I recently was fortunate to participate in a panel discussion on The Great Sales and Marketing Debate: The Cagey Sales Veterans Debate the Young Up-and-Comers, sponsored by the New York Software Industry Association, March 13, 2006, held at JP Morgan Chase.
Allen Reynolds and Jesse Mandell all took some notes, which we have merged in the summary below.
Master of Ceremonies, Bruce Bernstein, welcomed and introduced the two questioners and four debaters.
Questioners: Sherri Sklar and Ruth P. Stevens
Sherri Sklar, President, Sherri Sklar Strategies, LLC
Sherri Sklar has built a star track record in helping organizations obtain exceptional results. Over the last 20 years, she has enabled organizations to make dramatic turnarounds, helping under-performing divisions achieve significant growth in the most difficult of marketplace conditions. Ms. Sklar has helped organizations in marketing strategy and execution, sales strategy, sales execution and performance, business development strategy, channel management, and communication skills training. A frequent presenter at seminars and conferences, Ms. Sklar practices and teaches ‘peak performance delivery’, a proprietary technique Ms. Sklar employs to help clients achieve optimal results. Ms. Sklar is President of her own consulting company, Sherri Sklar Strategies, LLC., (SSS). SSS is a sales, marketing and business development consulting firm that delivers measurable results from assessment, proven strategies, and excellence in execution. Ms. Sklar received her MBA from Harvard Business School and her BA from Newcomb College at Tulane University.
Ruth P. Stevens
Ruth P. Stevens’ expertise in customer acquisition and retention derives from a decade and a half of hands-on marketing for both large enterprises and start-up companies. Just prior to beginning her consulting practice, she served as chief marketing officer at an Internet company in New York City. Before that, she had broad responsibilities for direct marketing at three corporate giants– IBM, Ziff-Davis and Time Warner.
At IBM, she served as director of direct marketing, North America, for the IBM hardware, software and services brands, leading a team of 140 direct marketing professionals. She then moved to the IBM Software Group, where she directed global direct marketing.
At Ziff-Davis, she served as vice president of marketing for the electronic publishing division, and later helped launch Ziff’s Consumer Media Group as its vice president of marketing. At Time Warner, she worked in marketing, new business development and general management for the Book-of-the-Month Club and Time-Life Books.
Ruth has been a regular columnist for DMNews and is a frequent contributor to a variety of marketing publications. She teaches marketing to graduate students at Columbia Business School and NYU’s Stern School of Business. Ruth serves on the boards of the Direct Marketing Idea Exchange in New York City and the Direct Marketing Club of New York.
She is past chair of the Business-to-Business Council of the Direct Marketing Association and holds a BA from Hamilton College and an MBA from Columbia University.
Debaters: Alan Kaufman, Ed Martino, Larry Cohen, and David Teten
Team Old School: Alan Kaufman and Ed Martino
Alan Kaufman
Alan Kaufman is a 38 year veteran of the Computer/Software/IT Industry. He was a founding member of the management team of Cheyenne Software, Inc., where as executive vice president of sales, he grew the business from $1 million in fiscal 1990 to over $200 million in 1997 to propel Cheyenne into the 13th largest software company in the industry. He has served as an officer in the Navy and holds a BS in Electrical Engineering from Tufts University. He serves on the Board of Directors of NetIQ, a leader in server and security management, and is a Trustee of Outward Bound USA. Alan also serves on the Board of Directors of NYSIA and is its founding president.
Ed Martino, Director of Industry Business Solutions, Sprint Nextel
Ed Martino is currently the Director of Industry Business Solutions for the new Sprint Nextel Company. He has worldwide responsibility for the market penetration, solution development and overall growth in industry sectors for Financial, Insurance, Media and Professional Services, a $2b business area. Prior to this role, Ed was the Director, Northeast Corporate Sales for Nextel Communications. Other roles have included the Senior Vice President of Marketing and Sales reporting to the President for two companies both in the global systems integration business. Ed also served in various global management positions for the IBM Company for eighteen years.
Ed is a member of several boards including the NY Software Industry Association where he is the Vice Chairman.
Team New School: Larry Cohen and David Teten
Larry Cohen, EVP, Heartbeat Software
Larry Cohen is one of the most creative and inventive minds in the software business. He has that rare ability to listen to a business problem, quickly isolate the key issue, and translate that insight into a practical software solution.
