Closing the Gap, Part 1
Summary: Eric talks about the function of proactive sales in a small ISV.
At some point in the many activities of a small independent
software vendor (ISV), the customer trades money for software. No
column on "The Business of Software" could be complete without some
discussion of this magical event.
I'll start by defining some of my terminology. Before the customer
makes the purchase, I like to say that there is a "gap". This gap is
the distance between the prospective customer and your product, and it
looks something like this:
Product -------------------------------- Customer
In order for the sale to occur, this gap must be closed. Until
that happens, the gap represents all of the issues and obstacles that
are preventing the customer from making the purchase:
- The customer has never heard of your product.
- The customer doesn't know enough about your product.
- Your product is too expensive.
- The customer needs two levels of management approval for the purchase.
- Your product lacks a feature the customer needs.
- Your product doesn't interoperate with the customer's other stuff.
- Your product isn't mature enough to meet the customer's expectations.
To continue to exist as a business, your small ISV must find a way
to close this gap, over and over again. There are exactly two ways to
close the gap:
- Move your product to the right. Tell the world about your product. Make your product better so that people will want to buy it.
- Move your customer to the left. Find people who might want your product. Convince them to buy it.
We will begin by talking about the challenge of moving your customer toward your product.
Let's define some more terminology. The word "sales" is somewhat
overloaded, but in the context of a job function, I prefer to reserve
this term for the process of proactively finding new prospective
customers and working with them individually to try and convince them
to make a purchase. A person who performs this job function is called a
I confess that the gender implication of this label is a bit
inappropriate, but I've been calling these people "sales guys" for so
long that I can't break the habit. Early in my career, it just so
happened that all the sales professionals I knew were men. For years, I
wondered if excellence in proactive selling required a level of
obnoxiousness that simply isn't present in most females. More recently,
I have come to know a number of women who are excellent "sales guys".
(One in particular has a disturbingly successful track record of
selling me advertising, which is something I truly hate
to buy.) Anyway, if you will forgive the apparent political
incorrectness, I'm going to stick with my usual terminology for this
To sharpen the definition, I need to clarify two things which are not included in "sales":
- Marketing is not sales. Marketing is an area
all its own. It includes many different activities, ranging from
strategy to communications. None of these activities are sales. The
sales guy is a customer of the marketing group. Marketing activities
are usually "one-to-many". Sales is almost always "one-to-one". Sales
is strictly about closing the deal.
- The person in your
office who processes incoming orders from customers is not a sales guy.
Yes, he deals with "sales" in the accounting sense, but I refer to this
job function as "customer service".
A defining characteristic of a sales guy is the way he is paid. The
compensation package of a sales guy includes commissions. He gets a
percentage of every sale he closes. The percentages vary widely based
on all kinds of factors, so I'm not even going to mention any ballpark
figures. However, I will point out that these commissions can really
add up to a lot of money. In many organizations, the highest paid
individual is a sales guy, often making more than the CEO herself.
Working with a Sales Guy
It is quite common for people in other job functions to have some
resentment of the sales guy because of these commissions. For example,
the lead architect who designed your product will be wondering why the
sales guy gets a cut of every sale when she does not. Is the sales guy
more valuable than the person who actually created the product?
Good sales guys understand this problem and work very hard to
counteract it by "sucking up" to the developers at every opportunity.
For example, in any situation where your sales guys and developers end
up together in a bar, there should be absolutely no question about who
is buying the drinks.
On the other hand, you can't allow your sales guy to spend too
much time with your developers. Left without limits, a sales guy will
start to routinely bring a developer with him on his customer visit.
Suddenly, your overpaid coder has become an extremely overpaid
sales assistant. The usual solution to this problem is to put your
sales guys in a separate office, preferably in a different city. Sales
guys need to be very close to a major airport anyway.
Characteristics of a Sales Guy
A sales guy needs a special set of skills. They tend to be
extraverts. They are usually excellent communicators with incredible
interpersonal skills. They are self-confident, sometimes to a fault.
They're usually very good-looking and snappy dressers. Sales guys know
enough about technology to be dangerous. They know how to handle
themselves well in surprising situations. They know exactly when to
move toward closure and ask for the deal.
A certain amount of variation from the sales guy stereotype is
acceptable, but there is one trait that is absolutely a requirement: A
good sales guy is someone who is motivated only by money. One of the
most dangerous personnel mistakes is to hire a sales guy who cares
about anything else.
