Insights From Jeff Bezos

[youtube http://www.youtube.com/watch?v=kA_0W4hIhuA&w=420&h=315]

Somebody sent me this video of Jeff Bezos being interviewed by Charlie Rose back in 2011. The purpose of the interview was to announce the new Kindle that came out at the time. In the first part of the interview, Rose really pushes Bezos on how the Kindle competes with the iPad. I loved watching the way that Bezos responds. Brilliant. If you don’t have time to watch the entire video, here are the key lines/insights for me.

• The Kindle doesn't compete with the iPad. It is the best device for long form reading. Amazon has made no tradeoffs in building the best product for long form reading.
• Amazon isn’t providing the experience, that’s Hemingway’s job. They are providing the ability to enjoy that experience.
• The number one thing that Kindle users are doing is reading Stieg Larsson. The number one thing iPad users are doing is playing Angry Birds.
• Reading a book on an iPad is like reading while someone is pointing a flashlight in your eyes.
• Amazon doesn’t want to be the 79th tablet. They want to be the best at what they do.
• He urges employees to not wake up worried about competitors, but to wake up obsessing about the customer.
• Amazon doesn’t force customers to pay for its own inefficiencies.
• Business is not a zero sum game. Competitors can thrive together.
• Amazon’s mission is similar to Sony’s missions when they started.  Sony’s mission was to make Japan a leader in building quality products. Their mission was bigger than themselves.

The Elevator Pitch is Dead

A while back there was a post on the Harvard Business Review blog titled, Win the Business with the Elevator Pitch.  The post started with this scenario:

Pretend that you are in an elevator at one of your industry's trade shows. You're heading down to the lobby when the doors open on the thirtieth floor. You instantly recognize the executive who walks in and quickly glance at his name badge to confirm he is the CEO of the most important account you would like to start working with. You have never met him before nor have you been able to generate any interest from his organization. You have forty-five seconds to introduce yourself, explain what your company does in a way the CEO would find interesting and applicable, and motivate him to take the action you suggest. Ready? Go!

The post went on to give advice on the best way to structure your elevator pitch and even gave a script.  I wrote the following comment on the post:

Great post, Steve. Though I have to tell you that if I ever found myself in the position you describe in the first paragraph, the last thing I would do would be to try to pitch.  Business people, particularly CEOs, hate being sold to -- especially in person, in an enclosed area, by someone they don't know.  A better approach might be to introduce yourself casually, talk about the event or the weather or sports -- basically show that you're a nice guy.  Then if you happen to bump into the CEO later on, you can start to talk more about what you do and -- if appropriate -- have a conversation about how you might work together.

Of course it may be unlikely that you'll get this CEO alone again -- but I'd argue that it's just as likely as converting a 45 second elevator ride with someone you've never met into a material sale.

That said, if you do decide to make the pitch on the elevator the framework you've described above is a great one.

The elevator pitch is dead. Yes, you need to be able to quickly and concisely explain your product's value. And having an elevator pitch in your mind is a great way to do that. But in today's complex sales environment, battering CEO's with your sales pitch is not going to work.

It's not about top-down pushy sales or bottoms-up deference to your prospect where you simply "learn about their business", it's about doing the work to build synergistic partnerships that scale way beyond the sum of the two parts.

So if you find yourself in the elevator with your dream prospect, don't pitch them -- get to know them. And if you're able to keep the conversation going outside of the elevator learn about what they do and tell them about what you do.  And get their implicit permission to keep in contact with them. And when it's appropriate to talk to them about how a partnership could help both of your businesses, send them your ideas and setup a time to talk (preferably, not in an elevator).

Social Selling: 3 Questions & Answers

There’s been quite a bit written recently about social selling – that is, using social media to help companies and salespeople drive revenue. Much of the advice is targeted at companies -- with tips on how to have conversations with prospects/clients through social media. I’m much more interested in how individual reps can use social media to their advantage.

A few thoughts:

1.  Which social networks should I be posting on?

I've written in the past about social graphs. You need to decide on the audience that you'll interact with in each social network. For me, at a high level, I interact with people I know professionally on LinkedIn, pretty much anyone on Twitter, friends and acquaintances on Facebook and only very close friends on Foursquare. You can view a list of my social networks on my About page.

It seems to me that the best social network to talk to your prospects and clients is LinkedIn and possibly Twitter. Your prospects/clients, for the most part, don't need to see your Facebook photos.

