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Summary:

As a company grows from a “seat of the pants” entrepreneurial company to a process-driven, mechanized one, the sales process has to change, too. Mark Suster lists the most important things sales teams need to standardize, based on the lessons he learned from his own startups.

Plant growing

As a company grows from a “seat of the pants” kind of entrepreneurial company to a process-driven, mechanized one, the sales team has to change to continue that growth. While your early-stage, evangelical sales reps are largely consultants, convincing prospects that they need your products, scalable sales reps often are not. Instead, a scalable rep is often a process-driven person who’s great at listening, building relationships, mapping your solution to customers’ problems and winning business through brute force.

In previous posts, I wrote about aiming sales reps toward the best deals and arming them with information to help them overcome common objections from prospects. But arming your sales team doesn’t end there. As my company grew, we learned some valuable lessons about what processes and materials a growing company most needs to codify.

Standardize your pricing and discounts. Like many people, I’d prefer a world in which the price is the price, but that’s not how human psychology works. You might get away with the list price with the business unit buyer, but when the procurement department gets involved, they need to prove that they’re earning their keep. Ditto the CFO. And let’s not even talk about legal.

In the early days of my first company, we had list prices that we could discount based on who the client was, how important the business was to us, who the competition was and how well the deal was negotiated. Over time, we standardized the pricing and allowed each sales rep to discount the prices up to 15 percent. Let’s say our list price was $10,000. The salesperson could offer the deal for $8,500 without checking with his boss, and the manager in each country of operations could sell it for $7,000 without CEO approval. Anything below $7,000 required my signature.

We also standardized the allowance rates for services such as document storage and maximum numbers of users and created standardized packages of features that reps could upsell as premium offerings. For example, if our standard offering included 100 GB of storage, we created upsell “packages” of 20 GB each to be sold at cheaper prices if a customer needed more storage. In the early days, each sales rep negotiated how much storage the customer got on a case-by-case basis. By reducing the negotiable elements of the pricing and packaging, we eliminated bottlenecks and hurdles to sales.

Don’t negotiate service-level agreements and terms and conditions. My company started off with a standard service-level agreement (SLA), but it was too favorable to us. We thought we were managing our economic risks, but in reality, we added a huge — and unnecessary — overhead to the process of negotiating deals.

The original agreement called for 99.8 percent uptime, and if a buyer pushed, we’d agree to 99.99 percent. We then would have to agree on what constituted uptime percent: percent of total hours or percent of working hours. Once we agreed on the percentage, we’d negotiate service credits, because the standard contract had no remedies in the event we didn’t meet our SLA. Really sophisticated buyers could push even further.

We also let customers negotiate terms and conditions because we didn’t want to lose deals. In so doing, we created a patchwork of non-standard contracts that made it much more complicated to manage the business as it scaled.

Eventually, we migrated to one standard SLA for normal customers and a high-level SLA for premium customers (and one or two specially negotiated ones that I regretted). If you can, create non-negotiable terms and conditions (and maybe agree to the occasional side letter if you need it to win bigger deals).

Automate the process of responding to RFPs. When I wrote responses to an RFP (request for proposal), I had a fair amount of text I would cut and paste to answer the standard questions. Our head of sales in France, was way ahead of me. He knew that he could compete for a lot more business if he could reduce the amount of time it took to prepare these time-sucking documents, so he tasked an intern and junior marketing person with mechanizing the process. He believed that his expensive direct sales reps should spend most of their time in front of customers. I believed that, too, but he actually did something about it.

Update your sales decks with the most effective slides. Most companies have a standard sales deck. As sales teams grow and become distributed, these sales decks morph according to the needs of reps, customers, and the company. When you release features that differentiate your company from competitors, deploy the slides describing the new features to all your reps. Also, make sure local reps can feed their changes up to management and marketing. If the new slides have been successful for one local rep, chances are they’ll be successful for others.

Script your demos. A good demo tells a story. It walks the prospect through “a day in the life” of a user trying to do his job. Yet probably 80 percent of the demos I see are features, functions and benefits. People don’t buy features and functions; they buy solutions to their problems. To institutionalize your company’s demos, script the storytelling of demos so they talk in your customer’s language. Train your staff to pause, ask questions and solicit feedback during the demo.

Empower inside sales with a clear process. It’s a trend these days to empower inside sales departments (aka telesales) rather than having them use formal dialing scripts. I understand this. It allows them to have a more authentic discussion with a prospect. If you hire super bright telesales reps, you need to trust them to manage a process in the same way you trust your outside sales reps. But too many startups hire bright people, train them on the products, teach them the pricing and unleash them to start closing deals –- and stop there. I know we did. Help them by providing call scripts (or at a minimum “call plans”), a process flow to follow during calls, the key people in an organization to call and, importantly, rules on when to escalate a deal to an outside sales rep. Without process and procedure, telesales reps will be less effective.

Define the sales process. One of the most important changes we made in our company was to actually define the sales process. We hired a trainer to help us implement it, rolled it out and enforced it across all sales campaigns. Just as we did with product releases, we put the process out there, monitored what worked and changed the things that didn’t.

The process essentially boiled down to:

  1. Create a business plan with a customer.
  2. Find a champion within the company to guide the rep through the sales process.
  3. Identify everyone involved in the decision and what their roles were.
  4. Identify the budget holder.
  5. Determine who the competition was and who was supporting them.
  6. Demonstrate your USPs (unique selling propositions) relative to the competition.
  7. Understanding the buyer’s decision process.

As I reread this post, it came across as a bit dry compared to some of my lively posts with fun stories. That’s kind of fitting. Scaling a business is often about the boring stuff that doesn’t excite early-stage entrepreneurs. It’s about having rules and having people follow them. It’s more about standardization than free-form improvisation. Some people excel at rules and process. And these are the people you want to find and hire when it’s time to scale your sales organization.

Mark Suster has started and sold two companies and is now a general partner at venture capital firm GRP Partners. He blogs about issues related to tech entrepreneurs and other startups at Both Sides of the Table.

Image courtesy of Flickr user Simon Peckham

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