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Only one company can lead, prosper, and win in any technology market. Will it be yours? The marketplace leader, or Marketplace Gorilla, will win 50 percent of the revenue and 75 percent of the profits in a given market space. Every new enterprise hopes to reach this status, but most will fail. Whether a company employs a direct or inside sales approach, neither methodology will allow a sales team to acquire enough customers to dominate the market. Author Donald Scherer makes it clear out of the gate why these traditional sales methods will simply not work for most technology companies. Instead, he provides step-by-step instructions on how you can HYPERSCALE your sales operation by building a high-velocity sales assembly line based on the principles used by modern manufacturers. Employing these techniques will help your company mass-produce sales while simultaneously lowering the costs of sales—a powerful combination that leads to incredibly profitable growth, which eliminates the need for enormous amounts of institutional funding. Scherer’s techniques are based on the experiences of CrossBorder Solutions, an unfunded, undercapitalized software company that was sold to Thomson Reuters for a home-run valuation. He further refined his approach as the CEO of AssemblySales.com, a SaaS company that helps early-stage companies hyperscale their sales operations.
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About the Author
Donald Scherer was CEO and cofounder of CrossBorder Solutions, one of the world's largest tax software companies. He developed the company's sales assembly line and pioneered the use of web meeting software to work with prospects and customers. CrossBorder was sold to Thomson Reuters for a home-run valuation. After the sale, Donald founded and is now the CEO of AssemblySales.com. Based on the software that powered CrossBorder's sales operation and the methodology outlined in his book, Assembly Required, ASSEMBLY is the first SaaS enterprise solution designed from the ground up to run high-velocity sales assembly lines. By optimizing performance, ASSEMBLY helps B2B sellers hyperscale by mass-producing sales. This allows them to quickly overwhelm their competition and achieve a market leadership position. Further information on ASSEMBLY can be found at www.AssemblySales.com and on Twitter @AssemblySales. Follow Donald on Twitter @Donald_Scherer.
Read an Excerpt
How to Hyperscale Your Sales Dominate the Competition, And Become the Market Leader
By Donald Scherer
Greenleaf Book Group PressCopyright © 2017 Donald Scherer
All rights reserved.
Launching a New B2B Technology Product or Service
1. STARTING THE JOURNEY
When determining how to launch a B2B software product and then conquer a marketplace, it is helpful first to gain an understanding of the contours of the market. Conventional wisdom holds that a bell curve, known as the Technology Adoption Life Cycle, is the best representation of a typical B2B technology marketspace. This curve is made up of five distinct segments, and each portion corresponds to a potential group of users of the new product, each of which has very different needs and buying characteristics. Visualized from left to right, as a product gains acceptance in the market, each segment becomes the potential group of customers that should be targeted next by the seller.
In his best-selling book Crossing the Chasm, Geoffrey A. Moore describes each buying segment. Specifically, on the far left of the curve are the Innovators. Innovators are "techies" — users who love new products simply because they are new. While they do not normally have the power within an organization to purchase the new technology, their opinions are respected by the rest of the organization, and they often serve as important gatekeepers to the rest of the organization.
In the next segment are the Early Adopters. Early Adopters are visionaries. Not only do they like new products because they are new, but they have the ability to envision how these products can be used to further their business goals. Moreover, they like to be on the forefront of change and are willing to implement innovative technologies, as they believe these tools give them a leg up over their competitors. To this end, they are comfortable working with new products and accept the problems that typically accompany any new product launch. These customers will likely be the start-up's first paying customers and early reference sites.
The Early Majority make up the next group of buyers. They are pragmatists who understand the power of technology and are willing to use new products if they clearly further the users' business goals. That being said, they are reluctant buyers of new, unproven technology, as they do not like taking unreasonable risks. As such, it is their preference to buy from the company that will likely become the market leader. It is critical that they be able to speak with happy references that can attest to the stability of the company and its product. Finally, as they are somewhat conservative, they need to buy a product that is relatively stable and includes most of the features necessary for a successful implementation.
Next on the continuum is the Late Majority. These are conservative buyers who are price sensitive, highly skeptical, and extremely demanding. They expect to receive a full product solution and will only buy the new product once the technology is firmly established in the Early Majority space and a clear market leader has been determined. Combined, these two segments make up the mass market for the product.
