The Organization of Last Resort

January 6, 2009 By Darrin Mourer

Yes, I’m talking about the SE organization in most companies. The SE org is a nexus in terms of capability and communication. We are able to relate to people, comprehend our technology/services, and match technology/services to business problems better than the competition. Not only do we interact with virtually all internal departments, we also interface deeply and continuously with customers.

This is a good thing right?

Absolutely, but there is a catch. Sales is in the (enviable?) position of being exposed to all of the internal and market shortcomings of its company and product. When Sales makes demands things usually happen. Those demands much of the time fall to the SE to provide resolution or workarounds.

What I’ve seen is that in very small companies the SE wears many hats. And this only slightly improves as a company grows. Product Managers invariably run into the same problem, but there is usually a high ratio of SEs to PMs so you can see where many requests end up.

I think that in any given day we could fill up our calendars working to solve perceived problems elsewhere in the company. Oftentimes we fall in that trap—I know I do. It’s in our nature to want to solve problems and be helpful.

But should we indulge ourselves for our customers and shareholders?

My answer today is much more of a resounding no than it used to be. In my earlier years I was more about highest and best use of my time from a shareholder perspective. I have gradually shifted to a sales territory perspective, which means the highest and best revenue for your sales team.

It isn’t because I caught the “not my job” syndrome, quite the contrary. I think it has to do with a slightly better understanding of human nature…

If you solve an out of band problem once, people will expect you to keep doing it. This is because others’ forget about the problem because it has been temporarily relieved.
It creates an inherent assumption that it is part of your job. Once you’ve assumed responsibility, it’s hard to back out of it.
Unless you’re vying for a position in a separate department, you aren’t being measured/rewarded for it. This means it is unproductive for you.

If you are an SE manager you have to maintain a watchful eye that your team isn’t getting caught up in firefighting institutional issues. Keep them focused on solving customers’ business problems with the solutions in your bag.

If certain problems become so acute they cannot be ignored and they cannot be acted upon, assign a single czar/taskforce from your SE/manager ranks. Make sure all of them are dealing with problems the same way, carefully documenting progress, and publishing a very noticeable scoreboard of progress. Most times we cannot direct change, we can only influence. It’s a good thing we’re skilled at that sort of thing

At the end of the day we should be exerting effort to be the best we can be in the job we are assigned to. Taking our eye off that ball makes us less effective in our accounts.

Sometimes this simplest of axioms captures points most clearly:

Focus on that which you can control.

Filed Under: Career Growth, Management, Roles & Responsibilities, Sales, Soft Skills Tagged With: Career Growth, Management, Roles & Responsibilities, Sales, Soft Skills

Sales Engineer MBOs

December 2, 2008 By Darrin Mourer

I recently covered some of the different compensation split options available for Sales Engineers at a very high level. This prompted a few questions, mostly around the use of MBOs. As a follow-up, let me go into the various options available to SE management as well as some common pitfalls.

MBOs are targeted performance goals. As such they should always follow the SMART approach. Even though a standard quota plan is just an example of an MBO, most sales/SE managers use the term more to apply to goals other than sales targets. For this article, I will refer to it in its more general sense.

The Four Pillars

Others may group them differently, but to me there are 4 categories of MBOs for SEs:

Business/financial
Employee satisfaction/enablement
Customer satisfaction
Process (continuous) improvement

This ensures that the 3 main stakeholders in business are accounted for: shareholders/owners, employees, and customers.

Business/Financial

These are the goals that concentrate on the financial statements and address the needs of shareholders or owners. I suppose this is technically a euphemism for “shareholder satisfaction” These are also the most common compensation plan metrics—sometimes the only one (over 70% of SEs have a bonus plan tied to sales/revenue). This is even more so for AEs. Here are some options that may be available depending on your company’s revenue reporting capabilities:

Percent attainment of quota
Number of new customers
Number of tradeshows attended
Percent time spent in customer-facing activities
Percent growth in pipeline
Percent growth in average opportunity size
Percent decline in average opportunity age
Percent decline in assigned opportunities without SE involvement/tasks
Percent growth in deals won with SE involvement or specific activity (e.g. POC)
Percent growth in deals won vs. competition or specific competitors

