Prepare the Soil

Quick Summary: Do not hire a sales rep until well-documented customer responses are available.

Abstract:

As a company begins to sell its product or service, the sales “burden” usually falls on the entrepreneur or CEO.  There is only one true measure of a company’s potential success; it is obtaining revenue from paying customers.  Nothing else matters.  However, the entrepreneur or CEO of the new company may feel that they need to hire a sales rep to take over this activity so that they can concentrate on the seemingly unlimited other activities that are crying out for attention.  “Letting go” of sales during the early stages can be a huge mistake.   

The more proper full title of this article is “Prepare the Soil Before Planting Seeds.”  Every farmer and anyone who has planted a garden understands the importance of following that advice.  For this article, the focus is on the necessary preparatory steps that need to be taken before a new company hires its first sales rep.  This article could have easily been placed in other Volumes and Chapters in this collection.  There are several articles that are directly related to this subject; some of which are listed at the end of this article. Placing this article in the Starting a Company volume is most appropriate because the issues covered usually occurs very early in the life of a company.  Further, it is in the Diversion section of the Starting Execution chapter because entrepreneurs often think of sales as a diversion!

The word “diversion” certainly has a negative connotation; especially when applied to an entrepreneur or CEO’s involvement with sales.  Without a doubt, every entrepreneur and every early-stage company must be focused on revenue as is emphasized throughout this collection of articles.  However, unlike internal activities, many of which can be scheduled, the time and place required when working with prospects and customers are often set by them.  Quite simply, when prospects call, you respond.  No one is sitting idly by waiting for the phone to ring or the email to appear.  Instead, the entrepreneur “sales rep” becomes interrupt-driven, “diverting” them from the other tasks that are underway.  Unquestionably, this is a “high-class” problem and is far better than having no prospect/customer interest or interaction.

Often the response to this situation is to assume that hiring a sales rep or a sales executive is the best way to free up the entrepreneur or new CEO’s time.  Long-term, when the product or service offering is stable and has been accepted by the market, hiring a sales team is the right thing to do.  However, in the very early stages from the pre-release of a product, to the availability of an MVP, or even when a fully featured version one product is available, it is in the company’s best interest to have the entrepreneur or new CEO be in direct contact with as many prospects as possible.  They need to hear, see, and feel direct feedback from prospects and customers.  This feedback can vary significantly from that obtained during customer discovery activities when potential prospects are asked to share their opinions.  They may have very different views when they actually see or try the product and are asked to make a purchasing decision.  The entrepreneur needs to receive their feedback firsthand – especially from prospects who decide not to buy.

The other issue and the primary theme of this article is the fallacy of thinking that “others” can sell since the entrepreneur has already been successful with the first wave of customers.  Those initial customers may have been the entrepreneur’s “Rolodex” customers – individuals that they already had a relationship with and were willing to trust the entrepreneur and the company.  Often the initial sales success can be traced to the entrepreneur’s intimate, but undocumented, knowledge of what their offering can do or will be able to do.  Through multiple contacts, they have heard the pros and cons, comments about competition and market fit, and have encountered multiple impediments. Through these exchanges, they are built up a series of instant responses to virtually every comment or question that occurs. In essence, their responses are like arrows in a quiver with the entrepreneur/CEO selecting the most appropriate arrow given the current circumstance.  The challenge, which invariably is underestimated, is the effort that it takes for the entrepreneur to transfer their knowledge to someone else and fill their quivers with the proper arrows that the sales reps can draw upon.

It is often thought that by hiring a “world-class” sales rep or a sales rep with intimate domain expertise solves this problem.  It doesn’t.  In fact, both the company and the new sales rep with impeccable credentials may be very disappointed and frustrated with their lack of success.  The problem is easy to describe but difficult to resolve.  It is all about preparing the soil so that the new sales rep can quickly take root and grow.  Below is a list of questions that a sales rep should ask the company before they accept a position.  In most cases, the entrepreneur/CEO can easily verbally answer these questions but seldom are they written down so that they can be shared with others.  Complicating the documentation process is the difference between verbalizing a response that often “meanders” and writing down a short, concise answer that others can understand, remember, and repeat.

The questions that should be asked and answered are listed below and are divided into several categories.  Not all of the questions will apply to all companies and situations.

Marketing

  • What market segments do you think are most likely to buy first?
  • What is the customer's most compelling reason to buy from us, now?
  • Do we have standard customer presentations?
  • Do we have a short, snappy elevator pitch that prospects can relate to and repeat to others?
  • Do we have to do missionary work in explaining the issue that we solve, and why it is important to customers?
  • What is the best way to contact prospects to get their attention and be receptive to agreeing to meet?
  • How often do we refresh our website?
  • Have you found that advertising is effective?  If so, what medium was used and how often?
  • Do I have to write my own proposals?  Are there templates available?
  • Do we regularly publish articles, newsletters, and other outbound "heartbeat" items to keep us forefront in prospect's and customer's minds?
  • Do we have channel partners or customer-facing groups that may be concerned about you "taking over" their customer relationships?
  • Are there any well-known industry pundits that openly support us?