2.  What is the point of social selling?

So often I hear salespeople talking about how their clients/prospects just “don’t get it”. They have an awesome solution to their problem but their contact just doesn’t see it. It’s not that the contact is stupid, it’s that they’re looking at the problem through a much different lens. As a result, they don’t see your solution as the clear answer. Using social media intelligently is a great way to slowly and steadily begin to get your clients/prospects to see their problems through your lens. That isn’t to say you should be posting things to try to sell or to teach people something they don’t know.  Instead, the approach is to show your audience how you see things and let them come on board with your way of thinking at their own pace. Social sales is a very passive form of "drip marketing". I've written a few posts on drip marketing -- check them out to get some more context on this -- you can find them here, here and here.

3.  What kinds of things should I be posting?

Knowing that the goal is to attempt to get your clients/prospects to see the problem the way you see the problem, you should post links to intelligent articles, blog posts, white papers, etc. related to the problem that your product addresses. Don't be afraid to widen your problem into other areas -- you don't want to appear to focused on your own small world. The critical thing here though is to never just post a link. Post a short note about the topic with your take on it or a quick introduction as to why people should find it interesting. The point is that it's interesting to you and something you're passionate about so you want to share it with your network. Finally, if your company gets some good press, I'd advocate posting links to those articles and videos on your social networks. Don't overdo it and post it in a humble way, but allowing your clients/prospects to see what others are saying about you and your company is another effective and passive way to help clients/prospect see you in a better light.

In short, social sales is not going to close deals. But if done well it's a great way to get your clients/prospects to change the perception of their problem, your solutions, your company and you in a favorable way.

Is There A Shortage Of Sales Talent?

An article on the Harvard Business Review blog today talked about the shortage of good sales talent and the need for more formal sales training programs. My theory is that there's actually a lot of sales talent out there but those people simply don't want sales jobs. Here's the comment I posted.

Great post and an important topic.  I believe that in today's business environment you need a variety of skills to be a good salesperson -- it's not about back slapping on the golf course anymore.  Sales is much more complex now.  You need to have a strong understanding of finance, economics, accounting, marketing, strategy, technology, product and management to understand what makes a good prospect, what problems your prospects have, where markets are going and how your company's products can fit in.  These skills are not easy to acquire.  In my experience, they come from getting an MBA or working in a client-facing role in a very early stage company where you're forced to wear a lot of hats and figure out how to make your product work or, in a rare case, you've gained these skills on your own by educating yourself.  And I've found that people that have that kind of experience under their belt are, for the most part, uninterested in filling a typical "sales" job.  They're interested in getting into finance or consulting or strategy.  This is because sales has a stigma to it.  People with that kind of ambition and experience often don't want to tell their friends and family that they're a "salesperson".  Not because sales isn't an admirable job -- it is -- but because there's a stigma attached to it.  People that don't understand the complexity of today's sales environment think of the used car salesperson trying to sell them a lemon.

As a result, I believe we need to begin to stop using the word "salesperson" to describe the roles we're trying to fill.  And not just for recruiting reasons.  Because the word no longer describes what these people are being asked to do.  These people aren't selling knives door to door to every house in town.  They're not pitching and responding to objections.  They're seeking out and understanding business opportunities, carefully selecting the appropriate individuals to connect with, having open, informal business conversations, validating assumptions, iterating those assumptions, refining products and services, participating in internal and external strategic planning, creating mutually beneficial partnerships, negotiating legal & business terms, setting goals for the partnerships and seeing that those goals are met.

I believe that the sooner that companies create roles and job titles around this new skill-set, the sooner we'll see more professionals signing up to fill these jobs.

Don't Be A Salesperson

One of the biggest challenges in sales that I hear about all the time is when a salesperson has had a good meeting with a prospect but now that prospect has stopped returning emails and phone calls. The salesperson keeps emailing and keeps calling but never hears back. Eventually the salesperson concludes that the prospect is either rude or just isn't interested in the product or service. I think that conclusion is completely missing the point.

As a professional, when another professional that I have met with calls or emails me I will always call or email them back. And I've found this to be true of nearly everyone I've interacted with in my career. It's a general courtesy to respond to another professional when they contact you about something. And I'm even more responsive when I believe that the professional has something that can benefit my business. And when I've determined that a partnership between our businesses doesn't make sense, I'll always communicate that to the professional with a call or an email.

But here's the catch: the professional relationships I'm talking about are what I call "mutually beneficial relationships". They are interactions where the professional can help me and I can help the professional. There's a level playing field of professionalism and shared value. However, when I begin to believe that the person I’m speaking with is trying to sell me something that I’m not interested in or is only trying to help themselves, they go from being a professional to being a salesperson. And I’m much less responsive with salespeople than I am with professionals.

