Hunting Farmers and Farming Hunters

One of the common missteps in sales organizations is putting people in roles they aren’t well suited for and thus fail to meet their numbers. The most common mistake of all is not understanding that some people are “Hunters” while others are “Farmers”. Both personality types are needed to build a long-term healthy business, however placing Hunters in Farming roles and visa versa is a costly mistake. Here’s a few indicators of what type of individual you are dealing with

The following are signs that someone is a Hunter vs. a Farmer

• It is all about The Sale vs. It is all about The Relationship
• Consultative vs. Cultivate
• Risk Taker vs. Risk Adverse
• Obtaining vs. Growing
• Independent vs. Collaborative
• Individual Selling vs. Team Selling
• Trusted vs. Trusted Advisor
• Drive vs. Passion
• Close vs. Build
• Prospecting vs. Mining
• Competitive vs. Loyal
• Networking Animal vs. Customer advocate
• Prefer no existing accounts vs. Prefer existing book of business
• Money motivated vs. Recognition motivated
• Wants a high variable comp vs. Wants a high base
• Order maker vs. Order taker
• Selling expertise vs. Domain or Product expertise
• Gets to decision makers quickly vs. Creates champions
• Effectively deals with rejection vs. Wants Praise
• Acquisition vs. Development

When we help optimize a sales organization, we help existing organizations put the right people in the right positions. With emerging or growing organizations, we use a set of interview questions to ferret out where someone is best positioned to succeed. It’s just as hard to hunt with farming skills as it is to farm with hunting skills.

Top 10 Reasons why Sales People Fail

CEO’s often ask me about “poor performers”. Downturns in the economy are often a catalyst to weed them out as companies watch every penny going out the door. I’ve found there are patterns that can identify these people so they can be weeded out of the organization. I share these below.

Sales People fail for (one or more than one) of the following reasons:

1. Fit
2. Motivation
3. Compensation
4. Training
5. Ramp
6. Sales process failure
7. Misalignment of goals and expectations
8. Time management
9. Mismanagement of pipeline
10. Work ethic

1. Fit

I am a firm believer that you can train a good salesperson to sell anything. So when I say “fit”, I am not referring to “domain expertise” or “dental experience” but rather are they a “profile fit” for the position?

Let me explain. There are normally 3 and sometimes 4 distinct profiles that map against the customer lifetime continuum.

a. Hunter

b. Farmer

c. Nurturer

I often times find sales people miscast in roles that do not fit their profile. A hunter wants to sell something, and sell it fast, and doesn’t want to have to farm or nurture them after the sale. They make horrible Account managers. On the other hand, a farmer wants to develop an existing account. They are better with an existing book of business where they upsell and cross-sell. The nurturer wants accounts to love them. And typically the accounts do; the nurturer will work tirelessly to keep their accounts happy and satisfied. But don’t ask a nurturer to sell anything.

In most cases, sales people tend to find their way into only one bucket, or have a strong preference for one bucket. If the primary role of your sales team is hunting, then we should be hiring hunters. We have interview questions and background checks that can test for hunters. People that have traditionally managed a book of business or a list of accounts in a given territory most often do not fit the profile.

2. Motivation

I want people that “want the A.” Mary is someone who always “wants the A.” She wants the executive team and her peers to say “nice job.” She wants to be recognized as a top performer and that drives her every month to success. And when she has a bad month, she tells herself, “I’m not going there again.” “I am going to go kick some butt this month, and make up for last month”

Passion, drive, motivation, success-oriented, goal-oriented are all terms that describe this characteristic. People who are driven to success, usually make good sales people.

Warning: Sales people with this characteristic are sometimes a pain in the butt. They are so driven that occasionally they will step on toes. They are not always elegant and tactful in getting things accomplished. As long as their passion is channeled in the company’s best interests and they are not creating any issues externally (with prospects and customers), I found that the internal challenges of highly motivated people were well worth the extra “internal mgmt. required.

