Think of product-market fit as the moment when “your customers become your salespeople.” Josh Porter, of Rocket Insights, calls it the magical moment when three things happen:
Existing users recognize your product’s value.
They tell others about their great experience with the product.
Your company replicates the great experience for the new users.
Daniel Ek, CEO of Spotify, recognized that many of the necessary pieces for product-market fit were already in place when music-sharing platform Napster collapsed in 2001 following allegations of copyright infringement.
The content already existed, mobile devices stood poised to distribute the music, and Napster had amassed a sizeable market of users. Ek banked on the possibility that this market of users would pay a small fee for legal access to the music, and he was right.
As of May 2019, Spotify boasted 217 million monthly active users.
Indicators of Product-Market Fit
Forbes Magazine characterizes product-market fit as ahair-on-fire problem that an identifiable group of people have. It’s a scenario in which a product satisfies customer needs in a way that alternative products do not.
Stated another way, if more than 40% of your customers would be very disappointed to see your product disappear from the market, there’s a good chance you’ve created a must-have item.
If your customers buy your product faster than you can manufacture it, you’ve likely achieved product-market fit. Other signs include a significant amount of press coverage or the need to hire more people quickly.
Marc Andreessen, who coined the term “product-market fit’ in 2007, believes companies who have achieved this ideal state can feel it, because money is piling up and investment bankers are staking out the company.
On the other hand, companies who haven’t achieved product-market fit can feel it as well, because word of mouth isn’t spreading, deals aren’t closing, and press reviews are flat.
Product-Market Fit Goals for Startups
Startups should prioritize product-market fit above all other goals, because those that find it will dramatically increase their odds of success. Conversely, many startups fail because they waste money on products that no one wants to buy.
To avoid this fate, make sure you understand the pain points your product solves as well as the challenges your customers are seeking to solve. You can do this by focusing on six primary areas:
1. Determine your target customer
Work to identify the target customer who represents the users that will most likely benefit from your product. Use market segments to define your ideal customer. Develop “archetypes” for those customers so your team will clearly understand who it is building toward.
The research phase itself is carefully crafted around defining your buyer persona, identifying which part of that persona you’ll target, conducting market research with prepared research questions, and summarizing your findings into digestible takeaways to share with your individual contributors, executives, and board.
2. Gather intelligence
Talk to your customers to determine their pain points and how much they would consider paying for a solution to those challenges. Seek insights from your sales and marketing teams to identify recurring customer complaints.
Collect a large enough data sample to provide meaningful feedback. Consider, too, that face-to-face conversations will often generate feedback that online surveys will not.
3. Focus on a single vertical
Startups have notoriously small budgets, which means that trying to sell your products to everyone will likely result in disaster. Begin with a narrow focus and dive deep into that industry. Establish yourself as the industry expert in a single domain with a goal to stimulate a viral spread.
For example, Spotify saw that people were ready to pay a small fee for unlimited access to music, legally. They didn’t go into the market trying to take on existing music streaming services like the discovery centered Pandora or the more traditional, pay-per-album structure of iTunes.
They created a platform for people who wanted to listen to any album, any time by only paying one fee. They identified a gap in the market and targeted the people in that gap.
4. Specify your value proposition
Determine which customer needs you can best address with your product or service. Figure out how you can outperform your competitors and surprise your customers. Don’t lose sight of your product roadmap when determining which challenges you’ll address. Not every problem will fit into yours.
For example,Spotify’s value proposition positions the streaming service as offering access over ownership, providing data-driven personalization, and the opportunity for content unbundling.
5. Measure your product-market fit
You must measure your performance in order to manage your success. Identify key data points that will help you track performance. Start by identifying your total addressable market (TAM) otherwise known as the total number of people who can benefit from your product/service (i.e., If everyone who could use your product/service started using it).
TAM is calculated by multiplying your average revenue per user (ARPU) by the total potential customers in the market. Once you have your TAM, determine what percent what percentage of your TAM are currently customers.
6. Avoid complacency
If you manage to achieve product-market fit, don’t assume you’ll always have it. Your customers’ needs will change over time, and you must constantly re-evaluate market conditions in order to continue meeting those needs.
This could look like sending out asimple survey that asks customers, “How would you feel if you could no longer use [product]?”
Product-Market Fit Examples
Wonder: Are You a Painkiller or a Vitamin?
Your customer relationships will drive your quest for product-market fit, from the search to find it to the battle to maintain it.
In its development, the company recognized that it had endless verticals to pursue, but it also understood the need for laser focus. The company developed a list of 15 verticals it believed it could help and then cold-called countless companies within those verticals to ask a barrage of questions.
Wonder chose its first vertical by determining which one felt the most pain and would therefore be willing to pay for a solution.
Uber: The Free Ride
Uber captured product-market fit by initially offering free rides between regional tech events in San Francisco. Uber’s co-founders recognized that the taxi system was prohibitively expensive and outdated, and few people used it. Once the Uber app gained steam, Uber offered 50% discounts to first-time users.
Experts point to Uber’s ability to solve a problem and create a need at the same time. Consumers weren’t demanding better taxi service, but once a more convenient, simpler option emerged, users began to rely on the concept. The network effect kicked in and users began sharing their experiences on social media, providing social proof for the startup.
To date, Uber has about75 million riders, and the company recorded 5 billion rides in 2017 alone.
In most cases, product-market fit doesn’t happen on the first try. You’ll likely test and adjust your product or service a number of times before you find the perfect combination of value proposition, customer base, and distribution.
Continually experiment based upon the feedback from your audience. Tweak your concept if your data indicates it and be prepared to pivot if necessary.
When you achieve product-market fit, your job will become much easier, because your customers and other interested parties will become a major part of your marketing effort. They’ll share their own stories with others so you can focus on the work of creating the same great experience for everyone who interacts with your company.
In the sales world, this annihilates results. How many sales coaching sessions are totally forgotten? Though not the sales rep’s fault (humans are human, after all), it costs organizations billions in lost revenue, as sales mistakes continuously occur despite ongoing sales coaching.