To me, the worst thing that can happen to a salesperson is to be viewed as a salesperson. Because in the prospect’s mind you have gone from being a professional looking to provide value in return for value to someone that is beneath them. You've gone from being the cool and interesting guy at the end of the bar to the loser that walks around hitting on anything that moves. And as you try harder and harder to push your agenda, the less interested the prospect becomes.

My advice: don't be a salesperson, be a professional. Be laser focused on mutually beneficial relationships. Have a healthy paranoia that the person you're talking to doesn't care about what you're saying. If you don't know, ask them. Walk away from prospects and people that aren't interested. You're bringing value and your prospects are bringing value -- if there isn't a match, walk away.

To say it simply, you should strive to create relationships with prospects where every email you send and every call you make is promptly responded to and returned. And that’s not a function of your pitch or the quality of your product. That’s a function of your ability to be perceived as a professional interested in providing mutual value.

NOTE: I’m not talking about job titles here. You may have the word “sales” in your title and that is fine. This post isn’t about titles, it’s about how you’re perceived as a businessperson.

Is Sales A Dying Profession?

A commenter on the 'A Sales Guy' blog asked this question the other day and Jim Keenan posed the question to his readers. There's a decent discussion on this topic on his blog so I recommend checking it out. Here's my answer:

Short version: Absolutely Not.

Longer version: Before you can answer the question of whether or not sales is going away, you have to define what salespeople do.  To me, salespeople make connections and tell stories that allow products to be diffused into the market at a faster pace and on a wider scale than they would be if a salesperson wasn't involved.  So companies hire salespeople when they believe that the investment in those people will be outweighed by the incremental revenue that will be produced from their activity.

That said, the commenter is right that because of the internet there are some products that can be sold to enterprises without the involvement of a salesperson.  But that doesn't mean salespeople are going away, it just means that salespeople will have to continue to adapt to selling those things that can't be sold off the shelf -- this means more complex sales and more innovative products.  This has always been true -- products adapt and salespeople adapt.

If a company decides that they can rest on their laurels and its products are so refined that they don't need people out making connections and speeding up the diffusion of their innovative products into the market, then salespeople aren't going away, that company is going away.  

In short, if a company feels like it doesn't need salespeople then that company either isn't innovating or doesn't have very ambitous goals.

Entrepreneur = Salesperson

At the start of the first day of class my Entrepreneurship professor in business school said two things to the class.

The first was, “if you don’t want to do sales every day, all day, then don’t be an entrepreneur”.  Then he asked everyone that was in sales to raise their hand. After about a third of the class raised their hand he said, “90% of you are not truly salespeople, you’re order takers, because you don’t have a quota and you aren’t getting rejected every single day”. I’m paraphrasing, of course.

While harsh, there’s lot of truth to this. Entrepreneurs are salespeople and salespeople are entrepreneurs.  They put their success and failure out there for everyone to see. A lot of other roles in an organization can take cover behind things like shared goals and muddled metrics and a lack of a direct cause and effect on revenue. Salespeople can’t. They have an individual goal, with clear metrics and a direct impact on revenue.  Like the entrepreneur, salespeople put themselves on the line.

Jim Keenan had a great post on this a while back. To emphasize the point, I’ll post an excerpt from it here:

So why doesn’t everyone want to be a sales person?

Because  . . .

It takes guts to only have HALF your salary guaranteed

It is sucks to be rejected on a daily basis

It’s hard calling up people you don’t know and asking them to meet you

It’s scary asking strangers for things

It’s uncomfortable challenging people

It’s tough being held accountable to black and white metrics. You can’t hide from the numbers

It’s not easy having your results constantly compared, in the open, to your peers

It’s not easy losing

It’s tough being fully accountable for your own success or failure

It’s not fun doing something where you can fail so quickly after be successful

Not everyone likes being in the spotlight

Unpredictability SUCKS

Most people don’t want to be in sales, because it takes GUTS! It takes guts most don’t have.

What Really Matters

Businesspeople are trained to believe that revenue, profit and shareholder value are what matter in business.  

So if those are the only things that matter, in order to make more sales, all you need to do is show your prospects a strong ROI.  If you can show the client that their investment will pay out 2x or more of their investment, they'll buy, right?  

Wrong. 

