong and they're ready to sign the contract. 

Ms. Smith:  Thanks, Doug.  Our wrap-up today is from Ken Kiser.  You've heard from three CEOs.  Ken is a straight sales professional, and one of the things we agreed upon at the beginning was that, generally, having the CEO go on the sales call is maybe not the best idea.  Ken may want to go into that with a little more detail.  Ken?

ken kiser: the real world

Thank you.  Now you know: I'm just a simple salesperson.  Kind of at the bottom of the heap, or at the top of the income scale, however you want to look at it.  I could go through the process and whatnot, but these gentlemen have done that quite well.  Process is the bane of a salesperson's existence.  Most salespeople are kind of free-flowing, “go out and do your thing” types, and your management is constantly saying, “Do this today, do this tomorrow.  Where's the forecast?  I want the money.”

          What I would like to do today is to talk a little bit more about the specifics of how you execute against the process that they put together.  I agree that the process they laid out is important, it is valuable, it is one I have found over my career to be successful, but there are a couple of things to remember.

          When you're a small company, the big company doesn't want to buy from you.  I think most of you know that.  The reality is, you're a huge risk.  The failure rate of small companies with big companies is tough.  Big companies know that they tend to kill small companies because they force you to do things through pricing, features, whatnot, that create massive stress in your organizations.  You want to do business with the big guys because, you know that once you land the customer there's a budget behind it that not only rewards you on the initial effort, but that you can continue to get more and more from.

          The other problem, and the other fact of life, is that your ability to create opportunities in these large organizations by working hard or making 400 cold calls a day is, not always, but a lot of times, a useless effort.  As you've heard all of these gentlemen talk about, the big successes they've seen in their organizations is when the big company came to them.

          The key is to make sure that your company is visible so that when opportunities or requirements get generated in these large organizations, they find you.  Of all the successes I've had when I was at a small company called CacheFlow, the biggest deals we got were calls into us.  It wasn't from the salesperson, the classic calling room where everyone is dialing, dialing, dialing, dialing.  That I found to be almost completely ineffective for the big, big accounts.  The trick is to figure out how to get your name out there.  Obviously, trying to do it the hard way, which is spending to do it, is not usually a realistic goal.  Trying to capitalize a marketing campaign to create a brand is not going to work.  What I found is that you need to figure out where your target customers are, which is part of the process Jeff talked about, so that you can get in front of them and get those inbound calls to your sales rep in California or on your vacation in Bermuda.

          You'll find the successful ones are the ones where the call comes into you, and, typically, the person calling you is the champion, the white knight.  That is the key part of any sales process when you're the little guy.  For one thing, you get someone who is motivated.  It's their idea, so it's a career move.  The best play is when you attach your product or service to somebody's play politically inside their organization so that they really get behind it.  Obviously, the best case is when that person also has purchasing authority.  Another thing you'll find, typically, in a big organization is that there are half a dozen or more people who are involved in the process.  You cannot get to those people, so the trick is to get to one person or set of people, convince them that your value proposition is worthwhile or that your interests are aligned with theirs, and they take you to all the other people who are sitting in their seats saying no, no, no, no, no.  You've got to figure out how to get in front of those marketing people and finance people and operations people so that you can communicate your value proposition and overcome their objections and help your champion help you.

          That's my high level message.  Here are some specifics.

          When I was at CacheFlow, I started out pre-product, zero dollars in revenue.  Two and a half years later, it was over $100 million in revenue.  Obviously, it was boom time—pretty tough to pull off something like that these days—but there were good examples.  I was involved very early with an opportunity we had at Xerox.  We were at some little trade show focused around something or another, and this individual walked up.  I thought it was a joke.  He said, “I'm from Xerox.”

          “Oh, really?  That's really neat.”

          “I really need one of those things.”

          I'm like, yeah, yeah, yeah, you and a half dozen other people that just walked up.

          So I'm talking to him, talking to him, and we have a dialogue.  Always talk, no matter how crazy the people sound.  He hands me his card and it says: Director MIS, Xerox Global Information Infrastructure.

          Wow.

          I get back and call the guy.  Just like everyone here said, the deal skipped four process steps almost immediately, which also is a common theme.  If you have to work every step in every process in every deal, you get tired of it pretty quickly.  I immediately got to him, he immediately figured out that I had value—my message and value proposition resonated with his problem—and the trick was that I didn't tell him that.  “You have one mouth and two ears, use them appropriately,” is part of the sales book.  Don't take your CEO to “deliver” the message.  Listen, then tell the message after you hear what they want.  Understand the problems.

          We got through this thing, jumped through a bunch of process steps, I'm all fired up, and we got it going.  That's when it really started.  That's when I started getting introduced to half a dozen other meetings with this person and that person and standards bodies and outsourcers and finance guys and on and on and on.  It was one objection after another.  The thing was, that was good.  You know you're into something worthwhile when you're being introduced by your champion to somebody who doesn't like you.  They're telling you, “This person has an objection; I need your help to overcome it.”

          The interesting part, and this is the human part of it, to reiterate the earlier point about the close.  We went through this entire process; it was probably eight months long.  The numbers were staggering for a small company because it eventually ended up that Xerox standardized globally on the CacheFlow product.  Xerox is a big company with a lot of sites, so the numbers on this thing were spiraling out of control positively.  We sat down to talk about the big close, and, I kid you not, it was a deal that turned out to be well over $5 million and it was closed over a $20 Arby's lunch.  No steak dinner, no fancy big event with brass pens and gifts and all that stuff.  It was real simple.  It was finding the champion, aligning your interests with theirs, having your champion introduce you to all the objectors, and knocking them down one at a time.  When it came time to actually sit down and put the deal together, it was literally two roast beef sandwiches, fries, a pair of Cokes, and it was done.

          In summary, the close is basically the rite of passage.  It's the last thing.  You've got to find the champion.  Selling is a people-to-people business, so you've got to find ways to align their personal interests with your product's value proposition.  The best prospecting is to position yourself so that the big companies, the innovators, and the early adopters will find you.  And, as any good sales guy, shut up and let somebody else start talking. 

[continued]

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