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(Shared) Sales Force Not Selling (all of) Your Products? (Part 1 of a Series)
For many technology vendors, a Shared Sales Force across multiple product groups is reality of how they go to market and sell their products. Sometimes this approach brings the hoped-for coverage synergy and robust bookings, But as we have all seen in our careers, sometimes “things don’t work out so well…” If you’ve had the role of VP/GM or Product Marketing for a product business unit, you know that
“SHARED SALES FORCE” OFTEN EQUALS BUSINESS UNIT FRUSTRATION AND LOW SALES $
A friend of mine used to be the VP and GM of a Product Business Unit with a tech vendor with many product groups and about $700M in revenue. His organization used a shared sales force across many business units, and his business was allocated a share of the cost of several other sales organizations within the company (that could conceivably sell his products). The problem was that despite all of these “allocated” sales resources, none of the sales teams to spent time selling his product (which did not help his BU performance…). After a year or so, he concluded that he could not control his own destiny, and he chose to move on to greener pastures.
The challenge is that when organizations use a shared sales force across multiple product groups, the sales team is asked to vote with their time, by focusing on selling some products and not others. The Tech industry generally sees this decision as an application of Darwin’s “Survival of the Fittest” theories on evolution, to “Survival of the Fittest” tech products.
Shared Sales Forces are usually seen as a way to gain sales efficiency. While it always makes sense to look for ways to reduce the cost of sales…
My experience is that tech vendors often make the decision to use a “Shared Sales Force” without fully accounting for how the approach will also reduce revenue (and profit) for some products…
Some lost revenue is inevitable and planned for, but what if some of the product groups lose a significant amount of their sales, or even just do not grow as expected. Would the decision to use a shared sales force still make sense? Of course the answer is “it depends”, but I think it is fairly common practice is to make the change to a shared sales force based on “financial necessity”, and assume that the BUs and the Sales Team will “figure out a way to make it work”.
The issue is that what often what happens is an accompanying reduction in sales and profit from some products – which can make a decision made for a “financial necessity” into a “financial disaster”…
Let’s take a look at a sample scenario below.
- In Table 1 we have the baseline situation with 5 products being sold, each with different revenue and gross margin %.
- In Table 2, we see a potential scenario of how that revenue could change with a shared sales force. The new approach works very well for Product A and Product B, which see 18% and 20% revenue growth respectively. The problem comes with Products, C, D and E (which have smaller revenue, but a higher GM% (perhaps due to lower competition, or a developing market). These products see significant revenue decreases and lost margin $.
Table 3 below shows that in this example, the Total Revenue $ Decreases by $4 Million (=96-100) and Gross Profit Decreases by $4.65M ($55.30-$59.95) – not exactly the outcome that the company wanted…
I am not saying that this always happens when companies go to a shared sales force
What I am saying is that companies need to be honest with themselves, recognize that this scenario can happen, and factor this into the decision on how to structure their sales organization
Technology Companies tend to assume that that sales and the product teams will “figure out” a way to minimize this issue, but depending on your situation, the revenue you lose may be gone forever… So how do you know when you are pursuing better sales effectiveness and when you are pursuing an “illusion”?
In next week’s post I will talk about “The Shared Sales Force Checklist”, a tool that I’ve developed to identify when different product groups can be sold together successfully – and when the hoped-for synergy is an illusion…
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Channel Not Ready to Sell? 2 Simple Steps to Enable Channel Revenue (Part 2 of Series)
In last weeks’ post I talked about the “5 Natural Laws of Channel Enablement”, and how following these approaches can help technology vendors “Climb out of the Box™” and drive more revenue through their channels. We also talked in detail about Natural Law #1 – the importance of enabling your partners to do something specific – not just know more about your product.
