Revenue interruptus

When selling products or solutions a salesman has one shot at getting big revenue from a customer. One shot at getting a commission.
Then the salesman has to wait until the expected life-time comes to an end before having a second chance to make any revenue. The risk of not getting the second sale is real.
The exceptions to this case are customers that have a fast expanding or growing business making them buy more appliances, devices or software. Only then there is more commission for the salesman.
Still it is revenue interruptus.

Bridging: maintenance and upgrades

In order to bridge the intermittent sales over the life-time span of the product the maintenance concept was introduced.
By selling the fear of not getting the service required in time, maintenance contracts were presented as the solution for business or production continuity. Reducing the perceived risk for the customer, while generating more revenue for the vendor and commissions for the salesman.

Clever businessmen went even further by introducing upgrades: especially in the software business. As a company you shouldn’t run behind, but keep up-to-date with the ever evolving technology. The more upgrades the more revenue.
In some cases upgrade contracts were sold in combination with maintenance contracts.

Avoiding the risk at the decision point: streaming revenue

Still the big lump sum in revenue is when a new appliance, device or software gets bought. However there is a risk involved at the decision point: the risk of the customer deciding to buy from a competitor. The more the market matures, the more the customers can switch between competitors.
As with any business the goal is to make profit at the least risk for both vendor and customer.

Newspapers have understood this a long time ago: instead of selling one newspaper at a time, subscriptions were introduced in order to smooth the printing numbers and avoid risks.
Other businesses have adopted subscriptions too.

As software and hardware as services are moving into the cloud space: the number of appliances, devices and software are no longer the unit of measurement for the revenue.
Time and the number of users have become the units of measurement for these investment goods too.

As time is a continuum, the revenue becomes also a continuous stream: subscription.

Benefits of subscription

Due to the ongoing service process there is no decision point at the end of the life-span of an appliance, device or software as the invoices have a steady flow (every month).
The advantage an benefit is that there is no catalyst in the process that induces a review or a decision as the service just continuous.
Additionally the resistance to change will keep the invoice flow streaming over a long time – if the supplier doesn’t screw up.

Additionally subscriptions are paid in advance of the supply of the service, whereas devices, appliances and software will bring revenue after delivery. Prepayment is always beneficial as the main risk of the vendor gets eliminated: getting paid.

The income has changed from an intermittent process to a steady stream of income for both the company and the salesman. Decreasing the risk for both.

Can your business become subscription based?
What are the technology hurdles?
What are the business hurdles?

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The tale of a market leader encountering open standards

This is a tale of a market leader who since many years made good sales and profit in a market niche using proprietary technology.
Management believed they were the ‘Masters of the Universe’ having high margins and ever growing sales volumes.

As the news of the ever increasing profits spread and the growth of the market had become evident as it was no longer a niche market, more companies became interested to become a supplier for this expanding market.

Due to the fact only proprietary solutions were available to the market, an industry organization or a competitor gathered a several vendors in order to define open standards.
As one of the market leaders the company was invited to participate, however management decided not to participate as the standardization didn’t seem to bring any immediate benefit but was considered as a waste of time. Management estimated it was certainly no threat for business of the company.
They considered themselves as the people with vision who had spotted the market long before (in reality it was probably just a lucky shot).

Slowly the open standards gained field as more vendors adopted them. Even the company enabled the open standard on some of its’ products in order to be able to present it to their customers but without the intention selling it.

Over time the open standard matured, got more features and gained field in the market. It became a real competition to the products or solutions of the company.
Customers preferred the having the freedom of choice and switching of vendors at almost no cost.

Open standards vs legacy technology

Once a technology is available as open standard the barrier to enter the market is lowered significantly as almost any vendor in the world can propose the solution (even Chinese manufacturers).

The sole differentiators that your company still can use for selling the legacy technology based products are:
- The installed base: all the references acquired since many years
- The quality of products and services
- The presence in local markets (if this has been achieved)

It will become hard to explain the premium price to be paid for the legacy technology as the open standards can rely upon components available on a large scale at a lower price and hardly any investment on development to be depreciated.

