Sales 2.0 Leaders Interview: When NOT to Build Inside Sales

I’m publishing a series of Q&A excerpts from my interviews with Sales 2.0 leaders, which will appear in my next book. This is the second excerpt from my interview with Jim Pitkow, CEO of Attributor, which produces Web-monitoring software that protects publishers’ revenue by preventing unauthorized use of content.

An inside-sales veteran, Pitkow worked with my company, Phone Works, to research his market and customers, as well as to test the feasibility of using an inside-sales model, before he ramped up his sales efforts. Like most Sales 2.0 leaders, Pitkow isn’t afraid to try new things, but he is smart enough to test his hypotheses on small scales with pilot programs in all aspects of his business.

Anneke: I’m curious about your perspective on testing sales messages and approaches, markets and sales processes before building a sales organization. Many companies want to do this themselves with their own employees — often after they’ve hired an entire sales team. Why didn’t you do that?

Jim: I’ve run inside sales. I ran a $10 million-plus run rate telesales company, multinational, multiple sales offices and stuff like that. The first issue is, if you haven’t done it, you’re going to pay the cost of learning on the job and go through all the inefficiencies of that. Even in my situation where I’ve done this — I’ve seen the movie, and I know how it ends — there are certain risks I’m not willing to entertain at certain critical points in the company’s growth cycle.

There is a certain amount of data I need before I’ll commit toward constructing a full telesales department. I’m a believer in efficiency being more a function of time than cost. I’d much rather bring on a temporary team for six months — where there is zero startup cost outside of working with them — to get to know them and nail the messaging.

I would hire outside consultants if I were building my own sales team. The startup costs are near zero, and in our project we were getting data back within four to five weeks from when we signed a contract, so we could execute upon our thesis. That began to shift our messaging, shift our notion of the product and shift our thesis in the entire marketplace.

Had we seen different results, we would have moved toward building an inside sales team. I wouldn’t build an inside sales team until I had the data that showed it was proved and repeatable. I wouldn’t want to spend six months building the team and then six months dismantling it.

Anneke: Exactly, and paying for all those severance packages.

Jim: There are multiple costs: the physical cost, the morale cost, the resourcing cost. It’s just an expensive proposition. In this day of low-cost, high-efficiency, quick time-to-market requirements, it doesn’t make sense not to test first. We don’t have time to lose getting it wrong. We’ll pay a little extra to get it right, and everybody benefits. The VCs are happier. The employees are happier. Our customers are happier.

Read the other excerpt of this interview series, “Why Pilot Your Sales 2.0 Programs?,” or find the full interview in the Resources section of this website.

Tags: inside sales, pilot programs, Sales 2.0, telesales

Why Pilot Your Sales 2.0 Programs?

I’m publishing a series of Q&A excerpts from my interviews with Sales 2.0 leaders, which will appear in my next book. This is the first excerpt from my interview with Jim Pitkow, CEO of Attributor, which produces Web-monitoring software that protects publishers’ revenue by preventing unauthorized use of content.

An inside-sales veteran, Pitkow worked with my company, Phone Works, to research his market and customers as well as test the feasibility of using an inside-sales model, before he ramped up his sales efforts. Like most Sales 2.0 leaders, Pitkow isn’t afraid to try new things, but he is smart enough to test his hypotheses on small scales with pilot programs in all aspects of his business.

Anneke: Why did you decide to run an inside-sales pilot program?

Jim: The pilot allowed us to address the multiple objectives of customer validation and customer development. Also, when you take a company that has existing product and some customers, but is struggling toward a fully scalable, repeatable sales model, we had to answer the question, “Do we have the right customer/product fit?”

I became Attributor’s CEO in January 2009 and was left with a set of key business strategy questions and options: How do I get that customer/product fit nailed and find out what repeatable sales processes I have? What’s the right sales model? Is it field sales or is it inside sales? What are the average sale prices? I knew I could find the answers through piloting an inside-sales program.

Anneke: What challenges did the pilot help you mitigate, given you were a small startup with limited resources?

Jim: One of the biggest challenges startups face is sales execution risk. When a company has a few sales, they think those sales are repeatable, and they think a field sales model is the best approach. Then they go out and hire a VP of sales based on these hunches, not metrics. Some time later, the CEO realizes the person they hired to run sales is not the best fit and/or that their field sales model is probably a telesales model. They’ve wasted anywhere from six months to, sometimes, 2 years before they get that clarity.

