FINDING NEW SOFTWARE MARKETS
Sales Tales: Winning Business after COVID 19 doesn’t have to be a Drama
Today’s tale: play like a pro and it won’t be deja vu all over again
by Stephen Allott, Venture Partner, Seedcamp Sales Tales
The Covid crisis may have helped your software business along. You may be one of the lucky ones. Digital transformation, technology, healthcare and pharmaceuticals are all getting a boost.
But, on the other hand, Covid may have hurt you. Many software markets are limping or on life support. If you are looking at your evaporating sales forecast and cancellations from your subscriber base and thinking:
“What do we do next? Go out and look for new markets? How best can we do that?”
Use our Pro Guide for finding and winning your new markets, “Software Sales is a 3 Act Drama” is published by Sales Tales here for the first time.
Mont Ventoux in the picture is one of the hardest bike climbs. Close to the summit after 2 hours of climbing, I’m feeling pretty good. The summit for a software business is market leadership. Covid could well change all that, meaning you may have to go back to the start. On Mont Ventoux the start is in a cute village called Bedoin. You just have to get on your bike and start the climb again.
Selling after Covid is different. You may have been a winner before and even summited. Get over it. Start over. And you will have to seek new markets as well. Learning to sell into new software markets is the same learning process you went through when you learnt to sell into your old markets. But now you have to learn super fast.
“It’s like deja vu all over again” Yogi Berra said famously.
This time, use our guide to the Software Sales 3 Act drama. With a better understanding of each Act, you are better placed to win in each of the 3 Acts.
Companies have been asking me for tips on where and how to look for new business since the Covid crisis started. Here is what has been working:
Start with talking to your customers. Find out which are doing well and which are not. If you sell to law firms, their insolvency and litigation departments are busy while their company commercial, M & A and real estate departments have less work. If you sell to waste disposal, those serving shop fitting and exhibitions are doing less well while those collecting hospital waste may be doing better. If you sell to the contract cleaning industry, look at the market for COVID deep cleans. If you sell income verification but banks have stopped lending, consider other areas where income verification might be needed such as welfare benefits or private medical insurance.
Talk to your customer base about helping them get full value from your products but make sure to ask them what new needs they have. Listen closely for new product ideas. Look at market research on winners and losers. Above all follow the money.
Keep your sales team busy with fact finding customer contact campaigns. Have activity targets and structured information collection. Use shared spreadsheets to track the answers to questions. Then analyse the findings weekly and decide whether to pursue a new business idea to the next stage or qualify it out.
Be aware of what is going on in your customers’ financial planning cycles. The Covid shock has initially led to a freeze in spending and hiring. After a while business will re-start. The key is to work out where demand will be after the freeze.
Our dramatic tale today is in three chapters:
- Understand the 3 Acts.
- Understand how to win each of the 3 Acts.
- Understand what can go wrong and how to fix it.
Understand the 3 Acts
Let’s start our journey with a common misconception: many think there are only 2 Acts in the software sales drama. Develop product market fit and then scale up. Sounds neat. You do customer research, design a product, build it, test it out and you are ready for prime time Series A scale up. Hire those industry reps, give them some leads and off you go. When you hit problems it’s either the product or the execution.
But you have to toddle before you can walk and you have to walk before you can run. And things aren’t so neat. Using football (Association football also called “soccer”) as an example, you have to play and win in the lower leagues to get a shot of winning the Champions League. And the game changes as you go up each level.
When I get asked “how do you do lead generation?” and “whom should you target” the answer depends on which Act you are playing. The answers are very different. So let’s start with explaining the 3 Acts and how that affects lead generation focus and also your lead generation tactics.
After Covid you can do Search in your base most easily. Should you prospect outside your base as well?
