VC’s Gone Wild: Yes, Sometimes it is the Product
It’s not easy disagreeing with one of the most respected VC’s. In fact a lot of what Mark Suster writes in his Techcrunch post on Salespeople excuses is accurate. But it’s what I call a Swiss cheese article. It looks good but is full of holes.
Blaming the sales team is usually the first thing most VC’s or startup CEO’s do when addressing a poor performing company. Usually it’s because they are easiest to measure. It’s simple just look at the revenue number.
But what if a startup doesn’t have a sales team? What if that company is Atlassian who sells thousands of seats of software without a channel or sales team? Their products are sold via word of mouth. They sell in volume because the products are that good. No evangelical sales team there however, just a couple of great products.
Let’s put that aside for now and address Suster’s sales excuses:
1. Suster: Sales people often blame the product
Suster claims that prospective customers are buying the best vendor salesperson in a sales situation which is more important than the features of the vendor’s product. While the feature point may be somewhat accurate, customers do buy on benefits. They buy product/solution benefits that best meet their needs.
If your product isn’t meeting the needs of your target audience, then either pick a new audience or fix the product. Hiring maverick or evangelical salespeople that are convincing people to buy things that don’t meet their needs will only get your new customer fired. That’s not what you want.
Moreover, if Suster’s “people buy the salesperson” claim is true, then every product shipped by a startup or company with an evangelical sales force should be a mega-hit. Yet we know this to be false. Most salespeople in the Open Source software industry all have well trained, objection handling salespeople (I know because I’ve faced them in myriad sales situations).
Each have product successes, yet each all have product failures. Why? The sales team is the same in most situations. So if the same evangelical, proven sales team is not successfully selling all products, how can you blame the sales team? Alternatively, perhaps some of the product line isn’t addressing customer needs? Bingo.
2. Suster: Sales people will often blame your pricing
Well done and well said. I agree completely with his points.
3. Suster: Sales people will often sell future development work (Somewhat Justified)
This is a tough one. If it can be handled by professional services or a Value Added Reseller then it’s probably OK. I do agree with Mark that it’s not OK to tap your core engineering team for development work unless it’s on the roadmap.
4. Suster: Sales people will often exaggerate the strength of competitors
Perhaps this is true, but so is the flip side. It goes something like this: “Don’t worry about the competition, so and so CEO doesn’t know what they’re doing. Our product is far superior to theirs anyway.” Thus shutting down further input from the sales team. And hence little attention is paid to market realities (and how your product is faring in it) to make any course corrections.
5. Suster: Sales people will always ask for more sales support
Suster’s argument that startup salespeople do all of the admin and sales engineering functions in a startup seems like great penny pinching advice.
Yet in reality you want salespeople on the phone closing business. Paying an admin $40k a year to free up 40 more hours a week for sales phone calls is better advice. Unless you’re selling $10 items those 40 hours a week should add up to well over $40k in business for the year.
6. Suster: Sales people will always tell you their quotas are too high
Sometimes they are. A good rule of thumb is to look for the highest performer on the sales team to see if she is making quota. If she’s not, then it is too high and it will cause a detrimental effect to your revenue.
Set quotas based on achievable company goals. Reward your salespeople for reaching stretch goals and don’t cap compensation. That’s where the game playing starts. Create an easy to understand, straightforward quota and compensation structure that anyone can do in their head. In short, make it easy to calculate how much commission is attached to any deal.
What you should be doing
While Suster’s post was ostensibly tongue and cheek, a lot of his advice will be taken at face value. As you can see however, It’s not as simple as that.
In reality, your company needs to measure your products’ reasons for winning and losing. Then confirm them via an independent source (surveys or third parties). Then make changes if necessary. Note: it may include removing the salesperson from the company.
Moreover, CEO’s simply must observe or participate in the sales cycle. If your CEO hasn’t sold a deal by himself, then they’re not qualified to ignore the sales team’s excuses. That goes for your VC as well.
An excuse card for everyone
Let’s be clear, what Suster is promoting is not just an excuse free sales team for start ups. In essence, he’s giving the rest of the company an excuse for poor performance. I can hear it now, “It’s not us, it’s the sales team.”
Targeting the sales team and telling them there are no excuses is not helpful. Why not extend the no excuses policy to every department?
- Marketing – Can’t drive more qualified leads? – No Excuses
- Product – Why can’t you deliver a product that produces a Wow experience in people? – No Excuses
- CEO – The Media and Analysts are ignoring you? – No Excuses
- Human Resources – Can’t find the best people at the lowest salaries? – No Excuses
- Your VC’s – Can’t raise more money in your next fund for our B round – No Excuses!
It’s a rare case where sales is the only non-performing department in a start up. Especially these days. Most often it’s a systemic problem within the organization. Perhaps you built a product that doesn’t address your customer’s needs. Perhaps you’re not communicating your value proposition effectively with the right market. Perhaps your competitors are just better at executing then your organization. Then, to make matters worse your sales people are then trying to sell your company’s dysfunctional situation.
Wrapping it all up
Today’s socially enabled buyers are more sophisticated and are armed with more tools. If your product stinks then most people probably know about it. Conversely, companies like Atlassian receive a large share of Enterprise Wiki and Bug Tracker sales because of the positive feeling they leave their customers after using their software. Yet no sales team?
To be successful as a startup you need to have a remarkable product, a remarkable customer service experience, and a remarkable sales/marketing team to have any long term chance at a decent exit. Sure there are a few exceptions, but the odds are greatly diminished.
Better to focus on the entire customer experience while producing a product that exceeds your customer’s expectations. Focusing on one element of that experience (the salesperson) and saying “no excuses” seems like an excuse in itself. I’d rather the entire organization take ownership of the issue and work together to change it
What do you think?