The reason this is wrong is because revenue, profit and shareholder value don't account for human emotion.  Humans are generally motivated by their own personal fear and their own personal greed -- these things are satisfied by events that are generally far more basic than numbers.  So when you focus your pitch around nothing but ROI, you aren't tapping into what matters to the human that you're dealing with. Here are some of the questions that a potential partner might be asking themselves when you're blabbing away about revenue, profit and ROI. 

• If this project works, will it make others looks bad?
• Do I want the added responsibility that will come with success?
• Will I get in trouble if this doesn't work?
• Am I going to have to work later at night or on weekends because of this project?
• Will my boss think this is cool?
• Will my spouse think this is cool?
• Will it be fun to work on?
• Will I get promoted if this works?
• Will I have to move to a new office if this works?  Will I have a longer commute?

This is why understanding your client and the individuals you’re working with is critical.  Know what will get them a bonus and know what will get them fired.  And be sure that the value your product brings to your partner will lead to one and prevent the other.  

Transactional Differences Between B2B and B2C

Recently I heard a quote from Steve Jobs about B2B businesses.  He pointed out that one of his favorite things about working at Apple was that, in some ways, his job was easy.  All he had to do was create amazing products and eventually consumers would buy them.  This, he noted, isn’t necessarily true in a B2B environment.

It’s an interesting and important insight.  To sell an iPhone, all Apple has to do is build it, put it on its website or in a retail store and an independent actor with full decision making authority will come to the store, give the cashier their credit card and make the purchase.

Imagine the same scenario in a B2B environment.  Apple makes the same great product, but there are a multitude of differences that make the actual sale dramatically more complex.  In a B2B environment before a simple transaction can happen, the following things must happen first.  The buyer needs to:

• Be sure they’re not already buying iPhones (in a big company it’s possible that the buyer doesn’t know)
• Assign a procurement team to survey a variety of teams within the organization on what features are most important to them in a smart phone
• Prioritize those features
• Build a framework for valuing smartphones
• Review that framework with multiple teams
• Research other smartphones to see if there’s a better option
• Potentially request a proposal from those other options
• Determine a budget for smartphones
• Negotiate pricing with the vendor
• Once a decision is made to go with the vendor, they must get buy in from multiple groups and multiple levels (this is where its more about emotion than process, any person at any level could stop the deal based on their own whims)
• Check vendor references
• Write up an agreement with the vendor
• Have legal team review the agreement
• Negotiate legal and business terms with the vendor
• Circulate negotiated agreement among senior managers and executives
• Request sign off from the appropriate executive
• Get sign off from appropriate executive
• Issue purchase order
• Receive and process invoice
• Pay invoice based on negotiated terms

Finally, if Apple is able to get through all of these obstacles, they’ll finally get a check.  These transactional differences illustrate why a super strong sales team can be a true competitive advantage for B2B businesses.

Mastering the Complex Sale

I just finished Jeff Thull's bestselling book, Mastering the Complex Sale. 

I highly recommend it for individuals focused on complex and exploratory sales.  It gives some excellent perspective.  It points out that there have been three key phases in selling over the years. 

Era 1: Cold Calling, Presenting Your Features (me, me, me), Answering Objections

Era 2: Consultative Selling: Asking questions that lead the prospect down a path into your solution

The third era, and the one that Thull promotes, is around truly understanding a prospect's business and key business process and to diagnose problems and their impact.  Much like a doctor, Thull encourages you to spend time asking questions to determine whether the patient (prospect) has a problem at all and what is its impact.  Only after you and the prospect have a detailed understanding of the problem and the impact can you discuss a solution.  And in many cases, you may find that the prospect doesn’t have a problem or it isn’t a material problem, and you should walk away.  Just like a doctor wouldn’t operate on someone that didn’t need an operation, you shouldn't make a sale if there isn't a problem.  

Here were some of the key insights I took away from the book.  