Last but not least, on the far right of the continuum are the laggards that do not believe in the power of the new solution. These companies are aware of the solution and the fact that their competitors are using it. In spite of this knowledge, they are willing to forgo its benefits. In sum, they do not like change and will never adopt the new solution, as they believe their "old way" of doing things will always be better. Technology companies will rarely be successful in marketing their solutions to these buyers.
With this understanding of the market, the seller of a B2B technology product must first figure out where the product stands on the bell curve. Knowing this location is an absolutely key factor because the sales approach that works at one stage of the continuum will likely not work in another. The needs and goals of both the buyer and the seller morph over time. The seller will continually need to evaluate and possibly change the sales approach to ensure it is constantly aligned with its goals as well as the goals of the buyers. While the method of interacting with the prospect might change, the chosen sales methodology must satisfy the following three criteria:
1. It must enable the seller to achieve a reasonable and sustainable profit (Profit).
2. It must be scalable, so it can successfully reach enough companies in the chosen market segment (Volume).
3. It must effectively convince prospective buyers to purchase the product or service at an appropriate and sustainable close rate (Close Rate).
For a company to achieve success in any given segment, the seller's sales approach must satisfy all three of the above criteria! If not, a company's prospects of success in the given market segment will be significantly diminished, and its growth trajectory will likely stall.
2. ATTACKING THE EARLY ADOPTER SEGMENT WITH A DIRECT SALES FORCE
Businesses have contemplated a number of different sales mechanisms since the industrial revolution. At the beginning of the twentieth century, enterprises relied on loose networks of sales agents distributed throughout the marketplace. However, in the 1950s, with the advent of a more robust transportation infrastructure, companies were in the position to rethink the structure of their sales operations. The result was the modern direct sales force that has been functioning without significant change for the past seventy years.
The defining characteristic of the direct sales force, regardless of the product being sold, is its absolute reliance on the concept that the individual sales professional would visit the prospect at his or her workplace to make the sale. This in-person approach allows the salesperson to develop a tight relationship with the buyer that presumably provides the prospect with the necessary comfort to move forward with the solution being offered. To ensure this occurs, it is not unusual for the salesperson to meet with the prospect multiple times. Due to the time spent on this effort, the average direct sales professional will meet, on average, with approximately eight new prospects per month and engage in five follow-up visits with prospects during the same period. Of course, if the salesperson is also responsible for post-sales support, the above new sales metrics can be substantially lower.
It is extremely expensive in terms of time and money to operate a direct sales force. To increase the efficiency and cost-effectiveness of the approach, almost all companies break up their marketplace into separate and distinct geographic territories. Under this scheme, depending on the size of the marketplace, one or more sales professionals are assigned to work with the prospects in a given territory. This is done to control travel costs and to increase the number of leads the salesperson can deal with cost effectively. In addition, since prospects often know one another within a tightly defined geographic area, territories should also help the seller build reference networks that should improve the prospect's comfort level with the salesperson and the solution being sold.
In the sales environment, the salesperson operating within a territory often acts in an independent fashion, "owning" the sales process from start to finish. Known as a Generalist, he or she is responsible for lead identification, direct marketing, cold-calling or appointment generation, and the actual sales process. To accomplish the job effectively, the professional is responsible for completely knowing the product and industry, inside and out. As if all that were not enough, in many cases the salesperson in the territory is also responsible for after-sale customer success, including upsell opportunities and renewals.
The following chart is a breakdown of the time a salesperson typically spends performing the above tasks. It is startling to note that under the Generalist model, a direct sales professional will spend only 12 percent of his or her time selling.
Thus, spending only five hours per week, or 240 hours per year, dramatically impacts the sales throughput or new sales volume the sales professional can generate.
This basic sales model is well supported by technology. In today's environment, almost all sales operations employ some sort of customer relationship management (CRM) software to manage their day-to-day sales operations. Based on the old-fashioned Rolodex, these database packages, such as Salesforce.com, were designed specifically to support and automate the activities of a direct sales force. Almost all of these tools are designed to help a Generalist effectively work prospects from start to finish in a defined territory. In addition, most are now cloud based so traveling sales professionals can have access to information from the road. Moreover, most packages assume the user will be handling relatively few leads, and as a result, the packages have not been optimized to support volume. The basic structure of these systems has certainly perpetuated the employment of the direct sales model.