Sales

  • What is your experience in the length of the sales cycle?
  • Who do you usually deal with as the first customer contact?  Is it a "gatekeeper" or the primary buyer?
  • Is there usually a difference between the buyer and the actual user of the offering?  If so, how much influence do both of them have on the actual buying decision?
  • Will I be calling primarily on new customers that are not familiar with us or what we do?
  • Who is the primary buyer?
  • What are the top three or four impediments that will likely slow down or lengthen the sales cycle?
  • In general, how many sales calls does it take to close a deal?
  • Will I have a specific territory and named accounts?
  • Will I be given hot leads to follow up on?
  • How many sales call will I be expected to make in a day, week, or month?
  • What are the most common reasons that prospects say "no"?
  • How often do we customize our offering and how do I get it quoted?
  • How do you establish urgency for prospects to move forward quickly?
  • What resources can I call upon to go with me on initial sales calls?
  • Does the company have a CRM system?
  • Are there cost justification tools that we can share with our customers?
  • What type of sale activity reports do I have to supply?
  • Do you pay referrals fees to others for leads?  If so, how much and when?

Pricing

  • Do we have both initial purchase and recurring revenue models?
  • Do we have published, standard pricing?
  • What type and level of discounts do we offer; can I offer them or do I need pre-approval?
  • What are our standard payment terms?  Do we vary from them?
  • Are out typical margins high enough to support the business in the long-term?
  • What is our warranty?

Customers

  • Do we have any truly dissatisfied customers, if so, what happened and what are you doing to correct the situation?
  • How many paying customers do we have?
  • Are there existing customers that I can call on for repeat business?
  • Are there customer references that I can learn about and mention?
  • Are we reliant on one or two large customers, if so, what % of revenue do they represent?
  • What percentage of customers are repeat customers?  How often do they buy?
  • Do prospects typically buy only low-price alternatives, or do they weigh features and value higher?
  • Do the prospects typically purchase through formal RFQ processes?
  • What is our customer churn rate; and what are the primary reasons?
  • Do most prospects support sole-source procurements?
  • Is there usually a single KDM or do purchase decisions go through a committee?
  • Is there a typical customer budget or purchasing cycle that slows their procurement process?

Competition

  • Who are our top three main competitors?
  • How do you differentiate yourself from others?
  • How does our pricing compare with others?
  • If we don’t lose to a direct competitor, what are prospects likely to do instead of buying from us?

Support

  • What should I do on Day One?
  • How will I learn about our offerings?
  • Who will provide me with pre-sale (technical and other) support?
  • Are their formal mechanisms for me to internally share customer comments?
  • Will I be expected to support sales that have been made by others in the past?
  • Who handles customer service?
  • What is our typical delivery cycle?
  • How do we process orders?  How much will I be involved?
  • Do we have RMA, warranty, and upgrade processes in place?
  • Will I be kept in the loop on shipping status and any customer service issues?

Personnel

  • How much out of area travel will I be expected to make?  By air or car?
  • Why is this sales position open now?
  • If I stumble, what do you think the two or three most likely reasons will be?
  • What will be my reporting structure?
  • Are there regularly scheduled performance reviews?  How will I know if I am meeting the company's expectations?
  • What will be my sales quota?
  • What will be my compensation structure, and is there a maximum that I can earn?
  • When are commissions paid - with the order, shipment, acceptance, or customer payment?

 

As an interesting other use of the questions above, the quote from Groucho Marx comes to mind: “I don’t want to belong to any club that will accept me as a member.”  If a company cannot answer these questions, it might not be the right company for the sales rep to join.  Conversely, if a potential sales rep doesn’t ask most of these questions, they might not be the right person for the company!

There is no question that as a company grows and expands its direct or channel partner sales force, these questions will have to be answered.  The entrepreneur/company should answer them first, making the soil fertile and ready to let the seeds grow.  When “preparing the soil,” rocks underneath the surface will invariably be discovered, often unexpectantly.  Answering these questions early in the process will uncover “rocks” that must be dealt with to continue.  In many instances, it will be frustrating, but it is better to resolve the issues early instead of waiting for the seeds to fall unto those rocks and not be able to take root.

Just as a farmer or gardener needs to tend the field after the seeds have been sewn, the company needs to continually support the sales team – forever.

Below is a list of related articles.

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Article Number : 3.040406   

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