Realigning selling
You don’t need to go far to see how different the 00’s are from the 90’s, just take a look at selling.
Ahh, the 90’s, lots of people in sales tell me you didn’t make sales calls in the 90’s, it was more like making appointments to take orders. Gurus of selling like Jim Dickie of CSO Insights, reported that, for a while, the percentage of sales representatives who made quota was in the neighborhood of 65% a few years ago, then came the nuclear winter. Although the number of people invited to presidents’ clubs declined precipitously in the early years of this decade, it has been recovering recently but it still has not revisited the earlier heights.
Despite the improving numbers of people making quota there is a pronounced difference between selling today and selling back in the day. We’ve been over this ground before so I will be brief. Selling today takes more effort because of a single word – alignment. What most people I talk to mean when they use it is understanding the world of the customer – needs, biases, motivations, their buying processes and a lot more and then demonstrating to the customer that you understand.
Alignment is spawning a cottage industry between marketing and sales and whether you call it alignment or something else, there are lots of emerging software companies working the angle, trying to improve a sales process that has been so well scrutinized that there might not be much room left to improve it further.
Frankly, I like a lot of what alignment is about for several reasons. First, in concept, it goes beyond the sales process per se because it requires the seller and the selling organization to invest in something more than simply buying a list of likely suspects. You know what happens to those lists – too often they just bounce off spam filters or contribute to the unread mail pile. Fundamentally, alignment turns the sales process into something that also respects the customer buying process.
Improving the customer
What I most like about the idea of alignment, though, is that it happens somewhere above the sales funnel and it contributes to improving the customer. I bet you’ve never thought of it that way – improving the customer, I mean – but from a pure process perspective that’s a good way to look at it. If the sales process really has been refined as much as I say it has, then one logical and somewhat disheartening consequence is that in many situations, execution by the vendor organization can’t get much better. It’s a classic case of diminishing returns.
If you want to improve a process – any process – you can either do it by scrutinizing and modifying the steps of the process or you can improve the inputs to the process. Ideally you do some of each. The wisdom of improving the inputs is summarized in the maxim "garbage in, garbage out" (GIGO). But how do you improve the customer?
One of the reasons we’ve preferentially relied on improving the way we sell is that it’s been nearly impossible to improve the key input – the customer – but modern techniques and computers have changed the game. This is the point where we cross over from hunting to farming.
In fact, we can’t improve all of our potential customers any more than we can schedule a sunrise, but we don’t have to. We only need to improve the customer that comes into the sales process, but this is not the same thing as improving qualification. Let me explain.
Improving the way we qualify will surely increase the number of good leads and improve close rates but not indefinitely. Better spears and bows will improve your hunting technique but they will only hasten the decline of prey herds. To summarize this is really about the difference between getting a bigger slice of a static pie and growing the chart. For years we have been doing the former, and it’s time to do the latter.
Various ideas like capturing the voice of the customer, improving alignment, and nurturing customers in a marketing pipeline that is separate and distinct from the sales pipeline contribute to growing the pie. To many people familiar with the ways of hunting, the idea of farming is not only foreign but they may treat it with hostility. Nevertheless, a shift from hunting to farming is underway. As marketing guru Jack Trout has observed, there is a "tyranny of choice" – so many vendors and so many available products that customers may be stymied by their options.
The way around the problem is to improve the customer who enters the sales funnel, to educate him or her to understand differences and options and that takes an up front investment mostly in time. Savvy new software companies are seeing this and orienting their offerings to address this emerging market need and that should surprise no one. How often do we visit a Web site to gather information about a potential purchase? They say a car buyer starts shopping the Web as much as six months before entering the show room. This is a learned habit that is rapidly pervading all other areas of the market and the driving force for ideas like alignment.
Minute Men and the Marathon
Today is April 18, Patriot’s Day in Massachusetts and an official state holiday. If you come from other parts of the country you might scratch your head and wonder why we have such a strange idea of a local holiday. I am sure we are not alone, and there must be lots of states that have something to celebrate that is unique and local instead of national.
For many out of towners, just knowing the today is also marks the running of the Boston Marathon (110th and counting), just knowing about the race and the 10,000+ bodies clogging the road from Hopkinton to Boston might be reason enough for shutting things down. The Red Sox play the Mariners at 11 AM and the marathon route goes right past Fenway Park and you can always count on a great ovation when they announce the first runners passing by.
