Social Proof in Action …

Yesterday I wrote about the benefits of using social proof and authority in raising venture capital.  If you didn’t read that yet it might be worth having a quick skim as a primer.

Social proof is defined as “looking for others to guide our decisions” and is also one of the most important techniques in acquiring customers in your company.  Many of you have read or at least know the primary thesis of “Crossing the Chasm” the seminal book on marketing your products to mainstream consumers by Geoffrey Moore.  It influenced a generation of tech marketers.

The book popularized the technology adoption lifecycle curve that originally came out of Iowa State University shown below.  We all intuitively know this curve now but we don’t all market effectively to it.  Chris Dixon alluded heavily to it in his brilliant post on “Techies and Normals.”  People who are “innovators” or “early adopters” like to be at the cutting edge.  We like to use new product and gain benefits before our peers.  We are evangelists.  We check-in when we go to restaurants when everybody else is wondering when we’re going to put away our F***ing iPhones or Blackberries.  We have to be first (this image is worth a click, I promise).

In short, innovators and early adopters have faith that there will be benefits to using products that are unproven and even if they don’t they enjoy the process of using new stuff.  This applies to business users as much as to consumers.  Sometimes these markets never appeal to “normals” (Chris Dixon’s definition) and other times it needs to be more effectively marketed to normals.

So the early part of a technology company is about finding your hard core group of early adopters and making them passionate about your products.  You need to give them “back stage” passes to your company.  You need to give them advance notice of your product development or better yet let them help influence your direction.  Sure, they need a little social proof.  If they hear that Robert Scoble, Michael Arrington or Jason Calacanis loves your product they’re more likely to give it a try.

This is what drove early adoption at Twitter, FourSquare, Quora and is now driving people obsessively at FlipBoard.  I must be an early adopter rather than an innovator because I DO NOT have my knickers in a twist to get on FlipBoard.  It looks cool, but I can wait.

But here’s the thing – the early & late majority will never come without social proof.  These are the people who want to see ROI studies (business), read NY Times reviews by David Pogue or WSJ reviews by Walt Mossberg (consumer).  And the key to understand how to market to these people is to understand the point made in the book “Yes” by Robert Cialdini.  Regarding “social proof” he says,

“Earlier we described the importance of testimonials in trying to sway others’ opinions in your direction.  The results of this experiment [the one on hotels listed in my previous post] suggest that the more similar the person giving the testimonial is to the new target audience, the more persuasive the message becomes … You should begin not with the testimonial you’re most proud of, but with the one whose circumstances are most comparable to your audiences.”

This is where heroes come in.  Heroes are those every day users of your product who are not overly senior in ranks but are in charge of implementing your solution within their company.  If they’re consumers they’re just everyday people like you and me.

Salesforce.come is brilliant at marketing heroes and I think Marc learned it in turn from Oracle.  We would take every day users from our customer base and make them heroes.  Here are some examples of heroes in action:

• A testimonial / quote from a hero on the banner on the home page of your website with their image and a link to a case study on how they used the product
• Speaking at a “city tour” in which Salesforce.com sales reps and executive management were present.  Heroes told our success stories, not us.
• Leading breakout sessions at our annual conference – DreamForce
• Speaking to industry analysts at Gartner Group, Aberdeen, IDC, Yankee Group, etc.
• Taking reference calls from prospects considering using our products

Marketing heroes is brilliant and you should find ways to implement in your organization.  On the one hand the early & late majority are more apt to listen to the benefits of your products from their peers through social proof than from any corporate bumpf you can produce to convince them of the benefits of your product.

On the other hand, what better way to build strong relationships with your company’s strongest supporters.  How often do every day employees get to appear on the home page of a major website, speak at a conference or get to talk with market analysts?  You’re elevating them in ways their own organizations probably do not.  And in turn you get not only strong endorsements but even more loyal future supporters.

Think about this – what is more powerful – a VC who tells you how great he/she is or when you read your peers reviews on The Funded?

And heroes work on the consumer side, too.  Ever notice all those iPad billboards are just ordinary users like you and me sitting on a couch using a product that they know you’re going to love?  OK, I know Apples has an unfair advantage – but the emotion their going after is social proof.  People like you use this product.  It’s easy.  It’s what they do when their sitting on their couch watching TV.  Everybody is doing it.

How are you going to cultivate and gain the support of your company’s heroes?  How will you work with your heroes to gain more early adopters or to market the early majority more effectively?  We already know from Cialdini that this is even more important than your putting a link to a press articles yet how much time do you spend trying to market these to everybody?

Last September I was on a panel with Guy Kawasaki talking about Twitter.  He said at the time that he Tweeted 4 times for every story that he wrote.  FOUR TIMES!  The exact same Tweet.  I couldn’t believe it.  His rationale was that he found that his audience was tuning into Twitter at several different times during the day and he found that four was the optimal number to convert enough of the people reading his posts into traffic back to his website.

I asked him whether he was worried that he was turning off potential followers who didn’t want their streams flooded every day with Guy Kawasaki Tweets.  He argued that anybody who followed enough people wouldn’t really notice much of a difference and if they followed so few people that they were significantly flooded then they were the wrong followers for him [on this point I'll never agree - I strive not to overwhelm any followers].  At the time I had a small enough group of people I followed that if anybody was in overdrive on posting for a day I always noticed (as I pointed out in Point 2 in this post).

I left the panel thinking that Guy was off base but realizing he had somewhat of a point.  I’ve argued previously that Twitter is a new form of curated RSS and in many ways it is.  But it is a transient RSS reader.  If you’re not logged in for a few hours and stuff passes through the pipes then it’s gone.  It’s true that there are ways to make sure you don’t miss stuff (like lists or segmenting traffic in TweetDeck) but most people don’t employ these techniques.  They just consume Twitter when they’re hungry for a conversation or some news right now.

So I started experimenting with multiple Tweets.  In particular I would schedule some Tweets (using CoTweet, which lets you schedule Tweets) to go out around 5:40am (in time for East Coast 8:40am consumption) and then again at 8:40am for West Coast time.  In fact, that is what I plan to do for this post.  I’ll finish writing around 1am and that’s a dumb time to Tweet because few people in the US are online.  Sometimes I would send a Tweet at 7pm and then again at 7.30am the next morning.  I wanted to see two things:

• Would the second (or sometimes even third Tweet) convert enough people to my blog to make it worth potentially annoying some people on Twitter?
• would I get a reaction from the Twitter community telling me it was too much?

