Category Archives: Lessons Learned

Posted On May 16th, 2017 by Crowded Ocean

Building a startup: ten startling facts

High growth startups are very different from other businesses. And they die remarkably young. In fact, nine out of ten startups fail within their first 24 months of operation.

Since our founding in 2008, we’ve worked with more than 50 companies and 45 startups. What makes startups so unusual? Let’s take a closer look:

  1. 25% of startups were started by immigrants  Source: Reuters, 2016
  2. By 2013, the median time to IPO was 7.4 years  Source: NVCA, 2014
  3. By the time startups raise the third round of financing, 52 percent of founder CEO’s have been replaced  Source: New York Times, 2012
  4. More than half of U.S. unicorns – startups valued at $1 billion or more – have at least one immigrant founder  Source: Wired, 2016
  5. VC firm Andreessen Horowitz funds about 20 startups a year out of 2000 warm referrals  Source: The Macro, 2016
  6. The Y Combinator accelerator is more exclusive in its acceptance rate than Stanford University  Source: The New Yorker, 2016
  7. Only 20% of the Inc 500, the fastest growing private companies, raised outside funding  Source: The New Yorker, 2016
  8. Americans in their 50s and 60s make up a 24.3% share of entrepreneurs who launched businesses in 2015, up from 14.8% a decade ago. And, 70% of startups founded by people age 50 or older last longer than 3 years, versus 28% for those younger than 50  Source: Wall St. Journal, 2016
  9. The majority of startups die after an average of 20 months and $1.3 million in financing  Source: New York Times, 2016
  10. In a 2016 survey of 700 founders, 31% said they didn’t intend to IPO and 69% expected to be acquired  Source: First Round, 2016

Posted On May 10th, 2017 by Crowded Ocean

Consider 3 Levels of Startup Blogs

Prior to launching, a startup may have a few blog postings, most of them either commenting on the industry at large or trying to recruit new talent by either profiling the company culture or giving potential employees a glimpse of the underlying technology. But it’s at and after launch that it’s time to get serious about blogging. And to our clients we recommend a 3-tier approach.

A tiered approach might sound like overkill for a young company, but keep in mind our two goals: 1) create the broadest image of the company, and 2) distribute the responsibilities of blogging across the entire company.

Business-centric blogs

The first tier business-centric. This is the purvey of the CEO (and perhaps one or two others on the management team). It’s a look at how you see the industry, market and technology trends, global issues, and where the pain points and opportunities are within it, and what you plan to do about it.

Combine business and technology

The second tier is a high-level approach to your technology, methodology and architecture. The authors are the CTO, head of Engineering, even the head of Products. It is technical in nature but is targeted at a C-level decision maker, and so has a blend of technology and business.

Deep dive into tech

The third level if for the troops. It can be a deep dive into the specific feature or technology that they’re working on—which shows both the excitement of working there as well as another glimpse into the technology—or it can be a note about the culture (Forget daily donuts: we have gaming lunches every Tuesday and Thursday.)

It’s up to Marketing to build and administer this schedule, but if you do it right you’ll have a rolling 3-month calendar without taxing your writers more than once during that period.

 

Posted On May 3rd, 2017 by Crowded Ocean

How Decisions Are Made Shapes Startup Culture

In his annual letter to shareholders, tech titan Jeff Bezos, Amazon CEO and founder, described his practice of “high velocity decision-making” that help sustain the growth and competitiveness of his company. The article published last week by Quartz summarized Jeff’s guidelines (including the unusual observation that “many decisions are reversible”).

Decision-making style shapes long-term success

One of the major predictors of long-term success is this: how decisions are made and communicated to the company. Not only are these initial decisions critical from a business and technology perspective, they establish a cultural tone at the same time.

Ask any employee and he or she will say that they not only want to be involved in these early decisions, but due to their investments in the company—time, reduced salary and quality of life issues—they deserve to be involved in these decisions.

Startups are always on, always moving: it’s a pace and environment not given to deliberation or self-analysis. It’s an over-used analogy with startups but making decisions is like changing a tire on a moving car—it would be better to pull off the road and do it right, but who has the time?