However, the real reason for Patriots Day is to commemorate the battles of Lexington and Concord back in 1775 and “the shot heard ’round the world” – for most people the beginning of the American Revolution. It was the moment when Enlightenment philosophy met gun powder and cold steel. In a set piece on Lexington Green then later at Concord’s North Bridge and on a 22 mile trek back to Boston (Battle Road on land owned by the Park Service) colonials engaged the British in what would later be termed guerilla warfare.
From the vantage point of the 21st century it is hard to imagine farmers fighting the most powerful empire in history, each armed with early muzzle loading rifles, but it’s all there in the re-enactments. Now and then it’s good to take stock of all that.
Salesforce Buys Sendia, Shows It’s Serious about Wireless
Salesforce.com announced its purchase of Sendia last Tuesday in a well publicized affair that included a luncheon/press conference complete with presentation, demo and panel discussion. Some of the buzz around the announcement was a mild debate about the importance of the whole affair. After all, it was said, companies buy other companies every day, but few hold an event to highlight it. That’s fair, and the natural question then is, what makes this different?
Well, there might be quite a bit. First of all, Salesforce.com has never bought another company, and its platform strategy more or less makes it possible for the company to never need to. The platform in question, AppExchange, already makes it possible for customers to pull together composite applications by selecting from hundreds of available solutions that are built to work together. Furthermore, Salesforce.com’s hosting model enables the company to profit from that integration as soon as the first seat goes live, so there is no financial reason to make acquisitions.
Completing the Platform
Absent some of the usual drivers, you need to look at synergy and infrastructure to find the reason. Sendia is a natural fit for Salesforce.com, because it provides the wireless infrastructure that completes — for now — the vision of a platform that can support users anywhere. Sendia brings assets that Salesforce.com apparently decided it didn’t want to invest in building from the ground up. This single new bit of infrastructure makes all Salesforce.com applications available on virtually all handheld devices, pending certification by Salesforce.com.
Parse that last sentence, and you come up with a compelling reason to make a big deal of the announcement. The union of all applications built in the AppExchange and virtually all handheld devices is a pretty big data set.
The idea of wireless computing has been more promise than reality for the last several years for many reasons. There were too many handheld devices with different operating systems and screen sizes for small, innovative companies to make headway in the space. Betting on the wrong hardware device was a sure route to financial ruin. Then too, there were speed and capacity issues for devices and networks that — for the time being at least — may be settled.
The Rebirth of Wireless
Immediately, Sendia’s technology makes it possible for users to develop once and deploy on many disparate devices; with that problem settled, and with bandwidth and overall device capacities improving, the stage is set for the rebirth of wireless. Make no mistake about it, this announcement will likely be seen as a rebirth. Just as network computing took close to ten years to really get off the ground, wireless has taken some time to develop too — and a lot of vendors have explored a lot of roads to nowhere. This announcement has the earmarks of the real deal.
Another way to look at this is to consider what it means for Salesforce.com. As noted previously, the company had never, to this point, bought another company. This act will no doubt be seen by many as the opening salvo in an acquisitions frenzy, but caution is in order. If this deal is to be considered the definitive case, hopeful acquisition targets should carefully analyze what Salesforce.com has done. Salesforce.com has shown it is willing to buy infrastructure, but the idea of buying applications will probably still be a non-starter.
The other thing worth mentioning is that acquiring Sendia takes Salesforce.com another step down the road to being a platform company that competes with the likes of Oracle and Microsoft.
Salesforce.com continues to say that CRM is its business and that it is focused like the proverbial laser, but you cannot ignore the fact that the platform is becoming huge potential business. I think CRM will continue to be highly important to Salesforce.com, but since this industry is not evolving at the rate it was five or ten years ago, it has plenty of spare cycles for trying other things. If you are building a 21st century application company, you simply must have not only wireless capability, but good wireless capability.
What’s Next
The looming questions now have a lot to do with where a company like Salesforce.com might want to go next. I think the smart money heavily discounts the idea of going head to head with SAP (NYSE: SAP) in the ERP (enterprise resource planning) space or of competing with any established conventional software house for that matter. There are numerous application areas that have not been penetrated or perhaps even thought of. The simple reason is that if your model of the world is a flat map, you don’t even think about going around the back.
In ten years, that’s most likely what we will say was the importance of this week’s announcement — if we say anything at all.
Suite Warriors Take the Field
On Wednesday NetSuite made five announcements designed to catapult it into a leadership position in the on-demand or software as a service (SaaS) market. In no particular order the company announced its version 11.0 release, informed the world that this release is fully AJAX infused, introduced a scripting language for customizing business processes, introduced a vertical market version for wholesale/distribution, and announced an edition directed at services companies. The announcements were made prior to the New York Yankees defeat at the hands of the Oakland A’s at the Oakland (McAfee) Coliseum making the day a clean sweep for the local kids.