Since this book is written from the perspective of a new product launch, I would like to introduce you to SocialFlow, a fictional company that is an amalgamation of start-up enterprises I have consulted with to jump-start B2B sales. This example, described in the following fact pattern, will be used throughout the book to evaluate different sales methodologies against the three criteria listed previously — Profit, Volume, and Close Rate — at each stage of the Technology Adoption Life Cycle.
Using the three criteria for a successful sales operation listed earlier, let's examine why the direct sales approach was the ideal method of sales when selling to the Early Adopter segment of the marketplace.
At the early stages of a product launch, the importance of profitability is greatly reduced. It is quite acceptable and even expected that a young company should and will absorb losses while it sells a new product to Early Adopters. In this light, capital is normally set aside to cover the initial shortfall. Providing further leeway to the seller is the fact that, during this stage, the costs of sales are often greatly reduced. The seller is likely dealing with a relatively small number of parties that have either self-identified or have been found through personal connections with the seller. As a result, it is not necessary for the seller to embark on expensive marketing campaigns or to build out a large sales force.
The Early Adopter segment consists of approximately 10 percent of the buyers in any given market. Given its small size, a direct sales force can be effective in reaching and attacking these defined targets successfully. Moreover, as a practical matter, Early Adopter clients are often identified through personal industry contacts. The segment is also a safe choice, as many early-stage companies have within their grasp the ability, effort, and expense necessary to build an appropriately sized sales operation.
In general, Early Adopters like personal, one-to-one connections that are provided by face-to-face meetings with a company representative. This type of interaction enables the seller to build a powerful connection with the buyer that goes well beyond the traditional seller-customer relationship. This approach should allow these customers to self-identify with the seller and provide them with the emotional comfort necessary to move forward with the solution and to become powerful super references for the new product. Since the Early Adopters are often seeking out the new solution, the close rate with these buyers is often relatively high.
Once success has been achieved with the Early Adopters (with success being defined as obtaining customers willing to serve as references), the seller will be in the position to attack the Early Majority portion of the mass market. At this point, the key to launching a successful product is to make a successful transition from the Early Adopters to this new group of buyers without stumbling.
3. TRANSITIONING INTO THE EARLY MAJORITY SEGMENT OF THE MASS MARKET
If selling to Early Adopters is like scaling Mount Everest, successfully introducing a product to the Early Majority segment is the equivalent of summiting K2. As we have discussed, Early Majority buyers are a difficult bunch of folks. They are pragmatists who are not interested in unfinished solutions. Instead, they are only looking to license a "complete" product that will do exactly what they need it to do and what the seller says it can do. The latter is extremely important, as the Early Majority has absolutely no interest in "making do" until the "next version" of the product is released. They want and need it to work immediately as advertised.
Making matters worse, if possible, is that pragmatist buyers are normally reluctant to deal with an early-stage company because they do not have the faith that such a company will survive over the long term. Instead, they feel more comfortable sticking with their current solution that comes from a more established vendor that has "stood the test of time" and can provide the necessary level of support and stability. This does not mean they are not interested in a new solution that can help propel their business forward, but only that they are content to gaze at the solution from afar and wait until they are sure that it is truly ready for "prime time."
As a consequence, it makes sense that the buyers in this segment of the market will only want to buy from the market leader or the company they perceive will be the market leader at some point in the near future. What often happens is that, at some point in the product adoption life cycle, pragmatists will begin to coalesce around one vendor, and this support will drive that company to become the market leader. Unlike in other industries, where multiple companies can share the limelight, in the technology space, it is a well-established truism that there can only be one market winner. This company is known as the Marketplace Gorilla. Normally, this is the first company to garner a 30 percent to 40 percent market share.
