Where's the December Newsletter ?

 

So What Happened To The December Newsletter ?

Well - As many of you have noticed - we launched a new website at the end of November and had a little editing and debugging to do after that. Like all new ventures it consumed more time than expected.

Then - I was travelling - and got into the zone for another 3 chapters of the long-awaited "Trusted Advisor Sales Engineer" eBook. Although I'm pretty good at multi-tasking many things - I'm terrible at doing it for two different writing projects. So the eBook won! The good news is that makes a 1Q 2016 release of the Trusted Advisor book far more likely.

There will be a January 2016 newsletter which I expect to get out a few days early. It will have all new content - including an article on The Piranha and The Sales Engineer and my vote for SE Book Of The Year. We're also rolling out an expanded 2-Day version of the Solutions Sales/Value Selling For Sales Engineers module, more SE Leadership classes and webinars and some other tweaks to the MTS curriculum.

Stay tuned!

The First Law of Business Value Discovery

Twenty-five years ago, a bunch of Sales Engineers sat in a bar (this sounds like a joke..) and came up with a number of rules and principles to guide them through the Business Discovery Process. Over the years I’ve added to and refined that list and it now forms part of our Business Value Discovery (BVD) workshops. Of course – the most important of all these rules is the First Law – and that’s the one I want to take you through.

It’s not anything like “ask open-ended questions” or “challenge the customer” or “link your technology to the business” as they deal with the how of BVD, instead it focuses, just as you should, on the customer outcome, or the what and why. The long version is:

“Every technology purchase is driven by a single business number. Either that number is too small and someone want to make it larger, or it’s too large and someone wants to make it smaller.”

The key to being a world-class Sales Engineer is uncovering

(a)    What is that number?

(b)   Who cares about the number?

(c)    Does it need to be made larger or smaller?

(d)   What’s the economic value to the customer of that change?

(e)   Is it important to change that number NOW?

Think about some of these situations. A number may be too large and needs to be reduced.

1.       Cost Of Goods Sold

2.       Response Time

3.       Online Shopping Cart Abandonment Rate

4.       Backup Time

5.       Personnel

Or a number may be too small and need to be increased.

1.       Market Share

2.       Success Rate

3.       Upsell Ratio

4.       Gross Profit

5.       Employees With A Specific Skill Set

Here’s the call to action. Think about the last dozen sales transactions you have been involved with – either as a sales rep, presales engineer or services person. What was your customer’s number? How early in the sales process did you uncover it? Is there any common theme across your customer base?

Understanding and then satisfying the First Law Of Business Value Discovery allows you to focus on outcomes and results instead of features and functions. First things first!!

 

(Note to true engineers: Yes - I know I conflated law, rule and principle)

June , WTF, And Other SE Things

The monthly website refresh has happened and the June newsletter has been distributed. The main topic this month is the "WTF" Presentation - or Wonderful Technical Features pitch that almost every SE has to give multiple times every quarter.

I decided to write this (and have a little fun with my inter-dimensional reverse dynamic network backup and data regeneration feature) because I have just seen a ton of these truly terrible product-oriented decks over the past 2-3 months. There seems to be a disconnect between Product Management/Marketing and the Sales/Pre-Sales team over what is needed. As an SE, sometimes you have to talk techie and satisfy the IT gurus in the room - that's part of the job - but doing it with a boring, unstructured and almost illegible deck isn't the way to go.

 

And many of the "three-hour-tour" demos I have seen are not much better! The article lays out three quick and very simple ways to change the WTF so that it is a little more fun and memorable for everyone. If your PM group generates WTF's pass them the article - and if they don't - be thankful!!

 

We also look at harnessing The Power Of Three's (note the "three" in the WTF article) as a way to help your customer actually remember what you are showing them. If they don't remember it, they won't understand it and if they don't understand it they most certainly won't buy it.

 

We also make a quick pitch for the MTS Video Series - it's just under 2 hours of video that covers six major SE concepts and is really "The Best Of John".

 

Enjoy!