Employee Satisfaction/Enablement

There is a host of revenue generating activities that are not specific to one’s own accounts. Creating sales collateral and supporting other account teams are specific examples. This category also applies to activities that go to morale boosters which address the needs of the employee stakeholder. Examples include:

Number of supplemental sales/marketing/support/implementation collateral created (and shared!)
Number of opportunities assisting regional sales teams in your personal niche
Number of posts on company bulletin boards or other social networking contributions
Number of published trip/win/loss reports
Number of informal training sessions (e.g. lunch and learns) delivered

Customer Satisfaction

Goals in this category encourage positive and long-term relationships with customers, which is in everyone’s best interest. These can include:

Number of repeat customers (renewals)
Number of published case studies or customer references
Percent achievement on customer sat surveys
Number of customer requested product features submitted to product management

Process (continuous) Improvement

Each of the other categories addressed a specific business stakeholder. Process improvement is a very broad category that concentrates on the foundational goals that generate continuous improvement in each of the others. This is best illustrated by the concept of moving the fulcrum over, or sharpening the saw in Covey terminology. It covers everything from contributions to business process improvement to personal development. Examples include:

Number trainings attended
Acquisition of a new skill or certification
Percent of activities documented in CRM
Contribution to special projects
Time management goals

Flexibility

Each of these basic options can be tailored (and weighted too) in numerous ways limited only by your creativity and ability to get at the data. You can focus these goals on specific products, business segments, or even competitors so that they align to company strategy.

Pitfalls

With the ability to be flexible also comes the possibility of actually lowering productivity if you aren’t wise in how you approach them. Some of the most common pitfalls include:

Not keeping them SMART. The biggest culprit here always seems to be measurability. In many cases a desired result is qualitative. In these cases I employ “correlated result” approach where I seek out measureable events that typically lead to (or are correlated with) the desired result I am after. Example: It’s difficult to measure someone’s product knowledge, so the measureable result is attending a training, passing a specific test, etc.
Not publishing continuous results. We all need immediate feedback to make the biggest impact on results. If you’re only reviewing quarterly or (gulp) annually, you’ll find the process very ineffective and discouraging.
Reliance on manual compilation. If you need to manually jump through hoops to get the data you need it is that much harder to integrate them into daily practice. Automate the process whenever possible.
No scoreboard. Even if you just keep it in your team, your people need to benchmark. Friendly competition in my experience is good. The best will benchmark against themselves. Keep it updated frequently.
Tedious recordkeeping. If your SEs have to spend an inordinate amount of time entering data so that you can report on it, your program is destined for failure (or minimally noncompliance).
Unintended consequences. Over reliance on these metrics leads to pressure to game the system. Communicate the spirit of the goals and the behavior you are wanting to see.
Top down only. When each of us is involved in setting our own goals, we feel natural ownership. Involve your team in the creation process, even if by a committee that standardizes them for the entire organization. No taxation without representation!
Not communicating the why. If your SEs don’t know why something is important, you will have a difficult time getting ownership of the number.
Metric overload. Anything over 10-12 goals starts to become overwhelming. Keep is short and sweet.
Business only. We in Sales are naturally focused on business results. Over-weighting your goals in Business ignores other stakeholders and ultimately leads to lowered effectiveness.

Hopefully this gives you a head start on crafting your own MBO program. By no means is my list comprehensive and should be thought of as a starting point of discussion. Mastering Technical Sales also has a balanced scorecard that may be helpful that matches fairly well with this post. I’m also working on a template for me to use personally that I will include here in the future.

Filed Under: Career Growth, Compensation, Management, Roles & Responsibilities, Sales, Soft Skills, Terminology, Time Management, Training Tagged With: Career Growth, Compensation, Management, Roles & Responsibilities, Sales, Soft Skills, Terminology, Time Management, Training

Carrying Buckets

November 25, 2008 By Darrin Mourer

Once a company expands its portfolio to 2 or more products, a question arises: Should sales (and SEs) be specifically incentivized to sell all of them. And, if so, how?

You run into ethical issues if you have competing products (such as stocks in a brokerage or mortgages for a loan broker) that encourage sales to put themselves ahead of the customer. We’ll assume your company has a portfolio of mostly complementary products and simply want reps evenly focused on all or other specific products.

