A Timeless Tale of Two Sales Cycles
Written by: Steve Hall
The first time I cold called Andy, in early 1994, he was pleasant but firm.
“Yes, I know all about your software but there’s no way we’re ever going to buy it. We’re happy with what we’ve got and we can’t afford the money or disruption of buying a new ERP.“
As the Managing Director of a large Australian publisher Andy was undoubtedly the decision maker. And as a new (if, at 43 years old, rather old) business development manager selling into the Australian publishing sector I had no option but to call Andy back – because there were only 40 publishers in Australia big enough to afford our software.
Luckily, like me Andy was a Pom from the North of England and (possibly unlike me) a very nice guy. We had a bit of a joke and a chat about the challenges of distribution in publishing and I said I’d stay in touch. And I did.
Every few months I’d call, we’d talk about publishing and distribution and football and we slowly developed a relationship. After a while I dropped in to have a drink with him when I was in Melbourne (I’m based in Sydney) and, after two years, things changed.
Things always change – eventually.
Suddenly the publisher’s distribution arm won new customers, volumes and demand went up and their warehouse system couldn’t cope. This stimulated a search for a new ERP, I was on the spot and the sales cycle proper began.
After 6 months we were chosen as the preferred vendor, subject to agreeing contracts. So in mid-1996, during my prearranged holiday in Europe, my wife and I sat on top of a small mountain outside St. Nectaire in France’s Massif Central trying to get a signal on my massive (or massif) analogue phone to get the news the MD had signed the contract.
Which was just as well because the commission was paying for the holiday.
My reception the first time I visited the Finance Director and IT Manager of a large Sydney based publisher, again in 1994, was somewhat different. They were, at least in theory, a customer as they used one module of our software (Royalties) but their IT manager was in love with their ERP system.
“We have the best ERP system in the entire company worldwide” he told me. “In fact, it’s so good they will be implementing it around the world. So, you have no chance – in fact we’ll be replacing your Royalties system within a year.“
The IT Manager left, the “best in the world” system never left Australia and soon became outdated, our Royalties system stayed in place, I kept visiting.
Eventually a search for a new system began. It took a year, encompassed many demonstrations, visits to New Zealand and negotiations and it resulted in my biggest sale in 1998.
So, what’s my point? Or rather, what are my points?
- Lifetime value
The first deal, in Melbourne, was something in the region of $1 million – quite a lot in those days.
But that pales against the lifetime value of the deal. That publisher still uses the software and in the 20 years since my initial sale they have invested well over $10 million in software, hardware, maintenance, support and services.
It was also the springboard for my company winning a number of other deals in Australia, the UK and South Africa.
Similarly, the Sydney deal has generated well over $15 million in revenue.
The morals – a) look at the big picture, not just the initial sale and b) “No” now doesn’t mean “never”.
Another moral that Joanne Black would love – you can’t beat referrals. These two sales got me a lot of referrals.
- Sales Cycle
What was the length of the sales cycle in both cases?
Well, it depends on how you define the sales cycle. From “let’s start looking” until signing a contract it was 6 months (Melbourne) and 12 months (Sydney) respectively.
From my first contact it was 30 months and 4 years respectively.
And on an ongoing basis it was much longer because I kept going back and selling both companies more modules and more users throughout my time as account manager (and later sales and marketing manager).
The moral – sometimes sales cycles can be very long, but sometimes it’s worth it.
- Customer experience
There’s a lot of emphasis on customer experience these days and as account manager after the deals were signed I put a lot of effort into making sure they remained happy customers.
But I’d argue that my involvement with them began the day I first spoke to them and their experience of me and my company BEFORE they signed was just as important.
The moral – the PROSPECT experience is almost as important as customer experience
- Adding value
I got my first sales job at the age of 43. I knew nothing about sales but a lot about business – and I was very comfortable dealing with senior executives.
I put a lot of effort into learning about publishing and it wasn’t long before I could speak publishing lingo (ISBN, returns, front list and back list, pub dates, etc.) and discuss publishing specific issues in depth.
It helped me win a lot of deals against better sales people and bigger generic ERP customers.
The moral – if you can speak the prospect’s language and provide insights and add value you don’t need all the slick sales tricks.
- Long term view
I was very lucky. I worked for a private company and I was given time to learn. In my first year I sold next to nothing. I did lots of cold calling and I hated it. I looked for other jobs but I thought “I’ll just make these calls and pretend I’ll still be here in 12 months.“
Twelve months later those calls were generating sales. Two years later I was selling heaps. Four years later I was in charge of worldwide sales & marketing and selling heaps all over the world.
If I’d been a rep in today’s quarter by quarter world with micromanagement and set activity targets I would have lasted 9 months tops.
The moral – or rather a question. Is the current system, where turnover of sales people is well over 25% a year and the average tenure is 24 months, a recipe for long term sales success.
I think you can describe the process I followed as “educating and nurturing”, not that I thought of it as such in those days.
I think it’s one of the most powerful ways to win big ticket, complex B2B deals. But how many software companies know how to do that these days?
Not enough, I suspect.
- Things change
That’s the moral. Things change. be ready.
I spent 13 years in a sales role with that company and only left two years after it had been bought by an international ERP developer.
Some years were better than others. Some years I made 300% of quota, followed by lean years. How many companies today will tolerate lean years?
Many companies today take a very short-term view. In my opinion that’s literally short sighted. But they would argue we have no choice, our shareholders demand short term results and we have to manage quarter by quarter.
To which I’d respond “What’s the most successful company in the world that takes a long-term view and ignores short term considerations?