I’d like to share my conclusions with you but then also ask you for feedback.  Many people reading today’s blog post would have seen it by clicking through on Twitter.  My questions for you:

• how often do you notice my second Tweet? I’m going on the premise that on most days most users don’t notice.  Some will notice it all the time (either because you follow 70 or less people or because you’re often on Twitter)
• how badly does it bother you when you do see a second Tweet?  Do you think to yourself, “I can understand why he’d send it twice because many people might not see the first one” or “man, is that annoying.  I wish Mark wouldn’t do that.” (I promise not to be offended by your answers – I’m trying to get a feel for the norm myself).

My conclusions

1. If your goal is to send a Tweet that converts people to a blog post, sending more than one Tweet is recommended.  I would assert that people following you by definition are more likely to want to see content from you and therefore you’re better off sending 2 versus 1 Tweets (we’ll see from feedback on this site whether others feel the same way).  As an example you can see from my awe.sm logs a recent morning that 399 people clicked on my link on Twitter the night before at 7pm.  I send out a second Tweet at 7am and by 8:30am I already had 224 clicks.  This number often passes the first number by the end of the day.  If I sent out a third Tweet later (I didn’t) it likely would get about 50% as much as the morning one.  This means that there are still many people who haven’t seen it and would like to.

Note that these numbers only measure people who clicked on that exact link.  Many people swap out my short URL code and put in their own so I don’t capture 100% of the total clicks with the codes but if you look at the overall traffic from that morning on my blog you’ll see that my Twitter link accounts for about 15% of the morning traffic to my blog (this percentage will drop by the end of the day as more people arrive via RSS readers or referrals) and last night’s link accounted for about 10% of the daily traffic.

So my conclusion is that the second Tweet is generally worth it.  The third probably is also but I usually resist the temptation in the desire to balance “reach” with “frequency” so as not to piss people (you!) off.

2. I try not to “double Tweet” every day and I vary the time of day just to shake it up a bit.  You’ll see from this morning’s logs that my post today was featured prominently on Hacker News.  This always leads to a spike in traffic.  I could already see this by early AM so in this case I didn’t think it was worth RT’ing to get another 200 viewers through the door.

3. The smartest strategy I’ve seen is implemented by Babak Nivi over at VentureHacks.  He’ll send out multiple Tweets linking to the same story but with totally different text.  What he does is pull out specific quotes from the story and then Tweets those but linking back to the same story.  I find that this is more palatable for me than seeing the same Tweet 4 times (but has the downside of potentially driving people to your blog post that they may have already seen).

4. I also try to mix up my Tweets with a combo of  Tweets linking to my blog, Tweets making general comments like where I’m going that night and some Tweets where I ask a question to engage the audience (obviously where I generally want to know something).  I think this is important – otherwise your Twitter feed just becomes, literally, an RSS reader.

So, whaddaya think?

Most technology startups seem to be founded by three types of people: product managers, engineers or biz dev types (MBAs and the like). Very few of them are started, in my experience, by sales people and very few early stage companies really understand sales. That’s why I started the Sales & Marketing Series and at one point I will do a bunch of posts on the sales methodology we developed at my first company called PUCCKA.

Today I want to talk about sales executives and a model for thinking about them. If you ever have to interview, hire, judge the performance of, decide whether to promote, assign clients/regions to them or have to decide whether to fire sales people, I think having a framework for thinking about them is helpful.

Here’s mine:

Let me start with a few biases. First, I think that most great sales people have an innate skill that can’t be taught. That view from me isn’t surprising since on the topic of Nature vs. Nurture in entrepreneurs I’ve clearly come down on the side of nature more than nurture (again, that doesn’t mean nurture has NO influence, just less than nature). Second, I think that running great sales programs is mostly about running great sales processes.   So as you grow your business and if you’re looking to hire sales people, one of the most important things to look for is somebody who understands the sales process and somebody that you perceive as “process oriented.” More on that later.

1. Journeymen - Journeymen (Journeywomen!) are, as the name implies, the people who have “learned a trade and work for another person usually by the day.” They are hugely process driven. These people take directions well from a sales manager on how to approach sales campaigns. When you hear them speak in an interview about how they’ve run sales campaigns in the past they describe the methods with precision. They are masters at using Salesforce.com because they love the structure that it provides. They’re organized and methodical. They’ll have taken 10 sales courses and they’ll list them all on their resume (why??).  They set up “tickler” lists to remind them of calls and they always make the calls they say they are going to make. They’re always on time.  They work through ROI calculations with customers. They’re great at orchestrating your company to deliver product demos. They know how to walk a deal from business owner, through IT, through procurement and through legal to get a closed order. They are the LIFEBLOOD of sales organizations because they’re plentiful and deliver great value relative to their costs. They’re also usually very loyal to your organization. Almost by definition. They’re journeymen.

But doesn’t Journeyman almost imply something pejorative? Yeah, kind of. Even though they’re great at process you can tell when you spend time with them that they miss some sort of “spark” that you’re expecting in a sales person. Some sort of magic where you just finished the meeting and can’t remember what they were selling but you know you needed three of them. It’s the “je ne sais quoi,” the “X factor.” And in my experience Journeyman are not good in two scenarios. a) they don’t tend to make great heads of sales departments and b) they aren’t the people you want early in your company. The reason for “b” is that most early stage companies survive on “evangelical sales” as in when you’re having to educate the customer on something new and different and get them to take a leap of faith. Journeymen don’t do “leap of faith.” They sell more commoditized or well understood products that can be sold via a well-defined process. That’s my view, anyhow. And my experience has taught me that.