Proprietary or legacy technology is only possible in emerging or niche markets as innovation still counts.
Once a market grows and becomes significant in size, open standards are introduced, then you have the choice:
- Embrace open standards
- Look for a different market or a different solution as prices and margins will only decrease.
Your competitors will be lean and mean as they never had big margins on these products.

Do you sell solutions based on proprietary technology or open standards?

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Except for the big corporations sales and marketing departments are managed by one person: the VP Sales and Marketing.

However it is unlikely this is really feasible:
- As VP Sales he needs to generate sales: having a short term view – easy to measure
- As VP Marketing he needs to plan events, efforts and investments all with a long term view and the results are hard to measure.

Sales: the Executors

In order to keep the company running th pressure is on sales and generating revenue. Hence the VP Sales and Marketing will invest most of his time in sales as selling drives the company.

- Deal flow and closing sales is now.
- Sales people have mainly one to one verbal communicators.
- Sales will detect demand and sell the solutions.
- Sales is easy to measure in the accounting dept using the invoices.
- Aggregated analytics are not required as each case is different.
- Sales are the executors of existing opportunities.

Marketing: the Invaders

Due to the fact Marketing:
- Has less pressure for delivering instant results
- Requires a longer term to see any return on investment
Marketing will get less attention of the VP Marketing & Sales.

- Marketing is for the future revenue.
- Marketing is one to many using written or visual communications.
- Marketing needs to create demand.
- Marketing requires analytics to measure its’ effectiveness.
- Marketing can be seen as the invaders into new territories.

Short term vs long term

The mission of a VP Sales & Marketing is impossible as he needs to split up his time between both:
- Sales giving almost immediate return: Action – Result.
- Marketing efforts and investments having an uncertain long term return: Action – Patience.
It is obvious he will have a tendency to focus primarily on selling as company management demands it.

Moreover in most cases the VP Sales & Marketing has previously been in sales not in marketing, hence their nature and attitude is more fast paced not matching the required nature of patience for building slowly a brand or awareness which is required for marketing.

Having one person as VP Sales and Marketing is probably not such good idea: he has a Mission Impossible to achieve.

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If the correlation between:
- The amount of time and effort spend by salesmen into the CRM
- The achieved sales level
is negative (the more time on the CRM – the less sales) then the company has a serious problem.

It means that salesmen are wasting their time by entering data into the CRM and have little or no return on their efforts. They perform administrative tasks instead of finding suspects, qualifying leads, following-up on prospects and closing deals.

This becomes especially apparent if the salesman with the highest revenue is neglecting all requirements imposed by management concerning the CRM as he spends no time on it. The CRM has really becomes questionable.

CRM administration vs selling

In the worst case the commission scheme includes a measurement of the administrative activities or tasks for the CRM.

As a sales manager you should have a metric indicating how much time salesmen are spending on the CRM compared to the time on leads and customers.

A CRM can become a self-fulfilling prophecy, allowing generating all possible sales and marketing management reports, that could just kill sales.

Sales people want to hunt for customers, nurture accounts and leads and sell.
They don’t want to do administrative tasks even if their commission scheme imposes CRM administration.

Revenue counts – not CRM administration and reports

The goal for any company is revenue that is generated by sales people. When sales people are busy with administration it is likely there will be less sales efforts and could even demotivate the salesmen.
Moreover if salesmen would have liked administration they would all have become accountants.

A company can have the best implemented CRM that generates the best sales and marketing management reports, but these won’t bring sales.

Does your commission scheme contains CRM administration as a parameter ?

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Consumers

People and people in companies want many different things.
People and companies only buy a limited number of things.

We all want many things that could make life better or to have a better feeling about life.

Companies

Managers want or aim for getting many things or solutions for different reasons:
- Productivity increase
- Convenience for their employees or workers
- Social status – enterprise status
- Ego
- Expressing of their power
- Spending lots of money or running an expensive department can help a career.
- Clearing out the budget at the end of year

Decision takers who are employees of a company mainly think or consider themselves first and the company comes in second position.
- They want a lot of things.
- They get little.

Decision takers who are founders of the company are entrepreneurs who will take risks in order to grow the company faster.
- They want a few things.
- They get almost all.

Both want different things for different reasons giving salesmen different chances to actually sell to them.

