Fractional Marketing Support by BC Consulting Today’s clinical trial technology and service...
Artificial intelligence (AI) and machine learning (ML) are likely the hottest topics at conferences, in blog posts, on webinars, and in board rooms today. Thinking of ways to use AI (or imagining new AI applications) is relatively easy for most people, but building a company based on this idea is a lot more challenging. Often people find themselves with a great tool to solve a problem, only to realize that the problem may not be as clear, or the solution may not be as simple as thought. This seems to be the case in the world of AI today and reminds me of the phrase “a solution looking for a problem.”
In the past several months, I have seen countless colleagues and new connections struggle to find their footing in the world of sales and marketing as it relates to their AI business.
In the world of sales, there are different philosophies regarding approach, methodology, process, strategy, and all the other tactical things that go into making a sale. There are also common misbeliefs that: sales is easy, salespeople lack product knowledge, salespeople don’t care about their customers, salespeople are only in it for themselves, and other similar statements. The truth about sales is vastly different from these beliefs. The best salespeople I have worked with are very hardworking, smart, team-focused, and customer-centric. They put the customer first.
This brings us back to the fact that selling an AI solution or platform is challenging. Great selling involves great focus, deep knowledge, research, networking, constant qualification, and a considerable investment of time.
New AI companies typically don’t have a significant runway or bankroll to invest in sales. They are usually focusing their resources more on product development than sales and marketing. You may recognize this one-man-band person as the Founder, CEO, and Head of Sales & Marketing – one person with more hats to wear than heads to put them on. CEO-led sales organizations are powerful but ultimately can’t scale. They need to separate the roles to allow their leaders to focus on their area of expertise.
It’s common practice for these companies to search for part-time sales professionals or sales mercenaries and offer them a commission-only plan. When a business leader says, “We would love to hire you as a part-time salesperson and we will pay you commission on the deals that you eventually sell,” that is another way of saying, “We’re looking for a sales mercenary.” Most salespeople say no thanks, due to the amount of upfront work and the long, intense and competitive sales cycle required to get a deal over the finish line.
In the clinical technology space, the sales cycle can be many months to well over a year long. Finding excellent salespeople who are willing to focus and be intentional about selling a product for that long, without any financial compensation along the way, may be an unfair ask.
On the flipside, some start-up companies recognize the challenge of sales and the need for selling professionals to earn money as they prospect and work their way through the lengthy sales cycle. Most companies hire and pay sales professionals a salary while building a sales pipeline and navigate a long sales cycle. But startup companies may be apprehensive about paying a salary to a salesperson who may never actually close a deal or generate cash flow over many months.
If commission-only part-time sales doesn’t make sense for the salesperson, and salary-based pipeline building doesn’t make sense for a startup company, where is the middle ground? New businesses, including AI and ML companies, can leverage a hybrid approach to starting a sales organization.
They can use a fractional sales professional (a hired gun) by blending a monthly retainer coupled with activity-based incentivization to satisfy both parties and lead to quick success. For example – a retainer of say $2,000 per month (just an example) for a fractional consulting engagement with a sales professional would provide the salesperson with the incentive to focus on your business. The next step is to provide real and tangible goals for that salesperson and develop specific incentives for certain milestones in the sales process.
If a newly signed contract in your business is worth $100,000 consider the steps necessary to get there. Before you get to the signature, you’ll need to present a best and final offer, before that you may need to respond to a request for a proposal (RFP). Before you receive an RFP, you will have to prove you have a viable solution (needs analysis, demo, etc.). Before that you will need to have a mutual confidentiality disclosure agreement in place. Before that, you will need an introductory meeting. Yes, this is sales 101, but it is up to you to determine how much value you would place on each of these milestones.
In our example above with a $100,000 deal, would you be willing to pay a fractional salesperson $500 to get a confidentiality agreement in place? If that sales professional can move beyond confidentiality agreement and receive a formal RFP, would you be willing to pay $1,000 to progress the sale to this point? If that proposal was appetizing enough for your potential client to ask for a best and final offer presentation, would you be willing to pay that salesperson $2,000? Using some of the general numbers we’veput together here, we are looking at about $3,500 to go from confidentiality agreement, to request for proposal, and final meeting. For a $100,00 deal value, $3,500 would equate to paying this salesperson 3.5% on top of their $2,000 per month retainer to get to this point in the sales cycle.
Most experienced sales professionals have a strong network and could make some phone calls to secure introductory meetings and non-disclosure agreements from past customers and professional contacts. But companies need to ensure these contacts are qualified prospective customers. Your fractional salesperson needs to prove that their contacts are viable buying prospects, that they have the budget, need, control, decision making capability or influence, and access to the person signing the contract. These answers help justify that 3.5% (or $3,500) in milestone payments on top of their retainer.
There is nothing easy about building commission structures that are fair for both the selling professional and the startup company. The key is that both parties feel equally invested in the success of one another. The selling professional should feel as though their time and focus on the upfront work is valued even if the ultimate opportunity comes out as a loss. The company should feel as though the sales professional is getting the details about customer pain, solution fit, budget and decision making, before presenting the final proposal to the customer. While there are significant nuances and details that go into this planning process, part time or outsourced sales is a model that can move a start-up company to a small business, or a small business to a larger company. It becomes a win/win/win for the company, the salesperson, and the customer.
I encourage you to consider a fractional sales professional to help grow your company. Great consulting companies that offer these services can help with the proper structure and incentives of the outsourcing model too. I am happy to say I found a stellar company called BC Consulting that offers this type of service. You can connect with Bryan Clayton directly here.
Happy Selling,
Joe Ehrline