2. Mavericks – Mavericks are the opposite of Journeymen.  Mavericks are by definition bad at following rules and bad at process.  I should know because I’m a maverick.  (John McCain used to be a Maverick but as Jon Stewart points out is no longer one – super funny 5 minute video – must watch if you have time and if, like me, you used to love McCain before his lobotomy.  If you still love McCain, um … not so funny then).  Mavericks are the people who innately know how to navigate a sales campaign. They can get access to senior executives and champion a sales campaign from the top. They still hit all of the highlights of the sales methodology (getting a champion, understanding the pain, mapping your solution, proving the ROI, finding out the competitors and differentiating and getting every department to “yes”) but they can’t follow the exact same process every time. They’re unmanageable. I’m unmanageable. We’re chaotic by nature. But in the end they know how to put the big wins on the board. They can smell the person who holds the purse strings in a company and how to gain access to them. They inspire trust in the buyers and they build long-term relationships. They’re not afraid to break a few eggs along the way – nothing ventured, nothing gained.  The buyer is more loyal to the maverick than to your company.  That’s OK.

Every organization needs maverick sales people. They hit your home runs. But … they DO NOT make good sales leaders. In fact, if they work in sales they shouldn’t have anybody reporting to them. They should go for the big wins and get all the support they need. I think I made a pretty good CEO but I know I would be lousy sales manager. Maybe like somebody who could run a restaurant but wouldn’t make a great chef?  To be a great sales manager you need to get a team of people to be able to follow your sales process methodically. You need to do weekly sales team calls, regular customer calls with your team, review their pipelines with them, find out when they’re BS’ing you, produce weekly forecasts, etc. Don’t confuse your mavericks who have the innate ability to sell with a potential VP of Sales that will need to run your team. The difference is PROCESS ORIENTATION.

Mavericks do work well in early-stage companies and are probably your best bet for you first hire or two. You need somebody who can lead evangelic sales and get referenceable clients that can be marketed later when you have your journeymen.

3. Superstars - These, as the name implies, are the rare breed of individuals who have the innate ability to sell and are very structured and process oriented. You get all the benefits of a maverick but with more reliability and predictability. You also get somebody who can work well with leverage. They’re able to manage and therefore harness the power of many journeymen to consistently deliver your sales numbers. I generally think that superstars are not the first people to hire in a startup. The best of them will require too much money and will be working for somebody else managing a team AND carrying a bag. Superstars are best to hire once you’ve got your product/market fit, proven your product will sell, hired a maverick and a few journeymen and now need to bring in leadership and structure to enable you to scale more quickly and predictably. If you found the right person who is a superstar and is ready to join your early-stage business I wouldn’t kick them to the curb. But … I question if they’re really a superstar if they’re willing to work for you at a super early stage. Have to ask yourself why. Or whether you have the wrong read on them.

4. Trouble – If you interview somebody who doesn’t seem like they’re religiously process-driven / can take good direction and if you don’t have the feeling that they could sell ice to the Eskimos then don’t hire them. They will not succeed at sales. Enough said.

In life I’ve found it useful to have little frameworks to try and interpret the world through.  They don’t always apply 100% of the time but they’re a useful way to shorthand.  The Journeymen, Mavericks and Superstars matrix has always suited me well and has stood the test of time.

Thank you to the lovely Jacqui for helping me with the Balsamiq mockup graphic.  LOVING Balsamiq!

File this under both Startup Adivce and Sales & Marketing Advice.

I was over at Robert Scoble’s blog Sunday night reading about the “Death of the Great Startup Launch.”  I’m not 100% sure that I understood his core thesis but I *think* it was that startup events such as Demo force such a zone of secrecy about what you’re working on (with a threat of being kicked out of the event for leaking your story) that they kill the ability for most companies to dazzle people with a great company launch and doesn’t allow journalists to triangulate with others in the market before going to press.  Oh, and Demo charges the startups $18,000.  Robert’s article is worth reading.

It got me thinking, which for me is always the sign of a good blog post.  I think Robert’s right.  Too many startup execs place too much emphasis on the big stage launch.  There are many problems with this:

- Your chances of being selected aren’t great

- When you are selected you share the stage with 49 other companies (in the case of TechCrunch50.  It is a great show but would be 10x more valuable if it were TC20)

- Most people pay attention to the first 5 companies.  Maybe 10.  By company 22 it’s hard to remember what any of them did.

- Journalists don’t know enough about your company before the show, don’t have time for proper research, and you will be competing for their time afterward with 49+ other companies that want them to write about you

- If you’re Yammer, Mint or RedBeacon (all winners) you’re knighted with wonderful coverage.  Many other great companies are not.

- So I’ve always advised people that if they do launch at a big show, the most important public relations work they do is after the conference.  Use the fact that you were on an anointed list to build credibility when you eventually approach journalists (and VC’s, customers, employees)

But more broadly it got me thinking to one of the biggest mistakes tech executives get into in the first place.  They see journalists as a means to and end.  They see them as a person who can influence the outcome of their company at a single point in time – when they (the startup) have something important to say.  I’ve heard many startup CEO’s (and VCs!) lament the coverage they get from journalists who reported the details unfairly.  It’s no wonder many companies don’t get good coverage.  Here’s my thoughts on improving your relationships with journalists and as a by-product improving the coverage that they afford you:

1. Have a great product – OK, I know I’m stating the obvious, but being friends with or helping journalists will never get you great coverage (if you’re dealing with a high-quality news organization or blogger) if you have a bad or mediocre product or service.  At best you’ll get coverage or avoid getting panned.  Don’t put in the time to getting coverage until your product rocks.  Guy Kawasaki said it best (paraphrasing), “you can’t do great marketing with a bad product.” Total waste.

2. Know that journalists are human – Again, sounds obvious.  But you’d be surprised how much tech folks either hold journalists too much on a pedestal or disdain them.  They’re human.  Get to know them as human beings.  The closest relationships I ever built with journalists were at cocktail parties where we didn’t talk anything about my company.  I became quite good friends with a journalist at the Financial Times and eventually helped her as she wrote a book on the venture capital industry.  It started socially.  The more she got to know more the more she called me for help with stories.  The more you connect with them the more you’ll get over the tendency to want to “spin” and the more they’ll trust you when you give them facts. They get BS’d too so much that you shouldn’t take their trust for granted.