Amazon. I rest my case m’lud.
The Lies Spread by Bankers About Cryptocurrencies
I had a chat with The Financial Times the other day, and provided lots of background as to why I don’t think cryptocurrencies are the choice of criminals. The comment that was reported was the following:
Chris Skinner, a financial technology author, said it was “complete rubbish” to suggest the main use of cryptocurrencies was criminal. “There is some criminal activity associated with some cryptocurrencies but it is quite minimal,” he said. “It’s a myth that the financial community want to promote.”
I feel I need to explain this further, so here goes.
My response was in answer to Vasant Prabhu, Chief Financial Officer of Visa (the card network) who made two claims:
1) Most people have no idea what they’re doing with cryptocurrency investments; and
2) Cryptocurrencies are mainly being used by criminals.
With the first point, I agree. In fact, I loved the John Oliver Show that discussed crypto and started with the line that cryptocurrencies are “everything you don’t understand about money combined with everything you don’t understand about computers”. A perfect combination for idiots to invest in. I agree with both Vasant and John, as many people are buying cryptocurrencies for no other reason than other people are buying them.
The second point I completely disagree with. Mr Prabhu said cryptocurrencies were a “favourite” for criminals.
“It’s very hard to get dirty money through a banking system. Cryptocurrency is phenomenal for all that stuff . . . Every crook and every dirty politician in the world, I bet, is in cryptocurrency.”
This is complete baloney and is a smokescreen being created by financial people to deflect the real purpose of cryptocurrencies, which is to use software and servers to manage value rather than buildings and humans. In other words, cryptocurrencies have the opportunity to reduce or even replace banks, which is why I find it interesting how often I hear a financial person say that bitcoin and cryptocurrencies are just for criminals when it’s blatantly not true. Unfortunately because they are in a position of authority, politicians believe them; and unfortunately, because they are also in a position of authority, the media believes them; and unfortunately, because they are in a position of authority, the public sometimes believes them too.
Most law enforcement authorities however, state that the levels of criminal activity with cryptocurrencies is so tiny today that it doesn’t matter and, specifically, does not warrant deflecting their time and energy to investigate them. Just to illustrate this, the total worldwide investment in all cryptocurrencies is around $300 billion today. Even if criminals were running 10% of that, it’s still just $30 billion. That is an insignificant amount compared to the trillions being laundered through the traditional financial system, mainly through offshore companies buying up properties.
From The Telegraph, November 2017:
Organised crime generates income equivalent to around 2.7pc of global GDP. Around $1.6 trillion of this is laundered to disguise its criminal origins: financial crime is undoubtedly a worldwide problem.
From What Mortgage, February 2018:
Julian Dixon, CEO of Fortytwo Data, whose research found that more than a third (37%) of all suspicious activity reports (SAR) across the entire legal sector were related to property: “For criminals, the vast amount of cash involved in property purchases provides the perfect cover for laundering the proceeds of drugs, terrorism and firearms offences.
From The Times, February 2018:
Rob Wainwright, director of [Europol], revealed that 3 to 4 per cent of the £100 billion of illicit cash circulating in Europe is laundered through anonymous digital currencies such as bitcoin.
So that’s around £4 billion max right now. That’s less than a particle of a drop in the ocean of crime globally.
Now, the concern may be that cryptocurrencies offers the opportunity to launder funds. This is possibly true and is why I said there is some criminal activity with some cryptocurrencies which is tiny today, but might grow over time. Even then, it is speculative and too early to call. For example, that paragraph from The Times is factually incorrect, as bitcoin is not anonymous. In fact, nearly all digital transactions can be tracked and traced online, and therefore offer the worst use case for money laundering.
This is why the only currency that criminals currently use in any volume for illicit activity is Monero, because it is nearly an equivalent of digital cash. Nevertheless, the total market cap of Monero is $3 billion, and even if half of that is criminal activity, it’s totally insignificant on a global scale.
All in all, it is obvious that most financial people have created this myth of criminals opting for cryptocurrencies for two reasons:
1) it is to protect their turf, as they don’t want to lose their role as intermediators of finance; and
2) it is to deflect the authorities from looking at the true perpetrators of illicit monetary activity, namely the banking system.
Bear these two points in mind when I say that banks were built for the physical distribution of paper, which is why cash and property are the physical assets that are the preference of criminal choice. If you didn’t know it, London is actually the money laundering capital of the world:
- British registered companies and British-based banks helped move at least $20 billion of the proceeds of criminal activities out of Russia between 2010 and 2014.
- Transparency International’s research found 766 UK corporate vehicles involved in 52 large scale corruption and money laundering cases approaching valuations of £80 billion.
- Around half of the 766 companies alleged to have been involved in high-end money laundering were based at just eight UK addresses.
- The Home Affairs Select Committee hearings found that the London property market is the primary avenue for the laundering of £100 billion of illicit money a year. No wonder first time buyers cannot get on the property ladder.
If anything is the preferred market for money launderers then it is banks, not cryptocurrencies. No wonder financial people are trying to deflect the media elsewhere.
Bottom-line: as all things move to digital distribution of data, the trail to audit such movements get easier because they can be sniffed out and monitored; as a result, most criminal activity will continue to leverage the weak links in the chain, which is the physical distribution of paper through cash and property assets in the traditional financial system.
I’ve written a lot on this in the past and would point to these two blog entries for more:
- Laundering-as-a-Service (a bank USP)
- Money laundering is most likely to wash with your local estate agent
And there’s also a lengthy but worthwhile read about why bitcoin cannot be regulated, as it is protected by America’s first amendment and the right to free speech.
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