As Geoffrey Moore described in Crossing the Chasm, typically the "losers" in the market leadership battle are relegated to supporting roles. Specifically, the vendor who is in second or third place will become what is known as a chimpanzee. Chimpanzees are reasonable alternatives to the gorillas, who are often considered by pragmatist buyers, but they are picked at a much lower close rate. However, they make enough sales to survive and even prosper. At the bottom of the barrel are the monkeys. These are companies that become low-cost providers that service distinct niches of the marketplace. Since the gorilla and the chimpanzee continually encroach on the monkey's sphere of influence, monkeys are constantly beating back attacks that encroach on their rapidly dwindling sphere of influence and as such are in a constant struggle to survive. Unfortunately, the other market participants eventually fail entirely. See Appendix A for a full discussion on the history of gorillas in the marketplace.
The mass market, comprising the Early and Late Majority, is where most of the buyers of the potential solution reside. This is where most of the money from the technology product will be generated, which means there is no tomorrow for companies trying to succeed in this segment of the market. Specifically, in regard to revenue, Geoffrey Moore postulated that the gorilla will obtain approximately 50 percent of the revenue and 75 percent of the profits from any given market. Thus, it is imperative that the seller of the new solution becomes the gorilla because this party gets all the bananas!
With a shift into this new buying segment, the seller now needs to develop a sales strategy that will meet the unique needs of the Early Majority. The first question that must be answered is whether the direct sales force remains an effective mechanism to sell to this new class of prospects.
4. INTRODUCTION TO THE GORILLA GAME
Moving into the Early Majority of the mass market is an exciting time for everyone involved in the product launch. As the offering has gained some degree of market acceptance, management's vision has finally been validated. The new enterprise is likely in the position to raise its first institutional round of financing. In addition to funding continued development efforts, often a large portion of these funds will be used to build out the sales and customer support staff. The company then seeks expanded office space to house the hordes of new employees that will soon be hired. Of course, this is all done in anticipation of the coming explosion in growth that occurs when a company transitions into the mass market.
All too often, though, this happiness is relatively short lived. Just when the company's growth should be exploding, the wheels start to fall off the bus. For the first time, forecasts begin to be missed. Instead of posting impressive growth numbers, sales begin to decline precipitously. Tense meetings are held with the new investors who are now, rightly so, concerned about their investment. Secret plans are being drawn up to replace the founders with "experienced" management who the investors hope will arrest the decline in time to save what was destined to be the "Next Great Thing."
Excerpted from Assembly Required by Donald Scherer. Copyright © 2017 Donald Scherer. Excerpted by permission of Greenleaf Book Group Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Preface: What This Book Is About and How It Came to Be vii
Introduction: Why Is It So Hard to Sell B2B Software Successfully? 1
Chapter 1 Launching a New B2B Technology Product or Service 9
1 Starting the Journey 9
2 Attacking the Early Adopter Segment with a Direct Sales Force 13
3 Transitioning into the Early Majority Segment of the Mass Market 19
4 Introduction to the Gorilla Game 21
5 Possible Lifelines to the Drowning Company 34
6 Building a New Sales Bridge 39
7 Conclusion 49
Chapter 2 Introduction to a Sales Assembly Line Solution 51
1 Can a Sales Assembly Line Seller Achieve Profitability? 54
2 Can a Sales Assembly Line Seller Reach and Dominate the Mass Market? 61
3 Can the Web-Meeting Seller Achieve a Sustainable Close Rate? 68
4 Conclusion 73
Chapter 3 Supercharging the Performance of a Sales Assembly Line 75
1 Benefits of Selling to the Entire Market 76
2 Benefits of Greater Command and Control 81
3 Conclusion 90
Chapter 4 The Financial Impact of a Sales Assembly Line 91
Chapter 5 Core Principles of a Sales Assembly Line 95
1 The Use of Free 96
2 The Importance of Image 99
3 Employing Mass-Production Theory 100
4 The Elimination of Territories 135
5 Using Statistics to Evaluate and Influence Sales Behavior 141
6 Conclusion 150
Chapter 6 Running an Optimized Sales Assembly Line 151
1 Conquering the Lead Plateau 151
2 Incorporating A/B Testing 157
3 Where Does Sales Development Belong? 171
4 Dealing with Multiple Products 182
5 Building Customer Relationships 187
6 Conclusion 194
Chapter 7 Final Thoughts 197
Appendix A The History of Gorillas in the Marketplace 203
Appendix B The Greenhouse Software Sales Assembly Line: How the Company Has Hyperscaled Its Sales Operation 209
About the Author 221