3. Understand their needs - You need to understand a journalist’s needs.  First, understand their deadlines.  Imagine if you had to release your software daily in order to keep your job or to have the traffic numbers you need to earn your paycheck.  They are often interested in knowing whether there is a story to be had from their discussion with you.  I’ve gone on social lunches with journalists where they’ve brought a small pad of paper and pen and left it on the table.  Sort of makes me a bit uncomfortable because I’m thinking, “sh*t, I hadn’t planned anything interesting to say.  Are they expecting an announcement out of me?”  I don’t think they always are.  But as journalists they’re always prepared just in case.

When they are interviewing you for a story, don’t be afraid to ask what the “angle” of the story they’re working on is and how you can best help them with the story.  Every great article has an “angle.”  The angle of this article is that most people don’t build good relationships with journalists and they should.  If I needed third party quotes to support that story I’d be calling journalists to get their opinion on my topic and calling CEO’s to get theirs.  In my blog I just save that for the comments where people can say what their perspectives are.

By knowing the angle you know how to better serve their needs when you speak.  Make sure you know before talking how much time they have – remember they have to publish frequently.  To that end, make sure you also know when they plan to publish your story.

Mostly, I believe that journalists want to be able to have “unfiltered” conversations with real business leaders.  Given a choice of your marketing person or talking to you (the founder) there’s no competition.  Make yourself available.  It is an important part of your job.  Not talking to the press is a bit like a politician saying they don’t want to talk to the press because they’d rather save that time for drafting legislation.  Might be true, but not in your best interests.

4. Help them better do their job – I’ve always been a big believer that relationships with journalists are a long-term investment.  You need to deposit in their bank first.  Get to know them when you don’t have a story that is running.  Offer to help them with stories they’re working on.  Be willing to go on the record with quotes / sound bites.  If they want access to people in the industry that you know make sure to help broker the intro – both sides will thank you for it.  If you’ve got good ideas for a story – shoot it over to them in an email.  If they call you for an interview that has a deadline – be responsive.  You’ll be depositing all the way and earning trust.

On many occasions I’ve offered to give 30 minute industry overviews on a tech topic to journalists when they’re not working on a deadline and want to better understand a topic like SaaS, Cloud, LBS, etc.  The bottom line – if you enjoy discussions with people, if you enjoy educating and sharing – these conversations will not only form closer relationships but will be enjoyable for you as well.

Robert Scoble interviewed me in 2006 about my startup, Koral.  This video will be too long for most of you to want to watch (22 minutes) but provides a good example of how I think about this.    We had a far ranging discussion.  I wasn’t trying to pitch a tightly controlled message about my company.  It was Robert’s show.  I wanted to just let him take it where he wanted it to go (while ensuring that I at least got in my points about what Koral did and why it was a benefit).

By the way, don’t forget that all those times you’re quoted in the blogs and press articles helping other people’s stories you’re actually accruing benefit as well by having your name and company listed.

5. When it is your turn you’ll get a fair shot – If you’re helpful to journalists they are far more likely to want to cover you when you have news to share.  It’s that simple.  Do not equate that with them giving you glowing reviews – you have to earn that.  But you’ll likely at least get inches.  And remember when you do to understand the angle of their story, understand the key points you want to communicate and make sure to balance those to make the article successful for both of you.  Often when the journalist is agreeing to consider writing about you they don’t yet know the “angle” so I always recommend trying to define the angle.  Don’t be afraid to be transparent.  You can say something like, “I was thinking that you might cover a story like, ‘why today’s mobile ad networks don’t benefit most application companies’ and then work me into that story line. Does that sound right to you or do you want to come at it from a different angle.

6. If you’re unhappy fight back fairly – There is always going to be the time where you get unfavorable press.  If you don’t that’s a sure sign that you never really had any success so you’d rather be the person who occasionally gets side swiped.  Deal with it gracefully.  Write the author and let them know that you understand why they wrote their story they way that they did and your OK with that.  But that you’d like the opportunity to clarify a few points so that they can better understand you for next time.  If possible, use it as a way to get an in-person meeting to discuss it.  At a minimum maybe you’ll have a chance to strengthen your rapport for next time.

Also, remember that this is the era of the blog.  Don’t be afraid to write a blog post with their comments in it and point out why you think the actual case is a bit different than what they wrote.  Be respectful.  If they wrote some good points obviously point those out, too.

Summary: Journalists are people.  It turns out that they’re actually quite interesting people.  And they spend time with people far more interesting than you or me.  So spending time with them can be enjoyable.  You can hear all sorts of wild stories and learn much.  So any relationship you build with them will be worth it purely at the friendship level.  But one day you’re obviously going to want coverage (after all, I don’t hang out much with journalists who cover the healthcare sector).  Make sure you deposit much in their bank in terms of assistance and trust before you ever luck for a withdrawal.

If any journalists read this please feel free to add extra tips or disagree with anything I’ve said.

Many of us in the technology, media and VC world sit on panels at lot.  Many of them are painfully boring.  It’s a shame since it’s such a golden opportunity for you to build awareness with your audience for who you are and what you do.  And it’s a surprisingly great way to meet people in this industry who share the stage with you. (photo from left to right: me, QD3, Brian Solis, Chamillionaire, Ian Rogers and Brian Zisk – most of whom I got to know through Twiistup panels)

I have written about the topic of sitting on panels before.  I sat on two panels in the past week – once at LeadsCon (** see appendix if you’re interested in a back story here) and today at the America’s Growth Capital conference.  So it’s fresh on my mind.  Hope I won’t be too repetitive.

Here’s my views on how to maximize your time on stage:

Give (your contribution)

1. Educate – Your primary role on stage is to educate the audience.  People have paid good money to be at the show and often times it’s to hear people like you speak.  It’s your job to know thy audience.  And thy topic.  Try to find out in advance the make of of the people who will be attending.  Things to know: mix of entrepreneurs, big tech company execs, service providers, media people, VCs, etc.  It would be good to undertand size of companies.  Make sure you really try to get inside the minds of the audience so you speak about what you believe they will think is relevant.  Obviously it should be closely aligned with what the topic of the panel is.

Tip: On panels I believe it is OK for you (even as a panelist and not moderator) to say, “I want to understand whom I’m speaking to.  Can I get a show of hands for how many people are X?  Y?”