Incenting SEs

Ways in which I have seen this done—both directly and indirectly—include:

Directing specific incentives for sales reps – SEs typically have to, or should, follow the reps lead with a customer
Quota buckets – Having separate quotas for each product
SPIFFs – a bonus for specific sale or activity
MBO – a bonus typically not tied to specific quota attainment

While these are usually monetary based they could also be tied to awards or rewards such as club attendance.

Trouble Spots

Here are a few things to avoid when leveraging the options above.

Not inclusive – Only incenting reps has two problems. 1) it creates a dividing line between reps and SEs, and 2) it can create animosity when SEs are doing a lot of the specific work to drive the desired behavior and are not seeing any of the direct reward.
No alignment – Don’t have competing objectives. The simplest way to ensure rep/SE alignment are to have comprehensive programs meaning both take part in the same programs rather than creating separate ones. I’ve seen misalignment more often than one might think.
Not immediate – Year long programs don’t yield the results and focus that quarterly programs do. You need long-term programs to maintain momentum and continuity, but always try to attach quarterly milestones. This way the SEs receive immediate reward and the positive reinforcement.
Not realistic – This is especially important for shorter-term programs. If your average sales cycle is 9 months for a product you’re promoting, don’t set the 1st quarter SPIFF on revenue goals of the product. The SPIFF money will only go to those that already have the sale in their pipeline. It also negatively incentivizes sales teams to push the sales cycle which may be poor for customer relations.
Too complex – The bigger the product portfolio the more temptation exists to build in qualifiers and rules to address every situation and product. Keep the programs extremely simple and make the purpose behind clause easy to understand and clearly mapped back to corporate strategy. People are very willing to accept these decisions as long as they understand the reasoning behind them.

Finally, make sure all details are well communicated and understood as early in the term as possible. Poorly defined compensation plans are one of the biggest morale killers in a sales/SE force I have seen.

Filed Under: Compensation, Management, Sales Tagged With: Compensation, Management, Sales

Virtual Lab

July 3, 2008 By Darrin Mourer

In the last of my three-part series on the SE lab, I want to cover the concept of lab centralization and virtualization. Once a sales organization reaches a certain size it stands to gain from economies of scale in various areas, labs being one of them. Because of the length of this entry I have divided it into 3a and 3b.

When a sales organization is small, for the most part the SE’s lab is his/her own set up at the office or at home. When the organization grows to the point of supporting regional sales teams with several SEs per region, it usually makes sense to create regional labs where SEs can experience the benefits I outlined in my previous post. When the organization grows large enough, or has extensive technology requirements, it makes sense to take the lab to the next step.

Creating a central lab environment has several benefits:

Focused investment – Budget can be pooled within the organization to invest in hardware that would not be feasible at the regional level.
Better management- Pooling resources allows for the possibility of dedicated personnel to managing the environment, meaning SEs don’t have to.
Formal strategy – A project of this size will require proper planning and maintenance to ensure success. This is often a problem that afflicts regional labs.
Higher utilization – Better resources mean more value for the SE which lead to increased adoption.
Remote access- SEs can leverage the environment from home and at the customer site which may be invaluable for proof of concept.

If you are in the business of selling software, you can also heavily benefit from virtualization. While up to this point I have used lab in a very generic sense, a central lab can be used specifically to enhance product demos and as proof of concept.

Demos
With everyone having access to the same virtual environment, SEs can use this as a launch platform for creating enhanced demos that would not be doable with a laptop. SEs should be able to share these demos with others. Having a standard demo catalog with the best of the best content is a great way to drive additional revenue. SE management/enablement and marketing can also leverage the work that SEs create and incorporate them into the master library. If you really want to get fancy, you can start tracking this in your CRM to statistically determine which demos work better than others. This is all part of building a repeatable sales process.

Proof of concept
Some companies use evaluation and proof of concept interchangeably. Sometimes a customer just wants to kick the tires without an SE. Sometimes the customer needs to see the product in action to validate the technical specs and sales presentation. Allowing SEs to build a environment that matches the specific requirement of the customer can be a huge time saver for both sides. It also reduces risk to the opportunity be being able to run the POC in a controlled and familiar environment.