The ROI in sales: the expertise of the salesman

However when it comes to the actual purchase the gap between wanting and buying becomes clear and evident: a budget or an economic reason needs to be present. The power of a decision maker is a big parameter.

All capacities in a company are limited. Also the capacity required for selling is limited. Hence a Return On Investment (ROI) needs to be made based upon estimated chances.

The salesman, using his expertise acquired over many years, needs to differentiate between the wanting or the needing demand of the lead.

This is where the salesman plays an important role by evaluating, qualifying and deciding whether a suspect or lead is a prospect or not.
His experience and expertise are is required to estimate the chances for success (= sales) with a suspect or lead as he (or the VP Sales) decides to invest more or less time in a potential customer.

However he needs to take the power of the decision maker into the calculation as his ego, his social status, his enterprise status or his need for expressing his power can overrule any rational or economic reason.

How many times have you mistakenly took wanting instead of needing?

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This is a list of mistakes made before, during and after sales meetings and conference call which are to avoid.
Although most seem obvious, many of them occur frequently:
- Giving a bad impression
- Feeling of being less important customer
- Losing trust

Before the meeting

1. Ignoring small customers
You don’t want to waste time by meeting small customers that don’t increase your sales significantly. Ignoring those companies saves a lot of time.
- Smaller companies can grow bigger. Management of small companies can refer you to friends and relations in bigger companies. References help selling.

2. Travel more than meet
You spend more time traveling than meeting face to face with the customer.
- Plan your travel better in order to have more time available to meet and to prepare your meetings.

3. Always rescheduling meetings
Rescheduling meeting or conference calls for whatever reason gives a bad and unorganized impression.
- When the appointment has been made to meet or to call just make the call on time. Stick to it as your customer needs to be available too.

4. Arriving too late
You know you will be late for a meeting is a sign of lack of respect for the time of your customer.
- If you know in advance you will be late, so warn him by giving him a call.

5. Getting lost
Getting lost is no excuse anymore as GPS systems are available at fair prices. Driving without a GPS is like taking an additional gamble to miss a sales deal.
- Get a GPS system.

6. Key content missing
When having planned a meeting or call but missing an important piece or key person the event will have less value. Why meet when the information is not available or the specialist is not able to participate?
- Once the meeting is scheduled make sure the valuable time with the customer is spend wisely and your opportunity keeps in existence. If key content is missing then cancel the meeting.
- If the specialist cannot be present physically, getting him to call in by phone or video conferencing can be a feasible alternative.

7. Basic customer investigation
Not knowing anything of the customer business or news seems a lack of interest in this era of the Internet.
- Before you have a meeting make sure you visit their website during 5 minutes allowing you to prepare some questions showing your interest in their business and awareness.

8. Meeting with somebody
When addressing the reception desk without knowing who you will be meeting gives a very bad impression and indicates being a less valuable customer or person. As receptionists speak with most employees and managers of the company the word will travel fast in the company.
- Make sure you know exactly who will be in the meeting.

During the meeting

9. Not knowing your customer personally
Your meetings and telephone conversations are limited to the business.
Still you miss out the human part and possible relationships.
As relationships matter in sales you miss a very important part.
- In order to be able to understand the problems to be solved and their decision process you need to know the customer better by using the small talk before each business conversation.

10. Smart phone playing
Playing with your smart phone during the conversation gives the impression of being uninterested as your toy is more important or interesting.
- Just keep your phone in your jacket and put it in meeting mode or even turn it off.

11. Cell phone answering
You just answer any phone call on your mobile that you receive during the meeting or even a conference call.
Your customer will feel unimportant and not respected.
- Set your telephone to quiet mode or even turn it off as during a meeting or conference call your customer is the most important (at that moment).

12. Too long presentations
Your presentations just take too long wasting the precious time of your customer.
- Be to the point with your presentations. Moreover the attention span of all people is limited.

13. Time flies
Your meetings and telephone calls always demand more time than average.
- Stay on topic and be brief with your information concentrating on the possible business opportunities. Effectiveness counts while not wasting the time of the customer.

14. You always talk
You just keep on talking and pitching and forget about their problems.
- Make sure the customer talks the most and explains you about their problems, situations and limitations.
Ask open ended questions.