Tip: It is always a good idea to save time on the panel for audience questions.  This is the moderator’s job but it doesn’t hurt to ask (read: remind) them before hand if there will be audience Q&A at the end.

Tip: It is always a good idea to email the other participants in advance with topics of discussion and alert the moderator if you’re worried about the direction it might take.

Tip: Get the audience to respect you for your content contributions.  Make sure they know your name, your company and what you do.  No more.  Don’t oversell or over market.  It will always be viewed in the eyes of the audience as unbearable.  The exception in my mind is if the topic of the panel warrants you talking about how your business operates as part of the learning experience.  But try to make it a functional discussion rather than a marketing pamphlet.

2.  Entertain – It is also your job to entertain!  I’m sure not everybody will agree with me on this one.  But let’s face it, on most panels a large number of people in the audience are surfing the web, doing Tweets, checking email, playing with their iPhones, etc.  It’s because they’re BORED.  You can’t show up with your monotone voice and have a deeply intellectual discussion like you might over brandy and cigars.  You’re on stage! Show energy and enthusiasm.  If you’re capable of it show some wit.  (If you’re not, don’t try. Nothing worse than bombing).  If you’re a nervous speaker bring bullet point notes.  If you’re really nervous join Toastmasters.

3. Have a dialog – I find the most enjoyable panels are ones in which the panelists engage in a dialog.  The worst are the ones where the moderator just asks questions and you go down the line answering each one until the line of people are finished speaking.  When somebody on your panel makes a point to hesitate to politely ask them a question that let’s them clarify their point a bit.  You can also politely jump in with, “that’s a great point.  We had a similar experience …” but if you do this obviously be respectful that you’re not cutting them off too early.  Let them get enough air time first.  When you do this it’s also a good idea to not have a commentary to another person’s point where you then talk for 5 minutes.  It should just be a quick comment / thought.

I also don’t think there’s anything wrong with a little bit of friendly controversy.  That was always the rule when I lived in the UK.  A panel without controversy was boring and a wasted opportunity.  The audience always likes this a bit.  It spices things up and makes for great entertainment.  If you’re nervous about trying this then go to your fellow panelist before hand and try saying, “hey, do you mind if I try to add a bit of friendly controversy to the panel to get the debate going?  I’ll try my best to do it respectfully.”  Obviously if they prefer not to then don’t.  And, yes, I probably take a little bit too much license with this particular advice.

Get (what you get out of it):

1. Awareness of your brand – You get so much out of being a great speaker on a panel.  I highly recommend it to all companies.  You get to earn credibility as an expert in the topic area.  People at the conference become aware of who you are.  If you say clever things the attribute positive feelings about your company even if they don’t really know what you do.  It serves as a great conversation piece to meet people the rest of the conference.  People will say, “oh, I saw you speak on that panel.  I liked what you said about X.”  It’s a free ice breaker for the rest of the conference.  It’s “earned media.”

2. Business Cards of fellow panelists – Make sure to grab everybody’s business cards.  They’re mostly wired to expect that you’re going to ask so don’t be shy – even if they’re in a league above your pay grade (the best kind of panels).  One of the most surprising things I learned over the years is the kinship you build with other individuals when you simply shared the stage for an hour.  Particularly if you were articulate and made relevant points.  It really is a great way to get to know people.  My recommendation is if possible ask for the business cards before you start speaking.  Afterwards everybody rushes the stage so it’s harder.  If you all arrive a bit late and you don’t have time to grab cards then immediately when the panel ends ask for cards before the herd arrives.

3. Follow up! – Obvious, right?  You’d be surprised how few people do this.  I’ve gotten to know so many people over the years through panels.  At LeadsCon I sat on the panel with Saar Gur, one of my favorite people to spend time with when I’m in NorCal.  Well, maybe we got a bit too friendly on this panel But I actually first met Saar on a LAVA panel in LA.  Afterwards we exchanged cards.  I called him on my next trip to Palo Alto.  From there we just started to get to know each other.  At LeadCon we grabbed 2+ hours, which I really enjoyed.  I never would have known him were it not for the LAVA panel.  Tomorrow I’m going to see Aydin Senkut.  I first met Aydin at a DealMaker Media event where, you guessed it, we sat on a panel together.  I won’t bore you with a laundry list, you get the point.

Avoid:

1. Speaking on panels with too many members – This is a waste of your time.  I have a rule about this.  No more than 5 people on the panel.  I prefer 4.  If there’s more people then you’ll end up not talking much, there will be limited back-and-forth conversation and you won’t get to know anybody.  I find these panels to be low value add for all involved.

2. Over promotion of your company – For some people it’s tempting to be an marketing automaton.  Don’t.  You’re better off with the earned media and the relationships.  Nobody remembers many of the details of what is actually said in a panel discussion anyway.  But they remember the impression they formed of you.  People generally don’t like over promoters who don’t add to the discussion.

3. Long winded intro – I really like when the moderator asks people to limit intros to 30 seconds.  Nobody is there to be “educated” about your entire career history or have a long-winded description of your company in the intro.  Keep it short, sharp, punchy and high energy.

4. Hogging minutes – The other annoying thing on panels is the “over talker” or the person who always has to answer the question first (the way that annoying kid did back when you were in elementary and high school).  Don’t be a wall flower – you should get in your minutes.  But don’t crowd out other people.  If your goal is to sit on panels with important people and build a relationship with them you won’t achieve this by not letting them speak!  (you might think you won’t do this either by being controversial – I think if you learn to do controversy with humor and tact it’s OK.  Just my view.)  Also, when it’s your turn to speak don’t speak for too long in any one question.  People prefer snappy answers to questions.

5. Being a player / manager (aka moderator with an agenda) – Moderators are moderators, not panelists.  That’s why they gave you your own special title.  You’re not a player / manager – you’re a manager.  Understand your role.  Don’t answer your own questions or ask questions that are secretly statements to show how smart you are.  Earn respect of the audience be well thought through questions.  Keep panelists on their toes by not letting them speak too long on any one topic.  Try to get a discussion going amongst panelists.  Get the audience involved.  You are the conductor.  You control the tempo.

