S t r a t e g i c P r eS t r a t e g i c P r e -- s a l e s s a l e s E n g i n e e r i n g :E n g i n e e r i n g : Special Operations Forces for Technical Sales Volume 1
Dan Herchenroether Principal
Executive Summary Selling enterprise software is more challenging than ever. Corporate Information Technology (IT)
departments’ budgets have shrunk since the peaks of the 90s and IT managers still have nasty burns from over-hyped products that did not solve their problems. Also, technology continues to move up the complexity scale, requiring significantly more prospect education before attaining the technical win.
Even in the face of renewed skepticism on the part of IT, software vendors are still ignoring the one sales function which can substantially improve sales efficiency: pre-sales engineering. Whether called “systems engineers”, “sales engineers” or “customer consultants”, far too many vendors treat the pre-sales technical team as a tactical resource or an overhead item to be minimized rather than a strategic Special Operations force which can shorten sales cycles and vastly improve customer relationships.
The keys to creating that Special Operations force of systems engineers are:
• Recognize the true value of your pre-sales personnel
• Expect more than technical prowess of your pre-sales engineers
• Align the SE force with your sales goals and philosophy
• Train, motivate and compensate SEs for maximum payback
The Rise of Software Think back to the 70s. Mainframe vendors such as IBM and Burroughs sold hardware first and most software was
written in-house by programming cadres controlled by central corporate management information systems (MIS) departments as they were commonly called at the time. The likes of IBM treated software as something to throw into the deal. Their pre-sales SEs were more concerned about hardware speed (remember “MIPS”?) and throughput than what a particular application could do. What independent software vendors there were simply followed IBM into an account and sold to the same MIS customers, who were also likely to be the vendors’ biggest competitor. The MIS people were, after all, developers as well and independent vendors were viewed as a threat to their jobs.
The environment opened up in the 80s with the appearance of departmental mini-computers from Digital Equipment, Wang and Sun Microsystems. Thus began the emancipation away from the computer glass house, accelerated by the arrival of personal computers, the local area networks, mainframe gateways and routers to link them together.
In particular, database management vendors such as Oracle, Sybase, and Informix rode the decentralization trend. These vendors perfected the direct corporate sales model for software, pairing sales representatives with technical counterparts to introduce customers to the arcane world of relational databases. Oracle invested heavily in their technical sales teams and set the early standard for strategic technical sales. Customers soon began to expect as high a level of technical support from their software vendors as they enjoyed from their hardware vendors. Following hard on their heels were enterprise application vendors such as SAP, masters of the complex world of distributed, client/server applications.
Throughout the 90s, software options proliferated in the market creating often bewildering choices for business and IT directors. Many information management directors became bewildered trying to rationalize the trends - both real and passing fads - and the alphabet soup of acronyms and terms: decision support, client/server, TCP/IP, CRM, EAI, data warehousing, HTML, object orientation, GUI, spreadsheets, WAP, middleware, SaaS, SOA, Cloud …
The technical complexity increased exponentially as did the need to link all this software into a coherent whole. Sales reps relied more and more on their technical partners to communicate the value of their products to prospects.
By the mid-90s software had acquired a certain sex
appeal, supplanting computer hardware as the driving force in technology. The initial public stock offering for Netscape rewrote the rules for valuing technology, rendering passé the heretofore requirement of three quarters profitability. Instead, revenue growth became the benchmark for valuation. Once the profit barrier to entry was removed, the venture capital spigots opened
wide. Seemingly, anyone with any idea – bright or otherwise – could get venture funding. Prodded by their internal, status conscious customers, corporate IT chased after every new software fad they could. Lastly, Y2K issues gave them air cover to expand their budgets. All IT directors needed to justify any necessary or frivolous purchase was to yell “Y2K!” It was like shooting fish in a barrel for software sales reps.
Lost in this feeding frenzy was a disciplined role for systems engineers. Because of the sheer volume of sales calls, most vendors focused their pre-sales teams on performing crisp demos and presentations, and replying to requests-for-information (RFI). Despite their best efforts, sales teams were still dragged into prolonged pilots or the dreaded competitive proof-of-concept or bake-off. The usual remedy was – and still is – to park a systems engineer on site for the duration of the project.