So how do you make sales reps remember their sales coaching?
That’s where Immediate Reinforcementcomes in. You may be familiar with this concept already -- the sooner the reward to the trigger, the more likely a person is to change behavior.
As an example: Imagine if every time a sales rep talked too fast during a sales call, alarm bells immediately sounded throughout the office. That rep would slow down right away -- no sales coaching required.
Frequently, organizations manually apply immediate reinforcement. Managers or peers provide feedback immediately after the conclusion of the call. Though effective on a small group, it simply doesn’t scale well and sales reps are hesitant to commit time to something that doesn’t immediately help them hit quota. The result is a bit ironic: immediate reinforcement is used less and less as companies grow and become more sophisticated.
Here are a few things, manual and automated, that you can try with your team:
1. The Trusted Ride-Along
A peer listens to live calls and provides guidance during and after the call. Frequently, a peer or manager connects to the call externally and listens on mute, providing suggestions via single-side audio that only the sales rep can hear (called “Whisper Mode” by most phone providers).
For fairness and objectivity, managers should use the same evaluation criteria for each sales call. They should also make sure that reps have a clear understanding of the criteria they will be evaluated on.
Here is a general sales call evaluation outline that works for most sales environments:
Allows for immediate reinforcement, both during and immediately following the call.
Provides managers with specific context around the call for a more informed coaching session.
Provides an opportunity to work directly with reps who may not otherwise receive 1:1 training.
It can be awkward.
It can be distracting.
It’s still subjective - the manager may give advice based on what's worked for him or her, not what is objectively correct.
2. Personal Reflection
Write down behaviors immediately after the call. For example, reps might carry a memo pad with them and jot down a minute of notes at the end of every call. Alternatively, they might mark a tally on a piece of scratch paper every time they successfully execute a particular skill.
After two to three weeks, consider having the rep graph out their results against a goal. By committing to a clear goal, they are more likely to keep it top-of-mind during their sales conversations -- a phenomenon known as “reactivity.” Additionally, it gives an opportunity to celebrate small successes along the way, as the rep’s ongoing improvement is recorded.
Feedback is fairly close to the antecedent.
It can be done personally, without the pressure of a manager, prospect, or peer involved.
It can be done simply -- simply tallying a piece of paper when a trigger occurs can have great results.
It’s generally time-consuming and often energy-intensive, especially for longer meetings.
There is no second opinion, so mistakes still go unnoticed and bad habits may be inadvertently reinforced.
Reps often don’t like doing it, especially if they have immediate deadlines.
3. 1:1 Peer Coaching
Routinely, every sales rep listens to another rep’s call and provides comprehensive feedback.
In order for peer coaching to be successful, sales managers must proactively schedule out coaching sessions. At Balto, we schedule team-wide peer coaching during our Monday morning sales meeting, when the entire sales team is in one place, and reps coordinate schedules on the spot. If you wait until later in the week, everyone will be too busy.
Reps sometimes feel more comfortable giving and receiving feedback amongst peers instead of managers.
It can scale well, as it increases the total “coaches” available for feedback.
It builds trust and camaraderie amongst sales teams.
It’s still after-the-fact, when the call has already been lost.
The coaching abilities and experience of the reps affect the quality of the feedback.
It's still very time consuming and some portion of reps won’t want to do it.
4. Real-Time Speech Analytics
Sales coaching software that listens to calls and provides guided insights, live on each call. Believe it or not, recent advances in speech recognition and artificial intelligence now make it possible to automate immediate reinforcement. For example, Balto understands phone conversations and tells sales reps what to say, live on each call. That way, immediate reinforcement happens automatically.
Provides immediate reinforcement, live on call.
Provides objective insights based on data analysis.
Is always available and happy to help.
It’s an additional cost burden on an organization.
Without buy-in, reps may hesitate to trust the technology’s feedback, especially compared to a trusted peer or manager.
Requires technical time and resources to set up and roll out -- not a quick fix.
These options will have a substantially different performance impact, both in terms of upfront investment and final results. As a starting point, calculate what lost calls are costing your team, here. This gives you a better idea if a big investment is even worth making.
If you still don’t know where to start, try something basic; for example, have a rep jot down every instance in which he or she uses a specific sales buzzword. It won’t be perfect, but it will reduce buzzword usage over time. You can rinse and repeat for new habits.
The following is an excerpt from the new From Impossible To Inevitable (2nd Edition), the hypergrowth bible of Silicon Valley, by Aaron Ross and Jason Lemkin. It’s republished here with permission.
Mark Roberge learned a few things in helping HubSpot scale from $0 to $100M in revenue and from zero to 425 salespeople across multiple countries. What does he see as some of the biggest problems in sales teams and scaling them?
1. Where Can You Tie Sales Comp Plans to Customer Success?
The biggest problem Mark sees today in the sales world: sales doesn’t care enough about customer success. We talked earlier in the “Seeds” chapter about creating a dedicated Customer Success team, but how do sales comp plans affect customer success?
People talk the talk . . . but when push comes to shove, vanilla sales teams are going to do whatever it takes to close a deal, then collect a check, and let other teams pick up the pieces later. Can’t blame them. Executives -- and their bosses the investors -- expect and demand it, and it’s what salespeople are measured and paid to do.
To Mark, a root problem is sales compensation. Sales teams obsess 99% over their attention on contracts, revenue, and commissions, and what happens post sale gets crumbs.
Shelfware existed because a sales team would get a million-dollar deal done, then the client needed 18 months to implement it . . . and by that point, no one used it. This was an epidemic in pre-SaaS software (and still happens, even in SaaS).
The cloud/subscription model changed everything. It reduced the friction to implement software or move to a different vendor if one overpromised. By paying over time, software companies are incented to keep customers happy, rather than extract as much money upfront as possible. People understand this intuitively, but our sales compensation plans haven’t caught up.
Think about this scenario: you have two reps who both closed $1M in revenue this year.
Your first rep, all of her customers are happy and they’re expanding and renewing their contracts because of it.