** Appendix (only if you’re interested in a story)

At the LeadsCon conference I actually made one pretty big error.  I turned up at the MGM Grand for the conference and they didn’t have my name on the registration list.  I spoke with the lady for 10 minutes while she looked for me in the computer.  I finally said, “I’m just going in – I’m supposed to be on a panel,” to which she replied, “Are you with IBM?”  Me: “No, why would I be with IBM?”  Lady, somewhat frustrated with me, says “Because this is an IBM conference.”  DOH!  Jogged to get a cab.  Arrived at the right hotel (The Mirage).  Jogged to the conference area.  Arrived to a room of several hundred people and 5 guys on stage already 5 minutes into the discussion.

Not a good start, right?  I tried to alleviate the situation with humor.  When asked to introduce myself I said, “Hi.  I’m Mark Suster.  I’m a venture capitalist.  I’m late because I went to the wrong hotel.  Obviously you don’t have to pass an IQ test to become a VC.”

I tried to be respectful of the other panelists and not drive the agenda of the discussion too much in the beginning.  They got into a really esoteric conversation about the EBITDA multiples of publicly traded companies.  It went on for ages and was now 25 minutes into the session.  The VCs were silent most of this time.  It wasn’t relevant to us.  I couldn’t see how it was relevant to a room full of people, most of whom would never IPO.  I was having an ADD moment. I started looking around the room and noticed a bunch of people on their laptops, iPhones and Blackberries.

I finally couldn’t bight my lip any longer.  I blurted out, “I’m not sure how this is relevant to a room full of leads people?” [totally shocked looks all around]  ”How many people in the audience are from companies of 100 people or more?” Very few hands.  ”How many are from companies of less than 20 people?”  Most of the audience.  OK, so now I thought I knew what was relevant.  They must all want VC, right?  I said, “how many of you are looking to raise money in the next 12 months from investors?”  Still, very few hands.  Um, wow!  What next?  This prompted Dave McClure to Tweet this.

By now the bankers are seething at me.  The moderator (rightly so) was also perturbed.  I didn’t handle this as well as I might have but I just kept thinking, “if I’m bored sh*tless and this is my business, I wonder what all of these people in the audience are thinking?”

So I suggested that we ask the audience what they wanted to hear about.  The moderator was respectful enough to do this (even though I’m sure he wanted to ring my neck).

A good discussion emerged.  I personally feel that the quality of the rest of the panel was much better for the audience.  Was anybody there?  I’d be grateful if you added comments below on how the session went.  Did the panel improve or get worse?  Please don’t feel you need to be nice to me – I’d love real feedback if you were there.  Criticism is fine.

I know that I could have / should have handled the whole situation better.  I have a small sense of regret that it had to come to this.  It was a bit of fun, though.  Except when the really tall banker got in my face after the panel.  I apologized.  I hope he accepted.  He was a bit bent out of shape.  At least for a few tense moments people stopped playing with their iPhones.

(Photo in the banner taken by (cc) Kenneth Yeung – http://www.thelettertwo.com).

This is part of my ongoing series on startup advice but also filed under my sales & marketing posts.

No advice I give will ever apply to 100% of companies, 100% of startups or even 100% of tech startups.  I just want to state that up front because while I believe that this post will apply to most startup technology companies out there, I’m sure there will be exceptions.  By all means light up my comments sections with any cases you believe where this advice doesn’t apply.

Let me start by saying that most channel relationships don’t work.  Period.  (Full Stop for you Brits.)  I’ve seen way too many startups spend all their energy getting channel deals done only to find out that they don’t produce ANY revenue.  Yet startups continue to pour tons of energy into a relationship that with the current structure will never work.  This post is dedicated to explaining why channel relationships suffer and how you can improve them.

A Channel Love Story

You’ve got the perfect product.  You’ve invested $1 million in building the perfect application the meet a large market need.  The only problem is that you can’t afford all of these expensive direct sales reps to go and sell it.  Nevermind.  There are these great big companies that have large sales departments looking to supplement their existing products so when they’re with clients they can increase their average order size.  Sort of amortizing the costs of their sales reps over more products.

Channel partners come in multiple flavors.  The favorite of many Silicon Valley startups is the Big Tech Co distrubution deal where you get to how off how effective your biz dev capabilities are.  Ink some deals with Salesforce.com, Intuit, Google, eBay, Verizon, etc. and you’re ready for your big round of VC investment to come in.  Or if you’re not planning to raise money you’re ready for the profits to roll in.

Or there’s the more old school deals with VARs (value added resellers) or consulting companies.  Here they’re already carrying a bag with products from many vendors so while there at the customer they just have to mention your product and budda bing.  It’s a perfect love story.  I got the brains, you got the looks, let’s make lots of money.

Except that most of the these deals end up going in the PR waste bucket.  Great inches eked out on tech blogs or industry rags.  End of story.

What Went Wrong?

Here’s the problem.  If you haven’t already sold enough of your product directly to have enough volume to satisfy your channel partner he/she simply won’t end up pushing it – no matter how excited their MBA adorned biz dev guy was when he inked your deal.

Imagine this.  You decide to go out and hire a sales rep.  He’s senior and used to earning $125k basic and $125k bonus.  Because you’re a startup he cuts you a deal (these sales guys are so good at this to work for only $120k basic in exchange for some equity [no, I'm not sales person bashing - I think sales reps are the lifeblood of any company - I'm just offering my realistic sense of a sales person's salary negotiation strategy!].

So he decides to work for you without a guaranteed draw (which means his pipeline where he’s coming from wasn’t strong) and he hits the road selling your product.  And because it’s a nascent market, an evangelical sale and you have very little sales today the lead times to sell are longer than he’s used to.  The price points are not as high as your beautiful Excel spreadsheet had forecasted when you raised your seed capital.  So 3-6 month’s in your sales rep is complaining she’s not going to hit her numbers and earn her expected commission.  But at least you gave her a base so she’ll gladly bank that as she looks for her next job.