Quality SEs chafed at this state of affairs. The technical SEs wanted to show off their technical prowess and not simply be trained seals or
prospect babysitters. They wanted to take charge of the technical sale. Sales reps, however, treated their SEs as marionettes, controlling the SEs’ movements and story for the benefit of the prospect. They also expected their SEs to deflect – or more likely be impaled by – the technical arrows shot from prospects. Naturally, intelligent and ambitious SEs, viewing themselves as technical super heroes, rebelled against such control, particularly from someone they considered as inferior, technical heathens. Once the inevitable cultural conflict erupted, frustrated SEs moved on to other opportunities leaving sales reps and managers to hire more compliant “demo Dollys”.
Upper management complied. They came to view the technical sales role as overhead to be minimized. Sales reps were continuously hired but not a commensurate number of SEs, increasing the burden on the existing engineers. Burnout of SEs increased as did conflict between sales reps as they vied for increasingly scarce technical resources, the lack of which reps used as an excuse for their blown opportunities or extended sales cycles. Turnover in the SE ranks surged ahead further exacerbating the shortage of technical talent. Because the revenue kept flowing, however, management rationalized all this as a cost of doing business in the new economy.
A New Sales Environment Of course, every party comes to an end and the software bender ended violently. Scores of vendors with dubious product and finances disappeared. IT
awoke to quite a hangover with volumes of useless product on their computers and shelves, and faced questions from management about something called “return on investment”. For instance, we saw many a telecom company commit to millions of dollars of Enterprise Resource Planning (ERP) software only to see a fraction of the planned implementation and no discernable return-on-investment.
After the tech bubble and Y2K hype passed, we have returned to more rational market conditions. Chastened by management for their earlier excesses, IT buyers are now very skeptical and demand proof of value from vendors. That usually means a pilot project or the competitive “proof-of-concept”. While these were common during the bubble era, they are de rigueur today. Decision makers are not accepting the career risk of buying without extreme due diligence. However, IT’s methodologies for evaluating software continues to reveal how naïve and uninformed many IT groups still are, creating the risk of further disappointment with the software industry. Vendors should be proactive in shaping evaluations instead of deferring to the prospect as was the
case in the 90s.
What this means to the sales organization is that the SE can no longer be a tactical, off-the-shelf resource but must evolve to be the Strategic SE. For a sales team to achieve that evolution, it must recognize the true value of the systems engineer and expect more of the pre-sales engineer. A “demo Dolly” does not fit the profile.
The increased emphasis on pilots and POCs puts tremendous
pressure on pre-sales technical resources. Unfortunately, vendors have poorly hired and trained their SEs for these more demanding times. The view of SEs by sales reps and managers needs a significant upgrade. The formerly tactical SE now must be a strategic part of the sales cycle, actively owning and managing the technical relationship with the prospect.
Let’s start over and redefine the pre-sales technical role for the new software market. It can be summed up thusly:
The pre-sales systems engineer is responsible
for achieving the technical win.
Technical wins equal revenue. The responsibilities of the Strategic SE are still largely the same – demos, RFI responses, pilot/proof-of-concept project management, expectations control – but the strategic SE should shoulder the responsibility for marshaling the proper resources in order to get that win.
Systems Engineers as Special Ops Forces As stated in our historical review above, sales management traditionally viewed the SE as a tool to be directly
manipulated but not expected to generally think on his own. The new tech market demands that SEs be more like Army Special Operations forces. In the words of the Command Vision statement of the United States Special Operations Command, their troops are:
“…thoroughly prepared, proper ly equipped and
highly motivated: at the r ight p lace, at the r ight
t ime, facing the r ight adversary…”
Special Ops are directed to their targets by the commanders but once on the ground, have the training and intellect to make the right tactical decisions to infiltrate the target. SEs may not be chasing terrorists or targeting a safe-house for smart bombs, but we can draw organizational parallels.
Thoroughly Prepared / Properly Equipped Special Ops troops are trained and trained, and trained some more before being allowed to perform in the field. All
too often, new SEs are simply thrown into the fray, left to fend for themselves. One of the extreme – but effective – examples of proper training is the legendary IBM training of the 60s and 70s. No customer-facing representative, whether sales, marketing or technical, ever came close to a customer or prospect until they finished a several-months-long indoctrination and training. Most new SEs will not need that kind of intense training, but it is typical that a new SE will need three months to get up to speed and one to two weeks per quarter of ongoing training.
• Product Technical Training Technical training must include in-depth product usage and technical internals. Technical depth is critical. The SE should come out of the training with a greater knowledge of the technological underpinnings than most of the expected prospects. It is deadly for the sales cycle if the prospect fails to respect the technical acumen of the vendor’s representatives. An overlooked – discouraged, actually, in many cases – is frequent interaction between field technical teams and product engineering. Sure, we do not want our precious engineering talent distracted from the critical task of building product but engineers need to understand – they crave, actually – how their products are being used in real life situations. Nobody knows that better than the field systems engineers who can speak the engineers’ language.