I wanted to be able to show demonstrable results quickly. The last thing I could stand to do is go six months, hire a telesales person, find out they’re not performing and have to start over from scratch. I didn’t have the time or the investor support to do that.

Anneke: You needed to fast track.

Jim: Exactly, so I hired Phone Works to help us to mitigate the sales execution risk, so we could test the market quickly and efficiently, and leave the market forces — not our ability to recruit, execute and perform — as the only unknown variable. That’s what we did, and it turned out to be very productive.

What is your experience with pilot programs? Have they revealed unexpected findings? Helped prove possible results?

Tags: inside sales, pilot programs, Sales 2.0

Farming 2.0: Innovating an Industry

When our Sales 2.0 community speaks of “farming,” we typically refer to a certain kind of selling by nurturing existing customers. Without “planting seeds” — taking the time to build trusted relationships and providing valuable and relevant information rather than “pitching” — the rewards of a revenue yield can diminish or stop completely. In Iowa, farming means something entirely different.

Today’s post is about real farming: the multibillion-dollar American agriculture industry, which, like approaches to selling, is on the brink of a massive transformation.

I have just returned from Iowa, where I shadowed clean energy entrepreneur Jack Oswald (who is also my husband). Jack and his team at SynGest Inc. are working with the local farming community, along with local politicians, economic-development professionals and financiers. Their collective goal is to make the current outputs of farming exponentially more valuable and to remove the social trade-offs we have experienced in the food vs. fuel debate.

Look at farming-industry leaders who, similarly, are experimenting with new ways to increase the productivity and results of traditional farming through the use of innovative practices and new technologies. What is most interesting is they are going about this, not by using more land or growing more corn or soybeans per acre, but by maximizing the value and simultaneous production of multiple products from the same crops we have been producing for ages.

Sales leaders can learn from this experience and recognize that, instead of taking a Sales 1.0 approach to increased revenue, which typically involves hiring more sales reps in field sales positions, they can think like Sales 2.0 practitioners instead. By re-organizing the sales resources they already have and leveraging or sometimes even replacing their expensive field reps with phone and Web selling specialists, they can significantly increase sales productivity and optimize results.

One example of modern farming innovation is a new approach to the production of nitrogen fertilizer, which is critical to the growth of food crops for both humans and animals. In current large-scale farming practice, natural gas is used to produce fertilizer, or “anhydrous ammonia,” as it is called in the farming world. Because we are so dependent on fertilizer for our food production, 3% of all energy consumption in the U.S. goes to producing fertilizer. To meet the demands of American farmers, we have to import 60% from other countries. Like the challenges we have with the supply of fossil fuels, we have similar energy issues related to feeding our population. By switching the input for making fertilizer from natural gas to biomass (things such as corn cobs, which grow in plentiful supply as a waste product in places such as Iowa), farmers can transform an energy- and carbon-intensive process into a clean energy approach. The new technologies, made possible by SynGest, not only produce fertilizer, but also food products (human food–grade oil and protein) and biofuels simultaneously, making every ear of corn that begins the process exponentially more valuable. And perhaps most importantly, the new SynGest factories will bring thousands of new jobs and new revenue to the Midwest, revitalizing and improving life in rural communities. Farming 2.0 will help accelerate the biggest economic revolution the U.S. agricultural industry has seen in the past 100 years.

Experimentation, pilot programs and testing  — all hallmarks of Sales 2.0 — are also taking place in farming. New crop planting, cultivation and harvesting are constantly being conducted by organizations such as the USDA and Iowa State University to continually improve the productivity of crops needed for the new process. While corn is plentiful across the Midwest, certain perennial grasses are showing promise as even higher-yielding specialty energy crops that can be grown on land not well suited for food crops.

Like Sales 2.0 professionals, 2.0 farmers are tracking, measuring and refining their processes constantly, doing experiments and looking for ways to optimize results. But as with Sales 2.0 skeptics, some farmers are reluctant to change the way they have worked the fields their whole lives, often preceded by their parents, grandparents and generations before them. As new practices and technologies are proved definitively by measurable and repeatable processes, those who are leading us into the future — be they farmers, investors or sales professionals — will be distinguished from those who are reluctant to change and destined to lag behind.

In what ways are you innovating in your industry? Are you questioning existing practices and testing new ones? Is this helping your business?

Tags: farming, pilot programs, Sales 2.0