The 5 Natural Laws of Channel Enablement
- Enable Your Channel to Do something (not Know something)
- Enablement ≠ Training – Training and Tools must go “hand-in-hand”
- Channel Sales Training ≠ Vendor Rep Sales Training – Enable Channel partners based on how they sell
- Enablement must be “Packaged” within a Channel Program, to drive adoption and channel revenue…
- Sales Engagement: How channel enablement becomes revenue $
This week I will talk about talk about Natural Law #2 and difference between enabling your channel and training your channel…
2 Alignment Problems that Destroy the “GTM Bridge” (and limit Revenue)
The challenge appears quite simple – How can a Tech organization set up and run their organization so that they drive revenue from their products and partnerships? But think about your experiences with partnerships – like Bus Dev agreements, with Alliances, and with Indirect Channels (such as resellers and integrators), and I bet you can think of more examples of performance issues than of realized potential. As I’ve talked about in many of my posts, many Tech vendors are set up to market and sell as if they were a direct sales organization – although many, even most, are heavily reliant on their partners to drive revenue.
The root cause seems to be “boxed” strategy and execution that results from organizations pursuing approaches that were developed in a different era, but no longer directly apply to today’s complex IT world of architectures, software-defined data centers and Hybrid Clouds. (more…)
Startup or New Product? Building a “Route-to-Market (RTM) Bridge” as the Foundation for Revenue
In a number of my posts in the past year, I’ve talked about the importance and best practices for “Building a GTM Bridge” to create a repeatable approach to marketing and selling your products – and drive more revenue. This process is shown in Figure 1 below.
Figure 1: Building a “GTM Bridge”
Building a GTM Bridge – to Make Your GTM Approach More Effective
What I have seen is that within a vendor, many organizations are involved in supporting the marketing, selling and delivering of products and solutions through sales channels – but often this alignment does not occur. The dynamics of why this process breaks down is covered in more detail in my series, “Why do Companies Struggle to Build the GTM Bridge?”
Here are some examples of what happens without a repeatable “GTM Bridge”: (more…)
Are You Jumping to the “Product Sale” Too Early (and Missing out on Revenue Opportunities)?
If you are a regular reader of my blog posts the past year you have seen a lot of discussion about the importance of “Solution” messages to connect to customers (and sell more of your products). My most recent series provides a good overview of the issues and the best practices in connecting with customers with Solution messages.
- Does Your Messaging Work in the “Cocoon”- But Fall Flat with Customers?
- How to Build the “Hook” into Your Messaging to Create “Pull” and Accelerate Revenue
- A Case Study: Building a Message Map that Connects to Your Customers and Accelerates Revenue
By now, I’m sure there are some folks out there that are saying to themselves – “This is getting old, we all know that selling products works (why else would everyone be doing it?)” It is true that I’ve made the discussion too much of a battle between “right” or “wrong” approaches, when the reality is that the right time to sell Solutions is more nuanced. (more…)
Do You Have Holes in the “Tire” of Your “GTM Wheel” That Prevent Revenue from Your Products and Partnerships?
The last few weeks I’ve been talking about how to build a GTM Program Wheel, shown in Figure 1 below, that aligns your company to drive revenue for your products and alliances.
- First we defined the layers of a GTM program in “Is Your Channel Program an “Onion”? Leveraging the GTM Wheel to Build a Program that Drives Revenue”
- Then we talked about 2 Common Mistakes in Defining the “Hub” of the “Channel GTM Wheel” that limit revenue for products and channels
- Last week we talked about the program elements, of the GTM Wheel, in “Are the Spokes of Your “GTM Wheel” Aligned to Drive Revenue?”
