"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble." - Warren Buffett
Every year we plan for what is ahead. Of all business functions inside a company, sales probably plans the most. Territories are constructed, compensation plans are adjusted, new materials are designed, and everything needs to be ready to go at SKO (Sales Kick-Off), the official start to any sellers’ year.
Territories are handed out and dreams are made or shattered as the opportunity ahead comes into full view. The hardest part of working a territory is admitting to yourself that most of it will never convert, never talk to you, probably never even know you exist. Sales managers will reassure salespeople that every no is closer to a yes” and “there is gold somewhere in that huge territory,'' but there’s almost definitely no way to know ahead of time. They could be all no’s and it is far more like there is clay instead of gold buried beneath the surface.
So what is a seller to do in a wide-open world of opportunity and despair?
I believe sellers need to treat their territories closer to how someone like Warren Buffett would treat their investments. This doesn’t just require a change in thinking from the seller, it goes up to management and how the company is run.
Develop a Thesis on Your Territory
A thesis would be what you think is going to work for you this year (and potentially years down the road) against your territory. Here is what I’m selling, here is what I think is true about the market, and here are the accounts that align with what I’m selling and what I think is true about the market. For example, an investment thesis in 2010 might have been:
- Business is moving to digital, therefore I want to invest in cloud companies
- The world is becoming more connected, therefore I want to invest in social networks
- People are going to spend more time in front of screens, therefore I want to invest in e-commerce.
An investment thesis helps you focus and gives you a place to start. It also helps you believe and, if things are going wrong, it gives you the opportunity to revisit the thesis and see if you want to change it.
Define Parameters for Your Territory
(Hint: You probably have access to more data than you think as your company shifts to a product-led growth (PLG) model. For more of a background on PLG and Sales, we have this video)
Much like Warren Buffett is “looking for great companies at a good price,” you should work with the metrics available to you from the companies in your territory to compare opportunities. Examples of parameters Buffett is looking at on the surface are things like price to sales ratio, gross margin, growth rate, and a multitude of other factors. The same could be created for your territory. While this is something that sellers generally do very well in the prospecting process through qualification with sales methodologies (BANT, MEDDIC, etc), the opportunity now is to start to do it in a whole new way as your territory of accounts have access to your product. If your company allows for pilots, POCs, freemium, or trials of your product, this would be similar to Warren Buffett initially liking a company based on certain parameters his firm invests in but then having the additional leverage of being Berkshire Hathaway and doing due diligence, meeting with management, understanding their roadmap, getting preferred shares, etc. Your product itself is your best signal and one that can help you forecast the potential of your customer. The product usage is your further due diligence and allows you access to potential behavior and growth that is almost impossible to see without your prospect accessing your product. This information is still very new to most sellers and companies and something that is most likely available to you if you can find a way to access it.
Double Down on Winners and Cut Your Losers Fast
From the quote at the top, the hardest thing in investing is having the guts to cut bait on your losers and double down on your winners. If you talk to any investment manager they will tell you this is the name of the game, but, of course, it is easier said than done. This applies to your territory as well. Often times you will hear that someone goes through their territory and, after finding a winner, moves on to try and convert the opportunities that have failed to show promise in their territory. This is most likely happening because the seller is following the incentive model a company has constructed for them. A seller is much better off asking to stay on their winner where they have already built a relationship, know the account, and likely has way more room to run. How can this logic be changed? It comes down to a seller following the first two areas outlined above. First, they have to show how this winner fits into their thesis (eg. this is a company that you think best fits the future direction of where your company/product is going), and second, they need to be able to forecast success with a customer by using their product data to show the potential TAM (Total Addressable Market) of the account and how they can tap into the unmet demand for their product. There is also the added bonus that no product is ever done being built. As the product team creates more, the seller increases their TAM with their customer.
While this advice is directed towards the seller, it goes without saying their success is predicated on a change in how management operates to allow sales to act more like investment managers. The shift in this direction would create sellers with better plans, working with customers for a longer period of time, and puts everyone in the sales process closer to the product.
More Warren Buffett and less Glen Ross is the future. Grab your bucket.