OK, I’m being harsh for emphasis but the reality isn’t far off of this.  People need to feed their families.  Channel partners are no different.  You think that Salesforce.com rep with a $1.2 million sales quota and the exact knowledge of how to sell salesforce automation tools is going to sell your dinky product that is unproven?  Heck, they can barely figure out how to sell all of the other Salesforce.com internal products let alone your product where they have to explain to their client that it isn’t part of his/her company.

People sell what they know how to sell to hit their quotas.  If your stuff flies off of the shelf then they’ll sell it all day long.  If it doesn’t they’ll soon forget what your product even does.  The sales market is as pure capitalism as it gets.  And your product isn’t going to fly off of the shelf.  Just do the math.  If they have $1.2 million quota to sell and your product sells for $20,000 / year (or even $100k / year. even $200k) – how much of it would they need to move in order to get their commission checks?  Don’t forget that when they sell their own products they get 100% margin.  On yours it’s at best 50/50.

So Should I Avoid Channels at all Costs When I’m a Startup?

No.  Not necessarily.  But here are my suggestions:

1. Limit your number of sales channel partners.  They will not sell on their own – they require even more training and nurturing than your in-house sales reps would

2. You still need to sell yourself, your channel partners fulfill the order.  What?  That’s crazy?  Then what’s the point of having them?  Well, I will tell you first off that in any sales channel relationship you need to sell the product before your partner does.  If you have a hard time selling they will have a harder time.  Channel partners will put the effort into training their people, developing sales collateral, bonusing their reps and moving other products off of their price list only when they know it’s dead easy to sell your product.

But channel partners give you huge credibility.  Imagine your visiting IBM and telling them to buy your product.  It sure would be easier if you announce Intuit as your channel partner and Intuit can actually sign the master services agreement and act as the single throat to choke when the order is signed.  Also, many businesses scale more cost effectively through channel partners.  So putting them in place now isn’t going to necessarily help you sell more products in the first year or two but once you’ve cracked the market then your partner will be ready / able to ramp up sales.

Also, channel partners are often your best potential acquirers and let’s be honest – most companies end up selling rather than IPO’ing these days.

So remember that you need to sell your product.  You need to market your product.  You need to stimulate demand.  Then hand the order over to your channel partner to “close” the deal.  P.S. Never let them actually close.  Don’t let anyone between you and a signed order.

3. Your partner needs to “earn” - Resist your temptation to be stingy.  ”But I did all the work!  Why should I share huge margin with my partners?  I’ll share it when they get off their arse and start selling!”  That’s missing the point.  You’re investing in your channel partners’ success in the early years so that they’re motivated in your scaling years.  That’s going to cost you margin.  It’s the definition of “investment.”

Margin deals can be all over the map.  My starting point mentally is about 30% for the channel partner.  You can get away with 25% if they’re not doing much.  You should be willing to go up to 50% if they play a significant role in the sales & marketing.  Also, another effective strategy is for you to take most (75-80%) of the sales margin but give them all of the service revenue (but then they actually have to do much of the implementation or servicing).  If anybody thinks these percentages are off please weigh in in the comments section.

4. You need channel resources – Most tech companies realize that they need Biz Dev resources to get lots of deals.  And frankly there’s lots of people running around wanting to be a Biz Dev person.  It’s a sexy title when you can’t design products, program  computers or sell! [yes, I'm joking. I love Biz Dev people - no hate comments, please ]

But where many startups under invest is in “channel managers.”  These are people whose job it is to manage the channel partners you do sign.  They need lots of love and attention.  They need to constantly be reminded of your company (they are by nature promiscuous).  You need to stay top of mind.  You need to go beyond their biz dev person and get to know actual sales reps, sales engineers and professional services staff.  They’re the ones who can help you identify customers that have a need for your product.  You then tip off your sales rep to focus on the deal and the channel partner gets their commission.  Everyone is happy.

Channel managers create channel partner specific marketing materials.  They help prospect deals together.  They understand the channel partner’s own product weakness and how your product helps them sell more of their core product (a sure recipe for you to get more sales).  They take the sales reps and extended staff out for drinks to remind them of what you do so you’re always top of mind.  They work on joint spiff programs with the channel partner. They are your lifeblood.  Know them. Hire them.  Without them you have great press.  Nothing more.

In summary I say that channels can be the lifeblood of startups.  In a world where we all raise less money we need to find more capital efficient ways of going to market.  But 80% of startups fail the channel test.  They understand how to ink the deal but not what makes their channel partner tick.  They end up being penny wise, pound foolish.  They blame their partners for not selling better rather than recognize the channel parter for what it is.

And I promise you.  If you start to make your channel partner successful – it will pay huge dividends when your business is ready to seriously hit that “j curve” you promised your investors.

This is part of my series on Startup Advice.

When I worked in London there were a ton of Aussies.  I love working with Aussies because their outlook on life seems very similar to what I grew up with in California.  Pretty laid back and non-hierarchic.  I also loved learning all of their sayings.

My favorite was when a guy told me to beware of Crocodile Salesmen. What’s that?  ”You know, big mouth and no ears.”

That’s always stuck with me.  Crocodile Salesmen are people who are always talking.  They’re pitching to you.  They don’t take the time to realize what your true motivations are because they’re too busy telling you what they THINK you want to hear.

Trust me – your chances of selling are much lower if you’re talking rather than actively listening.

I’d like to talk about Crocodile Salesmen in 3 scenarios: 1) when YOU are selling (or someone on your team), 2) when you are trying to recruit a sales person and 3) raising VC

1. YOU Selling – My wise old friend & mentor, Ameet Shah, once told me after a meeting we had with clients (when I worked at Accenture), “there are two ways to run a meeting: asking or telling.  You’re a persuasive guy but be careful not to always be telling people the answer.  Nobody likes that.  You learn much more about how other people think when you’re asking.  And you get to better results.”

That stuck with me long before I was ever a CEO (aka chief salesman).  It is my natural style to want to “tell.”  I’m an ENTP.  Many of you are “tellers,” too.  I know because many entrepreneurs I spend time with I can tell are in their own brains when we’re meeting rather than trying to understand what my position is.    You’re in sales mode.  I still do this sometimes, too.  But I’m keenly aware afterward when I’ve done it and kick myself.

