🔟 10 Wise Ways: How to Think About Sales
In a way, we’re all in sales. We sell or we die. Here are ten ways to make your product irresistible to customers.
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In a way, we’re all in sales. We sell or we die.
If you work on Product, you’re in Sales. They can’t sell what you don’t make.
If you’re in Engineering, you’re in Sales. There’s no point building it if they can’t sell it.
If you work in Support, you’re most definitely in Sales. No sales, no customers!
If you buy, make, or sell anything, Sales should matter to you. Even if you’re not directly involved in making deals with customers, you should make your it business to be wise in the way of how sales gets done.
No matter your role in the company, you can learn something important about your work from your colleagues in Sales. Very often, they’re the most underrated people in the company in terms of their insight to customer.
In many companies, there’s a one-way flow of information from product to sales. Turn that on its head and you’ll create valuable relationships with some of the smartest and best-connected people in the business.
You can learn not only about your customers, but also about networking, negotiation, relationships, and more. Sales is truly where the rubber meets the road.
10 Wise Ways for Sales
Today I’ll share ten of the best ideas I gained from my years selling in both services and product companies. This is a collection of ideas on how to collaborate with sales, and some specific and surprising tactics I discovered for winning revenue from customers.
At its heart, a company that is successful at sales is one that is performing well for its customers. Ideally, Product, Sales and Marketing teams should be equal partners, supporting each other and learning as a team.
Healthy companies make the goal of revenue growth feel shared by every employee. In the best companies, every person in the building has, at least in part, a mindset that incorporates the urgency of revenue generation.
A company can't perform at its best if the Sales team is shouldering alone the burden of revenue growth. This should be everyone’s concern. Revenue growth is like the oxygen supply that determines your success, if not your survival.
Here we go: 10 Wise Ways on how to think about Sales.
1️⃣ Have Good Salespeople
Easy, right? But what makes a good salesperson?
When I started working in sales, I was fascinated by the opportunity to get to know people who were seasoned experts at the job. It was new territory for me. I was trying to learn anything I could.
In one position, I was lucky be working alongside many successful reps at Adobe just as Creative Cloud was being launched. Many of them had 10 or 20 years of experience, and some were earning huge incomes.
It took me a while to realize what they all had in common: Almost nothing.
Salespeople are people. Like any other job, no two people do it quite the same way. Some exude confidence, some are deeply humble. Some wield a huge personality, others make themselves tiny through their continuous focus on the customer.
I never met a strong salesperson who didn’t know their product very well. Was it product knowledge that made them great salespeople? Or did they gain product knowledge as a consequence of being an effective salesperson?
It’s both, in a virtuous cycle. A good salesperson comes to know your product as well or better than anybody in the company for the simple reason of a powerful incentive.
A large portion of their income depends on making deals. As they do, their knowledge grows. It’s constantly being challenged by potential customers.
Many sales conversations start with product questions. Product knowledge builds trust with customers, it overcomes their objections, and it helps build the confidence necessary to close the deal.
In time I came to believe that product knowledge is the single most important tool for any sales person. It comes ahead of charisma, a silver tongue, resistance to rejection, or a pressed suit. Armed with enough expertise about what you’re selling, you can overcome virtually any other limitation.
2️⃣ Product / Sales Partnerships
A common dysfunction in product companies is to have a Sales team that is not truly respected or engaged by the Product leaders. That’s unfortunate because the Sales team is an invaluable asset and ally as the part of any Product team’s discovery operation.
The difference in skills, planning horizons, and personalities between these teams means that they often feel poorly aligned. I see it as the responsibility of the Product leaders to fix that.
Sales is your nearest and best ally for building your continuous discovery practice. If you’re having a hard time finding customers to talk to about their problems, you Sales team can fix that fast. All they do is talk to customers about their problems!
Salespeople are a continuously renewable source of customer empathy. Think of Sales people as a primary source of customer feedback rather than a proxy to go around. They have a deep understanding of the needs of the customers who chose to buy your product. They also know all the reasons for the customers who did not buy, as well, which is very hard information to gain through customer research.
Here’s another angle: If you only make Product decisions based on feedback from current customers, you’re saying that you only expect to sell to the same customers in the future. The Sales team already knows what growth markets are accessible to you, and what Product maneuvers will enable you to access them.
Salespeople are your best tool for calibrating whether customer feedback from existing customers is resonant with prospective ones.
3️⃣ Customer Segmentation
In the world of software products, customer segmentation usually looks something like this:
Individual
Small-Medium Business (SMB)
Enterprise (Large Companies)
As you move down the list, prices increase and the number of customers decrease. Here’s an interesting phenomenon: Business and Enterprise customers will choose and purchase a higher-priced product that targets their segment, even when the Individual product would have done the job.
Why? Because they can. Business customers are buying your product, in one sense or another, to make money. If they weren’t planning to make more with it than your product costs, they wouldn’t be buying it.