• Don’t present.  Always have one foot out the door.
• You don’t want a decision on the solution, you want a decision on the problem
• There’s no such thing as a decision maker – there are multiple people involved in decisions.
• People make decisions based on emotion (Boeing is based in Chicago because the CEO wants to live in Chicago)
• There isn’t a decision to buy, there is a decision to change.
• Credibility comes from asking questions about the prospect's environment or situation that they haven’t thought of themselves.
• Most prospects have a positive present state, they don’t feel they need to change.
• Key question: How does the absence of my product manifest itself in my customer?
• Procurement creates a framework for a decision and they always make the right decision within their own framework.
• Most salespeople are selling with 90% of their product’s value behind their back because the problem isn't understood by the prospect.
• Include all costs in your ROI analysis – including the cost of their resources to implement.
• Talk about your top 3 pieces of value, but know all of them.
• When diagnosing, get to the people that are closest to the data.
• Don’t be a person that makes a sale, be a person that transforms your client’s company.
• Take the customer backwards to get them to move faster, focus on the problem.
• Don’t focus on bringing the prospect a positive future – a positive future implies they’re incompetent now.
• Good salespeople mention the side effects or potential negatives of their solutions (like a doctor).
• Don’t get emotionally involved, always be leaving.
• If you can’t quantify the cost of the prospect's problem then there is no problem.
• The decision to change is made during the diagnosis of the problem.
• Don’t talk about your value proposition, talk about value hypothesis (e.g. net profit).
• If you’re feeling pressure during the sales process you’re doing something wrong.
• Go for the no.
• Crisis drives change.
• You cannot sell a group.
• Find out out who owns the business metric that is impacted by your product and work with them to diagnose.
• The hardest part of a psychiatrist’s job is getting the patient to see that they have a problem.  Same thing for salespeople.
• When reaching out to someone cold, be sure that the message you send could not have been sent to anyone else in the world.
• When a prospect goes cold, use the rule of two to give them the opportunity to tell you the truth.  “When I don’t hear back from someone it’s usually for one of  two reasons: 1.) they’re really interested in moving forward but they have some legwork to do internally to get the pieces in place or 2.) they’re really just not interested.  Either one is fine of course.  Which one is the case here?”

Complexity Creates Jobs

Doing a deal with a big company is extremely complex.  That complexity leads to lots of jobs.   There are multiple boxes within the big company that need to be checked to get a deal done.  And each of those boxes has an owner.  There can be hundreds of boxes and dozens of owners. 

Your inclination, of course, is to speed up the deal by simplifying the deal process by minimizing or eliminating the need to check some of these boxes.  While this is the right approach, and it must be done, it’s critical to remember that each of those “box owners” likely believes that their box is extremely important.  And that checking their box is a critical part of the company’s business process.  And they’re also likely to become extremely threatened when their box is minimized or eliminated. 

It’s important to be aware of this reality when attempting to speed up a deal.  Be respectful of every owner in the process, and coginizant of the consequences that come from speeding things up.

A Sales Pipeline & Process for Startups

The other day an entrepreneur was asking me how to best setup and monitor a sales pipeline and process.  I thought I'd post my answer here.  Three simple steps: Step One: Setup Stages.  I like to use these six:

1. Qualified: you've identified the right individual to speak to
2. Meeting Set (with right individual)
3. Meeting Held (with right individual)
4. Proposal (your proposal has been received by the prospect)
5. Verbal (prospect has agreed to the terms of your proposal)
6. Closed Won (signed contract received)

Step Two: Identify your "conversion angles" for each stage of the process.  That is, what are the secrets to getting the sale from one stage to the next?  For example, to qualify a lead it might mean identifying the person's job title and name by using LinkedIn or Hoovers.  To get an opportunity from verbal to close it might be putting a product launch date on the IT team's calendar or a price break in return for a quicker close.  Putting conversion angles for each stage down in writing is critical -- start with at least two angles for each stage.

Step Three: Identify the bottlenecks.  Look at last quarter or even the current week (if you have enough opportunities) and place them in the appropriate stage.  Identify which conversions are working and which are not.  See the sample analysis below:

Based on this analysis, here's what's working and not:

Working: Qualifying Leads, Holding Meetings that get set

Not working: Setting meetings, Sending proposals out of meetings

With this information the team can dive into the details of these conversions to find out what's slowing the process down.  Is it effort?  Is it resources?  The angles?  Are some team members converting this well and others not?  When this converts quickly, what are people doing?  Are there specific segments of clients that are converting better than others?  Why?  Dive into the problems with these conversions.  To add a layer of complexity, you can add a column showing the number of days that opportunities are in each stage.

This kind of analysis is valuable as a one off, but it will be even more valuable as time goes on.  Managers can look at how these conversions are changing week over week or month over month.  Relative data is always more valuable than a snapshot in time.

Even with a good sales process, there can still be holes that need to be patched.  Different reps may interpret the stages differently or you may need to add steps to the process to have more transparency.  To deal with the potential holes in the process, in parallel, I like to monitor what I call "tipping points".  Tipping points are pieces of information, insights and actions taken by the prospect that increase my confidence that the deal is legitimate and moving at the right pace.  Tipping points are crucial to keeping a sales team and a sales process on track.

This post is already getting a bit long.  I'll write a post on tipping points in the next few weeks.