• Product Positioning What is the target market? Who is the ideal prospect? Where the product is not appropriate is just as important to identify as the ideal fit. The SE should be able to ruthlessly qualify an opportunity for technical fit after the initial meeting. Wasting valuable resources on low probability prospects propagates throughout the sales organization. The SE is especially valuable in the product feature/benefit feedback loop with Marketing who should rely on field engineering data to validate positioning assumptions.
• Competitive Landscape / Objection Handling Many a sales manager has rationalized away the need for his SEs to know the competition. “I’d rather my SEs know more about our own products than the competition,” they say. Army Special Ops study and analyze the enemy’s strategies and tactics in order to form a defense and uncover weaknesses to use against them. The Strategic SE on the ground in a prospect account should be expected to defuse the land mines set by the competition and lay down some of his own. Equally important is the training SEs receive about dealing with hostile audiences. Human nature being what it is, a defensive or equally hostile attitude on the part of an SE will sink a deal regardless of the correctness of his position.
• Meeting Management The SE cannot always depend on the sales rep to drive a meeting’s agenda. In our divide-and-conquer sales strategy, once the entry has been made into an opportunity, the SE will be expected to manage the process leading to a technical win while the sales rep manages other aspects of the sales cycle and uncover other leads. The SE will be empowered to
structure briefings and planning meetings with the goal of keeping the prospect’s focus on the right issues.
• Technical Training There’s an old adage about two lumberjacks in a competition to see who could fell their trees faster using axes. At the start, both begin to furiously whack away at their tree trunks. Then to the astonishment of the crowd, one lumberjack stops to sharpen his axe. The other lumberjack, smirking at his competitor’s foolishness, keeps chopping at his tree. Repeatedly, the second lumberjack would chop for a while, and then pause to sharpen. After a while, it became clear to everyone that he was going to win the race, all because he had the more consistently sharp tool and chopped deeper with every stroke. After every engagement, Special Ops individual and team performances are critiqued and the training adjusted to address any weaknesses. They take nothing for granted. Likewise, vendors should take nothing for granted with their strategic SEs. Without continuous training the SE will lose his edge, will not be able to adapt to the changing dynamics of the marketplace, with negative implications for sales cycles. Keep your SEs sharp and they will continue to beat the competition and earn revenue.
• Sales Training Many times, SEs – and their management – forget that they are in sales. The strategic SE is a sales rep in sheep’s clothing and should be what sets a sales organization apart from its peers. If the sales organization has adopted a methodology, the SE must internalize that as much as the sales reps. Unless the SE goes through the same training as a sales rep, alignment – that word again – with objectives and sales strategy will not occur. It is important that SEs ask themselves if what they are doing day in and day out is on the path to revenue. If some activity is not, it should be questioned. Sure, the clever VPs of Sales out there will try to use the revenue criterion as an excuse to cut back on sales training expenses, but think again. Those VPs will drive the SE organization out of cultural alignment with the rest of sales. Ergo, the technical sales efforts will fail with the subsequent loss of revenue. However, the objective sales manager willl recognize that a forecast validated by his reps’ technical partners is significantly more accurate than by the responsible sales rep alone. Therefore, sales training is on the path to revenue!
Properly Equipped It should be obvious that SEs need to be equipped with sufficient
hardware, software and communications to properly develop and
demonstrate the vendor’s products. However, sales or financial management will often try to minimize the SE toolkit. Doing so is like handing a soldier a box of bullets with no weapon to fire them with. Beyond the demo and presentation needs, the SE’s mental health is at stake if he is constantly frustrated by a lack of firepower. A ten or twelve thousand dollar outlay is trivial to maximize a return on the six-figure investment in an SE.
Right Place / Right Time / Facing the Right Adversary At what points in the sales cycle is the SE most effective? Figure 1
shows a typical sales “funnel” segmented into the usual phases of the sales cycle.
Validation
Negotiation
Competition
Qualification
Lead Generation
Validation
Negotiation
Competition
Qualification
Lead Generation
Figure 1
The Strategic SE will be most effective in the Qualification,
Competition and Validation phases. During qualification, it is the strategic SE’s responsibility to
determine whether the prospect’s pain will be relieved by the vendor’s product. Customers in the new tech market will not tolerate the force-feeding they endured from vendors in the 90s and if a product does not fit, the vendor should do the right thing and move on. The trained, strategic SE will be more able and responsible for the technical qualification than the sales rep.