From his early days in the industry, Mr. Cohen has demonstrated a remarkable instinct for identifying a new technology solution and putting it to work quickly. Shortly after graduating from UC Berkeley, he pioneered the use of Webcasting in the healthcare industry. Soon after, he received an NIH grant to conceive the first online adherence programs ever developed.
Larry was a driving force behind the first enterprise-class, web-based software products for Marketing Content Management (MCM) in the financial services industry. He devised a highly innovative technology and methodology for performing online competitive intelligence. And lately, he’s been fashioning a new form of CRM that integrates data-mining and web services.
Throughout his career, Larry has closely advised some of the world’s most prestigious organizations, including Amgen, Novartis, GSK, Goldman Sachs, UBS, and Intel.
David Teten, CEO, Nitron Advisors
David Teten is a serial entrepreneur and CEO of Nitron Advisors, an independent research firm which provides hedge funds, venture capitalists, and other institutional investors with access to a network of frontline industry experts. He is also coauthor of The Virtual Handshake: Opening Doors and Closing Deals Online, the first business guide to how to use blogs, social network sites, and other online networks to accelerate your sales. He blogs on the Circle of Experts Brain Food Blog and at TheVirtualHandshake blog. David formerly worked with Bear Stearns’ Investment Banking division as a member of their technology/defense mergers and acquisitions team, and was a strategy consultant with Mars & Co. He holds a Harvard MBA and a Yale BA.
NOTES ON THE EVENT:
Larry Cohen, EVP, Heartbeat Software
David and I see 5 main differences between the ‘old school’ and the ‘new school’ of sales and marketing:
1. The new school sells highly focused products. The new school goes after underserved, highly niche markets (and submarkets) that do not have much competition or many me-too products. For example, Heartbeat Software does not sell CRM to pharmaceutical sales organizations. We sell a highly specialized CRM product to Medical Affairs Departments and their Medical Science Liaisons. Due to our specificity, we are able to work with the majority of pharmaceutical companies and offer them incredibly specific learning from their competitors. We aim to penetrate the majority of these markets (and have done so in pharmaceuticals). Similarly, Nitron Advisors focuses specifically on introducing their clients, hedge funds, VC funds, and law firms, to industry experts—and more specifically experts in transition.
The new school understands that we need to do a few things very well and that companies buy software because their competitors have bought software - period. One client told me that if no one has bought the software they would never buy it. If everyone has it — what’s the point? But if a few key competitors have purchased, they will quickly jump on board. Non-vertical specific back-up software, data storage, or cell phones are not specific enough to attract the new school.
2. The new school does not waste valuable marketing dollars on soft, non-focused, and unproven channels. The new school uses on-line and off-line tools that have a proven, measurable ROI by creating a direct, track able, one-to-one relationship with our customers. Among the major mechanisms for this:
+ highly targeted old school cold calling with a new school spin; selling a proven piece of software to a sub-market that is not being called on;
+ e-mail marketing to very specific titles and organizations where we have market share, with tracking provided by software provider;
+ Pay per Click search engine advertising (Google, etc.)
+ Pay per Call search engine advertising (Ingenio, etc.)
(Teten’s editorial note: Eloqua offers some useful marketing ROI tools.)
3. The new school focuses on smarts & network, not necessarily experience. Sales methodologies are interesting. They are also boring and notoriously difficult to get to stick or to actually change behavior. The new school understands that growing a stellar sales team is about hiring smart, energetic people who are great at sales. What makes a good salesperson? The new school knows that it is one thing: A person that keenly understands the part of themselves that other people relate to and who can leverage that part to get people to buy. We hire those people. No matter what experience, sales training, or existing client relationships they have. Google famously put a billboard up on the road from San Francisco to San Jose that had a complex mathematical problem on it. If you solved it, you gained access to a recruiting website. The new school knows that smarts goes a tremendously long way.
4. The new schools taps online networks, not only face-to-face networks. Consider that 84% of U.S. Internet users have used the Internet to contact or get information from an online groupmore than have used the Internet to read news, search for health information, or even to buy something. More and more of us are using online networks, such as blogs, social network sites, virtual communities, and other “social software” as a daily part of our business life. All the major Internet players, including Yahoo!, Microsoft, AOL Time Warner, eBay, and Google, are already offering social software tools and planning more in the near future. Bill Gates, John Kerry, and other celebrities are among the over 2 million people currently registered on LinkedIn, a popular business networking site. Nitron Advisors uses these technologies both to target customers and to recruit new industry experts on our clients’ behalf.