Disagree and commit

In his letter, Jeff Bezos emphasized the value he places on the phrase “disagree and commit” to propel swift action by his team (and to overcome any bias for consensus.) In the spirit of Jeff’s focus, we would emphasize the following tenets to make your style of decision-making a strong component of your startup culture:

  1. Get as much diverse input as possible. It’s been proven that the more diverse your group—in background, ethnicity, and gender—the better the output. If you’re smart, you’ve already got a diverse team; now is the time to reap the benefits.
  2. Instill “ownership” across the entire team to motivate employee engagement. Ownership is a trait that startup leaders need to foster and reward, but only if it’s genuine. Even if a CEO is seriously top-down in his/her decision-making, we encourage them to find areas of genuine ownership, however narrow, for each employee.
  3. Over-communicate to the entire team what you’ve learned in customer forums or open forums (even team lunches or celebrations) with all employees. Be sure to communicate back to the company in another open forum–creating the sense that employees been active participants in the process all along. It’s the founders who have to be active communicators to glue their team together.

 

Posted On April 25th, 2017 by Crowded Ocean

Tweets versus coding: lessons for startups

When we meet with a startup led by technical founders, it’s common for us to discover that the majority of the team have profiles or pages on channels like LinkedIn but they are far from active there. In fact, if they have a Twitter handle, it’s probably dormant. Consequently, we never assume that social media is considered by the team as a channel to engage with customers. And startup teams are typically so busy coding and wooing customers in the early days that social media—even if it’s viewed as important (and many tech startups don’t share that view)—is considered a priority for another time. So, what are the lessons for startup teams about when and how best to employ social media?

Taking a phased approach to building your social media program

There’s a phased approach to building smart social media habits that’s very doable and productive. As we outlined in Chapter 14 of our book, The Ultimate Startup Guide, we recommend that during the early days startup teams appoint a single owner of social media. Just as a startup needs a Chief Content Officer to really “own” (but not necessarily produce) all content, your startup needs someone to own your social presence. Choose someone on your team who already has a natural affinity for communicating and connecting via social channels. That’s the person to tap early on to be a rallying point, teacher and role model across your team in the early days of your startup. Remember that it’s temporary. With growth (and revenue!) can come additional staff, a PR agency resource or a dedicated contractor to staff your social media program as you grow.

Name an owner of your social channels         

After appointing an owner, step two is to determine your goals and your audience. And then, step three, prioritize the social channels that will support your goals. The top three channels for many startups tend to be: Twitter (for connecting with prospects, partners and influencers), Youtube (for sharing rich media content_ and LinkedIn (for recruiting new talent and for connecting with customers.) And, down the road, maybe you’ll want a couple of flat screen TVs – one in the lunchroom and one in your lobby – to display tweets and posts in real time to keep your team connected to your customers.

 

Posted On April 18th, 2017 by Crowded Ocean

Lessons for startups from social media grenades

It’s rare to find a B2B startup founder who is fluent in social media. The nonstop demands of company building diminish the time that can be devoted to social channels, whether that’s Twitter or Facebook or Github or you-name-it. And besides, as the theory goes, that’s a task best delegated to the marketing or customer success team.

For consumer-facing startups, however, it’s a different story, because an unfiltered tweet or video from an unhappy customer can be punishing to a consumer brand’s reputation and market valuation. (Just ask UAL CEO Oscar Munoz.) That’s why those companies have entire teams of employees devoted to staffing and responding to dialogue on the social channels of consumer brands.

Tweets can be brutal

Even so, the move by the new CEO of the company that owns Carl’s Jr. and Hardee’s restaurants took social media engagement to another level. One of the new CEO’s first requests, according to this New York Times article, was to install screens at company headquarters to display real-time social media conversations about its brands for all company employees. That’s a bold move, but a pragmatic one in the wake of recent, so-called “social media grenades” hurled at Pepsi and United Airlines.

It used to be that if you wanted new execs to get close to the customer, they could join the call center team staffing customer or tech support and listen in to learn common customer complaints. Today, a single negative comment or tweet by an unhappy customer can quickly spread to thousands, or even millions, of other customers. Rapid detection and response is the name of the game, and that leaves no time for internal deliberation.