The Strategic SE will own the competition phase. As project manager, he will marshal the necessary resources to fully support whatever project – pilot, proof-of-concept, RFI – the customer defines as criteria to meet for success. The SE will be alert to competitive threats, both from market competitors and internal politics. The SE will also be actively looking for other applications for his products within the prospect.
Once the competition phase is complete, the SE will make certain that the results are properly validated. He will fend off objections from whatever source and be sure that no detail is left to chance.
Highly Motivated A well-trained, well-equipped Strategic SE will be a confident and
effective weapon in sales, able to operate independently of sales rep partners. Strategic SEs want to be winners and will be strongly motivated to win for winning’s sake. However, in sales, nothing motivates like
compensation. In fact, if an SE is not motivated to over-achieve and reap his bonuses, he may not belong in a sales environment.
Compensation Plan Alignment A detailed compensation plan is highly specific to each
organization and as such is outside the scope of this white paper. However, there are some key concepts to consider.
In the past, SEs’ compensation consisted of a base component and a bonus component. Typically, SE base salary would be in the 75-80% range of on-target earnings. The structure of bonus plans varied greatly. Some were based on revenue achievement, quota achievement, objectives or a mix of all three and most would have a maximum earnings level regardless of how well the sales force did during the quota period. What was nearly ubiquitous about the SE plans was that they were seldom in alignment with the compensation plans of the sales reps.
For instance, a typical rep’s compensation plan might be $100,000 base with on-target earnings of $200,000. On top of that, the rep would have an accelerator ladder at 110%, 125% 150% or more and would be uncapped. Additionally, special incentives such as new account, services revenue goals or other bonuses were offered reps but not necessarily SEs. This mismatch of monetary motivation inevitably led to reps chasing ever more dollars while the SE would have no motivation to work any harder. Since one of the tenets of building a strategic SE force is having every part of the sales organization in alignment, this situation needs to be addressed.
First, we are not saying that SE compensation should be on a par, dollar-wise, with sales reps. The reps are, of course, still responsible for the management of the sale cycle and take significant risk by accepting a quota, falling short of which threatens their livelihood. If an SE is willing to take on quota then he should be a sales rep. What we are advocating is that the structure of the compensation plans be identical with respect to incentive and motivation. If the rep’s plan has a commission accelerator at 110% of quota, then the SE’s plan should have a kicker. If there are bonuses for new accounts for reps, there should be some reward for the SE on the deal. (Indeed, strategic SEs are most influential and valuable when selling into new accounts.) When the compensation plans for reps and SEs are in alignment, conflicts in motivation are avoided.
Variety Technical people are naturally inquisitive and crave learning and
new challenges. One common error in technical sales is parking an SE at the same accounts after winning the deal. The customer grows fond of “their” engineer and complains when the rep takes him out of the account. Naturally, the rep will acquiesce and return the SE to his prized customer. There are three primary consequences of this scenario.
First, the SE is not available to conquer other new accounts. This slows down innumerable sales cycles, increasing the demands on the technical team as a whole. Second, the SE becomes stale and bored. A bored SE is an unhappy SE and will soon start looking for more interesting work, probably with another vendor. Lastly, parking an SE precludes placing revenue-producing professional services engineers – the true implementation experts – on the account, or making partners happy by
referring new business to them. Enforce the discipline that while the SE will still be an important part of the vendor’s team after the sale, the SE does not “go production”.
Trust The SE has to feel that his judgment and opinions matter in forming
the strategy for products, marketing and management of the sales cycle. This is not to imply that the SE is truly a super hero. Management and the sales rep still has ultimate responsibility for any decisions regarding how a particular prospect challenge will be met. However, SEs have unique insight into the technical and organizational opportunities, and the competitive threats in an account. As such, their opinions should be given significant weight in ongoing account management discussions. Failure to do so will waste resources on low probability opportunities.
Hiring Profile Now that we have defined the proper infrastructure and
environment for your strategic, special operations SEs, what criteria defines the ideal SE for the new tech sales force? Here are some dimensions:
• The ideal SE is more than technical The primary responsibility of a pre-sales systems engineer is to communicate the technical inner-workings of a product to prospective customer in order to secure the technical win. At minimum, SEs must have good communication and presentation skills and, of course, technical depth to answer the most arcane questions. The best SEs take full ownership and responsibility for gaining that technical win by managing proof-of-concept projects and organizing seminars and other activities designed to insinuate the SE into the prospect’s technical team.
