Thursday, October 27, 2016

Lesson #248: Sales Not Closing? Know When to Panic!

Posted By: George Deeb - 10/27/2016

Most B2B businesses are sales driven organizations, often with a team of expensive sales people in the market trying to hunt down and ...

Most B2B businesses are sales driven organizations, often with a team of expensive sales people in the market trying to hunt down and close new clients.  This is typically a really stressful process for early-stage startups, as they typically are incurring the costs of the sales team, well ahead of the sales actually closing and running through the income statement.  The key is learning what the normal sales cycle should be for your specific business, and when the sales slowness is due to the normal cycle versus a weak salesperson or conversion process.  It is critical to learn when you have a real problem on your hands, and when you don’t, so you do not unnecessarily panic when sales are slow to materialize.

Key Drivers of Sales Conversion Timing

When closing sales, these are typically the key drivers around timing of the sale: (1) the quality of the salesperson and their ability to ask for the sale (or on the flipside, bullshit management into thinking that leads are real when they are not); (2) your nurturing process to move clients from upper funnel to lower funnel leads; (3) constraints of your clients, like available budgets or multiple decision makers; and (4) the average ticket of the product you are selling, where bigger ticket products take materially longer to close than smaller ticket products.  When you are worried about sales not closing, you need to dissect your business into each of these core components, to get to the real reason sales are not closing.

The Wide Range of Enterprise Selling

On one end of the spectrum, you can have very low cost software-as-a-service products that are priced at a low fee per user with a pay-as-you-go model, without a material long term financial commitment.  Those are pretty easy and fast to close, assuming your product solves a pain point for that customer.  At the far other end of the spectrum, you can have multi-million dollar installed software solutions.  These can be torturous to sell.

The big ticket sales often hit multiple departments, meaning multiple decision makers.  The business people need to see a business need for your product.  The technology department needs to approve it for compatability with its other systems and policies.  The procurement department needs to make sure they are paying the lowest price possible.  And, the finance department needs to make sure a budget actually exists to afford your solution—where it is much harder to sell if no current budget exists versus replacing another vendor with an existing budget.  Furthermore, the more consultative the product is to sell, the longer it takes to educate the business people that they have a real need for the product.  And, the more seasonal your clients planning process, the easier it is to miss the prime selling months, and lose an entire additional year in the process.

So, what does this all mean?  It means that some enterprise sales can be closed in a matter of days, or they can be closed over years of selling time.  Yes, years!!  So, you need to make sure you are clear on where your business falls within that spectrum, so you are not placing unnecessary pressure on your sales team to close faster, when in fact, it may not be their fault sales are not closing faster.

Learning When It is the Salesperson’s Fault

When you have a long sales cycle product, that means you are carrying a lot of salesperson costs over time, before the sale actually closes.  And, the worst thing you can do is carry a weak salesperson along for an extended period of time.  When you have long sales cycles, you need to be putting measurement around the four key sales drivers above, especially around the movement of clients through the sales funnel.  Set clear “proof points” along the sales cycle, and measure accordingly.  That could be number of initial calls made, number of initial meetings, number of proposals sent, number of contracts sent, number of contracts closed, etc.  If you are seeing good progress in these metrics, you most likely have a good salesperson.  If not, cut your losses as fast as possible, as you can’t afford any mistakes here.  This post will help you learn how to best screen your sales candidates for success.

Don’t Panic Too Early

I had a client that was making the pivot from selling lower ticket products into agencies to higher ticket products into enterprise-scale companies.  They made a huge investment in sales and marketing budgets to help propel their growth.  But, when they did not see the sales closing as fast as they used to close, they assumed they had a problem on their hands, and unwound their entire initiative half way into the normal process.  What a mistake that was!!  They just didn’t understand the new flows of enterprise selling, and basically, flushed a material startup cost down the toilet, and making any reasonable chance of materially accelerating their sales that much harder and longer-term in nature.  What a mess!!

In Conclusion

So, the keypoints here: (i) know where you are on the sales cycle curve, and set reasonable expectations for management and the sales team; (ii) measure everything, so you can get clear visibility into progress being made, even when sales are not closing; and (iii) for bigger ticket items, patience is a virtue (young Jedi), so make sure you have enough capital to afford the long sales cycle without panicking.

For future posts, please follow me on Twitter at: @georgedeeb.

Monday, October 24, 2016

[VIDEO] George Deeb Teaches Product Development for Startups

Posted By: George Deeb - 10/24/2016

I recently had the pleasure of mentoring the 2016 class of entrepreneurs at Founder Institute Chicago. Here is the presentation I deli...

I recently had the pleasure of mentoring the 2016 class of entrepreneurs at Founder Institute Chicago. Here is the presentation I delivered on "Product Development for Startups". The lesson provides high level guidance on: (i) doing your market research; (ii) setting the product vision and roadmap; (iii) creating product specifications; (iv) building a development plan; (v) doing UX testing; (vi) when to build internally or externally; (vii) building budgets; and (viii) setting development KPIs to manage by. This is a must see for any entrepreneur, to learn how best to build their first products.

