Sales Engineer Budgets And Headcount

After the usual compensation questions, the #1 question I hear from SE leaders is “what is the correct sales/SE ratio?” The answer, like most things in life, is “it depends” – but here are a couple of thoughts that may help.

1.       The SE Budget. My preference for setting an SE Budget is to base it on a true budget and not on a headcount number. That is, I’d rather be told I have $10m to fund an organization than be told I have a target headcount of 50 people. The monetary number (as long as it is reasonable) gives me far more flexibility in my hiring profile. Look at it this way – suppose I am told I can go out and hire two additional people – the usual response is to hire the best two SE’s I can find in the marketplace and bring them in as master/senior/principal SE’s. Yet it may make more sense for my overall business to hire five recent college graduates into an associate position – and it will cost me the same in terms of cash. Headcount gives no flexibility – budget does.

2.       The Sales/SE Ratio. Back in June 2010 I wrote “How Many SE’s Does It Take ToSell A Solution?” It was intended as a primer to walk you through the growth of a typical SE organization. However, it was still based on the fallacy of a Sales/SE ratio. The problem with a ratio is that unless you are a small single-product company it really doesn’t work too well. Sure – it’s a good starting point, yet the correct number of SE’s should be based on a return on investment as opposed to meeting a ratio or adding quota.

As an example: One of my customers re-aligned their Americas SE team, and decided that for global accounts the ratio would be 1:1, Strategic accounts and Federal got a 3:2 ratio, corporate/middle market was 2:1 and everything else (SMB, telesales and partners) was 5:1. These numbers were dictated by finance, and where they got them from I have no idea (and nor do they!).

So what is a better way? Base the ratio on how busy and how productive your SE’s are. I use a baseline figure of 60% customer-facing time (carefully measured, including prep time) as a metric for SE’s. If a team is consistently below that number, they are not busy enough, and if they are over 60% then they are running hot. Now – running hot is not the same as being efficient, so you need to look at what they are doing and the revenue generated. That is ROPE – Return On Presales Effort. All things being equal, if your North-East group has a ROPE of $2.3m and the South has a ROPE of $1.4m – I’d add SE budget to the North-East.

More later – obviously the art is in determining if all things are equal, and what to do if they are not .. so stay tuned.

MTS April Edge - Updated

Big Ooops. Despite checking and rechecking my newsletter I still managed to send it out with bad link. To the main article no less. If you are a reader -  my apologies for resending the newsletter, but I promise you'll enjoy the lead of "Tell Me A Story : Why Your Customer References Are Ineffective".

I also cover WhiteBoarding remotely over a Webcast (see prior blog post) and answer a question about working on an unmotivated cross-functional team. The book review is "The Challenger Sale" - one of the best sales-oriented books I have read in a while. Definitely worth the time and money to check it out.

Good Selling!

I start off many of my WB sessions by asking the participants to group together at their table and write a list of pros and cons about white-boarding. They do this on their team boards so it's an evil trick to get them up to the WB!

One of the cons I often see is "no remote White Boarding capabilities." And that's just not true. In fact - many of my customers now intentionally add in a blank whte or black slide in their PPT deck so they can "ad-hoc" a WB with a customer.

One great use for a WB is when you are reviewing / proposing an architecture with a customer. Often you need to make minor changes, add a box, reverse a data flow, relabel a component etc. The downside of using PPT of Visio is that it's difficult to do this dynamically. If you have a WB / drawing capability you can make those changes 'on-the-fly" and preevent the need for another sales call (and also misunderstandings and errors). Since no-one over the age of 12 can draw anything remotely artistic with a mouse I've been experimenting with tablets and drawing programs.  

My personal preference is the Bamboo Connect Pen & Tablet. It allows you to concurrently control your mouse/pointer with the standard mouse and the pen - and you can sketch/overwrite things on both PPT and the webcasts whiteboard. You can also modify Visio by allowing pen mods or dropping the diagram into a PPT deck.

For "start-with-a blank-page" type remote WB's then I'd look at the Papershow. It's a USB pen
that utilizes a special pad of lined paper. It's advantage is that you can see what you are writing and you can pre-draw in pencil (i.e cheat) on the pad before you draw it for real. It projects really well over a webcast. The downside is that you have to go through some complex hoops to do this for an existing PPT slide so it takes away much of the spontaneous aspect of your pitch.

Bottom Line - don't give up on dynamic drawing just because you're on a webcast. If nothing else - it will brighten up the presentation just because it is different!

The Executive Connection II - Denial

My children used to come home from elementary school and tell me that “denial” was a river in Egypt. Groan as much as you want, but it’s also one of the major reasons why Do Nothing Inc. wins so many of your sales deals.

As a Sales Engineer, you can talk, present, demo, whiteboard and architect your solution until you are blue in the face, but if the customer doesn’t acknowledge that they have an issue that needs taking care of – it’s going to be a long and pointless meeting. We like to speak about the great things that our company, our product and our solutions can do for the customer, but if the customer doesn’t accept they have a pain – nothing will happen.