These facts together mean that you can earn more revenue from the Business segment even before you’ve built features for them. A very successful and widely-adopted tactic is to create a new offering, and put the word “Business” on it somewhere. Sometimes that’s enough, but you can always beef it up with some intangibles:
A service level agreement that ensures uptime
A “dedicated” business account rep or customer support address
Payment methods not supported at lower price points, e.g. an invoice, credit terms, pay by wire or check
It’s said every single person on an airplane paid a different price for their seat, even though they’re all taking the same trip. Airlines are great at marketing an identical product to different customers at different price points, thereby maximizing the revenue they can capture from each flight.
Most companies have product teams working to target individual product features to market segments. Most do not have teams working to understand how the revenue potential of each segment can be optimized. They should.
One example is to study how your wealthiest customers (who are typically not price-sensitive) might be encouraged to spend more. You’re not successful until some of these clients are complaining about their spend.
As an example, your Business product might have usage-based limits which clients will encounter as they derive more value from your product. Offering usage-based pricing “upgrades” or a la carte pricing can drive more revenue from these customers.
This works differently for services companies, but it’s still relevant. Larger companies are less likely to have the patience for scrutinizing hourly estimates and may tolerate any price that meets their objectives.
Most services companies learn early that it’s much easier to sell more work to the clients you already have than it is to find more clients. Smaller customers in particular will sometimes readily agree to buy more and different services, but only after a track record has been established. Understanding these different buying behaviors can make the difference between growing a services company and scaling one.
4️⃣ & 5️⃣ Price Increases and Setup Fees
During the years that I was selling a SAAS software product, we were experiencing rapid revenue growth.
Larger and larger companies were buying, and none of them ever objected to the price. I read somewhere that this is a sign that you’re not charging enough. I started raising the price every month, then every quarter. We started around $100/month for our baseline business product and I think we eventually reached about $1,000/month.
I noticed an unexpected effect of frequent price increases (or “price enhancements” as I called them.) I’d warn customers that fees might increase in the coming quarter. They’d quickly complete their evaluation and sign our contract. Sales cycles shortened. I put a boldfaced warning on every email, quote, and proposal that reminded customers that only purchases completed by the deadline would be offered the current, lower price.
This worked extraordinarily well. Business customers are famously slow to deliberate, evaluate, and finalize the purchase decision. When I presented them with the opportunity to save money for their company by moving faster, they had a reason to encourage their colleagues to do the same. If you find customers are moving slower than you’d like, as yourself if you have given them any reason not to.
After a while things settled down and I stopped raising prices. Deprived of the motivating power of an impending increase, I noticed the sales cycle start to lengthen. I introduced a Setup Fee, which we had never charged before. I told each new prospect that the setup fee was being waived for orders received before a certain date (~60 days out from their inquiry.)
This renewed the effect successfully. We either closed the customer more quickly, or we collected the setup fee which increased the revenue from that deal. Since then I’ve noticed salespeople throwing time-limited offers at me, to reduce the price or “throw something in.”
Now I know why, and so do you. Next up, the single most important lesson I’ve learned in my career about how to find new customers your product.
6️⃣ Free is your Funnel
Nobody buys a software product they haven’t used.
Ignore my hyperbole for minute. Would you would buy a software product you hadn’t used?
That’s why we have free account plans and time - and feature limited trials. Customers won’t buy when they don’t know what they’re going to get. A trial or a free feature- or time-limited entitlement overcomes that barrier more effectively than a canned demo by a third-party. It’s free because payments introduce friction at the top of the funnel, where it’s most expensive.
There are a lot of product companies out there that ask customers to fill out a form providing their email and phone number in order to start the process of learning about a product. This flies in the face of everything we’ve learned in the last 20 years.
I can understand wanting to learn more about customers before you give them pricing. Wouldn’t you rather have the first conversation with the customer about pricing after they’ve already begun the process of becoming addicted to your product?
This is a dark pattern employed by companies who think that potential customers will be put off by the experience of using the product, rather than encouraged to want it more. It’s the only reason I can think of for making a human being the gatekeeper for the top of your funnel.
If your product can’t be experienced or at least self-demonstrated by a customer, that’s a problem to solve in the Product department, not in sales.
7️⃣ Free Trials
For business customers, a free trial is a powerful tool for bringing a prospective customer to the negotiating table. This tactic is most effective when it incorporates the the threat of losing something that they have gotten accustomed to having.
Many products offer a feature-limited free trial to customers who are expected to make a decision to buy before the time runs out. The trial experience for your most valuable customers should not be feature-limited. The more features the client is using, the harder it will be for them to give it up.
The ideal outcome of a trial is that client has so many users engaged so deeply with the product that it would cause a catastrophe if their access ended. Your client service relationship should support this outcome by looking to increase the number of users adopting the product, and the number of features they’re using. Use a time limitation instead to ensure that the trial isn’t used in place of a paid plan.
8️⃣ Networking
The simplest career advice I’d give anybody starting out in a tech product or services company would be to get as close as you can to the Sales function, and then try to get even closer.