While your second rep’s customers are miserable, complaining and churning out.
If your compensation model is set up so that both of those reps are compensated the same, you’ve got a problem. Mark proposes incorporating a customer lifetime value trigger into your comp plan.
Churn and retention are the best indicators of customer lifetime, but they take too long to tie to your sales comp. Mark says to find an “aha moment” in your product or service that your customer completes in the first two months that flag them as an ongoing success. Pay the sales rep half their commission when they sign the contract, and half when that “aha moment” happens.
Some popular examples of how a company knew a customer would be successful:
Dropbox -- when an account has added one device, one file, and one user.
Slack -- once a team exchanged 2,000 messages.
HubSpot -- once the customer used 5 out of the 25 available features in the platform.
Twitter -- after someone followed 30 other people.
2. Predefined Sales Promotions
In a role where success and failure are so easily quantifiable, having an annual performance review to decide on an annual percentage bump in salary doesn’t make sense. It provides little incentive for your top performers to push harder and doesn’t provide them a clear path to getting to the next level.
Instead, Mark recommends adding tiers to your sales roles -- each with clearly documented milestones to hit. Each milestone should have a sales component, a productivity component, and a customer lifetime component. If you hit all three, you get promoted to the next level.
Here’s what that looked like at HubSpot (ARR = Annual Recurring Revenue)
Sales Associate Level 1: $50k base + $50k variable (6.25% commission on an $800k ARR quota)
Milestones—Close$800k in ARR, customer churn rate below “X.”
Sales Associate Level 2: $50k base + $66k variable (7.33% commission on a $900k ARR quota)
Milestones—Close$ 900k in ARR, customer churn rate below “X.”
Sales Associate Level 3: $50k base + $80k variable (8% commission on $1M ARR quota)
Milestones—Close $1M in ARR, a customer churn rate below “X.”
You’ll notice that we did not include a tenure piece in the milestones. Mark’s best reps took seven months -- and some took 20 months -- to hit their first level up. It was all up to them.
The stars can level up faster without waiting for annual (or arbitrary) performance reviews for the next bump. Additionally, providing clear and public expectations gives everyone transparency into what management values.
3. Have Reps Help Redesign Their Comp Plans
Mark always involved the sales team in comp redesign. He started with a “town meeting.” After communicating the goals for the plan, he’d open up the floor to structural ideas. The brainstorming would begin. As the meeting progressed, he’d share some of the structures that were being considered and invite people to offer their feedback.
As a follow-up, he created a page on the company wiki, reiterating the reasons for changing the plan, stating the goals, and describing some of the structures that were being considered.
The conversation would then continue online with ideas and reactions. He responded to most comments and taking it online allowed salespeople to catch up on and participate when they had time.
Involving your reps in helping redesign their plans reduces comp plan change friction; They have a voice and can contribute concerns and ideas, it reduces surprises, and reps are pre-educated before a new comp rollout.
4. Rate Salespeople Like Uber/Lyft Drivers
It’s not Mark’s advice, but this fits here. Do you know which of your salespeople are creating great customer experiences, and which ones are too aggressive or overpromising? (Remember: big megaphones.) If you can’t tie comp to an “Aha Moment,” maybe customers can rate your salespeople. After a string of painful SaaS buying experiences, Jason proposed . . .
Survey: 90 days after a sale, send an automated survey to buyers with one question: “How was the buying process, on a score of one to five?” Sooner than 90 days is too early. “Churn and burn” deals, where products are sold to customers that don’t need them and “fakeware” deals where the rep overpromises on features, don’t show up right away.
Sales Score: Reps with a five-star sales score on an individual deal, and a 4.8 or higher overall score get an accelerator bonus. Maybe even 20%. Enough to be material. Possibly this accelerator is in lieu of other accelerators, perhaps it’s the only one.
Public: Every salesperson’s Score is published internally, so everyone knows. Customer Success can be alerted when a low-rated salesperson is closing a deal, as can the CEO. And their calls can be listened to for corrective action earlier.
Align your salespeople to the metrics of success that customers and management care about. Even with these examples, it will take creativity on your part, because sales teams and customers vary so much market to market. But do it and you’ll reap huge short and long-term rewards.
You know what sucks about networking? Keeping track of everyone you've spoken with.
I attend events, send emails, tweets, the whole networking nine-yards. But it often feels like I'm shooting shotgun pellets into the distance in the middle of the night.
Having a "handy" stack of business cards doesn't remind me how or when I met the person.
"Connecting" with everyone on LinkedIn doesn't share the specifics of what I talked to them about.
Since I've yet to find a great tool to manage my networking, I've created my own.
Inspired by the HubSpot CRM deal boards and the way I manage my sales pipeline, I modeled my own Personal CRM using Trello, a free collaboration tool. Trello makes it easy for me to visualize my connections, take notes, and understand the relationship I have with anyone in my network.
Trello Contact Management
Using Trello as your personal "CRM" in tandem with your free HubSpot CRM can be an easy way to stay organized and alert.
By integrating the two platforms, you can create Trello cards for bounced emails or when a HubSpot CRM contact property is changed, and build a variety of triggers, such as when a new deal is created.
Want to ditch the third-party integration? Consider HubSpot Projects, a native HubSpot tool that allows you to see every task that's been created for all of your projects.
Use filters to sort tasks based on assignee, status, and due date. And create projects and add details such as assignees, due dates, and descriptions. Plus, you can attach HubSpot assets, create templated projects, and archive or delete your projects.
Ready to get to the Trello template? Read on.
Personal Contact Template
If you're interested in learning how it works/trying it for yourself, I've listed the steps below. Here's what it ultimately looks like:
Step 1: Copy the Personal Connections template
First, sign in (or sign up for free) with Trello. Once you're logged in, select the "Menu" drop down on the right side of the screen. Under there, you'll see an option to "Copy Board." Go ahead and do that.