Duck and cover

That’s why an early stage startup needs to appoint an owner of your company’s social channels. Choose someone on your team who already has a natural affinity for communicating and connecting via social channels. That’s the person to tap early on to be a rallying point, teacher and role model across your team in the early days of your startup. Remember that it’s a temporary assignment. With growth (and revenue!) can come additional staff, maybe a PR agency resource or a dedicated contractor to staff your social media program as you grow. But appointing a temporary owner means at least you’ve got someone monitoring commentary about your brand and product and, at the very least, someone to yell “duck” if some industry wag lobs a grenade.

Posted On April 10th, 2017 by Crowded Ocean

Laying the foundation for early startup success

New Ways to Build

When it comes to actually building out your business, we liken it to building a house. This is not just some cute analogy (“Measure twice, cut once”): we’re talking about two industries (housing and startups) that are undergoing major changes and are the better for it. Think about home construction for a moment. For the past four thousand years, it’s been the same process: design the house; dig a foundation; truck your materials to the site; build outside in the elements; walk-through inspection on site; then move in.

But now, with modular and sustainable building techniques, entire homes (as well as rooms and wings) can be built off-site, then assembled at the site. Think about the benefits. Time-wise, you can now be building your house while you’re digging your foundation, cutting construction time in half. Quality-wise, you’re no longer hammering up on a ladder, squinting into the sun: you’re getting all the accuracy that comes from a factory setting. And you can see and catch mistakes much earlier in the process, holding down costs.

Now look at how startups are built today. Previous startups were mini-enterprises, with every function having to be addressed by full-time (or sometimes part-time) resources, leaving the founders stretched, mentally and financially. These days startups are dividing their requirements into three areas: what is unique (or ‘central’ or ‘core’) to their business, what functions they can virtualize, and what is commodity. On the front end of this equation is your Core – the vision, technology, product, culture that drove the founding of your startup. Core differentiates your company.

 

When it comes to virtual, you have a number of different options (see below) on how to move quickly to market by turning to a variety of best (or best-of-breed) available resources. In the beginning at least, these are functions that do not need to be on your headcount/payroll. They are essential building-blocks but also services you can outsource or virtualize to maintain flexibility in reducing your fixed burn rate and to build-in scalability or elasticity in these supporting functions.

  • Virtual or outsourced resources for marketing, engineering, sales, product testing, legal and staffing;
  • On-demand services for HR, accounts payable, customer service, eCommerce, transactions: tools that are easy to learn and can be integrated into your systems;

On the back end, you can choose commodity components for platforms like WordPress, Paypal and AWS that can handle your infrastructure.
On a related note, while these are not virtual or commodity components, startups today can also make these choices to build your startup quickly:

  • Physical community workspaces like incubators and accelerators for housing and support services;
  • Crowdfunding communities like Kickstarter and Indiegogo that help prototype and validate early products to accelerate your customer and product development

 We’re big proponents of virtualizing as much of the company as possible. The resources and expertise are there and at a fraction of what bringing them all in-house would require.
– Michael Shraybman, CEO, Cogniance

With those supporting functions in place, this new startup model frees you up from having to learn and hire for every component from HR to finance to legal, allowing you to focus on the two areas that matter most: your product and your customer. Just like home construction, where certain pioneers are leading the way in modular and sustainable building, there are three visionaries you should read and work into your planning process: Steve Blank, Eric Ries and Geoffrey Moore. The books they wrote—and the terminology and exercises they spawned—have changed the startup landscape and the thinking behind it.
‘Developing’ the Customer

In the mid 90’s, serial entrepreneur and business leader Steve Blank realized that all the formulas and paths to success for startups had to do with products and technology. And yet, he also noticed, the primary reason that startups fail isn’t because of a lack of technology—it’s from a lack of customers and the validation/feedback of customers to focus the application and adoption of innovative products. The customer development focus and methodology he created caused enterprise and consumer-facing startups to shift their focus from a laser-like preoccupation with product development to an expanded focus that included the market and customers these products were intended for. The methodology consists of:

  1. Customer Discovery: It’s a simple enough idea—find out who really wants your product, then test your hypotheses (product, problem, solution and price) with them, not with your peers or investors. The keys here: A) Get out of your echo chamber and go where the customers are; and B) Be flexible, both in your mindset and your technology, so that you can incorporate what you hear and learn. As Blank puts it: “In a startup no facts exist inside the building, only opinions.”
  2. Customer Validation: Start implementing what you learned above. Your goal here is to, by trial and error (and a lot of flexibility on your end) to create a proven, repeatable sales process. The validation is dual: the customer input to you is validated (which makes your customers feel like they’re being listened to; and your hypotheses about the product and customer are validated as well. Each sale is both a lesson and a validation.
  3. Customer Creation: This is where you move out of trial-and-error and into the mainstream. You know enough about the customer to invest in marketing and start driving demand into your sales channel.
  4. Company Building: Now—and not before— is the time to start investing in the infrastructure (more sales reps, marketing, customer support) to support your model. You’ve proven it, now it’s time to invest in it. You should have been keeping your burn rate low until now; if so, now is when that restraint pays off—with a steady pipeline of strong customer prospects.

Many startups want to deliver a broad platform. Invariably, they have to start with a point solution and then wedge out. There can be a lot of confusion if you start out as a platform and then end up collapsing back to a single tool. – Gary Little, Canvas Ventures

Startups Get Lean

There are few startup ideas as influential—or controversial—as ‘The Lean Startup’. Originated by Eric Ries, a disciple of Steve Blank, ‘the lean startup’ takes customer input to the next level. A technologist with a series of failed startups on his resume, Ries decided to forego the standard ‘locked away in a lab’ form of development and instead developed what he termed a ‘minimal viable product’. The key component in his thinking was to get this ‘MVP’ into the hands of the market early, then iterate on it often, based upon real customer feedback. It’s a concept that builds upon the agile software development approach that has been widely embraced in Silicon Valley. The concepts behind the lean startup are often misunderstood as ‘throw it against the wall and see what sticks.’ It is hardly that random or capricious: instead, its proponents (and there are many) use advanced metrics, key performance indicators and A/B testing to measure and formalize each phase of product development.

Product and people: entrepreneurs should be laser-focused on that. And be ready to change either one based on what they discover. – Theresia Gouw, Aspect Ventures

The Chasm

There was a time when Crossing the Chasm was required reading for every startup. And it’s still valuable reading. The author, Geoffrey Moore, argued that achieving early sales traction requires the recognition of a chasm that exists between early purchasers of technology (usually called Early Adopters because they’re willing to experiment with an early-stage product in the hopes of being able to influence its final form) and the ‘early majority’—the audience you need to get traction with to ultimately grow and succeed. But these are very different audiences with very different needs and purchasing processes—and how you adjust to them will determine your long-term success.

The key concept for our purposes here is the ‘early adopter.’ These are enthusiasts who love not only seeing how sausage gets made but want a say in the recipe. If you’re creating a new car, they want to be among the first to drive it. They’re willing to put up with breakdowns in return for having input in the car’s development (Their ultimate dream: to be able to point to the car and tell their friends: “See that bumper? I helped design it.”) These are the people you will be targeting initially, looking for early sales traction, but more importantly, they’ll be the ones to fuel word-of-mouth via social media channels and eager to talk to press, analysts, and other early adopters.

Combining the teaching and practices of these three, you should be proceeding well on your key fronts: cultivating your customer and learning tons about what they want/need and how that matches your product; developing that product and getting it in front of the customer early and often, gathering their feedback; then seeing how you can combine the two (products and early customers) to figure out how best to move into the mainstream.

Don’t try to do this as a hobby. You need to quit your job to do a startup, otherwise it’s like trying to build a company with just your left hand. – Juha Christensen, serial entrepreneur, Chairman of Cogniance

Before We Go Any Further: what market are you in?

This may seem obvious, but trust us, it isn’t. If you’re starting up a new business—and if you’ve gotten funding to back it—it means you’re probably doing something new and different. Which means that the companies and people you’re trying to reach probably not only don’t know that you exist, they may not even recognize they have the problem your solution is solving.