5. The new school sells based on product quality, not just on who plays better golf. Many salespeople spend a tremendous amount of time and energy playing golf and drinking beers with customers. They believe that a personal I like him relationship is key to closing the sale. In the new world, that relationship is helpful, maybe even a prerequisite, but it doesn’t close the sale.
Neil Rackham, founder of sales consultancy Huthwaite, conducted a study of whether salespeople who built good relationships would really make more sales:
“We found that sellers who dealt successfully with small retail outlets in rural areas seemed to rely heavily on personal factors in their selling. . . . For example, the seller might ask, Hows Ann enjoying her riding lessons? . . . In rural areas, where the size of the sale was small, successful sellers used more of these personal references than did sellers who were less successful.”
“But it was a different story in the large urban stores, where the average sale was more than 5 times the size. We found no relationship between success and reference to personal issues[emphasis added].”
“Ive heard many other professional buyers complain about salespeople who try to open calls by cultivating areas of personal interest. The last thing a busy buyer wants is to tell the tenth seller of the day all about his last game of golf. . . . Many buyers become suspicious of people who begin by raising areas of personal interest.”
Source: Neil Rackham, Spin Selling (New York: McGraw-Hill Book Company, 1988), 140.)
Alan Kaufman
After Cheyenne sold, I retired. Soon after, I was approached by the VP of sales for NetIQ Corporation and asked where I found my stellar employees. The answer was that I trained them. Training is incredibly important. Every new situation I went into was different. I never took a cookie cutter approach to anything. A good sales/marketer carries a quiver full of arrows and can use each one for any new situation that arises.
Sherri Sklar, President, Sherri Sklar Strategies, LLC
As my first question, can you sell a complex software solution without meeting the client face to face?
Ed Martino, Director of Industry Business Solutions, Sprint Nextel
Yes, you can, but I wouldnt advise it. If its complex, it needs lots of service. The biggest cost is in the service side and your goal is to build a bridge to the customer and use them as a referral to build business.
David Teten
Yes you can. Salesforce.com does it all the time. That said, the more complex the product and particularly the after-sales support, the more helpful meeting in person can be.
To sell virtually, you first need credibility (your potential clients and competitors look you up online and evaluate the validity of your service) and second, effective relationship management.
Ed Martino
I disagree with David. Most of Salesforce’s sales are to corporate customers and their success depends on the time that they spend with their customers.
David Teten
But it is impossible for a company to meet with all their smaller customers.
Alan Kaufman
You must identify how complex a sale is and whether you need to go out there to meet face to face.
Ruth P. Stevens
To be competitive in getting the product to market, how should the marketing be structured? What is the best marketing approach?
Larry Cohen
At Heartbeat, customers pay for product development. Marketing should focus on specific departments in like companies. When we call someone who works in hedge fund marketing, and say we have a product designed just for him, we get a good response rate. It’s not spam if the person is interested in buying what you sell.
Alan Kaufman
Good marketing programs include people who are interested in talking to analysts to see how the customers are buying. I dont believe in print advertising, especially if you are working with a small budget.
Bruce Bernstein
How should you go after your target market? How do you enable the sales to happen? How do you structure the sales team?
Ed Martino
It all depends on the size of companies. It always takes lots of research and phone calls, and knowledge of the competition. Draw 3 circles:
1. What business am I in?
2. What are the customers’ needs?
3. What does the company have to offer?
The little space where the circles overlap is what you develop and present to the CIO.
Larry Cohen
Small software companies are unable to pay to talk to analysts, so they must talk to businesses in the area for the problem they are going to solve. Refer to previous success that youve had at one or two other companies.
Ed Martino
I agree that if you dont have a large enough budget, dont talk to analysts. Talk to smaller CIOs from a niche group and then work your way up to the top.
Larry Cohen
I agree with Ed. We use that business model at Heartbeat Software.
Ruth P. Stevens
The marketing department must provide good leads for sales force. How would you suggest that you develop these leads?