• Broad-based Education Your candidate need not have written an operating system or reverse-engineered Microsoft Word but a bachelor’s degree of science from a program with intensive systems curriculum is a minimum requirement. Hybrid programs such as Information Systems may have less technical depth than a Computer Science program but have yielded very good SE candidates because those candidates can apply software to a problem. Probably because it is so rare, prospects are always impressed when a vendor can talk his business language. Candidates with a business degree – think MBA – on top of a technical degree will serve you and your prospects well.
• Pioneer Spirit The ideal candidate will have SE experience, preferably at a startup. The environment of a startup is vastly different than at a mature company. Resources are scarce; the SE will likely be remote, working from a home office or will be traveling frequently. If the candidate has not worked for an early stage
startup, ferret out how dependent he has become on infrastructure and staff support. The candidate must prove that he can work independently, roll his own resources and think on his feet. Of course, check references. Sure, there is plenty of competition for experienced technical talent. Vendors who adopt the Strategic SE philosophy will be more able to attract top talent weary of being pigeonholed into the stereotypical role of sales marionette. They are out there waiting for a chance at freedom.
• SE needs a Sales Personality Again, the SE is part of sales. Companies that separate SEs from the sales organization or merely rely on raw technical expertise fail to get the most out of the resource. It’s about organizational alignment with the goals, marketing strategies and compensation of the sales team. The best SEs have a competitive streak and are driven to make the sale. SEs should be lead generators. Once imbedded at a prospect, the SE can look for other sales opportunities which the sales rep can then follow up on. It is this divide-and-conquer strategy that most fully leverages the SE’s skills. Look for analytical and “what if?” skills.
• Broad Technical Proficiency Does the candidate have experience in the technologies your product embeds or will use in deployment? This may be very straightforward. For example, if you are selling an application server add-on, your SE will need at least some hands on experience with Java, html, and scripting. Be careful, though, that you don’t black ball a candidate simply because his or her skills don’t map to every technological need. Training can fill in any gaps, provided the candidate is motivated and can prove past experience picking up new expertise independently.
• Poise under fire Resist the urge to hire anyone simply because they can deliver a canned demo or marketing slideshow. This is an Achilles Heel of many sales managers. They like to believe that they can control the proceedings by saying “we’ll take that offline” or “please hold questions until the end”. Forget it. If your product has any level of technical complexity, an audience will try to take the presentation into the technical weeds. Even if the rep or SE is successful stonewalling the questions, the prospect will be very annoyed. The candidate must have experience dealing with challenging audiences or demonstrate the poise to do so and be bold enough to chuck the whole presentation and chalk talk the material.
• Strong Communication skills The candidate should demonstrate writing competence. The SE will have to design and execute project plans, respond to requests for information, and be able to convey, clearly and
succinctly, field observations to headquarters. The SE will be the eyes and ears for the startup and any inaccuracies or incomplete reporting will potentially send the product in the wrong direction.
• Unselfish team player Yes, it’s a two-way street, but it will be incumbent on the SE to cultivate and grow relationships within the company to properly do the job. Dealing with a field sales organization is likely to be a new experience for many – if not most – of the headquarters staff, particularly the engineers. An experienced SE will establish the right culture and communication mechanisms between the field and headquarters technical groups. Teamwork is also critical from the prospect’s perspective. The early adopter projects tend to be lengthy and complex, and working with fresh software guarantees that problems will crop up. The more the prospect can rely on the SE as part of their team, the more likely the technical win. Now that we have defined our target SE profile, how do you find candidates? Thankfully, the market has flipped from one of sellers to buyers. After the bloodletting of the last few years, there is a larger pool of quality candidates. Certainly, your stable of recruiters will have quality candidates, but simply working your industry network will uncover “A” players.
Conclusion The old ways of treating pre-sales technical engineers as a tactical
part of sales cannot support today’s demanding market. The SE organization of today’s technical vendors must be the Special Operations Force of sales, acting as the forward observers, infiltrators and competitive warriors in the technical trenches. Vendors who fail to organizationally align and compensate their field technical human resources to meet the post-tech bubble market are doomed to mediocrity or worse, abject failure. Liberate your SEs, train them to be Strategic SEs and you will liberate your sales cycles and revenue as well!
SellingAir, LLP acknowledges the valuable input of Michael Ping in
preparation of this paper. Also, portions excerpted from the author’s previously published
article, “Attention Software Startups: Hire Your Pre-sales Technical Talent NOW!”, SoftwareCEO.com, 12-02-2004