If you want to get found, you have to be somewhere that people are looking. Which means you need to establish what market category you’re actually in. This step is critical both for the experts who follow and recommend and for the early adopters who are looking for the kinds of solution you’re providing.

Here’s our first piece of advice about market category—and we can’t say this strongly enough. No matter how unique or compelling you think your product is, you don’t have enough money—or time—to create a new category. Roughly half of our startups, when we initially meet, will tell us that they’re in their own category or that they’re redefining an existing one. The problem is: companies don’t establish new categories. Analysts (and customer adoption) do. But companies don’t.

ASIDE: There has been a lot of recent attention being paid to the idea of ‘category creation’ and the resulting winners in these categories, called ‘category kings.’ The companies that get cited include Xerox, Google and Uber. And while we admire the thinking that’s gone into this discussion, as well as the supporting science and facts, it also reflects an ‘all or nothing’ approach to a market that we don’t believe the majority of startups can afford. Our recommendation to our clients is to find their unique space in an existing market, work to expand the definitions and criteria for that market in a way that uniquely fits your capabilities, and only then try to leverage your existing success into a major play to create/define a new market category.

Category creation is more about category extension or segmentation. No matter what you do, if you can’t differentiate it’s going to be difficult. – Asheem Chandna, Greylock Partners

Case Study: We had a startup that made collaboration across different departments easier. So they said that they wanted to launch a new category: the work processor. (The founder, doubting our intelligence, helpfully explained: ‘Get it? Instead of ‘word processor’, it’s a ‘work processor.’ Get it?) We helpfully explained back: “Who at Gartner (a major market research firm) follows the ‘Work Processor’ market (since analyst recommendations are critical to shaping customer choice and market preference and a startup’s market entry)? And on which aisle at InterOp (their major trade show) would we find ‘Work Processors?’

The Work Processor’ died a quick and deserved death. (NOTE: It would have been fine to call the product ‘the first work processor’, since that’s marketing hype. But that hype doesn’t extend to market categorization, although many have tried.)

Why is market categorization so important? Because in the world of inbound marketing, it’s all about “getting found” online. Which means influencers—those guys who shape market opinion (and they can be the media, professional market analysts, bloggers, industry pundits or influential customers or partners)—need to be able to Google their problem or area of interest and find your startup’s product or service. And market analysts—the next level up from influencers—need to know which person in their company to assign to follow your company. And early-adopters—the people you really want to reach, since they’ll buy your product and help you refine it—need to be able to find you online in all of the right places – social media sites or news sites or product reviewers.

Suggested resources:
The Lean Startup
Crossing the Chasm
Dealing with Darwin
Steve Blank and The Startup Owner’s Manual
Jim Collins and Good to Great

 

Posted On March 28th, 2017 by Crowded Ocean

More chiefs than you can shake a stick at

Your startup must have a few chiefs already: chief executive officer, chief technology officer, chief marketing officer…and maybe now you’re considering hiring a Chief of Staff which is a role that’s becoming popular in larger startups. (See our recent blog on this trend.)

But it turns out there is a veritable explosion of chiefs out there: everything from Chief Customer Officer to Chief Wonk to Chief Algorithms Officer. After a quick tour through LinkedIn, we found a bunch of noteworthy titles listed below. Title inflation? Hard to say. But as a watcher of trends, both good and bad, we caution all startup teams to go easy on handing out the title “chief” (primarily because higher equity expectations come with that title).