As if all this was not enough, NetSuite made it plain they were picking a fight with both the on-demand leader, Salesforce.com, and much larger rivals like Microsoft and SAP by giving the launch event a “Star Wars” theme complete with a short movie titled “Suite Wars” and requisite costumed actors parading as Darth Vader and other Star Wars icons.
Such silliness is almost required for this kind of event but behind it all there was real news and one can see the stratification of the on-demand market into segments where several vendors can and will effectively compete. Taken individually, here’s how the announcements stack up in my eyes.
With Version 11.0, Paul Greenberg, author of “CRM at the Speed of Light,” told me, “They’ve made their product sexy”. What he meant was that NetSuite has always offered some very serviceable products, especially considering they have both ERP and CRM fully integrated “out of the box” or more correctly “off the wire”. Nevertheless, this release has an eye appeal and functionality in abundance that prior editions may have lacked. The reason for Greenberg’s enthusiasm can be traced to one acronym: AJAX.
The second announcement in the list may be the most significant because by incorporating AJAX into every part of the applications NetSuite has reduced the functionality gap that has existed between on-demand and on premise applications to miniscule proportions. Version 11.0 will be known for its richness and usability, it offers role based interfaces with all of the help a user might need. In most ways users who might be accustomed to a traditional Windows client-server interface will forget they are working with an on-demand solution.
Where NetSuite is attempting to open a new gap between itself and its on-demand and conventional competition is in business processes. The company makes a convincing argument that the foundation for success in any business computing situation is having a fully integrated front to back office suite. CRM and ERP integration at the database level enables business process integration — what many call end-to-end business processes and NetSuite naturally claims superiority here. They might be right.
At any rate, presuming they already have all of the data and that their system can act as the true system of record for business transactions, they have introduced SuiteScript — a standard Java scripting language for modifying business processes, not the application per se. Application customization is handled in drag and drop tools for the most part though there are still some tables to fill out in a few spots. What’s important about this announcement is that there is concentration on the business process for once rather than a bits and bytes discussion of how easy it might be to add a field.
NetSuite’s CEO and best customer (we eat our own dog food), Zach Nelson, made that point especially well when he noted that many of the accounting functions in his suite were features, and not customizations that anyone could accomplish with the right tools when he said, “These have to be done right, I don’t want to go to jail”. Point taken.
That leaves the two vertical market editions for wholesale/distribution and the services company edition. I am not qualified to comment on the utility of these systems because I have not worked with them. However, what I find interesting about these editions is that they are areas that fall just outside of conventional CRM’s basic definition and they require an amount of accounting to work effectively and in that NetSuite has chosen its markets well.
On a larger scale, NetSuite has helped further clarify the market for on-demand computing as well as CRM and ERP. Market laggards now include Microsoft and SAP which have all of the software but little of the inclination to move it to an on-demand platform in any sense of real time. Though each company has made announcements and offered a bit of product, there is little evident commitment to the creative destruction each would need to muster to change their models. At the same time, Oracle also offers a rich suite of front and back office products and its recent acquisition of Siebel including Siebel On-Demand but the jury is still out on the integration angle. Further, the same question about creative destruction looms over Oracle.
Other contenders such as Salesforce.com and RightNow clearly lack the accounting functionality that NetSuite has in abundance, which brings up an interesting point about segmentation. There are plenty of situations in which an enterprise might want an on-demand CRM package but not ERP and all of the on-demand CRM vendors will be able to compete there. While NetSuite can certainly play in those competitions, its strengths come forth when a company needs both parts of the equation. Typically that means, smaller companies that are willing to put every kind of data out on the Internet for storage and in fact, NetSuite aimed its pitch primarily at the mid-market.
However that may be, one’s definition of the mid-market can be quite elastic. As an example, Associated Grocers, Inc. is a $3 billion company and a customer of NetSuite. The division that is a client manages retail store accounting for numerous members. Associated Grocers is located in Baton Rouge and when the hurricanes hit many of its customers stores were flooded bringing to mind the relative safety of storing information off site in case of disaster.
For the time being NetSuite says it is content to work in the mid-market but you have to look at the company as another disruptive innovation rising from the grass roots and aiming at larger markets. The integration of CRM and ERP in a single suite along with all of the announcements of functionality and usability is potent and should give other on-demand players reason to question their own strategies regarding ERP. Next week Salesforce.com will make an announcement and it probably won’t have anything to do with ERP but it will, no doubt, attempt to raise the bar yet again on some features or functionality. It’s a good time to be a customer.
