Background
The client is a south-east based software developer and managed services provider with a suite of products and services aimed specifically at two narrow, but potentially lucrative, vertical market sectors. Both of these sectors are heavily RFP-centric.
And, much of the company’s historic success and recent growth had come from the efforts of a well-organized Revenue for Profit (RFP) selection and response team, which was loosely managed by the lead sales representative.
Their sales team consisted of 5 long-term sales professionals that had been largely left to their own devices 90% of the time. They were used to setting their own schedules, goals and agendas, and they created their own pricing structures. They had also gotten used to negotiating contracts ‘on the fly’ with a multitude of special terms and considerations… frequently at heavily discounted pricing.
Their marketing department was a three-person team of young, inexperienced, but highly enthusiastic associates. They had a track record of using the company website, the occasional high density email blast campaign, and a small number of targeted press releases as the primary marketing tools.
There were no sell sheets, sales tools, or any ‘return on investment’ (ROI) or ‘total cost of ownership’ (TCO) data.
While their technology was packaged as a ‘software as a service’ (SaaS) offering, there was no on-demand, web-based demonstration system or ‘try-before-you-buy’ option. The company had not developed a webinar program or an on-demand video marketing system. The website was primarily focused on customer examples, static screen shots and a few case studies.
While the client had an excellent understanding of the threat from their current competitors, there was little realization or effort invested in future risk from as-yet-undefined threats; nor had much been done in the way of product improvement planning or market development initiatives to secure and expand on the slight market edge the client was enjoying at that time.
New sales were closed across the continental US and Canada in face-to-face meetings with no consideration for the possible deal size or even the strategic importance of the prospective customer.
Direct selling expenses were running at around $0.50 per dollar of first year revenue. First year’s revenue – including initial software implementation, customization, and training – ranged from $18,000 to $100,000 per new account; with annual recurring revenue ranging from $3,500 to $12,000 per year.
Turns out, there was a culture of “any revenue is good revenue”.
The sales reps were paid on first year contract value and were reluctant to help with customer service or issues arising from undocumented promises.
The reps had been paid their commission, and it showed!
The company was privately owned, had no external investors, board members or advisors, and had been grown organically from scratch by a serial entrepreneur.
The CEO wanted change; in a hurry; with minimal, if any, impact on current deal and revenue flow. The company had sufficient cash reserves to weather limited change costs and a 10-15% revenue hit for 4-6 months – but no more than that.
Next Steps
Hillspoint Consulting was hired on a long-term engagement to assess the current processes, infrastructure, and go-to-market strategy; to develop and obtain executive team buy-in on a completely new go-to-customer strategy; to implement and execute the plan; to re-train/re-build, manage and coach the sales and marketing teams to a high degree of excellence, performance and consistency; and to hire and train a new VP Sales & Marketing who would slot in place as Hillspoint stepped back and into an ongoing advisor and strategic resource role as the project wrapped up.
We used our practice area: Fractional Leadership
Where we served 1 day per week as head of sales – and did all the tasks and take on all the obligations expected of a VP Sales, and also:
- Assess, strategize, build or re-build (or at times realign)
- Train, coach, mentor, fieldwork, roleplay, work-hand-in-hand
- At the right time, recruit and train a f/t head of sales, transition, and step away; supporting as needed much less frequently (day a quarter)
The executive team was 100% on board with the CEO’s vision and engagement of Hillspoint; the majority of the rest of the company – delivery, development, support, finance, HR, etc. were similarly enthused; the marketing team were excited with the commitment to growth and potential to implement aggressive new marketing programs; …. the sales team were noticeably less enamored with the project – and the prospect that their unfettered way of life was about to change.
Process
A) We identified opportunities, pitfalls, problems in need of solutions, and areas of improvement that would generate immediate gain with minimal disruption.
B) We met one-on-one with a broad cross-section of customers to determine the external view of our client’s value propositions, strengths, and perceived weaknesses and competitive market threats.
C) We cross-referenced those finding with similar findings from multiple groups within our client and found significant gaps – real and perceived.
D) We developed a broad assortment of product, service and process enhancement suggestions – with initial estimates of impact on revenue, time to market and reduction of cost.
E) We worked with all internal groups to determine a powerful suite of customer-focused value messages, and aligned those messages with the business drivers and business needs of the primary stakeholders on the customer side. We tested the messages and message conveyance strategies – by role, profile and persona – and fine-tuned the client’s value messaging in every sales and marketing tool and customer facing role.
F) We developed a product demonstration sandbox that showcased the product strengths and competitive differences – and vastly simplified the extensive pre-demo setup work that had been a common element of all prior sales cycles.
Outcome
Sales revenue per rep increased almost 50% within the first 9 months, and the company continued to grow at similar rates – between 45% and 48% over the next 3 years.
Within 6 months, >98% of deals were meeting project profit goals, delivery timelines and margin contribution requirements.
With the introduction of the demonstration sandboxes and a more robust contracting process, requests for customer modifications/implementations dropped by >65% and promises for new product features and functions dropped to almost zero.
Everyone – from sales to finance – became totally customer aware and focused on delivering the value and the promise conveyed from the start of the sales cycle to the end of implementation, and the go-live date.
All customer-facing deliverables – website, email campaigns, selling and proof of concept tools – articulated a consistent set of messages crafted to appeal and be absorbed by all likely customer roles, profiles and personas.
While the RFP response team continued to search and bid on blind RFPs initially, the process was quickly modified to create a standardized response to blind RFPs that met stringent criteria. More importantly this freed up the administration team to develop more comprehensive, tailored bid responses to prospective customers where the sales reps had been able to develop strong relationships with the key stakeholders, and/or had been able to influence some or many of the RFP requirements. Resources were available for bids that had a high percentage of being classed as Column A or very strong Column B. Anticipated Column C opportunities were either no-bid or were standardized and 90% automated.
Overall RFP responses dropped by approximately 25%, and semi-automated standardized responses made up approximately 40% of the responses. Approximately 18% of the standardized responses were selected for the winning bid – a slight improvement over the win ratio pre-revised process – but at a vastly reduced resource cost. The win ratio of the tailored responses – making up approx. 60% of total RFP responses – was slightly over double the pre-revised process success ratio.
Bottom-line: They ended up crushing it.