Red Rocket's George Deeb Teaches Product Development for Startups from Red Rocket Ventures on Vimeo.

The matching slide show on SlideShare can be found here:

I apologize for the low quality of the video, but the substance of the speech is what I wanted you to focus on.  I hope you pick up some good learnings here, to help your business.

For future posts, please follow me at:

Thursday, October 13, 2016

Lesson #247: The Key Drivers of Company Culture

Posted By: George Deeb - 10/13/2016

Way back in Lesson #13 we talked about how to create a good company culture .  But, I recently read a research report on the topic fro...

Way back in Lesson #13 we talked about how to create a good company culture.  But, I recently read a research report on the topic from The Alternative Board ("TAB"), shared with me by their CMO, Jodie Shaw, which was summarized in this blog post on their website. It included a lot of quantifiable and actionable items around building a good company culture.   Jodie shared the base dataset from the survey results with me, and there were a lot of gems in there that were not highlighted in their original post, that I thought were worth sharing with you.  Jodie was kind enough to let me share them with you below.


TAB interviewed 100 small businesses in gathering the below results.  Approximately two-thirds were B2B companies and one-third were B2C companies.  They came from a wide base of industries, where professional services (31%) an manufacturing (29%) made up the majority.  Their mean age was 14 years old and their mean size was around 25 employees and over $2MM in revenues.  Which probably describes a lot of you reading this blog--either today or where you see yourself in the near future.


When you think about culture, most people are thinking about: management style (39%), employee experience (30%) and company reputation (18%).  Which are most impacted by: business owners (45%), business executives (23%) and the employees (21%).  Where 63% say business owners are the MOST important driver here, not executives or employees (which is a little surprising, as many owners are not often visible within the company).


Driving a good culture empowers people (43%), delivers business results (25%) and promotes good teamwork (22%).  And, the benefits therefrom include: shared goals between management and employees (47%), connecting employees to its customers (24%) and fosters a collaborative environment (18%).  Which in turn, drives productivity (39%) and improves morale (39%).


It all starts with hiring the right people who fit your culture, right from the start (91%), as it is difficult to get people outside of your desired culture to change.  When recruiting employee candidates, you can best assess their fit for your company culture through:  personal interviews (91%), employee feedback (64%), observing their interaction with staff (56%), calling their references (49%), hiring on a trial basis first (43%), reading their social media conversations (42%) and having them take a personality test (37%).


Employees are motivated by having trust in strong leaders (44%), more transparency around key issues impacting the business (21%) and more control in their day-to-day decision making (21%).  Employees are most interested in enjoying their work environment (91%), being mentored (90%), having advancement opportunities (83%), getting training and continuing education opportunities (80%) and flexible work hours (66%).  Only 30% thought telecommuting, working from outside of the home office, was important here.


The key obstacles and challenges to driving culture are: making sure you practice what you preach (43%), maximizing culture and profits at the same time (34%) and trying to make everyone happy, which is nearly impossible (18%).


Like with any business decision, you can't manage what you don't measure.  So, you need to be measuring your company culture, to make sure your company culture is improving towards desired outcomes.  The companies in this study that had a strong culture, had a net promoter score (NPS) of 8.4 (out of 10), based on employee feedback about their company.  The companies that had a weak culture, had an NPS of 6.2.  With the average company had an NPS of 7.4.  So, if you are below 7.4 when you test your own employees, you most likely have a culture problem on your hands.

Hopefully, you will agree there was a LOT of great data coming out of this TAB survey.  Be sure to incorporate these learnings into actionable strategies within your business.  Thanks again, Jodie, for allowing us to share these learning with our readers.

For future posts, please follow me on Twitter at: @georgedeeb.

Friday, October 7, 2016

You Can't Expand While Your House is On Fire

Posted By: George Deeb - 10/07/2016

Building a business or product offering is comparable to building a house. First you lay the foundation, then the rough carpentry, roo...

Building a business or product offering is comparable to building a house. First you lay the foundation, then the rough carpentry, roofing, plumbing, electrical, HVAC, drywall, flooring and finishings, in that order. God forbid you try to install the plumbing after the drywall has gone up, otherwise you will have to rip it all down and start again, at double the cost. And, unless an architect has provided the builder with a clear blue print on what is being built, chaos will surely follow.

But, that only talks about the initial construction. Unlike a house, a good business or product offering is fluid in its design and is constantly trying to improve, to keep up with its competitors and its customers’ needs. Think of it as evolving from version 1.0 to version 2.0 over time, captured by the mantra: continue to innovate or die a slow death. But, the worst thing you can do, is try to build features of version 2.0 on top of flaws embedded in version 1.0. That is the equivalent of building a house of cards, where the whole thing can topple over with one wrong move.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter: @georgedeeb.

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