Sales | The Sales Engineer

Opportunity Lost

August 1, 2008 By Darrin Mourer

I know I owe everyone some book reviews, though I’ve been so busy in other matters that those will have to wait. In the mean time, I do want to keep things rolling so here is a thought for the day based on recent experience.

Yesterday I had to cancel two home-based services, my internet access through Cox and my phone service through Vonage. Let me start with Vonage.

I made a call into their main customer service line. I was presented with a lengthy options menu which finally led me to the option of being able to cancel my service. I waited on hold for about 6 minutes and then was disconnected. I called back and went through the same procedure and was connected to a service rep in about 5 minutes. Being overly polite the entire time intentionally in the hopes it would speed the process I made the request to cancel my service. Then the loss prevention scripting began.

They wanted to know why i was cancelling and I was honest about it (had nothing to do with their service which was I happy with, I just decided to only use my cell phone). After making me repeat my reasoning 3 different times they began offering discounts. I went through 3 rounds of offers to try to get me to stay. Finally comes the (and I quote): “Mr. Mourer, I now have the cancellation button on the screen, before I ask your permission to press it, I want to review the reasons you want to cancel your service today.”

Still remaining calm, I politely interrupted the rep and gave her my permission. While it was “cancelling” I was probed yet for more information. 32 minutes later after being connected for the 2nd time the call was complete.

—

Let’s contrast this with Cox. I call the main service number and am presented with three general options. I pick service changes and get transferred to someone in about 3 minutes. The person asked for account information, proceeded to start cancelling my service and asked me why while that was happening and I gave him my reason. After about 2 minutes on the phone he asked me if there was anything else he could assist me with and bid me farewell. Total time about 7 minutes.

—

There are some lessons to be learned here for companies everywhere:

Treat your customers the way you would like to be treated, even if they are departing
Instead of using it as an opportunity to cajole customers into possibly staying (which I’m sure only a very small percentage do), why not use it as an opportunity to build a stronger long-term relationship
Whatever you do, don’t kill any future opportunity of a business relationship
And IF you kill it, be absolutely damn sure that it’s not such a bad experience that other’s feel compelled to write about it publicly (or record it) which does FAR more damage then the few extra customers you keep

The net of this semi-rant is this. I will gladly become a Cox customer again. I will NEVER become a Vonagecustomer again. In fact I will now go out of my way to tell people to avoid them, that is if they’re around much longer.

One last request: As easy as Cox made it, make it easier. Let me cancel my subscription from my online account. It would give me even more warm fuzzies and it would save you costs.

The moral of this story for SEs is this: Always take every opportunity to better your relationships. Sometimes saying “no” to moving an opportunity forward builds trust which can translate into even more business in the future. If a customer says no to a deal, don’t burn your relationship by trying to cajole the customer. Be professional and recognize the potential in every situation.

Filed Under: Marketing, Sales Tagged With: Marketing, 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

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

Sales Engineer Process and Methodology

April 30, 2008 By Darrin Mourer

I think, or at least I hope, that if you are part of any company that has made it beyond the startup phase you will have some type of sales methodology in place. I have come across my fair share of reps and SEs that see little value in such a process-some will go so far as to say it hinders their ability to sell. I’ll be the first to agree that implementing sales methodology does add some overhead to your sales team, especially at first. It would be a bad idea though to judge anything just based on the negative without looking at the positive. For those who actively resist, I pretty much guarantee will never have been accountable for anyone’s forecast except his/her own.The bottom line is that a forecast is a promise, especially from the viewpoint of the CEO, CFO, and shareholders. The company doesn’t really start operating without the sales forecast for the year. If the company’s forecast is based on anything other than science and repeatable process, you’re gambling pure and simple. Variability is your worst enemy. Minimizing it fosters stability-and thus trust-in your company.

I believe this trust is worth the extra effort.

