Saturday, September 08, 2012

Designing Sales like a Mensch

What is a Mensch?


Mensch (מענטש) a Yiddish word that means "a person of integrity." A mensch is someone who is responsible, has a sense of right and wrong and is the sort of person other people look up to. In English the word has come to mean "a good guy." Menschlichkeit (מענטשלעכקייט) is a related Yiddish word used to describe the collective qualities that make someone a mensch.

Intro

Sales is a subject every entrepreneur thinks s/he knows, by the mere fact that s/he has a company up and running. People believe they know what love is, but when they meditate a few minutes, they realize they can feel it when it happens.  At that time, it often contradicts whatever rational definition one may  have had before.

I am reading The 7 Deadly Sales Sins Committed By Startups. by Steli Efti . I list them here for easy reference:
  1. Not Understanding Your Customer
  2. Not Selling: 
  3. Not Showing Up
  4. Not Following Up
  5. No Process in Place
  6. Not the Right Price
  7. Not Asking for the Sale 
But all these Deadly Sales Sins can be reduced to  three 
  • (#1) Not Understanding Your Customer
  • (#5) No Process in Place
  • (#6) Not the Right Price

Not Understanding Your Customer

A technology startup is the result of a creative process. It is natural and I believe in it. Apple believed in Steve Jobs personal ideas,apparently ignoring whatever customers want. 

In the interview with David Ungar there is the following dialogue:
M.A.  What about the actual needs of real customers forming large market segments?
D.U    Did the iPad happen because of hardware developments or because of a real need? How would you answer this question?
M.A.  To me, Steve Jobs was inferring real needs from desires that customers could not utter by themselves. 
D.U.   My question to you was getting at an interesting linguistic assumption. When you say “real needs”, underneath  those words there is an assumption that the need is an objective thing in reality that you can measure with an instrument. You are abstracting away important aspects of context.
David Ungar referred to the teachings of  Count Alfred Korzybski,
He looked at the way people used language, and looked at the modern science of his day. He realized that common language usage was grounded in pre-science. Why not use language differently in order to think differently and discover new things? Human knowledge of the world is limited both by the imperfection of the human nervous system and by the structure of language.
Bottom line, beyond this philosophy, we need a new  way to discover who will buy the precious great product we just created. We need  a different context of who will buy and why. We need a different methodology than coding. We need a different language to convince our suitable future customers.

The KISS (Keep It Simple Stupid) methodology is described in  Tristan Kromer's Customer Development and User Experience . The most essential part is you walk out of the office and talk with about 50 potential customers identified via mental experiments. and finalize the Archetype of who your customers are

This alone will take of off these four bullets from the list.
  1. Not Understanding Your Customer
  2. Not Selling: 
  3. Not Showing Up
  4. Not Following Up

No Process in Place

Did you consider to sell by commission-only for of a small software startup?  With low sales volumes and prices unable to budget and justify a sales operation remote from headquarters?

 It seems many smaller startups, who invest zero, zilch in building a sales operation, expect some magic Uber-Salesperson who will make all the revenues in exchange for a  commission only.  They need an elegant solution to get good sales people. They may have an elegant software, but you don't have an elegant business model.

How can a remote office be maintained with annual subscriptions of say $200 per user or $16,000 for 100 users, by paying a 20% commission? To break even, the commission-only  needs between 3,000 to 5,000 user licenses sold, with no training, no expenses paid. 

I met a technology company with a lone architect making the software and has absolute power,  They describe proudly as their so called "sales force" some commission only, recession unemployed former salesmen, struggling to sell disparate complex products from many companies. They are all disposable, as some of those companies make only one or two sales per year.

Many times there is no need of a physical presence of a - say - West Coast  office for an East Coast company - when products are delivered via downloads. Just have someone telemarketing after hours EST from East Coast. Before one sells the 1st dollar, a commission-only sales person needs to drive a car, use a phone, have Internet connection, pay a rent, eat, feed his children, visit a doctor, see a movie and eat in a restaurant once a month to celebrate life. etc 

Who likes a progressive, 21st century company to have such a business model, by offering meager employment for someone to live in negative cash flow for months, in fear of not selling. 

This is the way business was done last century. By creating jobs that exploit desperate people,  jobs that belittle, one never becomes a leader. These are the commission only, no health insurance, no benefits, no expenses. This is NOT the spirit of Silicon Valley, to create desperadoes second class employees, exploited. in the name of sales and profitability. 

If the company does not have money to fund a sales operation,  considera second round of financing. If the revenues are not enough, create new derivative products and services . The aim is to have prosperous employees and sales, and create a magnet for talent. Optimize your work for happiness, not only profit

Not the Right Price


The Seven Deadly Sales Sins quote needs some clarification, IMO.
When you have a viral product that gets massive traction online, you can have a low price. When you need sales people to sell your product or enterprise customers, you need to consider if your product is priced appropriately to sustain your business. Ultimately, startups need to charge their customers what their product is worth and sell them on its value, not its price tag.
What do we mean value? The value for whom? It is the value for the customer, which I define  as follows
 The value of your product is the amount of money a specific customers looses for NOT buying your product
 This is why instead of a narcissistic raving about your baby's features, if we know what the customers do, we can calculate the value of our product for each customer. If we don't know our customers well, it's impossible to know it,  UC Berkeley Haas School  (professor Rashi Glazer)  defines it as:
EVC is the Economic Value to the Customer. This is maximum amount a customer is willing to pay , assuming s/he is fully informed about the benefits of the product. 
Finally no sales plan is complete, unless in parallel we create desire and habit for the people. I will write about this in the near future.


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