Taking a bit of editorial license here: remember that too many chiefs in the kitchen spoil the MVP…

Chief Revenue Officer

https://www.linkedin.com/in/jimhyman/

Chief Algorithms Officer

https://www.linkedin.com/in/ecolson/

Chief Innovation Officer

https://www.linkedin.com/in/mdkail/

Chief Data Scientist

https://www.linkedin.com/in/linderek/

Chief People Officer

https://www.linkedin.com/in/sulovegren/

Chief Network Architect

https://www.linkedin.com/in/jeff-behl-a981471/

Chief Product Officer

ht/tps://www.linkedin.com/in/sunilpotti

Chief Evangelist

https://www.linkedin.com/in/guykawasaki/

Chief Culture and Talent Officer

https://www.linkedin.com/in/apricejr1/

Chief Customer Officer

https://www.linkedin.com/in/coachlillie/

Chief Wonk

https://www.linkedin.com/in/lance-topping-1973b6/

And they’re hiring:

Chief Merchandising Officer

https://www.linkedin.com/jobs/view/281696313/

Chief Impact Officer

https://www.linkedin.com/jobs/view/268895902/

 

 

 

 

Posted On March 14th, 2017 by Crowded Ocean

It’s COO and COS season in startup-land

Most of the 45+ startups that we work with start with two technical founders, one of whom has the experience and desire to be a CEO, the other wants to be the CTO. Both of them are outward-facing in some way, either in a Sales mode (the CEO) or an SE role (the CTO). Which means they get around to managing the company in their spare time.

To balance that “outside” focus of the co-founders, many teams in startup-land are recognizing the need for adding an “inside guy” to the team. That third leader is operational in nature, focusing on critical components like finance, HR, systems, strategic planning and training. In the past, that person was not equal to the top two dogs (CEO and CTO), but that role—and its importance—is changing.

COO for growth

Recently, a couple of high-flying startups have announced plans to hire a COO. First, there’s Dave McClure, CEO of 500 Startups announcing plans to hire a COO in order to support growth plans. Although the skills and division of labor have not been described, this article on Quora provides a long list of the attributes of a successful COO. That COO is made from a position of strength and augments an already-positive situation.

COO for cleanup and discipline

Then there’s Uber CEO Travis Kalanick, who is hiring a COO in the wake of allegations of sexism, sexual harassment and a public tirade by the CEO himself. And just a month ago, Uber was accused of taking advantage of the airport protests that erupted during the immigration bans. Although no plans have yet been announced by Uber about the division of labor between Kalanick and the new COO, the hope is that new discipline brought in by the COO will help button up and repair the company’s image, starting with the CEO.

Chief of Staffs for planning, systems and more

Another option—and this is more frequently being adopted by mature startups—is to hire a Chief of Staff, rather than a COO. Similar to a COO, the COS has a mostly internal focus but a wide-ranging charter to help accelerate growth and efficiency. See this interesting article that describes the popularity and role of Chief of Staff at startups. For more reading about COOs at startups, check out this cool article on Medium from 2015, including a nifty list of related articles on the topic.

Posted On March 7th, 2017 by Crowded Ocean

How much time do you really have to pitch your startup?

In the process of researching our book, The Ultimate Startup Guide, we interviewed a wide range of VCs—some of whom we’ve worked with before, some of whom we knew only by
reputation. As we collated our notes by topic, there were a couple of back-to-basics takeaways that stood out.

The first had to do with the nature of the relationship you’re trying to cultivate.

The second had to do with how much time you really have to pitch.

Every single startup founder and VC partner stressed the long-term nature of the VC-startup relationship and likened it to a marriage (or family in some cases). The idea is that you’re in this relationship together for the long haul, so choose selectively. Founders will mistakenly focus on valuation or the term sheet and the brand name of the firm ignoring components like the stature of the individual partner within the firm, their capacity, domain expertise, individual track record and their potential to build rapport with you. This isn’t a marriage solely for economic gain.

You’re getting hitched

This is a marriage you are entering “soberly and advisedly” where the capacity of the partner to build trust and to guide and mentor you, the startup founder, is hugely valuable and not to be underestimated.

And you’re going to be in bed, so to speak, with your VC investor for a long time. As this Forbes article pointed out, according to the National Venture Capital Association, the median time to IPO exit since first funding for VC-backed startups was 3.1 years in 2000, and 7.4 years in 2013.

The second takeaway has to do with how much time you really have to communicate your new idea. The reality is that even though many VCs leave their laptops and phones outside the door (to show the startup that they have their undivided attention), they have their pad of paper…and they are human. More importantly, most VCs will cop to having some form of ADHD: they’ve got all their current portfolio companies as well as the ones they’ve recently met with that they’re considering funding. And they probably have three more meetings after yours. So there are a lot of places their mind can go while they nod at Slide 28 of your presentation.