Step 2: Create your first contact card
Trello is based around the idea of “cards.” For our purposes, each “card” is an individual. Within each card you can take notes as you connect with people and have conversations. To create your first contact card, simply click the tiny pencil icon at the top right corner of “EXAMPLE CARD” and click "Copy" from the right-side menu that appears.
Once the card is created, I typically like to populate it with some basic information about the contact -- such as job title or even a headshot to make it an even more visual networking database. To accomplish any of this, just click into the card and scroll down to the "Comment" section to attach images or write notes.
Step 3: Populate each contact card with a high-level relationship status
By clicking into the card, you'll notice three high-level questions that provide a great quick-view of what your relationship with this person is like.
The questions I use are:
"Have I added value to this person?" To jog our memory on how/if we’ve helped this person.
"Have I asked for something from this person?" To know if we've asked them for favors yet. I generally aim for a 1-1 ratio of asks-to-favors.
"Does this person actually know my name/face?" Be honest with yourself. If this person passed you on the street or saw that you wrote an article that they’re reading, would they make the connection and know you? If not, we need to get a few more touch points.
Step 4: Drag and drop cards with each touch point
I'm a firm believer that true relationship is formed with a contact after you've interacted at least six times.
So, let's say I had Anum Hussain on my Personal Connections Trello Board with the intention of selling to her one day. One checkpoint I may make is commenting on one of her recent blog posts to show my interest. After marking off that checkpoint, I can move Anum from the "People to connect with" list to the "Touch 1" card.
Step 5: Comment helpful notes as the relationship progresses
As you work through each connection, consider commenting helpful notes on their respective cards. Most of the time, we're hustling many connections at once. Some we'll work through in a month, some may take a year, so having the right notes to spark conversations and jog our memories can prove incredibly valuable. I typically take notes along the lines of:
"What are the things this person is passionate about?"
"How did I meet this person?"
"What was something we spoke on last that would be good to check in on?"
"Any other notes on their mannerisms or ways they communicate."
Tip: Card Aging
On this Trello template, I've enabled the "card aging" Power-Up. So, if any of your cards progress with no activity at milestones of one, two, and four weeks, the card will begin to become transparent. Once the card completely fades away, it may be a good reminder to make another touch point or re-establish the connection.
Of course, once you go through all six touch points, you can drag your contact into the "Established Relationship" list.
Now, at any given point in time, you can look into this Trello Board and see where you stand with any of your contacts.
Or let's say you suddenly bump into one of these contacts at an event -- just pull up this Personal Connections Board and refresh your notes on who they are and where your relationship stands before conversing.
Have you ever considered buying a product or signing up for a service but felt you needed to see that product or service in action prior to making your decision? Maybe because you were unsure of how it actually worked or you didn't know whether or not if would solve a challenge you were facing.
That's where a sales demonstration comes in handy.
Before we dive into the sales demonstration process, let's look at the difference between a sales demo and a product demo, as they're often confused terms.
Sales Demo vs. Product Demo
To reiterate, a sales demo is the process of providing a prospect with a demonstration of your product or service. A product demo is the same process but it involves a current customer.
The point of a sales demo is to create a sale whereas the point of a product demo is to show an existing client how to use the product or service they already invested their time and money in.
Sales Demo Basics
Now, let's answer a few more questions that may come up as you begin thinking about your business's process and as you prepare to start delivering demos to prospective customers.
At virtually every company, a sales rep will deliver a demo to the prospective customer.
Why deliver a sales demo?
You deliver a sales demo to close a deal. With a sales demo, you're showing a prospect exactly how your product or service meets their specific needs and can mitigate any pain points and issues they're experiencing. This makes your prospect want to buy your product or service (or at least want to learn more about it so they can convert later on).
When do you deliver a sales demo?
Sales demos typically occur after a visitor becomes a lead. Depending on where a prospect is in the buyer's journey, there are a few specific points in time when you might deliver a sales demo (or ask if your prospect is interested in a demo).
When a visitor completes a micro conversion (signs up for your newsletter or requests more information)
When a lead contacts a member of your sales team to learn more about your product or service
When a lead requests a consultation
How do you deliver a sales demo?
There are a number of channels through which you can deliver your sales demos. You might offer your prospects different options to be flexible and meet their needs.
Ensure you have all of the tools needed to offer these sales demo delivery methods. For example, if you decide to deliver a sales demo via video chat, make sure you have access to software like GoToMeeting or Zoom, which allow easy screen share, face-to-face video chat, messaging, call features, and more.
Here are some more examples of common sales demo delivery channels:
Automated/ pre-recorded video
Live video chat
Since you now have a better understanding of the basics behind the sales demo process, let's take a look at how to actually deliver a sales demo.
1. Research Your Prospect
The first step in the sales demo process is to research your prospect. As the rep who's delivering the demo, you should have a deep understanding of the prospect's needs and pain points as well as what it is the company they work for does.
A sales demo is something that's almost always planned in advance — so it's important to remember to confirm the demo prior to it happening. Make sure the planned time of the demo still works for the prospect and give them a window to postpone if they've accidentally double-booked or if something else came up.
Send a calendar invite as soon as you've confirmed the date and time of the demo (don't forget to include any dial-in information if needed). Ask if anyone other than the person (or people) you listed on the invite will be attending so you can add them. Then, follow up with a confirmation email the day before, or a few hours prior to, the demo.
You should also prepare statements around each tool or service you plan to show your prospects as well as any tie down questions — which spark agreement and invite the prospect to better define the value of a given tool or solution for their business — to ensure your prospect is following along and understanding the given information.
Plan tie down questions for each tool or section in your demo to ensure your prospect is following along, understanding your descriptions, and grasping how these tools can help them solve their problems. You want to lay out a clear path from A to B so they can envision the way your product or service can resolve their challenge.
4. Humanize the Sales Demo
If you start the demo with, "Hi. I'm Kristen ... Let's start the sales demo now!" you officially sound like a sales zombie.
To avoid coming off as a pushy, untrustworthy, and possibly unpleasant, ensure you're personable and show your caring, human side at the beginning of the call. After all, at this stage in the sales cycle, you and the prospect probably don't know each other that well. You might ask the prospect how they've been, how their latest project went, if their dog is finally potty trained, whatever. Time is precious, but so is rapport.
