Ken Krogue

Bumped into an interesting video interview, posted on The Brand Builder Blog about a new book buy Guy Kawasaki called Enchantment.

Anyone who’s spent any time in Social Media has probably at least heard of Guy through his voluminous Twitter account(s), as “one of Apple’s old marketing gurus,” or in his role as a venture capitalist.

I haven’t read the book, though it sounds interesting but the video itself had a fascinating take on building a business. In the video, Guy and the interviewer, Brian Solis, talk about the three pillars of creating a business that “enchants”: Be likeable, be trustworthy, and back it up with a competent (or better) product.

But here’s the interesting part: Guy says that to be an “enchanting” company, we don’t have to succeed wildly at all three. Using Apple as an example (based on his first-hand knowledge), he states that contrary to some people’s perceptions, Apple is in fact a very anti-social company. They don’t actively engage with customers, they don’t go out of their way to “listen” to the public.

In Guy’s mind, the reason Apple is popular is because they hit the product portion of their business so far out of the park that no one pays attention to anything else. The products provide such a great experience that no one pays attention to the fact that iTunes is actually a really clunky piece of software, that the iPhone was saddled for a long time to the worst U.S. domestic phone carrier (AT&T), or that the iPad doesn’t play Flash video.

He goes on to say, however, that other businesses compensate for less-than-perfect product with stellar “likeability” and trustworthiness. We go to restaurants all the time where the food is only “okay,” but we “enjoy” it because the experience and service are so great. Does Zappos really have the greatest selection of shoes, anywhere, ever? No, not really, but the level of trustworthiness is so high, that Zappos’ customers don’t even think about it. Their customers’ experience is based on something other than having every possible combination of boot, shoe, and color on planet earth.

So what does this mean for us?

It seems pretty obvious, but it’s about focus. There’s very few companies producing product at the level of Apple. If it was easy to build customer trust like Zappos has, more of us would.

So—do we know where we stand? Do we have any of the three right?

Every good business has to be competent, but to have any chance of “enchanting” our customers, we have to be excellent in at least one—and striving to build all three.

We forget sometimes just what exactly it is all this technology in business is supposed to be doing for us.

The point of it all is that ultimately we want to replace the aspect of human intuition….or do we?

On the surface you’d think that was it, right? If anything, we want sales to be predictable. It’s all the variables that get us tangled up, nervous.

Which source of leads is working? Which rep is doing the calling? Does that rep know the target market? Is the prospect really a right fit, or are they just a pie-in-the-sky, wishful thinking opportunity? Are we going too fast, too slow?

How do we sound to our prospects? What are they talking about behind our backs? In their budget meetings? Are we on the top-5 vendor list? The top 2? How’s our collateral look? Is our product demo up to snuff? Why’d they say that on our last call? Were they really looking for Feature X, or were they just feeling out our response? Why does it take X days instead Y days to close deals?

How much of a difference does technology make in answering these questions?

The answer, of course, can be “lots,” “none at all,” or occasionally both.

Sales technology is, and should be designed to replace guesswork. There’s dozens, maybe hundreds of points along the sales process where real, hard data makes a big difference. Knowing, for example, what your highest-converting pay-per-click ads are tells you where to focus energy, time, and money on your marketing. That’s hard metrics–”We convert 22% of clicks into contactable leads.” Then using your software tools, you track lead conversion: “We convert 55 % of contactable leads into opportunities within 30 days, and another 16% within a year.”

Here’s what the numbers don’t tell you:

How the prospect/customer perceives you in your market (though the numbers can be trailing indicators). Why you have a strong presence in a particular vertical. Which features of your product are most in need of update, which need to added, and which need to be dropped. Why you just lost a deal when the prospect was an ideal candidate. Why you just won a deal when the prospect is nothing like any of your existing customers.

Data is data, intuition is intuition. Data is only meaningful when interpreted, and that requires the ability to recognize the reality of what is being measured.