Plan on just 10 minutes, even if you’re booked for an hour

Therefore, even though the meeting you’ve booked is 60 minutes long, you should plan on 10 minutes of attention. (Sequoia partner Aaref Hilaly advises founders here to plan to hook your audience in the first 5 minutes of the meeting.) The point is that you need to engage quickly and powerfully and leave plenty of time for discussion. Pro tips:

  1. Make the meeting more a conversation than a pitch. Check in with the VC early in the presentation (as early as the 5-minute mark) to ensure engagement.
  2. Lead with the opportunity for the VC—not the dreaded ‘About Us’ or ‘Market Share’ slides. Why should they invest—what’s in it for them?
  3. Plan on bringing your product to life with visuals, screen shots, maybe a mini demo.
  4. After you’ve established that the market opportunity is Trumpian “yuge”, keep the detailed market metrics in the appendix.

For more insights into the “pitch and ask”, take a look at The Ultimate Startup Guide, available now on Amazon, Barnes and Noble and more. And here’s a review of our book that appeared last month in Inc.

 

Posted On January 24th, 2017 by Crowded Ocean

Walking in Another’s Shoes: Sales/Marketing Integration

Sales and Marketing may not be from Mars and Venus—or descended from the Hatfield and McCoys—but they aren’t natural allies, either. Sales carries the burden of a quota, screen-shot-2017-01-23-at-7-22-38-pmand when that quota isn’t attained, Sales will sometimes look for someone to blame. Maybe it’s the product (we’ve over-promised performance, ease of use or implementation, or we’ve mistakenly omitted key features), but more often it’s Marketing (our messaging is wrong; our claims are unsupported on the website; we don’t have enough leads—and the ones we do have are for shit).Screen Shot 2015-02-23 at 5.27.57 PM

Without sounding too much like Dr. Phil, the solution to this gap is ‘empathy.’ And the CEO has to steer Marketing towards being the one to take the first step in building an integrated sales and marketing plan. An easy first step is to have every person in Marketing listen in on an Inside Sales call. Or better yet, move their desk to the middle of the Inside Sales bullpen so that they can let these calls wash over them, even if they’re only hearing half of the conversation. And, when geography and budgets permit, have everyone in the company—nerds included—go out on a sales call.

Insist Upon Weekly Sales & Marketing Meetings

The next step is organizational: have someone from Marketing sit in on the weekly Sales meetings. Or better yet, have a regular meeting between the Sales and Marketing principals, with representatives from the lower ranks of each department participating and presenting (and listening) where appropriate. Make the content of that meeting both qualitative and quantitative. What can Sales report, fresh from their latest customer interactions and pitches, and what does the data-driven Marketing team report?

Once Marketing takes the initiative, it’s up to Sales to reciprocate. Sales needs to recognize how important, for example, reference accounts are—for the website, for PR (you can’t do a launch without customers that the press and analysts can contact) and for sales collateral (case studies). And if referenceable accounts aren’t part of a sales person’s quota and goals, they should be.

Screen Shot 2015-02-10 at 9.04.47 PMMeasuring the Cost of Customer Acquisition

Thanks to digital marketing systems like marketing automation tools, CRM, as well as a myriad of website tracking tools that help measure conversions of inbound traffic to your website , Marketing can now see both the quality of the leads it generates and what Sales is doing with them. This kind of collaboration between Marketing and Sales, fostered and modeled by the CEO, will enable your startup to answer the essential question: “what is the customer acquisition cost?”

Understanding Marketing Contribution to Sales

We’ve never met a startup that has modeled Marketing contribution to Sales. Startup CEOs will say instead that they want their Sales team to be much more productive, and that they want those productivity gains to be derived in part by having the right marketing programs and content to build market awareness for their company and customer preference for their solution.

Does all of this mean that the lion will suddenly lie down with the lamb? Nope. But it gives each party a solid understanding of the other’s jobs and pressures, which is a great start.