News
Supercharging Enterprise Sales in a Downturn PT 2 | Andrew Phillips
16 OCTOBER 2023
We are in a vastly different environment to a couple of years ago. Characterised by turbulence and uncertainty as we rapidly exit a low interest rate environment, further compounded by often slow and complex sales cycles in government, regulated and complex industries. It has been an extremely challenging period to date for the startup ecosystem.
So we spoke to one of the best operators out there Andrew Phillips, to see what founders and their teams can do to supercharge their sales function in a recessionary environment.
Andrew…
While it is a new experience for many of the companies we work with, these challenging conditions are something you must have experienced through eras such as the dot-com boom/bust while you were at Dell, the GFC through your time at VMware/AWS, and of course COVID while at UiPath. It would be great to dive into these areas.
What changes to go-to-market and enterprise sales need to be considered in a recessionary environment?
Top of funnel should become more scientific, and opportunity close conversion assumptions must be reassessed.
With sales, there is never a time to be conservative. In good times, conversion rates will increase, and selling will feel easier. That’s the time to make hay. In tough times, conversion rates will reduce so that’s the time to get back to basics, to prospecting more and to put more thought into how and where you prospect.
OIF Titbit: For example, at a 20% conversion rate, to sign 10 customers, a company would need to do around 50 outbounds. However, forecasting that your conversion rate is going to fall in a down market, companies may forecast a decrease in conversation to 15%. Therefore, you need to do an additional 16 outbounds. I.e. 13% more outbounds required for a 5% drop in conversion.
Change your value proposition to one that resonates.
Make sure to change the value proposition to one that resonates the most with customers during these turbulent times. Focusing on how your solution reduces costs for your customer instead of highlighting how they could use your solution to grow faster may be a change in posture that gets greater attention. In addition, don’t disregard organisations that may say no to your solution during a recessionary period. The skills you develop and the contacts you make while prospecting in a tough market will be muscle memory for you, and warm reintroductions to the contacts, when the market inevitably picks up.
OIF Titbit: For example, one of our portfolio companies realised there was greater budget in ‘digital transformation’ vs. the budget in HR, which unlocked a whole new set of customers.
Sales is a forward-looking activity – focus on sales productivity in a downturn to recover earlier and faster.
To be clear, this does not mean hiring more people. Sales is a forward focused activity from both an investment and a return perspective. Even if conversion rates have slowed or sales cycles have lengthened, the work done today will determine the grade of the angle once things do start to improve, ensuring that the recovery from the downturn will be as steep as possible. Improve sales productivity by getting back to the basics of selling, thinking more deeply about your customer’s needs and predicaments, refining “First Call Decks” to reflect the changed nature of prospective customer’s own situations, and may be trimming some of the “nice to have” components that were added during the better days. It is important for both the motivation of the sales team and the whole company that any changes made in tough times are communicated openly and explained in context of the impact to the entire company.
Government and regulated industries are typically the hardest to get into and often the most risk averse. You spent much of your early career focusing on these types of customers, how do you get in as an unknown solution?
There is a large amount of bureaucracy and complex procurement rules when selling to government and regulated industries. Yet the complexities and barriers to entry, once overcome, give an advantage due to stickiness and transferability across departments.
Spending a large amount of time gaining a large customer like this pays out in the end. I often compare this to an Airbus A380 taking off versus a fleet of fighter jets. Whilst the fighter jets are quicker to lift off, each one takes individual effort for minimal passenger numbers. The effort to get an A380 off the ground is much greater but, once up, the ROI for your effort is so much greater and once successfully completed, the following times become a lot easier. There are three things I would share –
- Complex new ideas require simplicity
- Understand the internal hurdles and barriers up front where possible
- Pseudo customers can give you credibility
Complex new ideas and technology requires simple analogies.
Jeff Bezos has a philosophy – people don’t remember data, they remember stories.
“Bullet points and PowerPoint cannot tell stories”
In an email to senior executives Bezos instructed that from then on, all presentations were to be written as 6-page “narratives” - i.e. convincing and memorable stories.
This concept can be directly translated into enterprise sales.
Analogies are a great way to use storytelling to get a complex new concept across. Let’s take AWS. Today a large amount of people would be familiar with the concept of cloud computing, but back in 2012, that wasn’t the case. When cloud computing products first emerged, it required thorough explanation to detail how cloud computing worked and why a company didn’t need their own data centres. I would often use the analogy of electricity,
“One could imagine cloud computing as plugging into a central electricity grid rather than relying on generating your own electricity.”
I.e. similarly, back in the early 1900’s salespeople had to explain that companies didn’t need to buy and maintain their own expensive electricity generators, plus a spare incase one broke down, for each factory they operated. They could just plug into the new grid and only pay for what they consumed.
It is important to bear in mind that the technical person you are pitching to may need to explain your complex technology to someone in Finance, HR or Procurement whose expertise is not technology. Make your contact’s job easier by coming up with a relatable analogy.
There are additional hurdles, barriers, and internal nuances – understand them up front.
Selling to government or highly regulated industries such as Financial Services, requires a superset of skills on top of those used to sell to corporations in general. It’s important to understand the additional complexities that your customers have that may be an obstacle to them buying from you. These could include such things as APRA-mandated rules for banking and financial services organisations, specific security protocols for Government agencies such as IRAP or company-mandated ISO criteria that your customer must comply with to operate under licence in their industries.
As always, your customer understands their business better than you do and regulations are different for each sector or organisation so it's important to ask your customer what their obstacles are to buying and then do your research on how your solution can comply with them.
Pseudo customers give you credibility
Rather than going straight to government agencies or to “the Big Four” banks, begin the process by looking for organisations and companies within that sphere that are more lightly regulated. For example, look at pseudo government agencies such as universities or Government Owned Corporations (such as Australia Post or the NBN) or second or third tier banks in the financial services industry. Look for ways in which you can build up critical mass before you approach a large organisation.
What are the tips and tricks you use to shorten the sales cycle, particularly in difficult markets?
Focus on the small wins – getting in is always the hardest.
The end goal may be multi-million-dollar contracts, but sales always start with getting the mental time of a single contact. Don’t hold out for the big deal at the expense of the first one. The first Purchase Order, regardless of size, is always the hardest one to win.
OIF Titbit: Three questions to consider could be;
(a) what should I pitch initially to reduce the number of sign offs required (whether Finance or Compliance),
(b) what is the highest contract value that the contact can approve themselves to just get a foot in,
(c) are there work-arounds, such as going through the AWS/Azure/GCP marketplace, which can assist me with a vehicle already established by procurement etc.
Use your customers as lead gen – it is your highest conversion channel and one that is typically missed.
Throughout the entire sales cycle there is one step that almost all salespeople forget. It’s the step which typically has the highest conversion rate and is one of the easiest to implement.
At the tail end of the sales cycle, once the customer has bought or implemented your product and is now happily telling you about the benefits of your solution, simply ask them:
“Thinking of the problem we have solved for you, is there anyone else at your organisation or in your network at other organisations, who you think may benefit from our solution too?”
A warm introduction from a customer is a better lead than any other lead, yet so many salespeople forget to ask this crucial question. Even if they give you a name, without an introduction, that is a head start on the next sale you wouldn’t have had if you hadn’t asked that one simple question.