The 3 Big Lies About RFPs

Answering RFPs is one of the relatively ugly costs of doing business. There are many myths circulating about RFPs, and in particular the best way to win them. Many of them are wrong. Completely wrong and out of date! Since the burden of responding to RFPs usually falls to the SE Community (who call them Really Fast Paperwork), it’s time to look at some of these myths in more detail, and debunk them once and for all. The Big Three RFP lies are:

a) 9/10 RFPs are biased towards one vendor;

b) If you don’t write it you won’t win it

c) You have to answer (and win) every request.

Believing these three alleged facts will cost you money, an ever-expanding amount of time and resources, and decrease the morale of any SE team whose job it is to respond to an RFP. You may not agree with my point of view, but it will make you take a fresh look at how you answer.

1. 9/10 RFPs are biased. Usually the losing sides make a statement like “it was clearly rigged for our competitor”. Here is my analogy: I train a youth football (soccer) team. We are one of the best teams, we play in a very competitive league and we win most of the matches we play. Sometimes we do lose. When we lose, the parents blame the referee for making a bad decision or favouring the other team. Yet sometimes we make mistakes and play badly (the children are 11 – it happens!), sometimes we lose to an inferior team that just does everything right and beats us, and sometimes we are simply beaten by a better team. In the eyes of the parents – it is always someone else’s fault – never their own children.

That is exactly the same view that sales and presales teams take when they lose an RFP. Over the past year I have spoken with more than fifty IT and business executives about the RFP process. Their responses match my own experience as a former CIO – “John, we never ever bias an RFP. We can’t afford the consequences if we are caught. There are so many other more subtle ways of influencing a decision if that’s what we wanted to do.”

A slightly more accurate version of the myth is that “9/10 customers are already biased towards a particular solution”. RFPs are rarely biased, people are. I do not believe the number is as high as 90%, I think it is more like 50% based on my data so far. Where that impacts the RFP is actually in the scoring process. Read on:

“This is what we do if we absolutely have  to change a score. Every factor has to be scored on a scale of 1 (low) to 5 (high) and then weighted. Making the determination of a 1,a 2 or a 5 is fairly clean cut. The difference between a strong 3 and a weak 4 is unclear and a matter of opinion. Upgrading a few 3’s to 4’s for your favorite can make all the difference in the selection process for getting to a short list. No one will ever know!”

2. If You Don’t Write It, You Won’t Win It. Seriously? How many RFPs have you written for your customers in the past year? It just doesn’t happen anymore.  You can certainly nudge and push an RFP by suggesting during discovery meetings that some feature/function should be made a requirement, and although I still suggest that every SE team has a standard list of questions to supply to a friendly coach in a pre-RFP stage those questions are rarely used.

   Think about the creation of an RFP and the history of the RFP process. The basic internal purpose of an RFP is to gather some momentum and collaboration inside the customer to get a project started. It is as much political and psychological intent as it is purchasing intent. It is often the first chance that business analysts have to document requirements they have gathered from the business and the technical users. Once the document is created it is then a common set of requirements that everyone can judge vendors by – to apply a sense of fairness. It is the way to get legal, finance, purchasing and everyone else on the same page.

Now go back 20-30 years. When an IT department wanted to purchase some technology to solve some user’s business problem and needed to issue an RFP – what happened? It was a long drawn-out process. Analysts were tasked with investigating the market and determining who even had something close to the requirements. They had to rely on vendor literature, analyst reports from Gartner, Aberdeen, Giga and the like, plus personal experience. When the RFP was issued, the customer did not know that much about the technology and the solutions. Contrast that with today’s version. The customer is far more educated, thanks to Google and vendor’s websites. They scour user group boards, Facebook and Twitter to research the popularity of a solution before the (electronic) RFP even hits your salesperson’s inbox.

The only way you can “write” an RFP in 2015 is to virtually write it through the internet, social media and good-old fashioned personal contact. You are still persuading, influencing, placing and educating (think PIPE!) the customer – but in a far more indirect and subtle way. When you discover text in an RFP apparently ripped directly from your competitor’s website – it’s usually because of a lazy analyst, not brilliant competition.