3. Compensation

More and more companies are moving to a 40/60 or 45/55 base/variable plan with less than half of the OTE (on target earnings) salary and more than half on the variable comp.

I recommend that your base salary is conservative enough that people can’t get too comfortable living on their base salary alone. If your comp package is above-market, this should allow you to attract excellent sales personnel.

4. Training

Formal training along with on-the-job training is a must. For most companies, there is a lot to cover for new sales people. Be sure to align training that is appropriate part of the customer lifecycle they deal with.

Ongoing training is always useful. Even simple things like:

a. Telling the company story

b. Overcoming objections

c. Getting past the gatekeeper

d. Giving a great demo that gets to close

e. Phone scripts, email templates

f. When to use referrals

Making time for peer-to-peer best practice collaboration is important. Sharing successes, strategies, tactics, wins, and losses are all important. Brownbag lunches can be great forums for this sharing.

5. Ramp

Be patient, but not too patient. Ramping to full quota should take place somewhere between month 3 and month 9. I would suggest that the average of those (month 6) is a pretty good guidepost. Certainly if someone has not fully ramped by month 9 (unless the sales cycle is 12-18 months), they should be placed on a PIP (Performance Improvement Plan.) Typically if they are unable to hit quotas by month 6, they are probably not likely to hit quota by month 9.

Make sure, though, that the goals are fair and the sales individual is fully trained.

6. Sales process failure

Let’s look at a company where the sales process centers around the demo and the close with the following steps:

a. Qualifying the opportunity

b. Identifying the decision maker

c. Getting to the decision maker early

d. Demo (and discovery) to decision maker and key influencers

e. Overcoming objections (might have to do a second demo, price discussion)

f. Getting the order

If the deal is not properly qualified or access to the decision maker is blocked or the decision maker is not available for the demo, et al., the sales process breaks-down and the likelihood for success diminishes.

7. Misalignment of goals and expectations

Sometimes the goals are unachievable. Stretch goals are fine, but should usually be set on top of an achievable goal. And achievement of stretch goals should be rewarded over-and-above the normal compensation for quota achievement.

Set goals that match the company goals (or the company re-stated goals) within a 10% factor. So if the company goal for a given month is $500K, align your quota model to distribute between $450K and $550K to your sales people. Under normal business conditions my personal bias is to roll out quotas that total the company goal. There can be factors (product delay, infrastructure issues, etc.) that justify rolling out something less than the company goal, but I still like to use the +-10% as a guide.

Sales People are “coin operated”; they want to make money. They also want to over-achieve their quotas/targets. Usually quotas that are unattainable lead to sales people that are not making money and are running at 50-70% of target each month. The good sales people will eventually look elsewhere if the goals are not aligned and the poor performers will hang out for awhile until something better comes along.

8. Time management

And as important as “time management”, is “time prioritization” (spending time on the right activities)

I have had sales people who were wonderful managers of time, very efficient, got a lot of things done, but were not “effective” at selling and working their pipeline.

So this means 2 things:

a. Are they using their time wisely?

b. And are they spending time on the right activities?

It also means, do they manage their time in order to maximize their productivity:

a. Making calls when it is a good time to catch decision-makers (early, late, maybe even lunch)

b. Doing their research and emails during times when it is impossible to get a hold of decision-makers

c. Prioritizing their month or quarter; working their pipeline to close business each week/month

9. Mismanagement of pipeline

This is typical with farmers and nurturers who are thrust into a hunting role with no formal training or experience in working a pipeline.

Pipeline management is not intuitive. You have to know how to most effectively work your pipe:

a. How many deals do I need at each stage to make my number this month/quarter

b. How many calls do I have to make to get XX number of demos

c. Which deals should I focus my efforts on this week/today

d. “Win early and lose early”

e. Am I talking to the decision maker, and I am talking to them early in the sales cycle?