And rapport does not stop here. Build it at the beginning of the call and ensure it's continually injected throughout all other parts of the sales demo as well to establish a human and trusting relationship.
5. Set an Agenda for the Demo
Your sales demos should always follow an agenda. Prospects should be informed of this agenda prior to the demo beginning and can also be reminded of which stage of the agenda they're actually in throughout the demo. This sets expectations and keeps everyone organized and on task. Knowing what will happen during the demo will put the prospect at ease.
Emphasize there will be time at the end of the demo for the prospect to ask detailed questions (but you can also stress questions are welcome at any time).
6. Summarize Past Conversations
As you begin presenting the demo, mention any past conversations you've had with this specific prospect. This will remind them why they needed your assistance to begin with, why they considered doing business with you in the past, and how you determined you can help them during any previous conversations.
One way to neatly do this is by outlining the prospect's goals, plans, challenges, and timeline (GPCT). Once they confirm this information is right, you can use this presentation slide (or brief discussion) as a springboard to jump into the meat of the demo.
7. Provide Background
As a rep, gaining the trust of the prospect is a critical component of closing any deal. To do this, provide some background information about your company. This will establish your company as a reputable and innovative potential partner for the prospect.
The ticket here is avoiding generic babble and incorporating specific facts about your company and it's products/ services that align with the needs of the prospect and their company.
7. Explain the Product or Service
Now, it's time to explain your product or service. When doing this, you'll want to ensure the explanation is both specific and tactful.
Start with an overview or the product and it's basic features. Explain why this product exists, and link it to the prospect’s needs (which you already confirmed with the GPCT). Each feature being presented in the demo should tie back to why the product is the best solution for the prospect's challenge.
Next, bring in the "wow" factors. This should answer the question, "What unique value does the product offer?"
This is where personalization is key. For example, if a HubSpot prospect mentions they want to improve their blog's SEO, you could feature the SEO, Content Strategy, and Keywords tool. You can also always refer back to any previous conversations and plans you worked on with the prospect during earlier conversations and ask a tie-down question to ensure you're all on the same page at this time as well.
Furthermore, if your company provides excellent customer service to help with the onboarding process and beyond, include that information in this part of the demo. Knowing help will be available when needed does wonders to reassure a doubtful prospect.
By picking up on these emotions and concerns, you can frame your responses and answers in a more personalized way. You can also determine whether or not you should pull out that extra infographic or show an example of a customer successfully solving the same problem using the tools being referenced. This builds social proof, credibility, and shows the prospect that others have succeeded by partnering with you.
10. Set Expectations For Next Steps
Whew! You've officially completed the delivery of the sales process. Now, the big question: Is the prospect interested in moving this conversation forward to possibly make a deal?
Let the prospect know upfront what's required on their end for the solution to be successful. For example, show a final slide to summarize the discussion in terms of the prospect’s necessary commitment, skills, time, willingness to learn, and budget for the solution to be a worthwhile investment for them.
If they're interested in learning more or keeping the conversation going, you can set up a follow-up conversation. Or — even better — if the demo was highly effective in convincing the prospect, it might be time to begin a closing sequence to complete the deal (yay!).
Sales Demo Best Practices
There are some best practices you'll want to make sure you follow and consider while working on your sales demos to meet the needs of your clients and develop a consistent, effective, and repeatable process for you and your fellow reps.
Personalize the Sales Demo
Personalize the sales demo to fit the needs of the specific prospect you're speaking with. You always want to distill your demo down and customize it to your audience's situation with only the essential information they need.
To do this, make sure your demo demonstrates the ways your product is suited to address their pain points and meet their needs. Prospects and customers only care about the features that impact them in a positive way, so you'll want your demo to highlight those.
Always Explain "Why"
With everything you present and share throughout the demo, you must explain the "why" behind it. Why is your product better than your competitor's products? Why is your product or service ideal for managing the prospect's issue? Why should your prospect want to do business with you? Why do your current customers love your product?
These are the types of points and comments that may just move your prospect from an interested lead to a new and loyal customer — they differentiate you from other companies and make your demo significantly more convincing.
Remember To Be Adaptable
The sales demo steps are a bit like an adaptable script you can refer to and pull from to ensure you're providing all prospects with an on-brand, consistent, and professional experience.
You can also make sure you run through various situations regarding the reasons why prospects might need your product or service and how it can help them with your sales manager so you're ready for all scenarios. Additionally, you might choose to review some possible questions the majority of prospects currently ask the rest of your team so you're ready to provide quick, helpful, and impactful responses on the fly.
And remember, every interaction, prospect, company, and situation is unique, so prepared to adapt the demo as needed. Your job is to meet your prospect where they are to show your support, flexibility, and commitment to their success.
Prior to, during, and after the delivery of any sales demo, it's critical you listen to both the prospect and your fellow reps.
You need to listen to your prospect's needs, pain points, concerns, questions, hesitations, and positive or negative feedback. This will allow you to customize the demo and all future conversations to fit their needs and tailor the points you make during the demo to highlight the ways your product can resolve their challenges.
Additionally, you need to listen to your fellow reps. Your demo process is ever-changing and you're the group people who are actually working with prospects, conversing with them about their issues and needs, and delivering the demos every day.
So, who better to ask for feedback on the current demo process (what should stay the same and what could be improved) than the other members of your team? Because, maybe they've uncovered something you've never thought about or encountered (and vice versa).
If a prospect asks for specific information about one of your product's capabilities, you can also pull in real data about the ways in which your solution works and functions.
Begin Creating Your Sales Demo Process
The demo is to sales what the climax is to a movie — this is the part where all the action has built up and resulted in one big moment where everything comes together.
That's why it's so important to get the demo right. Take the time to prep, understand your prospects, and determine how to tie your product back to the prospect's needs and challenges. This way, it'll be smooth sailing and improve the likelihood of closing a deal.