Microsoft goes even further and has integrated this strategy into their corporate marketing efforts on their website. With many of their products, you can register onlineand get access to a virtual environment with a demo script to evaluate the product remotely–without an SE! This can take a huge load off the channel or SMB SE’s shoulders. It also gives your corporate SEs an alternate option of letting a customer self evaluate in a controlled and scripted environment. This is especially useful for opportunities that you would not deem appropriate for a full SE-led evaluation.

Training
One other very valuable use of this type of platform is as a training aid. Instead of trying to get access to a classroom with a purpose-built set up, or messing around with virtual machines on laptops, you can configure the labs ahead of time, virtually, and allow students to access them through the browser on their laptops. Whereas the demo and proof of concept provide additional revenue opportunity, this is an easy way to demonstrate cost savings to the company.

In the follow up post I will detail the process and considerations for building out a virtual lab.

Filed Under: Demo, Lab, Management, Marketing, Proof of Concept, Roles & Responsibilities, Sales, Training Tagged With: Demo, Lab, Management, Marketing, Proof of Concept, Roles & Responsibilities, Sales, Training

Reporting Structure

June 17, 2008 By Darrin Mourer

Here’s how it typically goes:

A startup hires a VP of Sales. S/he actively sells to customers until enough growth or funding comes in that a team of reps can be hired. The reps will be expected to be very well versed in the product details. In super technical areas, an initial SE or two may be hired to support the sales staff and perhaps participate in services implementations.

The next level of growth changes dramatically based on several variables.

The two somewhat conflicting goals when considering the reporting structure are:

Checks and balances
Sales alignment

Checks and Balances
In a perfect world, reps and SEs would be ideally compensated on fostering deep, long-term relationships with customers. Because this is usually not the case (they end up being purely quota based), sales engineering has morphed into having a check and balance responsibility on the account. Ask any customer which vendor role has higher credibility, reps or SEs, and SEs will always win out.

If I was a sales manager that would stop me in my tracks. I can’t think of a more dangerous symptom as this effectively means a lack of trust pervades the relationship with the customer. Why most sales organizations accept that as business is usual absolutely confounds me, but that’s a separate topic. Because of more frequent turnover, overt focus on quota, changing account assignments, or similar systemic problems, SEs are often the bedrock of the customer relationship. They are trusted. SEs are put in a position of checking and balancing the rep within the account (i.e. the true guardian of the relationship).

For the record I don’t think that’s right, but I do understand that that’s how it is most of the time. With that in mind, as the sales organization grows, a separate SE management chain is usually in order to prevent the SE getting steamrolled on the account team.

The 2nd aspect of this system is that most reps and sales managers have never been in the SE role. I personally believe that most sales managers could manage SEs quite effectively. There have, however, been enough that couldn’t that it has more or less removed that as an option for all but the small and/or extremely enlightened sales organizations.

I do understand the inherent difficulty. Good SEs can bring extreme clarity to complicated scenarios. If you’ve never been in that position, it’s very easy to not notice the extent of preparation that goes into it. Things like extensive product and industry training, trade shows, lab time, customer presentation or demonstration prep, technical research, etc. can all seem like time spent not selling. Simple is HARD, and it takes time. Time out of the field is still one of the hottest debated issues between sales and SE management today. Having the SE manager as the gatekeeper to taking this time away from the SE, thus, is a necessity to ensure maximum effectiveness.

Alignment
Removing the need of checks and balances, it makes the most sense to get everyone on the same team and as close to the customer as possible. This means that reps and SEs would report to the regional/district sales manager and be tied to specific accounts. If we need the checks and balances what is the next best thing? Optimally you want an SE leader for every line of business that your sales organization is broken down into and reporting to a sales director or higher depending on the size of the company. Putting SE managers reporting into regional/district managers does not create enough separation to implement the gatekeeper role.

Having a central SE organization under the head of sales can also work, though it can introduce some tough political issues. Sales directors will all feel they not getting enough resources, or will be tempted to lay blame for loss of sales on the SE organization (scapegoating).