For SEs that are reading this, it probably isn’t hard to step back and agree that reps should be doing thing. But what about SEs? Whoa, hold on a sec. How does this impact me as the SE? I participate in the account review sessions and I work with my rep to even develop the requisite account plans. Aren’t I doing my part?

As an SE you manage a technical sales cycle within the sales cycle. The technical portion of the sales cycle is mostly yours alone to manage and move forward. So here are some questions to ask yourself. Do all SEs perform the same basic demo (allowing for some tailoring) to the customer? What about presentations and product evaluations? Is everyone emphasizing the same 3-5 competitive differentiated benefits of your product to the customer and are these consistent between all touch points with the customer?

When you can answer yes to these questions you have the basic building blocks of a repeatable process with your customers. When it’s repeatable (good or bad) at least you’ll have a pretty good idea of what the outcome will be. This is how an SE organization builds trust within the sales organization.

So as a leader in your SE organization, I say it is your responsibility to drive towards the same level of process and consistency as our peers. If we want to think of ourselves as pivotal to the sales team (of which I whole heartedly believe) then we should not except or expect different treatment in the level of professionalism we bring to the table.

It’s just too damn important to ignore.

Filed Under: Management, Roles & Responsibilities, Sales

Thoughts on Sales Engineer Compensation (Commissions)

March 29, 2008 By Darrin Mourer

Coming from someone who has made a career in sales this may seem like an odd question, but are pure sales-based commission plans the right way to incent reps and SEs? After giving it some thought as of late, I believe that answer to be no.

Just to be clear here, I’m speaking specifically of the how, not how much.

Before you dyed in the wool reps and SEs stop reading and write me off as an egalitarian idealist, reflect on the following:

Do quotas put our needs ahead of the customer?
Do time-based (e.g. quarterly) quotas incent us to close the deal before it should?
Does this behavior promote short-term gains at the expense of longer-term results?
Does any resultant behavior negatively impact the customer’s perception of the company? of us?
Does it build trust with your customers?
Could it incent us to recommend solutions that aren’t in the best interest of the customer?

I believe the answer to these questions is YES! Unless you can offer a staunch justification of no for these questions, hear me out.

What if we were all measured on customer satisfaction scores, or how many references we are able to obtain, or by how many customer referrals we receive, or by how many junior reps we mentored? There will always be a place for sales-based rewards, but if we don’t look first at rewarding long-term trust and relationship building, is it any wonder customers will do almost anything to avoid our calls?

Customers actually LIKE to buy things. Shouldn’t customers enjoy working with us?

My Recommendation

If you like your job-especially as a VP of Sales/Engineering-it’s probably not a wise idea to muck with the commission spigot overnight. Take a phased approach:

Year:

Make base pay a larger portion of total compensation (upwards of 60% – reps; 70% – SEs). If we can’t put food on the table if a deal doesn’t close, most of us will stop at nothing to get the deal and nothing else you do will change that. Overly “hungry” sales teams do indeed bring in more revenue in the short term, but as a consequence burn bridges long term.
Add a customer satisfaction portion to variable compensation. Start with 10-20%.
Round out your customer focused incentives and get it closer to 50% of variable compensation. Ensure your metrics are encouraging long term partnering between various sales teams and customers.

A change of this magnitude will almost certainly result in the voluntary attrition of some sales team members-probably even some high performers. I would make the case that these are the folks who are not as in tune with their customers’ long-term needs as they should be. They are likely the same folks who change jobs every 2-3 years after they are able to make some sales but have difficulty building lasting relationships that most large companies are trying to develop today with customers.

Every situation is going to be different so fine tuning of the percentages can take quite a while, but there is definitely an upper limit to my methodology. I think most people can visualize what would happen if reps and SEs were mostly compensated on customer satisfaction. You would have us fighting even harder for discounts than our customers at the expense of shareholders. Finding the right number is a quantitative exercise assuming sales management has both access to past performance data and a repeatable sales methodology in place that minimizes the variability in forecasting/revenue generation. More on this last bit in a later post.

Filed Under: Compensation, Management, Sales