Mark is the managing sales director at his company, and his job is to help businesses grow better. He spends each day meeting prospects and clients, understanding their core needs, attending conferences, and exchanging information.
Mark operates in the finance sector, where information is primarily exchanged with business cards. When he receives new cards from contacts, he sits down at his laptop, opens his CRM, and manually transcribes the information.
Mark doesn’t always enjoy this process, but each and every business card is important, and he needs to capture that information for his CRM.
Sound like a clunky, monotonous, time-consuming process? It is, and Mark isn’t alone.
HubSpot recently conducted a survey on how sales teams operate, and they found that salespeople spend 20% of their time on data entry activities, such as inputting lead information, adding notes, and attaching documents.
That’s almost two hours of an eight-hour workday … which is valuable time that could be spent on other revenue-generating activities.
At HubSpot, we decided this wasn’t good enough. We dug deeper into that 20% and tried to understand how and where this data entry was happening.
We found that although modern technology is universal, salespeople still depend on exchanging contacts the old fashion way — through business cards. From conferences to one-to-one meetings to baseball games, this was happening everywhere.
We started with a rudimentary version that used a simple, rule-based model, allowing for quick release and market validation. For example, if a piece of data was a number, the Business Card Scanner tool recognized it as a phone number. If the data included an @ symbol, the tool captured it as an email address.
Upon release, the Business Card Scanner tool quickly became an invaluable tool for traveling sales representatives. We saw an immediate boost in usage, about 20% week-over-week.
With validation in place, we started brainstorming version two of the Business Card Scanner. We were working in a competitive space and needed to differentiate our product. With the feature already in the market, we had a rich pool of users telling us the same thing: they wanted the Business Card Scanner to be quick, accurate and cheap.
As we dug deeper, it became evident that no matter how seamless and accurate the business card data extraction was, salespeople wanted the technology to classify the data for them. We needed to approach this problem systematically.
We divided the challenge into three phases:
Optical Image Recognition (OCR), and
The first phase, Capture, was all about image detection and capture, photo perspective corrections, edge detection, cropping and other factors that prepared the image for step two.
For the next phase, OCR, we used Google Cloud Vision to extract the business card text. As we developed this solution, we researched and benchmarked four OCR tools using the business card data from version one. These included two open-sourced tools (Tesseract 3 and Tesseract 4) and two proprietary solutions (Amazon Rekognition and Google Cloud Vision). Google Cloud Vision consistently came out on top.
The final phase, Classification, was where the fun happened. It was the perfect problem for machine learning and artificial intelligence to tackle. At a high level, machine learning is all about attempting to copy human decision making. If a human is given unlimited time and the right data, they’d be able to make the right decision — this is what artificial intelligence attempts to emulate.
This was the exact challenge we had with the Business Card Scanner. Our goal was that when someone used the tool to scan a card, it would automatically set the text to the CRM property they wanted. For example, if a job title was pulled from a business card, the tool would set that data as the Job Title in the CRM.
Before we started doing this prediction, we needed to train the machine learning model to know which field in the business card corresponded to the proper CRM property.
To train the model, we released version two of the Business Card Scanner to our iOS users as they’d been asking for the tool since the Android release. We also wanted our machine learning model to capture and learn from how the users manually set CRM properties for the scanned data.
Once our model captured enough classification data, the team was able to devise a predictive model that would classify key properties without any user input — with 95% accuracy. That meant that for every 100 properties scanned into the Business Scanner Tool, only five would need manual changes.
This would be how our product stood out among competitors.
It was time to release our final version to our users. We’d gone from a tool that required users to manually select the CRM properties friction. Our new version was also twice as fast — what used to take over 10 seconds now took merely five.
Ever heard of contract lifecycle management (CLM for short)? If that answer is “No,” you’re not alone. You’d even be forgiven if you thought it was just another convoluted business term with an accompanying three-letter acronym (Why are the acronyms always three letters long?).
But, in this case, you’d be wrong.
Many business owners, managers, and sales reps think contract management is just a matter of getting a signature and storing the contract away in a CRM.
The result for the vast majority of businesses? Lost leads, sales, and revenue.
The reality is that contract management is a fundamental part of the sales cycle. Implementing well-tested processes around the creation, approval, and renewal of contracts can dramatically boost your sales while cutting costs.
In this guide, we’ll cover two things: how to streamline and improve your contract management process, and how to enhance the effectiveness of your contracts with templates and tips just for you.
In essence, a contract contains the names of the parties involved, the goods or services being sold, and any additional terms.
A sales contract is usually sent towards the end of the sales cycle. It comes after sales-focused documents like quotes and proposals have been sent. When a client agrees to receive a contract, they’re usually ready to start a business relationship.
Sometimes, contracts are included as part of a broader proposal or quote, depending on the needs and expectations of the recipient.
What is Contract Management?
“Contract management” refers to the set of processes and guidelines companies use to create, send, store, and review contracts.
There are four critical stages in a contract’s lifecycle:
1. Request for Contract
The “request stage” occurs when a potential buyer agrees to purchase and asks to receive a contract. Usually, buyers will have a specific set of requirements depending on their industry or sector, and contracts should be tailored to meet them. Government contracts, for example, typically come with numerous stipulations.
Creation involves the writing and sending of the contract. Because contracts are primarily legal texts, legal teams will have a high degree of involvement in this business process. Usually, lawyers must approve the final version of a contract, especially if a salesperson is responsible for putting it together.
3. Approval and Storage
Once a contract is finalized, it is sent to the recipient for signature. It’s common to receive feedback from potential clients at this stage. You might need to amend parts of a contract. If using a paperless workflow, contracts will be stored digitally.
4. Review and Renewal
Periodically, contracts should be reviewed to ensure that both parties are acting accordingly. As the contract period ends, renewal may occur.
5 Proven Tips for Writing Better Sales Contracts
Before we look at some useful templates, here are five general ways to improve your contracts and your entire contract management process:
1. Use Contract Management Software
Implementing contract management software as the basis of your operations will almost certainly save you significant amounts of time, workforce, and money.
