A star is touring New Zealand this week. He’s not quite Justin Beiber or Elton John, but Professor Ken Morse is still something of luminary in the world of hi-tech business success.
Morse is running seminars for hi-tech entrepreneurs in Auckland and Christchurch, sharing some of the secrets of his success as the co-founder of six high-tech US companies. According to his bio, five successfully progressed to IPO or acquisition, and one was a ‘disaster’.
Helping ‘techpreneurs’ with the most important skill any of them can master, selling into big complex organisations, is a focus of the Morse sessions.
The seminars are not for the fainthearted. Morse paints a scary, but realistic picture of the challenges of selling to multinational companies. It is as complex and demanding as coming up with technological innovation in the first place.
Technologists sometimes look at sales people with disdain. As the slippery, shiny-shoed types who are a necessary evil when it comes to getting their inventions to the market. In business-to-business selling the real skill is not so much about persuasion, about the gift of the gab, but about being an expert at understanding a prospective customer.
Great enterprise sales people build a clear picture of their target customers. Understanding and refining the problem they are wanting to solve, and the value to them of doing so. Who the people involved in decision making about your product are and what process they use to do it. What risks they are trying to minimise, who the competition is and how well they are connected to the prospect.
Christchurch company Tait Electronics have talked about becoming a more strategic selling organisation, where their sales people moved from being pushers of a product to gatherers of information about customer problems that are bought back to the company so the experts can develop solutions.
For example, Morse talks in his seminars about the critical importance of finding who ‘Dr No’ is in the organisations you are targeting. This is the person who controls the finances and typically doesn’t want to spend on new technology unless they can be persuaded of a very strong case.
Overcoming Dr No and the rest of the sales puzzle would be at top of any technology entrepreneur’s list of main business issues. The annual Market Measures study of technology sales and marketing highlights this.
In 2010 it identified four types of selling approaches used by Kiwi tech exporters. First was the “build it and they will come” method. Driven by the owner’s belief that their product is so good it will attract buyers with little or no sales and marketing activity. This is not common amongst tech exporters, with most firms more realistic about what is required to succeed.
Second was the “hanging up the shingle” style of selling - companies that undertake some promotion (e.g. a website) but do little proactive sales activity. They hope hanging out the shingle will be enough to attract buyers. A minority of companies were using this approach, but it was still apparent.
Most prevalent was the “door to door salesmen “approach. Companies arm their sales people with brochures and other collateral and send them out to ‘walk the street’ in offshore markets. The sales person is left to do everything – from introducing the company and overcoming objections to closing the sale.
Companies using this method typically experienced a high cost of sales and long lead times, which stay relatively constant. They are very reliant on quality of sales staff and find it difficult to engage distributors. Revenue is lumpy and unpredictable, and they find that their growth is restricted by the size of their direct sales resource so it is hard to achieve scale.
So what was the highest performing sales approach for tech exporters? It was the “moving the herd” method. This involves telling a compelling and unique story through promotional tactics to help move a tightly defined target market en masse through the sales cycle. Through this promotion (e.g. social media, PR, advertising) prospects become aware of the product, understand the value it provides and become attracted to it all before a sales person arrives.
“Moving the herd” companies typically notice that sales activity starts to build over time and average cost of sales drops. They have a broader company involvement in ‘selling’ activity, it’s not just left to the sales force. Distributor engagement is better, and growth increases as the sales person becomes less involved in all stages of the buying process. They can build scale without building a large sales force.
To achieve success offshore, technology entrepreneurs must take a lesson from their farming colleagues, and build a real sales process that moves their herd of prospects towards the ‘pen of purchase’.
The alternative, as Professor Morse himself says, is stark: “sales results are clear, digital and brutal. They are easy to measure; there are no shades of grey. Either the sale was made and the customer paid – or not.”