/ Product Marketing

The Sales Cycle - Observations

Nearly 20 years in the business of tech marketing and product management, and there are some "interesting" observations that seem near universal with regards to sales and the orders.

Some of this goes to the relationship between sales and the product team, and some is about when / how orders are taken.

The "Hockey Stick"

Looking at the bookings during a fiscal quarter, it looks much like a hockey stick. Close to nil orders close in the first month, a trickle of orders in the second month, a ramp in the third month, and about 60% of all bookings in the last two weeks of the third month of the quarter.

Every freaking quarter.

Sales says, "What's the big deal, we met quota …"

Stewart Facepalm The big deal is that such non-linearity of the orders means that production can't build as needed. Instead we need to guess as to what the product mix will be, and be prepared to react to last minute orders to smooth out the revenue (you know, actually shipping the product that pays for your commission).

There are plenty of excuses, but from product marketing's point of view, they all pale. The reality is that the "Hockey Stick" puts undue stress on the whole organization.

The Customer wants X, but …

This is the start of an email that the product manager despises. It is the indication of a pending special. Regardless of how flexible or capable the product is, there is always someone who wants it to do something outside its design envelope.

And Sales is there to catch this. Inevitably, several times each quarter, they come to product management with a specials request. Some are trivial, and are dispatched quickly. But some are absolute icebergs, lurking beneath the surface, ready at a moment's notice to sink your profitability.

Seriously, I get the desire to please the customer. I hate to be told no. But sometimes the requests that come to product management are so outrageous, that I just stand there with my mouth hanging open wondering if I heard correctly.

And he has heard it all. From someone wanting to buy a $200K system to extract one small component to use for a new tool (all they want is the detailed drawings and documentation of our secret sauce), to someone who wants you to build something 10x as {accurate|precise|better|moar power} because they are {insert industry name here} leaders.

Unfortunately, often Sales will discuss this with the GM, or business leader, making it seem like a trivial request. Then, product management is on the defensive. Ultimately, this ties up important resources at the factory to investigate whether we can do it or not, and whether the customer is likely to be successful with it or not, thus draining important resources from other programs (i.e. new product development). Predictably, this begins to cause delays in your current programs, and the roadmap slides. You can bet your bottom dollar that the powers that be will not accept that your delays were caused by "specials".

(sidebar: Early in my career, I had one of these specialization project go horribly awry. At the start it seemed reasonable, and straightforward, and assurances by engineering that it was "in the bag" was a major contribution to my accepting the customization. Thousands or engineering hours later, a torn to shreds roadmap that took two years to recover, and a failed project, all to have a customer, and an influential one at that, bad mouth your product and company because of a failed project we should never have accepted)

Alas, the real pity is that not only do these specials steal cycles from factory people, but they consume the sales person involved to the point of them not following up on their other prospects. So the cycle degrades, and some of the neglected customers move on to the competitors.

Lose – LoseLose all the way around.

How long from lead to order

The wildcard in the sales cycle is the length of time it takes to curate a lead, nurture it into an opportunity, and to finally convert it to a won order. While there is some cadence to this process, the timing is all over the map.

However with good CRM tools, and with sales staff who diligently updates their database (far from a given) you can begin to extract patterns.

Some classes of customers will have a naturally long lead time. There are many steps and people to deal with in the process.

However, some are not so drawn out. One would think that sales would be able to close those orders quicker, but the data doesn't support this.

When you look at the cadence, and steps of the sales process, and segment by sales engineer and by customer type, an interesting phenomena appears. You find that the long sales cycles follow the sales engineer, not the industry segment. That is, even when the customer type calls for fewer steps in the process, and thus a potentially shorter sales cycle, the sales engineer still forces all the steps on the way to an order.

The irony is that the delay causes the prospect to explore more competitors, and ultimately to a lower win ratio.

When the Dude has shown this data to sales management, they see the problem, but universally, there has been no action to adjust the process. Indeed, the hands get tossed the air, and the shoulders shrug, it just is and we must accept that.

So as we move to a more diversified customer base, with often less rigor required in the detailed sales process, our team can't adapt, and we aren't able to grow as much as we ought to be able to grow.

Summary

The Dude didn't intend to ramble on this much, but the topic gets his blood boiling. He feels the need to further explore the "marketing – Sales" dynamic, and how the world has changed in his small slice of the pie.

Regardless of all the professed flexibility, and sacrifice of the sales team, they are remarkably slow to respond to the changes, and to fall back on their past glories. This doesn't work in marketing, and it sure as hell doesn't work in Sales.


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The Sales Cycle - Observations
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