Personal example – I actively encourage people to write positive reviews of my book. I do this to make sure that when someone searches “sales engineering books” MTS comes up #1 in the list because of great Amazon rankings – and also to counter the negative review a competitor placed online.

3. You Have To Answer Every RFP. Says who? Usually Sales! I routinely ask presales leaders what percentage of RFPs they know they will never win – but answer anyway. The answer is a staggering 25-33%, which is an amazing waste of resource. In Winning The RFP Game I lay out a number of steps a SE team can take to increase both their win rate and their internal efficiency.

In business, one of the fastest ways to go out of business is to say “yes” to everyone. As an individual, you learn to control your time and prioritize your efforts towards those activities that have the greatest payback (subject to managerial preference). When you personally say “yes” to everyone you rapidly run out of time, perform poorly and are heavily stressed. A sales and presales team – working together – cannot afford to say “yes” to every RFP.

Now let’s talk about winning. This is a strange statement to make in a sales situation – but you don’t always have to win the RFP. It depends on the type of RFP. When the RFP is issued to determine who will source a project – go for a win. Yet more than 50% of RFPs are issued as a gating process – which means they are used to reduce a large field of vendors (often 8-12) down to a short list of 2 or 3 who will go to the next stage of demo/present/propose. If all you need to do is to clear the gate that’s a different process. Know the difference.

 

In Summary

Just because you lose an RFP doesn’t mean it was biased. Sometimes you just lose – far more often than you think. That is because the 1990’s viewpoint of “you gotta write the RFP to win it” no longer exists except in the minds of salespeople and sales trainers. It is now a far more subtle form of influence. So when you do receive an RFP, make sure it is really worth answering and perform due diligence and discovery on the document before you open up the laptop to respond. Fewer, yet more targeted RFP responses will lead to more revenue, not less.

Sales Engineer Humour

Start of the week funny:

So a Doctor, a Priest, a Salesperson and a Sales Engineer are out playing golf. They are getting really frustrated with the extremely slow play of the foursome in front of them.

As they start to complain, a club official tells them:

"Those are four firefighters who were blinded earlier this year when they put out a fire in our club house. The least we can do is let them play for free."

"Oh, that's terrible", says the priest, "I'll pray for them every day."

"I agree", adds the doctor, "I'll work every day to find a cure."

"Hey, how about I just pay them $100 each to let us play through and get ahead of them?" schemes the salesperson.

"Wait." says the Sales Engineer, looking very puzzled. "Why can't they play at night?"

Enjoy your week!

Elevators, Scampering & Saying No to Sales ..

Despite a crazy April with no blog posts (there goes a 2015 resolution!) the May content was actually posted a few days ago.

We lead of with The Elevator Pitch and The Sales Engineer. I've never been a big fan of those artificial "you have 45 seconds to.." exercises, yet they help bring a little thought and discipline to the process. What process would that be? The process of concisely explain what you do, and why that might be important to your elevator companion - and then more importantly - handing the control of the conversation back to him/her. Give it a read as I suggest 3 or 4 different versions of the elevator pitch, although I still think we should give it "the shaft".

Next we look at a great process called SCAMPER. It's not mine, I just use it to look at an existing process that a customer may have, when I want to help determine what (if anything) needs changing and how we might do that.

"Ask John" covers some interesting ways to say "no" to sales, often without having to say "no". The word can be a very emotive and even confrontational one, which makes many SE's back away from using it. Then they get into a different kind of stress and trouble because they have over-committed their time. I'm a big believer of saying 'no" (easier as I run my own business) and it helps keep me, and Mastering Technical sales, on-point and less distracted. 

Looping back to an earlier post from the year, "Is 2015 The Year of SE Leadership?" we ran 3 separate SE Leadership workshops in April. I learnt a lot from each of them (as I should), but what is interesting is that no matter where you are in the world, and no matter what you are selling ..