Often times, inexperienced sales people spend way too much time on deals that are never going to happen. Learn to disqualify deals early and move on. Spend your time on deals that fit the “Hot Opportunity Profile”, that is prospects who fit our ideal customer profile.

You want to avoid being in the business of educating the marketplace. Leave that to consultants and analysts and marketing departments. We want to find people who can make a buying decision, and make it now. The marketing team should put on seminars/webinars to find and educate these people. Leave it to them if you are in Sales.

10. Work ethic

This is an issue that typically surfaces after 2-3 months. People can fake it for a while or they can be energized by a new opportunity. But people who would prefer to be golfing or lounging or playing video games show their true colors at some point.

I am not a huge fan of the “work smart, not hard” philosophy. Typically, that is just an excuse. I want people who want to “work hard and work smart”…that combination can yield success.

And the early warning signs are usually obvious:

a. activity levels (calls/demos) dropping

b. Pipeline is stagnant

c. Missing meetings/work frequently

d. Customer/prospect complaints

Use this as guidepost. Quickly identifying the issues/problems, will help us quickly determine a remedy/cure. If you want some help, talk to us about a Sales Process Optimization project. Having the right metrics and processes in place readily identifies the issues outlined above.

Dave Chase interviewed after New Business Models for News Summit

Chase was interviewed by David Cohn of Spot.Us about his experience at the New Business Models for News Summit that was put on by CUNY, David Cohn and Jeff Jarvis. He shared his experiences about building a successful hyperlocal local media business particularly in this challenging economic time. The interview can be watched here.

The company that Dave is working with is NextNewsNet that builds off of the success of SunValleyOnline and NewWest.Net. He has been applying both the methodologies of Altus’ Sales Learning Curve and Sales Process Optimization practices with the help of Bill Lawler. Bill’s background with Dell has been particularly helpful in developing a low cost customer acquisition model. NewWest.Net has already seen the quantity of HOT Opportunities increase 4-5x in the early stages of the project. If past experience holds, this will result in a significant increase in revenue.

The video is of Dave Chase doing a “lightning round” at the summit explaining what has been learned with SunValleyOnline and NewWest.Net that is being applied to the NextNewsNet business model is located here.

Release: Startups Create Revenue Traction and Successful Acquisition in Today’s Volatile Economy with Altus Alliance’s Proven Sales Process Optimization (SPO) Service Altus Introduces SPO, the Firm’s Newest Practice, with ISSI Data Case Study

After a dozen successful engagements with the Sales Process Optimization practice, we formally announced the practice highlighting our success at ISSI Data. We’ll share more as our clients allow.

Here’s a copy of the release…

FOR IMMEDIATE RELEASE: October 31, 2008

Seattle, Wash. – October 31, 2008 – Altus Alliance (www.altusalliance.com), a Northwest-based venture consulting firm serving early-stage companies interested in maximizing their the yield out of their sales investment, today released a case study that shows how the firm’s exclusive Sales Process Optimization (SPO) has enabled early-stage companies such as Seattle-based ISSI Data to create revenue traction and acceleration for a successful exit in today’s tumultuous economy.

“Altus Alliance’s analysis allowed ISSI Data to understand our sales process at a much greater level, fit the process to our customer’s rhythm of business, and take control of our sales pipeline,” said ISSA Data CEO Charles A. Walsh. “Our rigorous application of data analysis to our daily sales process was an important selling point for the buyer who later acquired our company.”

In September 2008, Media Recovery, a leading Datacenter products and services company, acquired Altus Alliance client ISSI Data (www.issidata.com). ISSI Data is a recognized national reseller and direct marketer of information security and storage infrastructure solutions.

The Sales Process Optimization service was developed by Altus Alliance Co–Founder Bill Lawler, a former sales organization leader with Dell and Apple, among other highly successful companies. SPO helps new or existing teams attain a highly optimized sales organization that includes best practice lead generation, sales processes, methodologies, and metrics.