I believe that customer denial is worse than customer inattention because it doesn’t matter what you say –it’s not important to the customer. So how do you get the customer’s attention? The standard SE practice of linking business pain to your technology solution and proving that you are uniquely qualified to do this will not work. Yet that is what usually happens – and the salesperson and SE keep going down the path of logic, business reason and all the aspects of selling solutions. The more the customer resists – the harder they push. The more the customer resists – the more people they speak with to make that customer change her mind. But if the customer is in denial then it just won’t help.

Back to getting the customer’s attention – what does work? Easy – you talk about two things.

1.       You talk about someone else’s pain who the customer can relate to.

2.       You forget about the customer’s pain and focus on the beautiful gains instead. But – do it along the lines of discovering what other things the customer will be able to do (or fund) once they address the pain you don’t want to talk about.

Sound a little confusing? It is – welcome to denial. More on how to make the Nile flood and create fertile selling grounds in the next post. (You knew that pun was coming…)

The Executive Conversation

A short snippet from a role-play last week in a workshop. As background my customer prides itself on the blazing-fast speed of its solution and always likes to lead with that fact.

I’m playing the part of a CIO from a medium-sized business. I just asked the Sales Engineer to make a case for the value his solution will bring to my business. I'm in full "Simon Cowell" mode and decide to make things as difficult as possible for the poor SE.

SE:          "Well – our product is twice as fast as the nearest competitor’s is."

CIO:       "That’s great – but I don’t have a performance problem right now."

Silence. Crickets chirping..

The moral of the story is that “it is only a problem if your customer says that it is a problem”

It's NOT an Objection - So Answer The Question!!

Pet peeve time. The whole concept of “Objection Handling” has always really bothered me. This started when I was a first-time SE many (many) years ago, plus sitting through multiple sales training since then – all from people supposedly teaching me how to handle, absorb, deflect and occasionally answer an objection.

My concern – as an SE – is well over 90% of the questions you get from a customer are not actually objections. That’s right – the customer asks you a question because they just want an answer! I think “Objection Handling” makes it a very confrontational affair – and one best left for salespeople. It’s NOT about defeating the customer in a battle of wits, it is about working with the customer so they see the value, simplicity and uniqueness of your “stuff”. It’s one of the reasons I teach “Answering Customer Questions” instead of “Objection Handling”. Certainly the classics like “I can’t afford it” and “We already have a product that does that” are objections, but questions such as “why does it take so long to..” or “do you interface with X” and the "how can I.." should be handled as questions. And no-one ever teaches you how to answer questions, you are just taught how to defuse an objection. As SE's that's missing the mark and certainly not setting you up as a trusted advisor.

There are all kinds of techniques out there for answering questions, and mnemonics that go along with them. I’m a fan of LACE – Listen, Accept, Communicate, Execute. Yet I keep coming back to the fact that as an SE your intent matters more than your ability. As both a former IT exec and a former presales leader, nothing used to irritate me more than watching someone tie themselves up in knots by NOT answering my question.

So – the next time you are asked a question by a customer, go through the standard routine of pausing, making sure you understand the question and why it is being asked – and then ask yourself … is it a question or is it a blunt objection? I think you’ll be surprised at what happens.

Pain, Gain and Clouds

The March edition of the MTS Edge went out today. Subscription continues to climb - with a big rise in readers from Austrialia-New Zealand this month. So thanks to whoever is promoting my material down under!

The lead article is Pain And The Sales Engineer. A bunch of stats out there tell us that almost half of the deals that hit the top of the pipeline and are somewhat qualified turn into ZERO Revenue. They are won by "Do Nothing Inc." and "Alternate Use of Capital". Looking at the other 50% of deals that someone wins - 80% of those are driven by some problem or pain that the customer is attempting to move away from. Yet as an SE we tend to focus on the good and great features of our solution and less on how it prevents that pain. I give you some ideas on how you should amp up the pain and win more deals away from Do Nothing Inc.

Ask John answers the question "how long should a webcast be?" The best answer is probably just long enough, which is a shorter time than you think!

As I spent a lot of time in 2011 teaching SE's how to effectively whiteboard and visually sell their solution I've decided to start up an occasional whiteboard tips section. This month is "Drawing The Cloud". It's not just a swirly mass on the board - learn how to make it memorable and meaningful. That's also a good entry point into the newest Mastering Technical Sales Offering - which takes all the best practices around whiteboarding and in conjunction with marketing and enablement builds a whiteboard that SE's can customize and deliver to their customers.

Book Of The Month is Dan Ariely's Predictably Irrational, which seems to equally apply to both our customers and many of the salespeople we deal with. It's actually a great scientific based explanation about why people would rather avoid pain than seek out gain - and provides more background to the lead "Pain" article.

Final word promotes a well-written technology and sales blog by Dave Kellogg, and also some shameless self-promotion of this blog and the MTS Twitter account.

Good Selling and Enjoy The Read.