1. SE Leadership is woefully underserved in skills training.

2. The problems are more-or-less the same.

3. Everyone needs metrics to proactively run presales as a business instead of just reacting to the loudest salespeople. 

Best view of the month from a workshop goes to this one in Singapore taken from the Millenia Tower. That's the Singapore Flyer in foreground and you can make out part of the Marine Gardens behind it.

Good Selling!
 

The Neat And Tidy Sales Engineer (or not ...)

Maybe it is my original background as a Chemical Engineer,
working on an Oil Refinery, but I've always been very conscious of working in a neat, safe and tidy environment. So it's always bothered me that many SE's operate in a totally different way - with cables, hardware, paperwork and everything else they need for a customer presentation or demo just scattered around them.

It all finally came to a head last week when I sat in on a brand new demo given by a principal SE from one of my clients. The demo was a thing of beauty - tied the technology back to business benefits, injected competitive differentiators, challenged the status quo and kept everyone's attention - except ... the team used a laptop (with a power cord), a projector (with a power cord and sound cable), and yet another external device (with a power cord) . The cords snaked all over the conference room table and under the feet of the SE and the Rep. At least a half-dozen times during the meeting someone nearly tripped over a loose cable or had to move the projector connection. It was just messy! The Director of IT Operations even made a snarky comment about how the vendor was trying to kill her.

It doesn't project (poor pun) a professional image to operate that way - especially when there is mid to senior level management in the room.

Look at your power cord - see that little piece of Velcro attached to it - use it! Wrap up the loose cable.

If you have to run a power cord by where you are standing, have some painters or duct tape in your laptop bag - and tape it down.

If the connector to the projector runs across the table - keep it out of the customers way.

It's not that hard. Be professional and be safe. (Who thought practicing "safe demo" meant things like this?)

February Was A Great Month For The Sales Engineer!

Since I believe that Sales Engineering is one of the greatest jobs around, every month should be a good month. Yet February was exceptional for the profession as a whole. Here are some truly cool and magnificent things I saw happen.

1.       Two SE leaders were promoted to match the status of their sales peers. A VP of WW Sales Engineers became an EVP, and a Director of North American SE’s was elevated to a VP. I am sensitive to this as many years ago it always used to bother me that I was a SE Director with a team of over 40 people, and worked side-by-side with area sales VP’s who had teams of 10 to 20. It struck me as a sign of the different status between sales and presales even in the eyes of HR at the time. OK – I’m just sensitive..

2.       A mid-size software company decided to re-organize their SE team and eliminated the horrendous “player-coach” positions they had created. That position required a lead SE to manage 4-6 other SE’s and still do a regular SE job. Leadership is a full-time job. Awesome!

 

3.       It’s the year of SE Leadership. We’ve now run three SE specific leadership workshops already, have another three booked and two more likely. This is a global phenomenon and not just limited to the US.

 

4.       A joint group of sales and presales individuals “negotiated” an agreement with Marketing to update their slide decks so they were customer focused instead of analyst and/or “what’s new?” focused.

 

5.      Two other large technology companies started up their own grow-your-own SE programs. Taking in college recruits and putting them through a comprehensive 12-18 month training program.

6.       Three companies modified their salesforce.com practices to allow SE entry of technical and business sales data.

 

A good month indeed!

The Magnificent SPIFF

Have you ever wondered about the impact of a SPIFF? (That’s a Sales Performance Incentive Ffund) . Does it really make a material difference to sales performance? Should pre-sales engineers participate in a SPIFF? What happens if you reverse a SPIFF and exclude Sales?

Well – this may not answer all of those questions – but it will lead you to some interesting conclusions. Here are the long-term results of a SPIFF program, paid out by an enterprise software company, over a 7 year period.