This point is also echoed by the author of my favorite business (life) book of all time – The 7 Habits of Highly Effective People (by Stephen Covey) – in which he says as one of the habits, “seek first to understand, then to be understood.”  If you follow that mantra I assure you it will lead to more positive results in whatever you’re doing.

But how to apply “listening” in a sales meeting?  Let’s assume you run a Customer Support software company.  Do you simply begin by asking, “I’d love to understand what your objectives are in customer support?  Where are your current pains?”

Never.

You need to first establish two things: credibility and rapport.  I recommend starting the meeting with a VERY brief introduction of your company, your background and why it’s relevant to the job you currently have.  I would then always say, “Obviously we know a little bit about you but if you feel comfortable we’d love to know just a little bit more about you and about your role.”

Too many people are racing through the pitch, pitch, pitch that they don’t realize it’s polite to let the “opposing team” talk and do intro’s also.  They’re into crocodile mode.

After that you need to begin discussing your company.  You need to identify a customer problem and talk about how your solution meets the needs of that problem.

What I personally recommend is that you use “What We Find’s.” Highlighting a few problems that you have seen in some of your existing  customers.  You can mention them generically.  Even better if you have permission to discuss actual names as a “reference client.”

So you would say (in the Customer Support example), “What we find is that many of our clients have existing ‘trouble ticketing’ systems.  But many of these aren’t integrated with the way that their customers want to communicate with them in 2010.  They don’t handle Twitter feedback, emails or IM.  So ‘what we find’ is that many of our customers are using separate tools for managing these but don’t have a holistic view of the customer.”

So you’ve identified a problem.  But DO NOT crocodile into your solution page.  You have hopefully established enough rapport and credibility by this point to enable you to ask a question.  Start very simply and subtly, such as, “do you find similar challenges at your company?”  Hopefully this will elicit a long-enough answer for you to engage in a discussion.

If you get no love after that you might be in for a tough meeting.  You have no choice but to jump into solution mode for a bit to see if your case studies on a successful implementation at other customers opens up the person you’re meeting a bit.

The end goal in your meeting is to get the customer to trust you enough to talk about their existing problems.  You should be actively listening the whole time (actively listening as in listening, writing important things down and asking relevant questions as they talk about their problems).  At the end I normally like to say “I’d love to list out what I  think I heard are your issues to test whether I had properly understood them.”  Normally after I read off my summary they clarify points a lot and I realize that I was only directionally correct.  Always “test your understanding.”

The art of building rapport, establishing a base of credibility and then shifting to a discussion is how the best sales processes work.  The quicker you slip into Crocodile Mode the greater the chance that you’re telling somebody about solutions you have to somebody else’s problems – not your prospect’s problems.  Or you’re not speaking in their company’s vernacular so they’re not making the connection.

Beware of Crocodile Sales.  They are seldom productive.

2. Hiring a Sales Person – So you’re running your own startup and you need to be able to hire a sales leader and ultimately more junior sales people.  You conduct an interview.  How do you know if you have the right person?  The best sales people understand that an interview is a sale and they demonstrate that they understand the process by conducting your interview in the format I outlined above.

If they start the meeting with, “I’d like to know what you’re looking for in your VP Sales person – what’s important to you?” then it’s going to be a long meeting.  They clearly don’t understand that until they’ve established rapport they haven’t earned the right to ask that question.  This happens in about 10-15% of the candidates I interview.

The much more common is – you guessed it – the crocodile sales person.  After some basic banter of getting to know each other I turn to their resume and ask some questions.  A good sales person knows to answer each question briefly and then check back with you, “would you like me to go into more detail in that area?”  A Crocodile Salesperson is off to the races.  Turn on your stop watch – they’ll be talking for the next 12 minutes about all of the great and successful campaigns they’ve led – even before you’ve asked.  Zzzzzzz.

I always politely listen even though I may have already written them off.  I probably will jump in with a few questions about their industry and start a discussion.  I know they’re not going to get the job but I don’t want to be rude and end the meeting in 10 minutes.  But to spare me from 50 minutes of totally wasted time I figure I might as well use it as a chance to learn a bit more as an industry.  Unfortunately this happens in at least 40% of my sales person interviews and confirms my theory that at least 40% of sales people suck.  Probably higher.

The GREAT sales people know how to turn an “interview” into a “discussion.”  This is a rare gift since the interviewer often feels empowered to run the meeting as he / she sees fit and doesn’t intend to cede control.  But I’ve had situations where I’ve intended to interview a candidate and he’s flipped it to a point where I feel like I’m trying to convince him what a great opportunity this is.

It’s subtle and slow.  It starts with the basics: rapport and credibility.  Then it moves to politely answering questions as asked and short bursts.  But after a few of these I’ve noticed some great sales people then throw in a question.  They are not generic questions.  They are specific ones that show that they’ve done their research.  ”I noticed that you’ve had some success with your customer support software on Twitter accounts, but how do people using Salesforce.com typically respond?  Do they want it all in one solution?  I’d love to understand how that part of your sales process goes, if that would be ok.”

BOOM.  Now I’m selling.   And just when I thought I’d answered it he finds a clever way to ask a follow on question that demonstrates both his research / knowledge of my company AND he’s asked a question in a way that he’s demonstrating his sales knowledge so that he’s still scoring points, “when I was at Oracle the problem we ran into competing with Salesforce was A,B,C.  We found some success when we tried D, E, F.  Have you guys faced similar experiences in selling?”

3. Pitching a VC – As I said in a previous post – the best VC meetings are discussions and not sales pitches.  Let’s be honest – raising money IS a sale and you need to treat it as such.  You’re running a sales campaign to raise money.  You have target customers, you have competitors and you have a product to sell.

So all the same rules apply.  Prepare for your meetings by doing research before you go.  Try to find out who in the organization is most likely to buy your product.  It’s always best to “sell high,” which means to get in front of the most senior team if you can.  But also to focus on somebody who is interested in your area – not just the partner you can most easily get intro’d to.

And importantly – when you have your meeting: build rapport, establish credibility (if you haven’t seen why I believe the first slide in your deck should be your bio’s see this post), and find a way to flip it and ask the VC to respond with their point of view on topics.  VC’s have a crocodile aversion as much as the next guy.