No matter your career stage, you can gain so much from partnering more closely with the Sales people. If you have ever felt uncertain about how networking works, the most practiced networkers in your company work in Sales. Buy them a cup of coffee and ask them for advice.
Sales people work under a tremendous amount of stress and pressure. For better or for worse, the most important aspect of their contribution is extraordinarily easy to measure. The team brings intangible, cultural, and emotional aspects to the workplace, but at the end of the day (or quarter) they’ll be measured by the number with the currency symbol next to it.
That can be difficult. Many are well-compensated for their contribution, and many Salespeople also realize a benefit that’s not often acknowledged. Day in and day out they are honing their networking skills and building a community of relationships.
More than most of us, the relationships a Salesperson builds are likely to be portable — they’ll take it from job to job. Those contacts are also invaluable when the time comes for a salesperson to find themselves a new job.
Incorporating this kind of network-building into our daily work is an extremely healthy career habit. That’s a good enough reason to spend some time with your colleagues. You’re sure to pick up some good ideas.
9️⃣ Terms & Conditions
The SAAS product I sold was governed by Terms of Service that we posted on the website. Customers who bought online paid with a credit card and auto-renewed each year.
As larger corporate customers started showing up, some complained that this process didn’t suit them. They didn’t want to pay by credit card, they wanted to issue a purchase order and receive an invoice, which they’d then pay according to credit terms (e.g. in 30 or 60 days.)
When I started, we were making deals with corporate customers for $99/month using a 7-page contract. It would sometimes take 6 months or more for the client’s legal departments to review, modify, and approve the agreement. This was driving us crazy and costing us a fortune in legal fees, which I couldn’t see how we’d ever recoup $99 at a time.
I created a new PDF order form process. This would allow corporate customers to opt out of credit card payment, and instead receive an invoice that they could pay according to their terms. Just one catch: this process was only offered for our new “product.” It differed from the consumer version only in how it was purchased and paid for. It was also stratospherically more expensive.
Surprise! Some of the customers who “required” invoicing and legal approval suddenly found credit cards they could use. Others were happy to pay the much higher fee, for a product that differed only in terms of the paperwork you did in order to get it.
As our customer base continued to grow, we started signing larger corporations. Many would insist that their legal department couldn’t accept our simple form process. They needed a version of the terms and conditions that they could modify (“redline”) to make acceptable to them.
For a while I simply said “no” to this. It was too much work for not enough money. It was costing us customers, though, and after a while I couldn’t stand watching them head out the door.
So I revised our policy with a new “Enterprise” product that did include negotiated terms and conditions (as well as some other intangible big-company benefits.) The price for this option was another 5X more expensive than the simple form option.
This changed everything. Customers stopped walking away. Generally, they talked their legal departments into accepting our T&Cs by explaining that they would be saving the company a small fortune if they did. A small handful of companies insisted they needed a customized agreement, and they agreed to pay for the privilege of doing so.
Here’s the lesson I took from this: customers will walk away if you say “no” when they tell you what they need. Find a way to say “Yes, if…”
🔟 Truing Up
In the bygone era of perpetual software licensing, before subscription and SAAS became the norm, companies would buy software that covered a certain number of employees. Software publishers were obsessed with revenue lost to piracy, or use in excess of the licensed quantity, and tried everything to prevent new users from discovering their products this way.
If that sounds stupid, it was. After a while (and this took far too long) publishers became aware that piracy was a great sales tool for them. Like many people, my first experience using Microsoft Word was probably not with a properly licensed copy. As we discussed in 6️⃣ most people won’t buy until they’ve tried. Eventually developers figured out that they should want customers to try before they buy.
They wisely rolled back limitations on the distribution of their software inside large companies. They created a process called the “True-Up.” After two or three years, they’d look at how many users were actually using the software, and compare that to how many were paid for. Then the client would need to buy a new license. The publisher had a lot of leverage in making this deal, because as we discussed in 7️⃣ the threat of losing something they already have really motivates a customer.
The concept of “truing up” is slowly being forgotten in the context of cloud licensing that ensures only the appropriate number of licensed users are able to access or use the software. In some ways, some cloud licensing models have forgotten the lesson of true-up. That is that if you minimize adoption friction so much that it results in unlicensed users, you’ll eventually end up with more customers.
The wrong way to handle entitlement provisioning today is to strictly limit to the licensed amount the number of users, amount of storage, or any other way that a customer derives benefit from the software. A better way is to provide customers with as much flexibility as possible. Let them exceed the entitlement they’ve purchased, and then periodically get them to “true up” their agreement to cover the difference between the licensed usage and the actual usage.
Many smart cloud companies do this. Some do not, I think because they’re still fascinated by the power that cloud deployment gives them to control customer behavior. If you can overcome this instinct, you may see that this is thinking exactly backwards.
The saying about technology goes “adoption wins” and it’s true in this case. Encourage, motivate, and reduce friction in adoption of your product, even if it violates the license, because in the long run it will create more demand.
That’s all for today! I hope you’ll share your thoughts about these ideas and share some of your own.