Wednesday 19 December 2012

You are not selling pens!

Here's the next chapter of the ebook by Rob Symes. Enjoy the read and come back for the last chapter next week.

“Most salespeople don’t give you orders, they give you bar bills.”
Paul Johnson, Serial entrepreneur

My first experience of sales was trying to sell a pen. Not just any pen but a crap biro. It was hard. Eighteen years of education, a posh private school and a lifetime of competitive sport hadn’t prepared me for the sheer difficulty of persuading someone to part with their money. My interviewer wasn’t particularly impressed and I didn’t get the job. But the experience left a lasting impression that a sale was very very hard. Selling technology is even harder. Customers haven’t heard of your product and if they’ve heard of it they often don’t understand it.

Hiring star salespeople is a universal problem for technology companies. Good salespeople are difficult to find, harder to hire and a track record at one firm does not translate to success at the next. Most participants of this E-book mentioned varying degrees of difficulty in hiring salespeople that actually did what they were hired for: Sell. One CEO, when describing his salespeople, squeezed his paper cup so hard in frustration that water exploded on his trousers.

Sales are where the rubber should meet the road for tech companies. But as Richard Leaver, CEO of Blue Star Capital, quips “techies think ‘If we build it they will come. If they don’t they’re idiots’.” Unfortunately, however good your product, at some point you have to sell it. Which means, if you’re not going to sell it yourself, you’re going to hire a salesperson. And even established technology companies have difficulty doing this effectively.

Therefore, I was interested to hear if a former Autonomy executive had any answers to permanent conundrum of hiring “five-to-one” salespeople.

Chandratillake’s story is a technology reporter’s dream. Born in Sri Lanka before moving to the UK and studying at Cambridge, he set up the American office for Autonomy’s CEO, Mike Lynch, before spinning out a team of twenty to form Blinkx in 2001. Blinkx’s revenues grew by 73% in 2012 to 114 million dollars.

What makes Chandratillake engaging is not just his story but also his capacity to analyse it. I’m a question machine, it’s my job, but he needs very little prompting explaining the obstacles Blinkx has overcome.

As Blinkx left the Autonomy mothership Chandratillake knew they had to create their own identity. Lynch wasn’t going anywhere, in fact Chandraktillake called him every day for the first six months, but in the words of Autonomy’s CEO they had to create their “own terrorist cell.” Being obsessive, even evangelical, came easily to the start up team. Failure did not. Their first product was a bust. Consumers didn’t care. Just changing from suits to jeans wasn’t going to help them understand the consumer market overnight.

However, Blinkx persisted and soon had created the beginnings of the video search product that has been the bedrock of the company’s success. However, even as Blinkx’s product gained traction Chandratillake began to notice some his salesforce were not as successful as he had hoped. It was not that underperformers lacked diligence or motivation. It was a fundamental flaw in their approach.

Not unusually for a tech start up, Blinkx was selling a new product into an untested market. Sometimes it was difficult to see who the potential market could be and even when they identified content providers like NBC as potential customers there were still difficulties. Over time, Chandratillake saw that traditional salespeople were ill equipped to sell disruptive products. The reason for this is simple to grasp but difficult to implement.

Let’s look at two types of salespeople in 2010: A pen salesman and a salesman selling Wi-Fi into pubs.

The pen salesman knows who he sells to: Retailers. He knows what quantity of pens his customers bought last month. Two characteristics determine his success: personal charisma and the price of his pens. When he engaged with a new customer it was usually once the customer had decided they needed to buy pens. Therefore, he asked questions, negotiated a price and then either succeeded or failed. Simple.

 The Wi-Fi salesman’s job was far harder. In boom and bust, for hundreds of years, pubs had been a simple, profitable business. But the pub trade was changing in part because of the smoking ban and the recession. And while the pub landlord had Wi-Fi at home he’d never thought of putting it into his pubs. The salesman’s job in this case was not to try to flog a Wi-Fi connection based on his charisma and the product’s price. The salesman’s job was to educate the landlord about the disruptive trends happening in the pub market: Less Blue-collar workers, more families and a younger, on-the-go generation who wanted nonstop access to their smartphone and weren’t content with pints alone. Pubs were losing their old day-in-day-out blue- collar workers but not gaining the new generation. Once the salesman had explained the disruptive insights happening in the pub industry he could position his product as a solution. The Wi-Fi product would increase footfall of the younger generation, they would stay longer and buy more because of that and revenues would increase accordingly. 

Unfortunately, the technology industry has been hiring too many pen salesmen. To combat this, Chandratillake’s solution was to “assess salespeople like engineers.” He gave them case studies or logic tests to see how their mind worked. The salespeople were rarely as good as engineers but it gave him an idea if they could spot and explain disruptive trends. Chandratillake knew that his customers, like the pub landlords, often didn’t know what their problem was and therefore would have little idea how to solve it. He therefore needed salespeople who could educate and develop insights based on his video search product and the market surrounding it.

When hiring salespeople technology companies must assess the right characteristics. The pen salesman is dead. Long live the engineer.

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