Let me tell you a true story about stumbling on a new business which I researched while looking for case studies during my time as Crown Representative for SME. In 2012, Government Digital Service were looking for new suppliers to deliver agile projects for digital transformation. An official found a promising supplier on an obscure framework and asked for a proposal for a trial piece of work. This supplier at the time employed about 250 people and was privately owned but did not do much Government work. They qualified out the inquiry. No bid. The official went back and pleaded. “Please bid”. Eventually they were persuaded to bid. The work sent well. Today in 2020, they are one of the biggest suppliers on the G-Cloud Digital Marketplace, publicly listed, 1500 people and have a market cap of £750 million. The lesson is that your old qualification rules can stop you starting new Covid businesses.
Understand how to win in each Act
The 3 Acts differ in whom you prospect for business, how you win deals and the type of sales people you need. It may be a while since you have played in the lower divisions and gone through the Search phase so be careful to play the right tactics. Playing Scale tactics when you are back in Search just won’t work.
Let’s just clear up what some of those terms mean:
“spray and pray” lead generation means trying different things
“rifle shot” lead generation means targeted sales outreach to a tightly defined ideal prospect profile
“missionary” sales means educating your prospects rather than selling to them.
“optimal S & M mix” means the sales and marketing lead generation mix that yields the highest return on your spending.
Customer demand and problem awareness can change radically between the 3 Acts. In Act One, prospects are not aware that their Pain has a solution and will not have a live project to solve it. With Covid, this is particularly true. Create lists of the art of the possible to share with prospects. By Act Two, you have educated the market through reference customers that their problem is common, can be reliably solved and they are creating budgeted projects. In Act Three they are now shopping for your solution and have a budget to buy it
Lead generation changes radically from Act 1, trying anything that works (“spray and pray”), to, in Act 2, using rifle shot tactics to target three promising markets to, by Act 3, a conventional marketing mix.
Product management evolves through:
- Act One: do anything (I’m exaggerating for effect)
- Act Two: do what it takes
- Act Three: do only what we do.
And overall Act One is about getting reference-able customers, Act Two is about winning some early market share beach heads with some repeatable solutions while Act Three is about scaling up. So you need to practise winning in Act Two to win in Act Three.
So what can go wrong and how to fix it?
The number one request for help I get is how to close trials. Companies get introductions to supposed potential customers, offer the prospect a free trial which then goes nowhere. Usually this means Act One companies don’t realise they have to solve a customer’s pain rather than pitching their technology. Instead of “show up and throw up” sales meetings, try “let the customer build their own baby” by using their imagination. Customers can often give you false hope by taking meetings to learn about what you do, not refusing a free trial, but then not doing anything. If the introduction is from a powerful person, prospects are even less likely to say they are not interested and more likely to look falsely enthusiastic. Here is our guide to closing trials , the most popular Sales Tale in the series, which has the winning tactics you need.
Other common problems include the big company rep in Act One who doesn’t sell anything, going big on mass marketing in Act Two but the leads peter out rather than turning into sales. Save both of those moves for Act Three.
A completely different problem can come from success. If you are really really successful in either Acts 1 or Act 2, so might not realise you needed to change tactics for next Act.
Here we set out the full pro playbook “Software Sales is a 3 Act Drama” for winning the Champions League equivalent in software sales. Use
It solves the typical questions I get asked about lead generation, closing sales, crafting marketing messages, the ideal timing for a Founder to hire a sales rep, how a Founder’s sales role evolves, what profile of early sales reps to hire, how to hire a great sales rep and how product management changes as you scale. Even pricing evolves Act by Act from Flexible through Exploratory to Fixed & Formulaic
The key message to take away is that the right answer is often different in each Act. After Covid you have to learn again. Be conscious of which Act in the drama you are playing. Then you can play to win. Ask your self which Act you are in and how the answer would differ by Act.
With thanks to Ian Lobley (who commissioned my first talk on this topic in 2002 to his 3i technology investing team in Cambridge) and for feedback from Mark Littlewood, Martin Rehak, Devin Hunt, Omar Pera, Paul Gannon, Greg Lawton, Ben Miller and David Mushin.
And acknowledgement to fellow London Dynamo, Carlos Espinal, for inspiring the Sales Tales series.