And it’s not just about removing the hassle of paper contracts, with the continuous printing, scanning, and hand signing they require. Paperless proposal and contract solutions provide a host of powerful features for streamlining everything from contract writing to client follow up.
Contract management software makes it dramatically more accessible, for example, to consistently create high-quality contracts with the use of pre-built templates, ready to use content libraries, drag-and-drop electronic signature and payment blocks, approval workflows, and more.
What’s more, automation and tracking features enable salespeople to improve outcomes beyond creating and sending. Analytics tools, for example, clearly show when potential clients open, read, and respond to proposals, allowing you to tailor your email responses accordingly.
2. Automate Work from a Proven Template
Most salespeople and lawyers aren’t natural writers. So how can you ensure high-quality contracts without the need to hire people with strong writing abilities?
Templates eliminate an array of errors. They provide tested structures for writers and ensure all necessary legal texts are included.
What’s more, improving in-house templates based on testing and data from recipients is one of the surest ways to boost your close rate.
3. Include eSignature and Payment Options
The manual printing, signing (often by multiple parties), and scanning of contracts are one of the biggest hurdles to approval.
Adding electronic signature and payment options to contracts, which allow multiple recipients to sign with only a few clicks, can significantly boost conversions by removing this unnecessary friction.
Electronic signatures are fully secure, often more so than handwritten signatures, and it’s becoming increasingly common for decision makers to use them.
4. Adhere to Any Industry Requirements
Sometimes, contracts are only accepted if they meet specific requirements.
Some industries have regulations surrounding quality assurance and delivery of service that must be adhered to and specified in the contract. Government agencies, for instance, will often have strict stipulations demanding high levels of transparency.
Equally, it’s essential to ensure that legal allowances are made for areas that are often problematic, like intellectual property rights for freelancers or accident liability in construction.
5. Provide Important Legal Documentation
One of the biggest reasons for slow contract creation is a legal team that takes weeks to amend essential documents. A simple way of overcoming this problem is to create reusable content that contract writers can access during the contract creation process.
Content protection features in online software ensure that text is not tampered or edited. Communication tools in a central dashboard enable the legal team to make any necessary changes quickly.
Content libraries also provide writers with the ability to drag-and-drop relevant sections like Ts&Cs, warranties, payment contract terms, and so on.
6. Prevent Errors with Accurate Product and Pricing Data from CRM Records
Pricing mistakes are prevalent in business documents. If a recipient signs a contract that’s priced in a particular way, only to be told that a mistake was made, it can cause an utterly unnecessary holdup. It doesn’t look too professional, either.
It’s good practice to have a standardized set of prices that managers, salespeople, and others can consult. And one of the easiest ways to do this is to integrate and sync your CRM (like HubSpot) with your contract creation software.
Whenever a rep or manager is putting together pricing information, they can automatically request information from the CRM, where prices for goods and services are stored. They can then select the appropriate pricing with virtually no margin for error.
What Should You Include in Your Contracts?
Most contracts follow a similar general template. Irrespective of the recipient’s industry and unique needs, certain elements should always be included.
Here’s a quick rundown of the essentials:
Names of both parties - Use a cover letter that displays the name of the client and the name of the recipient.
Scope of work - The “scope of work” describes the goods or services exchanged.
Delivery method - How and when will the goods/services be delivered?
Terms of payment - This section should include the price of the goods/services along with any payment methods, timeframes, etc.
Additional legal items - You may also wish to include confidentiality agreements, quality assurance, compliance processes, termination rules, force majeure (unforeseen circumstances), and so on.
Sales Contract Template
Sometimes, a standard sales contract will do the job. Other times, it won’t.
It’s important to recognize when to tailor contracts to specific industries. And it’s worth having dedicated templates for each of those sectors.
Here are the main contract types and the more substantial differences between them:
1. General Business Services Contract
Business contracts usually cover multi-faceted deals that include a mixture of goods and services.
For this reason, it’s vital to include a detailed section that outlines the scope of work along with a specified timeframe that informs clients about when they can expect to reach individual goals. You might wish to attach specific quality criteria to outcomes so that recipients do not doubt what constitutes a satisfactory outcome.
It is also essential to include a section that covers liability and indemnity (compensation). Many recipients will want to know they are not liable for any mistakes on your part.
Goods contracts are usually more straightforward than service contracts, which tend to cover broader projects with more terms attached.
The detail is essential when it comes to goods contracts. Along with an exact item-by-item breakdown of the goods sold (or reference to an order form), you should also provide specific information about delivery, potential changes, and quality assurance.
Buyers may also want to inspect products on arrival, so include any terms relating to this activity.
Clearly outline any payment stipulations, like when invoice payment is due and what happens in the case of faulty items. Make sure you include information about taxes if they are not already shown in the pricing.
The word “consulting” covers an array of activities, everything from one-off training events to long-term positions on company boards. Because of this, it’s crucial to outline the exact terms of engagement. Stipulate what will be provided, for how long, the amount of compensation, and which fees, such as travel and accommodation, will be included.
It’s usually also appropriate to include a section about confidentiality, intellectual property, and personal liability (as you won’t be an employee of the company).
A well-written contract is a cherry on top of your delicious “business deal sundae.”
Contracts cement all the hard work of engaging, persuading, and closing deals. So it’s vital that you include all the appropriate information and remove all friction. What’s more, a proper contract management solution will ensure that you won’t lose repeat customers.
A host of tools enable you to streamline and improve your contract lifecycle, often at a fraction of the cost of using legacy processes. As a business owner, manager, or salesperson, there’s no excuse for not taking advantage of them.
This is an excerpt from the book, "Sales Truth" by Mike Weinberg. It has been republished here with permission.
Just because a customer asks for a demo or a sales pitch, does not mean that it benefits you to do so. And that is even more true when a customer instructs you to work through their procurement process or solicits a request for proposal (RFP).