“Altus Alliance understands that early stage firms with limited resources often short-cut critical sales and marketing processes, and instead proceed straight to lead qualification and an attempted close, without understanding how or why their customers buy,” said Lawler

Sales Process Optimization delivers both the guidance and execution to create the most effective sales organization and compensation models, supporting job descriptions and hiring assistance, client profiling, and more — all within a proven go-to-market strategy.

“Altus clients have already seen tremendous traction by utilizing our tools and best practices, and in this period of economic turbulence, it is more important than ever that sales execution is right on the mark,” said Altus Alliance Co-Founder Dave Jones.

Successful exit built on the strength of Sales Process Optimization

This week another Altus Alliance client had a successful exit that was reported on Forbes.com. The following is an excerpt from the beginning of the article.

Media Recovery, a leading Datacenter products and services company, has acquired ISSI Data (www.issidata.com), a privately held company headquartered in the Seattle, Wash., area. ISSI Data is a recognized national reseller and direct marketer of information security and storage infrastructure solutions.

The acquisition of ISSI Data will enable Media Recovery to harness the power of a strong inside sales operation and an expanded online catalog sales business.

From the time that Altus partner Bill Lawler joined the firm we saw the opportunity to build a practice we refer to as our Sales Process Optimization practice that has a major effect on Inside Sales operations. ISSI was one of the first clients where we saw the impact of optimizing the sales process from lead generation through acquisition, development and retention of clients’ sales organization. As the examples at the aforementioned link demonstrate, optimizing the sales process can have a dramatic effect on revenue and profitability. We are thrilled that ISSI has had a successful exit particularly in the midst of a tougher climate for exits.

ISSI was a great example of how Altus engages with a client to tap into the breadth of Altus’ expertise. Dave Jones was the original partner helping with business development. During that time, he brought in Dave Chase for a day to tap his knowledge around Internet marketing and lead generation and again when Chase helped on a 6-week Sales Learning Curve Assessment project. Later the baton was handed off to Bill Lawler to address the areas identified in the assessment which manifested itself as one of the first Sales Process Optimization projects.

Originally, we thought of the Sales Process Optimization practice as strictly a complement to our Sales Learning Curve and Outsourced Business Development practices that would apply later in a company’s lifecycle as was the case with ISSI. Instead, we have found that startups at a much earlier stage in their development are interested in ensuring their end to end sales process is optimized from day one. For example, NextNewsNet is a digital media startup in the local Internet media arena that is applying the Sales Process Optimization methodology as it prepares to make its first sales call. NextNewsNet’s team and advisors are some of the most seasoned and well known people in the Internet media business who know driving down the cost of customer acquisition is vital from Day One. It’s much cheaper to get it right from the early days than reengineering later.

When is the time right for Renaissance vs. Coin-operated Sales?

The Wall Street Journal recently reported the news of sales executive Joanne Bradford joining Yahoo after a brief stint at Spot Runner reminded me of Mark Leslie’s commentary in his seminal paper on the Sales Learning Curve published in the Harvard Business Review. In that paper, he described three sales phases — Initiation, Transition & Execution — of a company’s market entry and the accompanying sales talent that fits with the phase. The sales talent needed at the Initiation phase is more akin to a Product Manager function than a pure sales role.

Joanne is one of the top two sales executives I’ve ever worked with. She was certainly what the doctor ordered when she came into Microsoft early this decade after a long tenure at Business Week when Microsoft was in the Execution phase. I have no doubt she’ll make a major impact at Yahoo as well. Not knowing what happened at Spot Runner, I can only speculate that it may have been a similar situation to countless sales reps and executives hired before into startup world with storied sales careers only to find it isn’t a fit at the startup phase of a company.