Alan Kaufman
Having an inside telesales group that goes through incoming leads and cold calling is good. You also need to develop a good computerized process that is repeatable. Leads from the Internet need to be shown to the inside sales group as well.
David Teten
We get to the big dogs through networks. Each member of our sales team (and of our whole company) has a personal network that we can tap.
In addition, no surprise, we use online networks. We post intelligent comments on someones blog to make an entrée, and get into a target’s network in that manner.
Microsoft has approximately 1,200 bloggers out of 55,000 employees. There is no excuse to cold call Microsoft; just contact a blogger in your target area, and use their blog as a conversation starter.
Ruth P. Stevens
What incentives do you use for the sales team to follow up?
David Teten
Pay people a good commission. Develop a sense of ownership. Give options.
Larry Cohen
We have company wide minimums. If its a top 25 pharmaceutical company we go in person and talk to them
David Teten
In order to get leads, people should be thinking about how to talk to their particular network. This method is much easier than getting leads from a database company.
Bruce Bernstein
The old school is emphasizing structure and the new school is going with leads. We hate the people who contact people for business by my boarding school alumni directory. What do you think about Davids method?
Ed Martino
If you have a niche, then you dont need to worry about making the phone call. If youve got value and youve done the research, then the other person may actually appreciate the call.
Bruce Bernstein
It might also be a generational thing. The youngsters dont mind getting the networking call.
David Teten
The issue is how to get the most targeted individual. Email used to be an effective means, but today, email is broken. You cant reach people easily via email due to spam filters and overuse of the email medium. If you can find the name of person in your sweet spot, call them. Even the shallowest referral is better than an cold call.
Sherri Sklar
What are the most important things that someone in marketing can do to create a buzz for their firm and their product?
David Teten
Get to opinion leaders. Get to bloggers. They are very powerful way to spread word of mouth. That’s a large reason why companies like Foldera have attracted over 1 million downloads—great coverage in influencer blogs like Techcrunch and Om Malik.
Lead events. Be a speaker and put yourself in a leadership position. You will reach far more people speaking at a conference, than you will handing out business cards before one. Reach 100 people, not 5.
Ed Martino
Blogs sound good. We want to look into them. Press releases are also good. Sometimes a trade show is a good idea, if you can find ways to bring customers too it. You will create a buzz just from saying that you are going to be at the show. Target is the key word. Marketing to promote your product in a targeted way is very important.
Larry Cohen
For selling to institutional investors, I lean more toward conferences on asset management trends, rather than trade shows, since marketing and business people will be speaking at them. Pay for your sales people to attend, and shake hands and create relationships. It’s cheaper to send 5 salespeople than to get one corporate sponsorship.
Alan Kaufman
The trade shows that you choose to attend must have your customers there. I like to allow our customer a chance to demo our products. If possible, get a small booth so people can at least see your company logo.
Ed Martino
Its all about ROI. It can make the difference between a million in sales and 60-70 billion in sales. ROI is key. You must be selective and you must leverage the money that you put out to get a return.
Sherri Sklar
How do you grow a stellar sales team? Do you simple hire energetic, smart people, or is there much more?
Ed Martino
I am big on balance. People with fire in the belly are important, but what you really need is diversity because it enables different groups and people to bring in their abilities to the sales force. You want young people who are energetic and idealistic to bring in pep, and older people who can bring in learned skills to pass on. You also need people from the industry for which you are selling. The younger people will give you a lot of overtime. Motivation, however, is key. People need to feel empowerment and ownership.
Larry Cohen
We are a $10m company. Each person needs to meet their quota. We do, however, go after a wide range of people. The key is to find people who know what about themselves makes them successful. We interview a ton of people, but after they are hired, 99 percent of them stay.
Ruth P. Stevens
As sales managers, how do you optimize profits to your firm when the sales team is always trying to give away a deal?
Alan Kaufman
I think it is sloppy to sell on price. You can always cut a deal if you have to. If they cut a deal too much, the loss should come out of the salespersons percentage.
Larry Cohen
We need to train people to stay by their product.
David Teten
Another idea is to pay your sales team a commission on margin instead of based on revenue. This margin info should be shared with your team, but it often isnt. We show all our new employees our full business plan on their first day of work, because we want them to understand the big picture.