Most of us in sales are not paid to do work. We are paid to bring in new business and win deals. Said differently, there are no rewards for jumping through hoops, perfectly complying with someone’s ridiculous process, or for completing more pages of RFPs than other sellers.
I’m sorry if this message offends you or upsets your apple cart, but I have some harsh news. Blindly going along with a buyer’s direction simply for the sake of scoring “obedience points” is not going to help you bring in more business.
Too many salespeople wimp out on their own sales process and continue defaulting to the buyer’s process even when it makes no sense. This deprives them of the opportunity to execute proper discovery work, enhance relationships with the right customer stakeholders, and prevents them from being able to tailor their approach, presentation, and proposed solution.
I understand that for many salespeople, pushing back against the customer’s suggested (dictated) process creates discomfort. We want to be liked. We want to be perceived as empathetic. We want to be helpful and responsive and respectful. We want to be easy to do business with. We want the prospect to want to work with us.
Those are all great motivations and there is nothing wrong with our desire for a smooth relationship. But there’s just one problem with what I call the “Acquiesce Approach,” and it’s a biggie.
Acquiescing to the customer’s strict process can prevent us from positioning ourselves as true advisers and consultants, stops us from differentiating our approach, and often ends up getting us commoditized as procurement lumps all potential suppliers together into the same box.
I can’t speak for how much you enjoy getting stripped of the opportunity to differentiate yourself, your company, and solution, but I can speak for myself. I hate it!
Getting commoditized sucks. Playing by someone else’s rules whose desire is to squeeze all the creativity, differentiation, and profit margin out of our deals is not fun. Following orders from a certified procurement person whose stated mission is to “level the playing field” is not very motivating to me and certainly not why I am in sales.
I have two missions as a professional salesperson. First, I am driven to create the absolute best possible and highest-value outcome for the client. Second, I am committed to winning every deal for which I compete – assuming, of course, that I’m convinced that is in the best interest of the client.
Those two missions are what drive me and drive my sales process. I am beholden to getting the client what they need to win and doing what I need to do so I can win.
The term “win-win” gets thrown around a lot, but this is one instance where it perfectly applies. I’m committed to creating a win-win situation, and if that means having to circumvent, avoid, or alter the client’s buying process, so be it.
I don’t work for procurement people. I work for my client contact (business person), for my company, and for myself. It’s incumbent on me to do whatever is ethical and necessary to ensure the client gets the best solution and to give myself the best chance of winning.
Translation: when I perceive that the customer’s stated buying process or instructions to me are counter to either creating the best solution or improving my likelihood of winning, that’s when it is time to stand my ground and push back.
Top-Producers Are Usually Pretty Good at Telling Procurement to Pound Sand
Based on my experience from years of coaching salespeople at all levels of experience and success, I am confident that a good number reading this will not believe the following statement: Top-producing sales professionals regularly alter their customer’s buying process.
Regularly -- as in doing so is the rule, not the exception. And if that #SalesTruth baffles you, let me take it a step further. Quite often, top-producing salespeople not only disregard procurement’s directions and rules, they actually dictate to the customer how their companies will do business together.
These top sellers change the rules, change the game, and change the outcome – all in their favor!
The structure of a sales force has significant bearing on its success. For example, a rep used to selling to a given region might flounder when asked to concentrate on just one industry nationwide. If each of your company's products require deep and specific technical knowledge, it might not make sense to have reps sell all products by territory.
It's simply not true that sales talent translates into all situations. Take a software representative who sells exclusively to manufacturing companies, and ask them to start selling hardware across all verticals. They're probably not going to be as good at one of these assignments as the other. Salespeople who excel get very good at excelling in a particular environment, and organizational structure is the bedrock of that environment.
In his book Aligning Strategy and Sales, Frank V. Cespedes, senior lecturer of business administration at Harvard Business School, explains in depth how organizational design impacts selling effectiveness, and emphasizes the importance of choosing a structure carefully. In the chart below, he lays out the pros and cons of four commonly used structures. Accounts and opportunities can be divided by:
Take a look, and then think about whether a reorg is in order.
Source: Table 8-1 from "Aligning Strategy and Sales" by Frank V. Cespedes. Reprinted here with permission.
Sales Organization Chart
Here's an example sales organization chart. This can be modified depending on which organizational structure you choose (i.e., by geography/territory, product/service line, customer/account size, or industry/vertical segment).
At this stage of the S&OP process, data is gathered about prior sales and forecasts are made for future sales. It's important to consider any internal and external factors that can impact sales (e.g., industry, customers, competition). Any trends will be identified and analyzed.
2. Demand Planning
Demand planning is when cross-functional collaboration comes into play. The forecasts are analyzed, and adjustments are made to inventory and customer service policies based on the product demand and sources of demand. The demand can be measured in either revenue or units of a product.
3. Supply Planning
During supply planning, representatives from finance, operations, and materials to evaluate capacity. They'll determine if there are any constraints on people, machinery, and suppliers. From there, a supply plan is created that will account for any capacity constraints.
4. Pre-S&OP Meeting
During this stage of the S&OP process, leaders from finance, sales, marketing, operations, materials, product management, and human resources meet to collaborate. They'll compare the forecasts to the demand and supply plans, and they'll consider the financial impact of the plans.
5. Executive S&OP Meeting
The final stage is when executives meet to analyze all the forecasts, plans, and recommendations from the pre-S&OP meeting. By the end of the executive S&OP meeting, a final sales and operations plan will be approved.
Here's a visual overview of what the S&OP process looks like.
Oracle provides process templates you can use to make your sales and operations planning run smoother. You can monitor each stage of the process and dashboards allow you to see KPI summary graphics. It allows you to collaborate with colleagues and assign tasks. Plus, it integrates with Excel.
The SAP Integrated Business Planning software makes your S&OP planning quick and agile. Key features include scenario planning, simulations, and advanced analytics so you can stay on top of forecasts and hit your financial targets.
With the Infor Sales and Operations Planning software, you can synchronize demand and supply imbalances, coordinate across business units, and analyze performance. It even includes predictive financial analysis so you can see how business decisions will impact the bottom line.