15. Wild guesses
Pretending to know what you’re talking about while you really haven’t got a clue. As the customer probably knows more than you, he will spot this immediately and your trust is destroyed.
- Be honest and admit you don’t know, write down the question while promising to get the information as soon as possible which gives you a cliffhanger for having a subject during a follow-up conversation.

16. The big pretender
You pretend to know all in order to make a big impression.
- A meeting is not to impress, but to co-operate and find solutions together.

17. No added value
Your information is what can be found on the company website or internet: there is no added value from your visit.
- Bring your expertise or experience in order to make a meeting or telephone call interesting and beneficial for the customer as you help to solve their problem.

18. The co-operation lie
Your co-operation proposition comes down to selling stuff to them or through their channels. You have raised expectations that wasn’t your plan thus distrusting your customer.There has to be a benefit for both in a co-operation.
- If you want to sell to them, then make it clear upfront.

19. Trashing the competitor
In the heat of the discussion you could trash your competitor.
- Never ever trash your competitor as it will likely trash you too. Your customer considers the company as your competitor due to a certain merit or impression created.

20. The questioner gets all the attention
During the meeting you mainly pay attention to the person asking the most questions. However it is likely this person is not the decision taker but merely an influencer He is probably a geek who can ask more questions than you ever can answer.
- Make sure you pay enough attention to the decision taker and involve him into the conversation in order to find out what he really wants. Geeks don’t buy.

21. Yes man
Promising to do everything or being capable of delivering everything the customer asks won’t fly long.
- You need to say no to your customer.
Limit your offering in order to stay credible and being capable to supply what has been promised within the agreed delay time.

22. Granting additional discounts
In order to win a customer, you give additional discounts.
- Once you have started this discount game, customers will continue to ask for more discounts for the next purchases.

23. The soon promises
Your production or shipments are delayed still you keep the customer believing the goods or services will be delivered soon.
- Be honest and set the exact new delivery dates you can keep instead of lying. Breaking the trust will be reflected in your future sales.

After the meeting

24. Dropping slow customers
If a customer or lead requires too long to decide, you forget about them.
- Slow moving customers can become big customers as these bigger companies have a longer decision process.

25. The invoice
After all the negotiations on delivery terms and pricing, a minor item gets added to the invoice. Why did you have all those meetings for?
- Make sure there are no surprises (even minor ones) on the invoice as the price has been agreed upon as you need to have new meetings with them.

26. Neglecting to contact afterward
Once the deal has been closed and the invoice paid, you forget about your customer as you don’t find it anymore challenging or you see no obvious additional sales.
- Acquiring customer cost many times more than keeping a customer.
A customer who has decided in your favor, you need to keep as they have taken the risk with you.

Any of these mistakes apply to you?

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Online social smalltalk

Inspired by Facebook and Twitter a number of on-demand solution vendors propose to introduce the concept of social websites into the daily operations of sales and marketing by merging a CRM with a social messaging in order to have more direct interaction or more social contact with customers and leads.
Somewhat similar to the social smalltalk at the beginning of a telephone call or a meeting in order to know more about the person sales people are dealing with.

The difference is the smalltalk is controlled related to the beginning of an event and controlled in time whereas the social messaging or chat is rather uncontrolled.

The white noise of social websites

The main problem with social website is the amount of white noise as social messaging is:
- Unstructured
- Without a subject line like email
- Capable of deriving quickly from the subject

All this white noise could derive people from their actual work as it could be more interesting.
Still the work needs to get done while the employees could be wasting their time filtering out the white noise not related to their actual work.
This filtering is already a problem with emails that are contained and classifiable items, whereas social messaging, chats or status reports are unstructured demanding even more time to file.

Customers and leads willing to participate in online social?

Even if your company enables and offers social features the question is if customers and leads will use it as they have to open a social conversation with you.
Are they ready for this?

Social website Return On Investment

Enterprises and corporations need productive operations from their employees that contribute directly or as directly as possible to their bottom line.
This will be hard to proof when employing social websites during work especially as it tends to be apparently unproductive work at first sight.

It could get even worse in case the marketing and sales teams are getting used to the social tool. They could get addicted and use it for all kinds of purposes not always related to marketing, selling or operations.
Work should be fun, but it should not be a waste of time.