Breaking SEs up into more than one group can have disadvantages of less pooling of resources or fewer conversations between areas, though this can mostly be solved with the assignment of central person/team that can act as a coordination point. This is especially important in larger companies that can benefit significantly from combined budgets for training, events, lab resources, etc.

If you’ve had superior results with a particular model, I’d love to hear about it.

Filed Under: Management, Roles & Responsibilities, Sales

Knowing to Whom to Listen

June 14, 2008 By Darrin Mourer

I’m fond of saying that one of the biggest determinants of success is knowing to whom to listen. Since the dawn of the printing press information has become more and more ubiquitous in each subsequent generation. Today with the proliferation of the Internet the “problem” has surged 100-fold in under a decade.

This truely is not a problem, but a great gift–though every gift introduces new challenges. The biggest challenge is making sense of the vast quantities of information. It’s no wonder that Google now has a market cap of just under 200 Billion dollars. Helping us find the needle in the haystack is very big business.

On any topic of great interest or consequence you will see countless opinions expressed in the news, blogs, friendly conversations, etc. Your ability to discern truth and wisdom from the great flow of information is, I believe, one of the best indicators of future success in business today. I also don’t believe it is that difficult a skill to master. And it is definitely a learned skill. This challenge of information overload (at least to this degree) is something that we have only had to begin dealing with in the last decade or so. Consequently there is not a lot of emphasis placed yet on the education and training of how to more intelligently process new information.

Critical thinking, and more specifically critical listening is really the parent skill were are talking about. Critical listening is really just about judging what you hear. One of the real gifts about today’s environment is that you have access to hundreds of critical assessments on any given topic. To me that means that we are able to outsource a lot of critical thought to niche experts and opinions we never would have had access to in the past. This brings us back to the original challenge.

As a self-proclaimed armchair economist I love using the economy as an example. It is shocking to me that not once has a majority of economists been able to predict an upcomming recession. Even more amazing was that in in 2001, 95% of the top economists polled by The Economist did not forecast that upcomming recession. 95%. 95%.

I don’t know about you, but I am very interested in meeting that 5%. What I’ve discovered during a lot of contemplation is that it is less difficult than it might appear. I’ve discovered a few shortcuts if you will that have allowed me to steer clear of some bad advice.

Follow the Money
Going back to the 95% example, I don’t really believe that they are all poor economists. Most of the top folks are employed (or heavily influenced) by big companies that rely on growth to survive. What happens over time is this influence either creates pressure to look at data through rose-colored glasses. One other possibility is that people who tend to do that anyway rise to these positions precisely because of that trait.

Whatever the reason, next time you hear an “expert” deliver opinion, remember that that expert is usually being paid by someone for that opinion. I typically flat out ignore opinion offered up by someone who has something to gain from the outcome. Avoid those with an agenda.

Unbiased History
We all have our biases. The trick is to seek out people who let data override them. In the previous example, it’s one thing to listen to someone say the economy is going to tank hard if they always seem to find a reason why we are doomed. But if that same person a few years earlier called for a huge bull market, now that is someone I’m going to lend some credibility towards. When you start evaluating opinion based on this criterion, you will be amazed at just how many people fail this basic test.

Original Research
I find that the most interesting bits of information come from those that embark on self-discovery versus analysis of other’s findings. Self-discovery can come from one’s own research or reflection. It usually comes from an ability to see relationships in sets of data that others do not see. These are the people that challenge our established beliefs and are in the best position to bring us real insight.
So the next time you are making a big decision, ask yourself on what information are you basing it. Look critically at your sources. When you hear expert opinion ask yourself (or find out): Is this person benefiting from this advice? Does this person let data overcome his/her bias? Is this person parroting the same data/opinions as everyone else?

When you find these rare inidividuals that pass these tests, cherish them deeply. They are the mentors you want.

Filed Under: Roles & Responsibilities

Forecasting for SEs

June 4, 2008 By Darrin Mourer

Depending on your sales organization, you may or may not be heavily involved with the official forecasting process. The most optimal forecast process involves the rep working collaboratively with the SE and any other sales team member (e.g. inside rep) to set the forecast. At the end of the day the reps need to have final say as they are the ones directly responsible for quota attainment. The forecast process should be well defined with as little subjectivity as possible. This leads to a far more amicable relationship with sales management. If this is how it works at your company, I would be impressed, as this seems to be a small minority of sales departments.