Figure 1: The “GTM Wheel”
This week we will be talking about the underlying foundation, or “The Tire” of the GTM wheel highlighted in Figure 2 below. The “Tire of the GTM Wheel is the Operations and Infrastructure that take your GTM program and make it a reality for your team and your partners. (more…)
The Recipe for “Productization”: Step 3 – Build a “Solution Cookbook” to help your Channel Sell More of Your Product
Part of a Series: The Recipe for “Productization”
- 3 “Productization” Steps to Help your Channel Sell More of Your Product
- Step 1 – Define the “Solution Menu” Partners Can Sell to Drive Product Sales
- Step 2 – Create a Solution Enablement Toolkit (SET) as the “Recipe” for Marketing, Sales and Delivery
- Step 3 – Use a “Solution Cookbook” Portal to Communicate the “Solutions Menu” and the “Recipe” to Partners
In the last two weeks, I’ve talked about how you can help your partners “Productize” your offerings their business as an analogy to building a menu for a restaurant, with a Menu that includes multiple entrees, the recipe for those entrees and the ingredients that make up the entrée.
Today’s post will focus on Step 3: Creating a “Solution Cookbook” – the third and final step in “Productization”.
Channel Not Selling Your Products? Help them “Productize” Your Offering within Their Business (Part 5 of Series)
In the “Channel Not Selling (enough of) Your Product Series, we’ve been exploring the root causes of low channel revenue and what you can do about it. Below you can see an overview of the topics discussed so far, links to these posts and a summary of how these posts fit together to help readers take action.
In Part 1, we discussed,3 Questions You Can Ask to Diagnose the Problem
- What is the Value Proposition for partners to invest their time in selling your product?
- Is your product and go-to-market program “Channel-Ready”
- What is the Sales Process for your product and how does it fit into how your channel partners sell?
- In Part 2, we discussed Question #3 as 2 layers to understand, “How Do You Fit Into the Way They Sell?”
– Layer 1: What 3 Questions Indicate Whether You Need to Sell “Solutions”?
– Layer 2: Getting built into a Partners’ Business “Practice”
- In Part 3 we discussed how to address Question #3 in “2 Steps to Connect Your Products to How Your Channel Sells “
– Steps to overcome the “Solution Branding Box”
– Steps to make your GTM programs connect with how partners do business – by helping partners “Productize” selling your product within their business
- In Part 4 we talked about the balance between recruiting and enablement – Should You Recruit, Enable Or Both? How Do You Decide?
- In part 5 today, we will drill down on what it means to “productize” offerings
In today’s post we are going back to the recommendation to help your partners sell your products within their “Productized” solutions. What does that really mean and what are some concrete steps you can take to help partners “Productize selling your product within their business?
What’s Next on the “Cloudy” VAR Landscape: What’s a VAR To Do …?
If you’ve read previous posts for my “Climbing Out of the Box” Blog, you may have noticed that the point of view is from the vendor perspective – e.g. “How do I sell more of my product to customers?” You also may have noticed that the #1 piece of advice has been to “put yourself in the shoes of the customer” to understand their challenges and how your company could help, so that you can market and sell your products as part of solutions that connect to the customer perspective.
The same dynamic holds true for your sales channels and your channel partners. As the customer requirements for buying IT products move toward solutions, outcomes, software and SaaS/cloud services (rather than hardware and point products,) your channel has had to evolve from the traditional hardware-centric model. For your company to be successful, you need to be talking to your partners to understand the channel perspective, and you need to be taking steps to create new sales opportunities for you and your channel partners that reflect the changing sales and channel model…
Guest Blog Post from Thom McAleer (more…)
Leadership? Management? Neither? “What’s in your Company’s Wallet?”
One of the most interesting elements of being a consultant is observing the differences (and similarities) between how different companies handle a particular challenge. To get this visibility, you don’t always have to work directly with a company – often this visibility comes from networking and business development discussions about “what is working”, and “what is not” with colleagues, or more formal forums like a “Partner Advisory Council (PAC).
One area that I find is challenging for many companies in the tech industry is the dynamic of “Leadership vs. Management”. For both small and large tech companies, leadership and management are required, but the needs vary quite dramatically and I’ve often seen companies that are short one or both of these types of DNA. Table 1 below shows accepted definitions of these terms. (more…)
“Climbing Out of the Box”™ 