Technology produces data designed to answer classic If/Then statements: “If I do Action X, the data shows me Result Y should happen.”

It just won’t tell you why the prospect thinks Result Y is important, or if Result Y is even going to matter in 6, 12, 24, or 144 months.

My biggest takehome from yesterday’s Dreamforce Keynote by Mark Benioff wasn’t the power of the Cloud, Mark’s personality, or the evolution of the salesforce.com platform (though it’s interesting to follow the continued expansion away from purely sales-oriented “stuff” to a broader host of applications).

It was the realization that the move to cloud computing as a mainstream service highlights a very real concern for such systems: the need to carefully control and streamline the data itself.

In the old days, computers were largely personal in nature—we used them at home, with our own software all the time, we rarely moved data from one computer to another (where have you gone, oh great floppy diskettes?).

As a result, our own schemes for managing and organizing data were mostly of our own personal preferences.

And now computers are no longer our own.

They’re our companies’ systems. Our spouse’s. Our neighbors’ in cyberspace. Our data is now part of a corporate network, a critical application database, a Web forum, our social media sites.

Sales intelligence and predictive analysis systems only work if the data they’re using have a basis in accurate reality. We’re increasingly going to have to learn to break some bad data management habits, especially as the future of cloud computing goes forward.

Based on the announcement of the Database.com platform, it’s clear that we’re still suffering from the shock of waking up to discover that our computer systems are no longer personal and individual, but communal—and taking care of our data in a communal space is a whole lot different than doing it when it’s just us and a couple of 5 ¼” floppies.

Sitting at our booth at Dreamforce, I’m always amazed at the energy these big conferences bring. It’s a testament to me of the power of human creativity, how we as people are at our best, our most noble, when we are in the act of creation—from steel and silicon to words and ideas.

We are a race of builders. We weren’t meant to sit around and wait for society to create itself. We make it ourselves, in our images.

I don’t know why I’m bringing this up at this very moment, sitting in this rock-hard plastic chair, the noise of a crowd echoing—but it’s the truth. Building something, sustaining something is the point of who and what we are.

I guess I bring this up because marketing, particularly direct marketing, too often settles for something less. We talk about tapping in to customer needs, organizing our efforts around creating real customer value, but end up simply selling the “thing,” not what makes the thing valuable.

Over the next four days, I’m interested to see who’s going to be giving out real, valuable information and insight, and who’s going to be giving out thinly-veiled promotional pitches.

Real quick:

Found an interesting research analysis by CSO Insight’s Barry Trailer that showed that sales rep quota attainment actually goes up when the ratio of reps to managers goes up.

In other words, sometimes we need to avoid the temptation to “over manage” and “over analyze” our sales people and simply let them do what they’ve been trained to do.

As Barry says,

“Any time taken from selling is reducing sales capacity. Coaching meetings, research and other value-added activities are valuable and important contributors to overall success. But standing meetings (e.g., every Monday morning at 8:30 am) are often holdovers from an earlier way of doing things. CRM reporting tools and dashboards can provide a basis for both managers and reps to communicate routine matters and to gain performance improvement insights.”

Ostensibly without the need to verbally re-hash each reps’ pipeline.

As a football coach for a city league team of 13-year-olds, I came across a very interesting statistic over the weekend.

Want to know what the difference between success and failure in the NFL?

It’s one yard.

It’s the difference between having a 2nd down and 5, versus 2nd down and 6.

An NFL offense that can average 5 yards on 1st down instead of 4 converts nearly 30 percent more 1st downs.

The same principle applies in baseball.

To bat .300 (the statistical “All-Star” gold standard), a player has to get 180 hits in 600 at-bats.

The difference between hitting .300 and .250 in 600 plate appearances? 30 hits, or 1 additional hit every 20 at bats.

That’s it.

A five percent increase in base hits a year is the difference between being an All-Star (and getting paid like one) and run-of-the-mill.