Ed Martino
In smaller companies, I would drop price to get marketing traction. If the customer will eventually become a testimonial, then its good. You need to take risk. Larger businesses need to have focus. They need to pick customers. At the end of the day, you want sustainability. In smaller companies, salespeople dont see the sales price, and thats why they try to give it away for lower.
Sherri Sklar
If someone says that he is interested in your software if you can prove to them that it is buy worthy, do you fly someone out? How do you approach the relationship?
Larry Cohen
Because products are focused, we phone and then fly to meet with them. Ive learned that we are more likely to make the sale if we stick to the price, because if we slide, then they may question the value of the product more and more.
Alan Kaufman
In todays world, regions are a lot larger so you have to be careful about support. How would you support your product in South Africa? This scenario requires discipline in the sales force. They should know not to go after crazy leads. If its a one-time, you might want to walk away, but if it’s American Airlines in Texas, you have a lot of chances to make other sales.
Sherri Sklar
What technologies can you use if you dont know what the return will be, you dont want to lose it the sale, but you also dont want to send expensive resources out?
David Teten
Use all the media: IM, email, webconferencing, phone, in-person meetings. This allows for a steady progression of relationship closeness. Professor Caroline Haythornthwaite has done some very interesting research in this area showing that the more media channels you use, the higher the trust levels that develop between two parties.
QUESTIONS FROM AUDIENCE:
Scott Lichtman
How do you feel about PowerPoint and its role in sales pitches?
David Teten
People buy from people, not from paper. The more talking I do, the less selling I do. Communicate value and use a slide show for support. You want the attention focused on the company and the project, not the PC.
Ed Martino
I am seeing that the PowerPoint is here to stay. Today, it is more animated and you are trying to stay way from stale slides. There is more animation and stuff over the net. Webinars etc. are a great way to get your story in front of a lot of people.
David Teten
Humans are wired to be interactive. PowerPoints are passive, and your potential customers will learn less and buy less when they are passive. You need to keep them active if you want to keep them interested.
Bruce Bernstein
What method was used before PowerPoint?
Alan Kaufman
We used flip charts and then foils. I love listening to good speakers. A major problem today is that people dont speak to the audience. Also, never read from your charts. If you read to your audience, you will lose them. Using a wipe-board works for developing an idea in front of a crowd. Using a PowerPoint can be a disservice.
Audience Member
In your experience, what best motivates a sales force?
Ed Martino
Incentives work if they are fun. Recognition of achievement is also important. Build a plan at the beginning of each year. Each person should know what the accelerator and multiplier is. If they blow the doors off, they will know what the cap is.
Alan Kaufman
Salesmen have fragile egos, and when they are in a losing streak, it gets to them. Give recognition to the people who perform the best. This has the incredible effect of reinforcing their positive performance.
Audience member
The three most important things for generating leads are current clients, (stealing from) competition, and referrals.
Larry Cohen
I find that if they have a rolodex, it may be all that they have to offer. Thats why we dont go with them. At some point the rolodex runs out.
Alan Kaufman
There is nothing wrong with a portfolio, especially when you are trying to capture a vertical.
Larry Cohen
We put out our own PR, and when we come out with a new product, we send out targeted emails.
Bruce Bernstein
Earlier in evening, David Teten mentioned that email was broken. Ed Martino said that there is no place for instant messaging in corporate America. Please expand.
Ed Martino
Instant messaging is internal. Email should only be used because everything needs to be logged. Instant messaging isnt on the radar screen, and it cant be logged or archived.
David Teten
As the young grow up, instant messaging will become an increasingly important medium. There are plenty of companies which sell archiveable IM and email solutions. IM is being used regularly across corporate boundarieswe use it with our clients.
Bruce Bernstein
Are there fundamental differences in advertising that that came out during this discussion?
David Teten
1) There is a movement in spending from advertising in mass media to PR. We are so deluged with advertising that it has lost efficacy. However, people do read the actual content in the magazine around which the advertising is wrapped. A good PR firm can get you in there as content. We get sales leads every few weeks from a Businessweek article about us from last year.
2) Secondarily, there also exists a movement to advertising where you can calculate an ROI. We’re moving from pay per click, to pay per action or pay per call. Compare that with throwing a million dollars at the Superbowl and seeing what happens.
Ed Martino
I have to disagree because my company (Sprint) sponsored the Superbowl! It depends on the industry. If you are in a big industry you have to make a statement
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