It is questionable if the online social talk will be any profitable or improve profitability.
How about all the time wasted on messages that have little or no relation to the business whatsoever?
Calculating a Return On Investment on all the time that has been spend on a social corporate chat or status message board will be hard to do – if not impossible.

Online social websites allowing to interact sales and marketing with customers and leads are likely only to succeed if these social functions could be integrated with features that enhance productivity: for example workflow.

Will you take advantage of integrated social functions and features of your CRM?
Will your customers or leads use the online social conversation possibilities offered by your company?

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During any conversation with potential customers or customers you need to avoid to trash your competitor as this is likely to have a negative effect on your image and business too.

Often during meetings and telephone calls your competitors become one of the items discussed. Then you have to avoid to say anything really negative about them.

The worst thing you can do is presenting bogus reasons why their solutions are less good or your solutions are better than the ones of the competitor. People know more than they say they know and by using the Internet they have access to a vast amount of information and knowledge.

When you start trashing the competitor it is often perceived as being on a losing strike.
Any negative statement will reflect negatively on you too.

However you can state the main differences in function, features, market segment or even years of experience.
Try to steer the conversation away from your competitor to another subject like:
- Your references or successes
- Back to the problem that your customer needs to get solved

Your competitor has its’ merits and benefits too, else he wouldn’t be perceived as your competitor by the customer.

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Since years you have been fighting your main competitor on:
- Products
- Services
- Pricing
- After sales service
- Marketing events

It was a neck to neck race or even a cut-throat competition turning in advance for them in most cases.

However since a few months it seems you are winning easily deals that previously would have been won by the competitor.

The reason of change
You need to know why this sudden change:
- New management
- End-of-life products
- Pricing issues due to technology lagging behind
- Change of focus to other products or services
- Underpaid sales men
- Changed commission schemes
- Reorganization
- Acquisition ahead
- Change of technology

The main thing you need to find out is if the cause related to:
- Their internal affairs
- Management vision or focus changes
- Management anticipation for yet-to-come changes
- External causes: Market changes or Technology advancements

Maybe the company management of your competitor has already anticipated on an external fact or developments that will hit your market soon.
These type of changes could make your products or solutions almost obsolete overnight.
You have to find out if the change or the reason of change of your competitor could be a threat to your company or market soon.

Don’t cheer – Watch out instead
Don’t cheer and consider yourself as the Master of the Universe when overnight you start to win market share without making any significant changes.
Instead be careful and investigate if your main competitor all of a sudden decreases fighting for deals as their might be a bigger problem lurking around that just might change your market.

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In the software industry before releasing a product commercially to the market the solution is to be given to so-called beta customers.
The idea is that these companies or users will test the software thoroughly in real life situations experiencing real life events in the hope to debug the application as much as possible and to test have real life strain tests.

Reasons for becoming a Beta user
Why should people or companies sign-up for the Beta?
- They have the opportunity to influence the development of the solution
- They can have a solution at no cost

Beta vs future customers
- Are the suggestions made by the Beta users the same level of importance for your future real customers ?
- Could using Beta users drive and change your solution surpassing the original goals set as these Beta customers are far more technically advanced than the potential customers of the marker you are targeting ?
- Is the Beta customer representative for your future paying customers ?
- Will Beta customers eventually become paying customers ?

It is the myth of Beta customer.

Finding beta customers
In reality finding and having signing-up user as Beta is not that simple. It requires a complete marketing campaign to generate interest and having people to take the risk.
Getting the Beta customers to sign-up is not that easy.
Especially with business applications, as these companies need to take the risk:
- For the benefit of having a free solution
- Having to stumble on all the possible problems and errors
- Interrupting the normal activity due to these bugs
- Reporting the required feedback to the vendor
Whereas the main rule for companies is risk-avoidance.

The myth of the Beta company customer is even bigger.

Currently we have the Beta for popupbooster:
- Providing relevant content to your visitors in real-time.
- Dynamic web pages: less bounces
- Matching landing pages: keep their attention
- Decrease cart abandonment: more sales
- Exit stopper: win their interest or gain awareness
- Conditional conversation starter using popular web services
You can sign-up a Beta user here – If you want.

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