Bottom Line Up Front - Here is the Data

Year	Participants	SPIFF Design	Product Pull Through
2006	None	None	14.2%
2007	Sales only	1.5x quota credit	24.2%
2008	Sales only	Sell 500k , get 25k bonus	20.5%
2009	Sales + SEs	5k/sale ; split 75/25	41.0%
2010	SE’s only	2.5k / sale	35.2%
2011	SE’s only	1.25x quota credit	34.9%
2012	Sales only	1.5x quota credit	26.1%
2013	None	None	12.1%

 Here is the Background

Every year (from 2007 through 2012) the company had a 2^nd quarter special where they incented part or all of the sales team to upgrade existing customers to the latest release – and potentially cross-sell them an additional module. They measured the amount of additional product sold as “product pullthrough” – the last column. As I cannot reveal financials it is expressed as a % of the installed base which is in direct proportion to revenue because of their business model.

There were also three different combinations who had differing opinions about the efficiency and structure of SPIFFs. Those are the three shaded areas.

And The Analysis

By dividing the program into three different periods some factors emerge.

1.       Reps are more motivated by quota credit than a bonus (2007 and 2012 vs 2008)

2.       As soon as you add SE’s to the SPIFF, performance rises quite dramatically from approx. 22% to 35%). That’s comparing 2007/8 to 2009-11.

3.       With just SE’s receiving a SPIFF you get better performance than just Reps, but not as good as the 2009 team-based SPIFF which yielded a 41% pull through.

4.       SPIFFS in general made a difference raising an average 13% pull through with no incentive to 31% with an incentive.

Now you can argue that the product upgrade or module additions may have been better in some years than others, the economy changed, personnel changed – and even that this was an upgrade into an installed base, rather than net new logo sales. All perfectly valid points which are difficult to prove or disprove, but unless you have something better and data to back it up you are arguing emotion versus facts.

And my ultimate point – if you practice team-based selling then you should practice team-based compensation and share the SPIFF. That’s where the revenue is!

Is 2015 The Year Of Sales Engineering Leadership?

 

I have long maintained that first line leadership, whether as a sales or as a presales manager, is one of the hardest jobs in the company. You are responsible and accountable for so much, yet have little decision making authority. Add to that the fact that the management selection and promotion process is often “who is our best SE – let’s make him/her a manager so they can teach everyone else to be just like them” instead of “who would make the best leader, make smart decisions and motivate their team to obtain maximum efficiency?”

This means that first line managers often flounder and struggle in their new positions and don’t receive much guidance and training except perhaps for some generic HR stuff. This is where the sales and presales path tends to divide. Sales managers can attend coaching classes about negotiation, about mentoring, and about guiding reps in account review processes. The metrics that sales managers have to measure and are judged by are relatively simplistic and predominately monetary. Presales managers get … reheated sales training or sent back to that generic HR material …  and no clue as to how to run presales as a business.

For years I have had a passion about SE leadership as it is one of the few things I miss about the corporate world. I sure don’t miss waking up in the morning wondering which of my SE’s want to quit, who had a fight with a rep, who skipped training, who apparently “screwed up” a deal etc… And every year I run maybe one or two SE leadership oriented sessions with an “enlightened” client.

That is now changing in 2015.

Already, here at MTS, we have four SE leadership sessions booked, and three more that I would be willing to forecast to my boss (if I had one). I’d also place another five or six early in the pipeline.

What is happening?

I don’t believe that I, or my business partners in Singapore, have suddenly gotten smarter about how to pitch and sell the requirement for this kind of training.. No .. you, the collective SE/High Tech community have suddenly realized that you have been significantly under-investing in a key component of your sales force. One of my more famous analogy quotes is “Sales Engineering is the oil that keeps the sales engine running smoothly”. If you believe that the #1 job of a SE Manager is to develop and serve their people then maybe the manager is both the filter that keeps the oil clean and the mechanic that ensures it is regularly topped up and doing its job.

It seems that 2015 is shaping up to be the year of improvement for the SE Leader – and maybe we can rid ourselves of that horrible “Player/Coach” position whilst we are at it!”

The Technical Win : A Worthless Metric?

I have always disliked the concept that Sales Engineers are responsible for winning the technical sale

and gaining the Technical Win. During my pre-MTS career as a presales leader anyone in my organization who spent a lot of time talking about The Technical Win (TW) was generally met with a withering glare and a statement like “Where in your compensation plan does it say that you get paid on the Technical Win?”. It’s an intermediate point in the sales process – at best.

