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A very exciting thing is happening at one of our portfolio companies, Zmags.  The company spent the majority of 2011 shifting its core product focus, and its distribution model, from a horizontal market segment to one focused on eCommerce marketing.  With that shift in market segment, and customer value proposition, Zmags is finding its average deal size grow a factor of 7x. The marketing messaging has dramatically changed to one around increasing customer Web conversion rates into eCommerce sales. And the sales process evolved from a primarily inside sales model to a combined field/inside sales model, with an associated expansion of the sales cycle.

This kind of evolution of distribution models requires an inordinate amount of changes in the day-to-day operations of sales and marketing. It also requires the recruiting of a different set of talent, and the adoption of new skill sets by the existing sales reps.

Which brought back memories of the concept of  The Sales Learning Curve, a classic paper by Mark Leslie and Charles Holloway. It is a must-read for any founder/CEO looking to build or ramp up a sales team. Mark and Charles primarily focus on the launch of new products, and the organizational learning curve required to support their success. I would say that the learning curve also applies to pushing an existing product through a new distribution model or channel.

The key points for pursuing a new distribution strategy or distribution channel are:

  • It requires the attention of the entire senior executive team, as the effort will impact each function in one way or another
  • It should be tackled by a “tiger” cross-functional team that can adequately pursue the initiative with an open and learning mind frame
  • Dive deep into the success requirements from the standpoint of the prospect/channel partner to understand the true pain points of each, the company’s value proposition for each, and how each wants to engage the company
  • Adapt as learning is accumulated, adapt again, and again…
  • Once the learning is near complete (it never ends), drive to a clearly mapped out engagement model and the specific associated touch points through the whole distribution channel (company to partner to prospect to customer)
  • Once the core model is baked, only then hire the “steady state” team that will carry it forward

And this is where the renaissance sales rep comes in… As Mark and Charles point out, in a new market or channel, the learning curve of the organization is different from that of the sales rep. The sales executive on the tiger team is very different from the executive that would carry the process forward once it is baked.

Hence the concept of the renaissance rep (again, I refer to Mark/Charles’ paper). The renaissance rep must have the following characteristics:

  • Entrepreneurial (as much as a sales executive can be)
  • Has experienced an early stage company and wants to do it again
  • Willing to learn and adapt, learn and adapt
  • Willing to roll with the punches without pointing fingers at marketing or development or finance
  • Has the instinct to walk away from deals that will never close
  • Has the strength to push back on prospects that try to get something for nothing from an emerging company
  • Willing to forgo some compensation in return for company success and equity
  • Has faith that the money will come eventually, and the company will do well by him if it doesn’t

Firas Raouf is a founding member of OpenView Venture Partners. He is a mentor to OpenView’s Portfolio, an
engaged board member, and plays an active role in investments. Connect with him on Twitter @fraouf.

0 Responses to “How to Change Your Sales Model Mid-Air”

  1. Frank Dale says:

    Firas,

    Good post!  I read “The Sales Learning Curve” paper and it is fairly similar to Steve Blank’s approach in “The Four Steps to the Epiphany.”  I would be interested to hear what Zmags did to accelerate through the transition process to a vertical focus from a horizontal one.

    Frank

    • Firas Raouf says:

      Frank, it took about a year of research and planning. Making that kind of commitment to a single segment is a very difficult thing to do for an early stage company. But the difficulty is more psychological than anything. It tends to mainly manifest itself in the fear that a focus on a narrower segment of the market will slow growth. That is nonsense. A segment focus actually accelerates growth and improves operational efficiencies. The biggest misconception is that focusing on one segment will immediately dry up sales to other segments. Not true. Inbound opportunities from other segments will continue to flow in, and your sales team will continue to work them. The key is to make the outbound focus of the organization be segment focused.
      Anyway, to answer your question… Zmags started with a commitment to figuring out the answer. Then used our Labs team to facilitate a market research project to hone in on the best segment. Then started to define the product and operational requirements to serve the segment. Then started to figure out the targets and the messaging. Then the outbound prospecting started. Then the sales process evolved to suit the segment.  Lots more to do, but they are on a great start.

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