Sales Management – Entrepreneurial vs. Static Approach

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Apr 292012
 

What do I mean by this title? Isn’t Sales always entrepreneurial? How can it be static if I keep on winning customers? Well, what I mean is allocating territorial responsibilities to your sales people in a way that they have their own region, no matter what size, under their responsibility rather than allocating them specific accounts or splitting up regions in strange ways. In doing this right, three key elements need to be considered: Potential (size of the responsible area) Synergies Goals 1. The main function of Sales is to exploit a certain potential. So, the potential should be large enough in order to be attractive for the individual sales persons. And “attractive” means, it … Read more

How To Treat Your Customers

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Nov 192011
 

In the times of traditional software sales, the roles of supplier and customer were pretty clear. The vendor provided a solution; the customer obtained a solution. Nowadays with Cloud solutions, a new partner model between vendor and customer needs to be established as (B2B) customers and vendors have become equal partners (see also previous posts to “Effective Channel Management”). Also, in the past the main focus was on winning the customer and therefore on presales activities, since closing the deal already provided the main chunk of the revenue. Postsales activities were often managed by so-called farmers, sales people specialized in keeping the customer and focusing on support renewals and add-on sales (usually providing not more … Read more

Customer Profitability

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Sep 182011
 

In almost all high-tech start-ups (and actually also in most Fortune 500 companies), profit aggregation only happens at business unit or company level and not at customer level. That is mainly because customer responsibility is in Sales. And Sales usually only cares about revenues because that is the key indicator they are measured on. Most managers do not see customer profitability as a priority because they make the false assumption that profits can be optimized by simply adjusting fixed costs (usually meaning human resources). However, understanding customer profitability is important for two reasons: If you have non-profitable customers it has an impact on your bottom line; in order to address this you have to know which customers these are … Read more

How To Do Pricing Right: Price Promotions

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Nov 142010
 

Customers typically use reference prices when making purchase decisions. It is very hard, if not impossible, for anyone to assess the absolute value of a product, service or solution. Therefore, customers compare the price with alternatives. Such alternatives can be other methods of solving the same problem or they can be competitive solutions from other vendors. But customers also compare prices with previous prices, special prices or standard list prices. Therefore, once you set the right pricing based on the value of your product, the question is if new customers can be won and revenue can be increased by offering price promotions (also called price frames). There is an interesting study by the US Office … Read more

The Buying Center

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Oct 152010
 

When you sell to a business customer, you don’t sell to a single decision maker but to a group of people, the so-called buying center. The buying center usually consists of all persons that are involved in the purchase decision. These are mostly the people responsible for the business area that your product addresses. The buying center can include, but must not necessarily, the Chief Executive level of the company. In my experience of selling cloud products (and really, in high-tech software sales there will be nothing else pretty soon) I identified four key buying influences: Product management The technical buyer The economic/financial buyer The buyer representing the customer (if that is not product management) … Read more

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