To me there are three essential ingredients to a successful forecast:

1) Trust – If the sales team does not trust that they can be open and honest with sales management—or will be penalized in any way for doing so—the data input into the process will reflect it. In other words, we’ll lie.

2) Process – If forecasting in your company is an art and not science, the forecast, in aggregate, will have high variance. Just ask your CEO/CTO or stockholders what they think of variance in financial data.

3) Communication – If the person entering the data does not have a complete picture of the opportunity, the forecast will be made based on false assumptions.

At the sales management level, you will have varying influence on all three. Since this focus in on the SE, let’s spend some time on what we have some control over, which is communication. Since you’ve read this far, I’m hoping you already inherently see the benefit of working with your rep to ensure the forecast is as accurate as possible. I can think of a couple tangible benefits:

- Sales teams that have a high degree of forecasting accuracy are (rightfully) seen as having a better handle on the business. This gets folks higher pay and more promotions.

- Management tends to leave you alone and allow you more leeway in your daily routine and with potentially more perks.

- If you really like your rep, it helps ensure they stay around. If they are seen as senior people, they also may get more influence on account selection.

Sales managers are primarily judged on quota attainment, but that is an incomplete statement. Consider manager A that over the course of 3 years comes in at 70%, 140%, and 90% of forecast versus manager B that comes in at 90%, 92%, and 91%. A averages 100% while B averages 91%.

If I was the VP of Sales, I would prefer manager B other things being equal. Why? I’d sleep better at night. What would scare me with A is that I don’t know if we’re feast or famine. I would be spending a lot of time with A in coaching and micro management sessions. If I had the chance, I would promote B to watch over and help the As.

This example is why you can reap benefits helping your rep be as accurate as they can be. Now, I’m not a fan of blaming problems on the “communication” scapegoat. Far too many things can be loosely tied to poor communication to make it very useful for us. So here are some tactical examples of things we can do improve accuracy.

Sales Process

Use the chosen sales technology/process at your company mercilessly. It’s a huge pain in the ass, but long term, forcing your team to use the established guidelines prods you to use the same diction. It also subconsciously forces you to begin thinking the same way. If everyone is always keeping their eye out for the “technical decision maker,” “key product champion,” “sponsor,” etc. you will find that everyone begins to navigate the sales process in similar fashion. What you are essentially doing is adding more rigid process to the sales cycle which improves forecast accuracy.

Continuous Review

After every meet and greet, presentation, demonstration, etc. spend 5 minutes after the event breaking down the meeting with your rep. Talk about what went right, what went wrong, next steps, and generally work toward making sure what both of you heard from the customer is consistent. If there is ambiguity, address it in your follow up communications with the customer. What you’re doing in creating a habit of having micro dialogues that help keep you in sync. Trying to do this in email after the fact is a sure way of ensuring it never gets looked at. You can reinforce with writing (especially since you’ll want to do it anyway for your sales tool), but get in the habit of doing it in person right after the fact. Quarterly Business Reviews (QBRs) are fine, just make sure they happen in addition to frequent dialogue

Learn the Process

In most companies forecast reviews are not pleasurable experiences. It involves reps saying the least amount of words possible that allows them to leave the meeting without two black eyes from the sales manager (one is acceptable). Most of the time SEs are not required attendees. Most reps do not even want their SEs present to remove the possibility of providing the sales manager with conflicting data. Even still, you need to go to a few of them. The purpose is nothing more than to become as familiar with the forecasting process as your rep. Even if your reps dislike you for doing it initially, they should at least respect you. This is other side of the coin in terms of the sales process. Common terms, common process, and common experience should equal better and more effective communication.

For the SE Managers out there, it is your job to help your SEs see the benefit of becoming active in the forecast process. It’s not necessarily intuitive even for many senior SEs. Spend some time during your next meeting going over some best practices. Even better, invite a sales manager or director to deliver a talk about the importance of this process from their perspective. Most folks don’t know what happens to the forecast after it goes to the sales manager, so it could be quite an eye-opening experience to see the process end-to-end.

Filed Under: Management, Sales, Terminology