Has the Technical Win become redundant in the modern world of Solution Selling? Ask any group of Sales Engineers to define their job, and the phrase “we’re responsible for winning the technical sale” is mentioned. Many SE organizations measure and publish their Technical Win Rate for RFPs, Proof of Concepts and Trial/Evaluations. This month I will examine the Technical Win (TW) and determine if it is real, if you should care, and what the metric tells you.

 A VP of Sales Engineering at a large software company told me his POC Technical Win rate was 82%, yet the Business Win rate (generating revenue) was only 59%. I asked if his team was directly compensated for a Technical Win. They are not. My point exactly. But you can learn something from the statistics.

The Technical Win

The strict definition of a TW is when you are informed, in writing, that your solution has been accepted and judged superior to that of your competition. For example, you may have scored a 13/14 on a POC evaluation compared to an 11/14 by your competitor.

Most SE organizations have a far looser definition, which may only require you to complete a POC or trial by meeting the success criteria. Acceptance may also come in verbal fashion. Recording of the TW may be as simple as checking a box on a screen in salesforce with no proof. An exasperated Regional VP of Sales based in Hong Kong once told me that in his opinion the TW was the equivalent of not losing – which is very different from winning.

 By contrast, the Business Win is definitive and measurable – as it will result in the generation in revenue flowing from the customer to your company, and eventually, one hopes, into your personal bank account. You are paid to generate business that will cause a purchase order to be issued.

Should You Care About The Technical Win?

Another way of looking at the TW is that it says to everyone that the SE organization did its job and the sales force did not. This is hardly the best way to promote teaming between sales and pre-sales. I have always believed that pre-sales is also responsible for the Business Win, just as sales has some responsibility for the Technical Win.

Given the incredible focus that most organizations currently have on Selling Solutions instead of Selling Products it is hard to rationalize the justification of a Technical Win in that environment. Selling value means that you continually need to link your achievements in a proof, trial or evaluation to not only the technical criteria, but also to the business and financial criteria. Put simply, how does your solution increase revenue; decrease costs or mitigate business risk better than the other guy’s stuff? Technology and Business are inextricably linked.

It is an unpleasant fact (small startups aside) that the TW rate will always be higher than the BW rate. Companies can decide to do nothing, lose or move funding, make an acquisition, change market strategy, fire your internal champion or base their decision upon boardroom or golf course politics. The BW rate can underperform the TW rate by 20 or 30 percentage points.

The most important aspect of the TW versus the BW is why the difference occurs for each specific deal. Should an SE team successfully complete an onsite evaluation, but then generate no revenue because there was no executive sponsor, no budget or no agreement to consider a purchase – then that is a sales execution problem. However, that leaves the SE organization open to charges of execution errors every time they engage in a perfectly teed-up evaluation and lose. It is a two edged sword.

 How To Use The Technical Win Rate

1.      Measure a TW against a tight definition – with proof required from the participating SE team. Which means define your rules for a TW and then stick to them. No cheating or grey areas.

2.      Make TW an internal SE metric, which is never provided to sales unless accompanied by a fully prepared pre-sales executive. Given a statistically valid quantity, breakdown the numbers by geography, vertical, solution area and competitor and monitor the trends for a rolling period equivalent to your average sales cycle.

3.      When presented to sales, position the TW-BW difference as an opportunity to (a) close more deals; (b) highlight competitive or regional trends and (c) operate more efficiently.

4.      Investigate the reverse win. That’s when the SE team loses the TW but your company gains the BW. There are often patterns, especially around executive access or partner utilization, that can yield positive results the next time around.

Summary

When the SE organization is focused upon, and satisfied with, the Technical Win you are doing your company and your bank balance a disservice. It is a useful intermediate metric, and can promote a good discussion at the executive level, but should be selectively applied at a field level. If you are truly focused upon selling value, then look at a Solution Win – which is when both the business and the users accept your solution as being uniquely qualified to solve their problems.

 

Because no one is paid for a Technical Win.