So what’s the big “So what?” here?

Mostly that I don’t think the majority of us plan our sales pipelines around prospects walking up and saying, “I need what you have, where is it and how soon can I get it?”

If you’re one of the lucky sales reps who gets leads that are always qualified and ready to buy, more power to you, but I know for most of us, sales aren’t 80-yard touchdowns or “home runs.” They’re a consistent process of “moving the chains,” controlling down and distance, and setting ourselves up for success.

Hitting singles, moving baserunners, and setting up RBI opportunities.

Too many reps go into their next phone call, their next email, their next conversation not really knowing what they want the outcome to actually be—so it’s not for lack of reason that noted sales evangelist Paul Castain preaches using a “sales playbook.” A playbook teaches a rep how to make the “right call” for the right “down and distance,” and to make progress with every “touch.”

If it feels like you’re constantly facing “3rd and long” situations in sales, go back and look at your strategy and playbook–for every down and distance. Occasionally you’ll convert a “3rd-and-13″ type of prospect out of sheer luck, persistence, or both. But good “down and distance” means running the right “plays” to have productive first and second downs–and not having to sweat the pressure of converting a “3rd and long.”

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Working for a strictly B2B sales company (caveat: many of our clients sell direct to consumers, but we ourselves really only target businesses), I’m constantly evaluating the differences between B2B and B2C selling — as well as the similarities as they arise.

Branding, connecting with the customer, sales approaches, creating demand, and so on, all have some crossover between the B2B and B2C worlds.

But I’ll admit I’ve had a hard time justifying investing lots of money into social media. In the B2B space, it just always seemed relatively unimportant in the scale of things, compared to other means of business development.

So I was interested to see a post on No More Cold Calling that affirmed my suspicions.

Author Joanne Black states,

“Social media is a powerful tool for three things and three things only:

1. Search engine optimization — use your key words and raise your presence on the web.
2. Find out who people are — learn about a person’s background and your connections.
3. Find out who people know — look for close connections that you can leverage.

Some salespeople tell me they actually get clients through social media. Well, maybe if you have a commodity business. Could it happen? Yes. Do I rely on it? Absolutely not. I only count on what I bring about-through a proactive, intentional, referral strategy with personal introductions.”

As Joanne says, are there absolutely zero direct marketing opportunities in B2B using social media? No, but the very nature of B2B demands working with multiple decision-makers, multiple levels of needs to address, and multiple tiers of implementation. The simple fact is, the “reach” necessary to make large scale B2B sales happen through social media is incredibly thin.

Heaven knows Seth Godin doesn’t need an ounce’s worth more publicity from anyone, least of all me.

But one of his posts last week, “No knight, no shining armor,” struck a chord with me.

He states, “Does your project depend on a miracle, a bolt of lightning, on being chosen by some arbiter of ‘Who will succeed?’”

We know who these people are, don’t we, these “Arbiters of Success?”

Consider this: Oprah has turned books that were literally out of print back into best sellers simply by speaking the book title and author’s name on the air.

Obviously that’s what we all want in sales. To have some individual, some company reach down from their lofty place on high and say, “You’re the anointed one.”

And it’s incredibly easy to get caught up in this “Arbiter of Success” myth. That if only we could get that one, single enterprise account that suddenly our lives would change radically, because we’d instantly have the “street cred” to call into any CxO we want.

But if/when we “bridge the chasm” and move to the mainstream, it’s almost always because we’ve successfully built a foundation of client accounts that are happy and engaged with what we’re offering, not because someone anoints us. “The Big One” almost always comes from one of “The Many” who already chose you, are happy with you, and just so happen to be in the right place at the right time for you when “The One” asks them.

I recently bumped into a compelling article on Sandhill.com about the 10 Laws of Being “SaaS-y”.

Though written in 2008, the piece is a brilliant strategic blueprint for long-term management of an SaaS company, written by Byron Deeter, a key executive with Bessemer Venture Partners.