For a founder that isn’t steeped in Sales & Marketing, it is appealing to hire a Sales leader that fits the profile of someone who has many plaques on their office walls with etchings of “President’s Club” that speak to their sales success. However, these are executives that are accustomed to being surrounded with a well-defined market and product to meet that market. Further, they are used to the full complement of sales collateral, systems engineers, sales support, defined sales compensation model and the like common in the Execution Phase.

Unfortunately, as Leslie states “It’s both unrealistic and potentially dysfunctional to assign large sales quotas in the Initiation phase”. He goes on to say what their priorities ought to be. “The members of the sales team should be encouraged to focus instead on learning as much as they can about how customers will use the product.” The byproduct of hiring the former President’s Club member is frequently great frustration as the sales exec finds he or she can’t earn the money they expected as there are too many issues with the product and go-to-market strategy. He outlines what is needed at this phase as follows:

The types of skills needed during this phase differ from those needed to sell more mature products. They include a facility for communicating with many parts of the organization, a tolerance of ambiguity, a deep interest in the product technology, and a talent for bringing customers together with various functional teams within the company. Salespeople must be resourceful, able to develop their own sales models and collateral materials as needed. We think of this kind of person as the “renaissance rep.”

Later, in the Transition phase, sales management should focus on developing a repeatable sales model, refine market positioning and more. Leslie talks more about the type of sales rep needed at this point.

The original renaissance reps should continue to focus on learning. The people hired at this stage — we call them “enlightened reps” — should be comfortable contributing to a still-evolving sales model but do not need to have the analytical and communication skills of the renaissance reps.

At this point, the executive team should assess whether they are confident that they have sufficient traction and a proven, repeatable sales process. If they are confident, that is the time to rapidly scale the sales organization. Leslie expands on this…

In this phase, when the formula for success has been developed and all of the support requirements for sales reps are in place, the company needs more traditional salespeople — what’s known in the industry as “coin-operated reps” — who require nothing more than a territory, a sales plan, a price book, and marketing materials to bring in orders.

The common mistake of hiring a coin-operated team when a renaissance reps are needed is a costly and time-consuming mistake that delay success. Counter-intuitively, this “go slow” approach is the fastest way to achieve success.

Related Article: Altus Alliance Partner, Dave Chase, wrote an article entitled “Go Slow to Go Fast” on the Sales Learning Curve for the leading Internet Marketing site iMediaconnection.

Demo tips from a seasoned pro

Demos are vital for any startup whether you are trying to raise money or close a sale. Collected below are the insights of a veteran of demos — Jason Calacanis.

For the past 10 days I’ve sat through 200 company demos for the TechCrunch50 conference. These demos are mostly done over the phone for 10 minutes using the phone and web conferencing software like WebEx or Adobe’s wonderful new “Connect” service.

After doing 2,500 minutes of demos (40 hours) this year and many more last year for the conference, I’ve learned a lot about what makes for a great demo and what makes for a horrible demo. Since demoing your idea is a key to your success as an entrepreneur, I thought I would share everything I know in a few simple bullet points.

These tips are applicable to presenting in front of an investor, a partner as well as a demo style conference. Of course, every situation is different so consider these loose guidelines.

Background: The TechCrunch50 conference is taking places on September 8-10th in San Francisco and you can find more information here: www.techcrunch50.com. Mike Arrington of TechCrunch.com and I started the event last year as a place where fifty startup companies could launch their products without having to pay a fee (i.e. the incumbent conference called DEMO charges $18,500 to launch a startup company–that’s really low/abusive in my book). Google, Microsoft, Yahoo, Sequoia Capital and a bunch of other fine partners have joined us in hosting the event.

I have listed his tips below. If you want the full commentary, go to the article on Techcrunch where he expands on each tip.

