Over the past decade, sales has transformed from a subjective and personal relationship driven industry to one led by data analysis and algorithmic lead management.
Sales a decade ago
When I considered investment opportunities before the transformation of sales forces, a big part of my decision making process would rely on building a relationship with the sales teams of portfolio companies. This is because ten years ago it was the sales teams that gathered simple data on prospects and customers through door-to-door or over-the-phone conversations. They collected names, budget, and contact information. They were some of the only direct channels to customers at the time, and helped me understand the market and evaluate the opportunity on a quantifiable market demand.
This process allowed my team at Wesley Clover and I to understand whether we were able to sell to a market, and to consequently get better than average returns. That was the way in which we invested. Though the core value of our decision making process hasn’t changed, the way in which we do it now has changed dramatically.
Sales in the age of information
We at Wesley Clover still want to understand consumer demand and customer opportunity for a technology, but the way in which information about customers is collected in 2017 is completely different. Today marketing and operations teams take over a large share of the original sales process by managing lists of prospective customers numbering in the millions. Funnels for these prospects are created using data rich information to inform the sales team about a customer. They can now know what users listen to, what they read, where they shop, what infrastructure they use, how many times they’ve visited a website, which social media channels they are active on, and so on, all before any time is spent on initial contact with a sales person.
This enormous leap in data collection means that we at Wesley clover no longer feel a need to form a personal relationship with the sales teams in portfolio companies when making investment decisions. We like to look into companies that are dividing up their sales process among the marketing, operations and sales teams as well as adopting these tools that evaluate customer and market opportunity. Both have enormous benefits for companies and investors alike.
Realize cost & time benefits
10 years ago, what you had were the most expensive people in the organization spending a huge amount of time qualifying and disqualifying potential leads. This was expensive and time consuming work.
The more marketing (specifically automated marketing) and operations teams can take over the sales process, the more time and costs are cut. This is good for both the company and the investors that are deploying money into that company.
Remove emotion and use data
Sales people are naturally motivated to over-promise and create a positive picture of their leads. This creates a positive impression of themselves and a motivating culture within the sales team. The problem with this is that the subjectivity can misdirect and impact the way in which decisions are made about potential leads.
Switching over to a digital process means making use of marketing and performance marketing that gives you direct and quantifiable metrics about leads. Automation allows less room for human error and misjudgement. It also allows you to find people who are interested in what you are offering without heading out the door yourself. Even a partially automated marketing process is greatly beneficial to companies. The sales team can still take the information produced by the marketing tools to make better informed decisions. This way both CEOs and investors know that decisions are made based on numbers, rather than the impressions and intricacies of a human relationship.
Another benefit of incorporating digital processes into sales is that digital marketing drives leads directly. You can use marketing to speak to your audience of potential customers by giving them meaningful information that they’re likely to read and share. You can organize an information session, setup a webinar, or create infographics. You can pass along information to your community of potential customers and then allow them to identify themselves and say “I’m interested” before you even approach them.
The whole qualification process and knocking on doors of customers is all gone. Today we use automated marketing and performance marketing that gives us a quantifiable metric driven machine. Your sales team can still do the hard part of the sale, but that’s all they have to do. The qualification and lead generation (both time consuming and potentially subjective) can be taken care of elsewhere.
Bring in the data
It’s easier to evaluate a business and its potential when you have metric factors: growth, funnel, conversion rate. This trend started in the SaaS industry, but it is now a worldwide phenomenon affecting every industry.
I was recently speaking to a Scott Phillips, CEO of StarFish Medical. As a medical device design company, they have a very high touch sales process. Scott mentioned that he increased sales by involving his engineers in the content marketing process. In fact, company sales had tripled in 12 months. Scott attributes the increased sales to convincing engineers to write about their work.
This is a direct example of how digital marketing can improve the sales process. The content the engineers at this company are producing is making a difference in their sales because the engineers are really the ones at the front line of solving the customer’s problems. Through the articles they write, potential customers learn more about the process the company follows. Even in a face-to-face sales environment, a good marketing strategy makes a difference.
Customer acquisition going forward
We at Wesley Clover base our evaluations on a portfolio company’s ability to grow customers. We look for proof to show they are a sensible investment, and the metrics derived from digital processes such as performance marketing does just that. At minimum, I’d recommend you make sure that you know digital customer acquisition is critical to your business and the way that you sell. This is a massive market with almost unlimited potential.
Technology in 2017 shows much more analytics about how your funnel is doing, and affects churn rates positively. You can take a whole pile of the cost, time, and subjectivity out of the sales process.
I’m very fortunate to be located in Victoria where the biggest employer is technology, and the biggest segment in our technology industry is digital customer acquisition. I’m able to see first-hand world class talent in this field, and that is a subject I will be sure to pick up on again at a later date.