Byron has worked in the SaaS space since it first came on the scene, and serves on the board of a number of current SaaS companies, most notably Eloqua.

The Ten Laws:

1. Key metrics are Contracted Monthly Recurring Revenue (CMRR) and cash, not “booked” sales like with premise-based software solutions.
2. Keep the sales team small (3 or fewer) until reps are consistently hitting $100k in MRR.
3. Separate “hunters” and “famers.”
4. Creating active channel sales partnerships is difficult. You’re going to have to sell direct for a long time.
5. Stay local (a.k.a., North America) until you hit $1 million in MRR.
6. Don’t use multiple data centers until you absolutely have to.
7. Tenant-based installations = a big no-no (there’s one production code base, and you control it. Period).
8. Savvy online marketing is vital for leads and sales.
9. Cash on hand vs. growth is going to be a constant trade-off.
10. SaaS generally requires a 4-year allotment of “growth capital” to get off the ground, so pace spending and expenses.

**Bonus Item: You can reasonably ignore any one of items 1-10, but if you’re missing two or more, it’s probably time to re-evaluate how you’re running your SaaS business.

This summary hardly does the post justice, so go check it out here.

The two most interesting points to me (being focused primarily on sales) were #3 and #4.

Item #3—Just as Byron describes, we’ve found that having back-end account managers to “farm” current clients and keep them up to speed is crucial. Part of it has to with the nature of SaaS itself. SaaS means constantly updating your software, and adding features that create more value, and without actively getting that information to clients, you’re losing out on potential revenue. Our dedicated account management team has meant huge dividends, and especially for the fast pace of SaaS, it’s impossible to expect a “hunter” sales team to work in both roles.

Item #4—InsideSales.com has run directly into this problem since nearly the beginning. For several years we had a channel sales VP, Troy Fullmer, who is one of the most engaging, power-packed, action-oriented executives you’ll ever meet, and one of my favorite people I’ve ever worked with—but just as Byron describes, we had a very hard time putting him to use effectively. The whole point of SaaS is that users are actively avoiding having to work with “go betweens,” and to this point in our company’s existence, channel sales partners seem to add more overhead without adding much value.

Tuesday’s Sales Performance Thoughts:

1. Don’t get too cute in your sales presentation.

Your product and value proposition should largely be enough to get a close. If you’re having to get “creative” to “find the pulse” of your prospect, take a hard look at just how qualified they are. If your marketing team is generating leads that consistently require a song and dance just to get an appointment, it’s time to start evaluating some new lead sources.

2. It’s better to make a decision that’s “good enough” and go with it than to agonize (and waste time) over making the perfect one.

Like most things, “careful thought and analysis” is useful in moderation, not in excess.

This concept has served me well over the years. You can always adjust plans on the fly, but it’s pretty hard to accomplish much with your backside stuck to the bottom of your chair.

3. There’s ultimately only two obstacles to success: stuff out of your control, and stuff people do.

Budgets are out of your control. Either a prospect has the money or they don’t. But what if you could get a prospect to rethink how the budget funds are allocated based on the value you show them?

4. When people fail to execute a given course of action, it’s usually for one of three core reasons:

1. In their minds they’re still deciding over whether it’s really the best decision (out of fear, lack of information, lack of experience, lack of perceived value, etc.).
2. They don’t know how to implement it.
3. They’re actively sabotaging it for the sake of their own personal agendas. This can be as extreme as Enron-level fraud, or as simple as employees surfing the Web on company time “because they think they deserve it.”

5. It’s not always the case, but sometimes consistency trumps performance.

My sales metrics friends and gurus at The Bridge Group are constantly evangelizing the fact that sales teams should rarely be over or under their quotas by more than 10%. Massive over/under numbers in sales forecasting means either managers and reps are sandbagging, or the company isn’t getting good sales data.