1. Show your product within the first 60 seconds

2. The best products take less than five minutes to demo

3. Leave people wanting more.

4. Talk about what you’ve done, not what you’re going to do.

5. Understand your competitive landscape–current and historical.

6. Short answers are best.

7. PowerPoint bullet slides are death

8. How to use this new device called the phone.

9. How to handle questions you don’t know the answer to

10. Always confirm the time of your meeting/call, and always be 15 minutes early.

Jason went on with some more tips in Part Two. He set up Part Two before going into his additional tips.

Last week, I camped out at Sequoia Capital on Sand Hill Road and did rehearsals with most of the 50 companies that are presenting–in fact, launching–new products at the TechCrunch50 event next week. These 50 represent the top 5% of the companies that applied to our demo-style event. Truth be told, the top 150 companies were all qualified to be on stage–if only we could have a five day event with two tracks.

These are the best of the best, and most of them came into “first rehearsal” with a demo that I would rate a seven out of ten. (Yes, I’ve come up with a rating system for these presentations, but that’s another email).

Actor Ashton Kutcher did his rehearsal last week, and I have to say it was kind of ironic to be sitting there giving presenting advice to someone who’s been in, and created, a large number of movies and TV shows. As an actor, Ashton obviously has the ability to draw you in, but presenting a product in this format is a very, very specific skill. He picked it up quickly.

After coaching hundreds of folks over the past two years, I’ve developed 18 solid rules. You can see the first 10 rules over at TechCrunch, which reprinted the previous email with permission here. These extra eight are very detailed and speak to some deeper techniques for capturing people’s attention and transferring your enthusiasm for your product to them.

These eighteen rules are just a framework, and are based on demoing at a conference. However, the rules can apply, to various degrees, to presenting your product to investors, partners and potential employees.

11. Show Don’t Tell

12. Use inclusive words, live in the present

13. One driver, one navigator

14. How to handle technical issues

15. The Setup

16. Horrible ways to start your presentation:

17. Describe your product five times

18. Change up your style (i.e. shift your tone)

Go big by starting small

Business Week has an interesting story about how the tables are being turned on where technology first gets adopted. It used to be the small & medium sized organizations waited for the trickle down from what was being implemented at large corporations. The article highlights how the reverse is now happening. That is, small & medium businesses are adopting technologies that are then migrated upstream. Salesforce.com and RightNow Technologies are two examples cited. This is instructive for companies developing their go-to-market strategies.

I’ve observed this going one step further. That is, there are a number of examples where consumers and end users are adopting technologies before businesses and/or their own companies. Recent examples include instant messaging, peer to peer technologies, social networks and blogging. They’ve all started at a grassroots level before moving upstream. In most cases, new features have to be added to address organizational issues but they’ve already overcome the biggest obstacle — end user adoption — so the feature investment is well justified. In the early days, with consumers/end-users, the bar for bulletproof software is lower which is a plus while the young company is tight on resources. Over time, the bar will raise for a variety of reasons (req’ts of enterprise customers, scalability, competition, etc.) and the organization may require more funding/resources to scale. Tim Oren had a good post earlier in the year on two-stage companies that fit with this approach.

Update: Payscale is another example of a business that started at the end user or small business level before moving upstream. This article highlights what they’ve done.

Avoiding wasted Biz Dev cycles

A saying that many of us have cited is “sometimes the best deal is no deal”. Ed Sims has a good post on how to cut your losses if you are getting the biz dev run-around.

Excellent deal terms series

Brad Feld of Mobius Venture Capital has done a great job of raising issues and sharing experiences with various elements of a VC term sheet with a balanced perspective. So far, here’s what he has…

Brad claims the list is complete (one update below)…

• Conversion
• Liquidation Preference
• Price
• Redemption Rights
• Dividends
• Pay to Play
• Anti-dilution
• Protective Provisions
• Board of Directors
• Conditions Precedent to Financing
• Vesting
• Information and Registration Rights
• Right of First Refusal
• Voting Rights and Employee Pool
• Board compensation
• Update: Restriction on Sales, Proprietary Inventions, and Co-Sale Agreement