A good sales guy will do only those things for which you have
provided him a financial incentive (a commission). Everything else is a
waste of time, and he is essentially immune to management influence
through any other means.
Note that every coin has two sides. Although I consider this
mercenary nature to be an important trait for a sales guy, there is a
downside that accompanies this benefit. A good sales guy has incredible
listening skills that only seem to work when he is working on a deal.
When listening to a prospective customer, he will catch and understand
every single detail, never missing something that might help close the
On the other hand, when that sales guy's manager walks in and says:
"Fred, we need to talk. I heard a rumor from the developers that a
couple of them had to buy their own beer at the pub last night even
though you were right there. What's the problem here? Those beers are
only going to cost you a few bucks. With the kind of money you make, I
certainly think you can afford to pick up the check in situations like
A truly excellent sales guy will hear this:
"Blah, blah blah blah blah. Blah blah blah blah blah blah blah blah blah blah blah blah blah blah BUY blah blah blah blah blah blah blah blah blah blah blah blah blah blah. Blah's blah blah blah? Blah blah blah blah blah blah COST blah blah blah BUCKS. Blah blah blah blah MONEY blah blah, blah blah blah blah blah blah blah blah blah CHECK blah blah blah blah."
So while the greed gene can obviously create some challenges, the
pros definitely outweigh the cons. Managing a money-driven sales guy
ends up being simple and largely devoid of surprises. You don't have to
spend all kinds of time figuring out what motivates your sales guy like
you do with your developers. All you have to do is make sure his
compensation is carefully correlated with the set of things you want
him to accomplish.
The corollary to this principle is this: If your sales guy is doing
something that you don't want him to do, there are only two possible
- He is a bad sales guy, because he cares about something other than money.
- It's your fault, because he is simply doing things that you have "incentivized" him to do.
For example, suppose your sales guy is rapidly closing deals with
customers, but a lot of those customers end up unhappy shortly after
buying the product. This usually happens when the sales guy is selling
products to people who don't really need them. By the time the customer
has realized this, the sales guy has already collected his commission
and has moved on to his next victim. You forgot to make customer
satisfaction part of his incentive, so he spends no time on it.
Luckily, the solution to this particular example is rather simple. For
example, you can just hold back the majority of his commission until
you verify that the customer is still happy 90 days after the purchase.
Similarly, if the sales guy is spending too much time with your
developers, you can just start charging him for it. Deduct $100 from
his commission for every hour he spends with a coder. To be fair, give
him a few hours for free, since he needs technical information to get
his deals closed.
One More Mandatory Trait for a Sales Guy
Any sales guy who is offended by all the vicious jokes in this article is probably not competent.
A sales guy simply must have a thick skin. If he can't handle my
caricature, how will he cope when a customer tells him "no"? Even the
best sales guy is going to hear "no" more often than "yes". If he can't
accept all that rejection without getting discouraged, he's probably in
the wrong job.
Reasons to Have a Sales Guy
A good sales guy is worth his weight in silicon. Yes, he gets paid
an awful lot of money in commissions, but he brings in even more, by
Still, not every organization needs a sales guy. The decision to
hire one is a toughie, and needs to be considered very carefully.
Hiring a sales guy will forever change your company. Don't do it unless
you really need to. Here are a few common reasons why you do:
Reason #1: Nobody really wants your product
By their very nature, some products require a lot more effort to
sell. Some products are just basically not any fun. For example, nobody
really wants to buy life insurance. People buy life insurance,
but not with the same enthusiasm they show when buying a hot new movie
just released on DVD. This is why you can't swing a 5-iron anywhere in
America without hitting an insurance salesman. Without these guys, far
less insurance would ever get sold.
Similarly, some products are targeted at people who don't realize they have a problem.
If your product solves a problem that is not a strongly felt need,
you've got to have a sales guy to help your prospective customers
realize how miserable they really are. This tactic is called "creating
dissatisfaction with the status quo".
If by chance you are just getting started with a new small ISV, now
is the time to avoid these bugs. Start out with a small gap. Choose a
product that people know how to get excited about.
Reason #2: Your product is very expensive
More expensive products are far more likely to require a sales guy
to help the customer through the decision. Cars and houses are usually
(but not always) sold by sales guys. Expensive software products face a
similar cycle. Big purchase orders are big decisions, and most
organizations will need a lot of hand-holding before they finally pull
Reason #3: Your product is no longer being improved
As a software product matures over the years, it tends to gain sales
guys and lose developers. For a product that is nearing its twilight,
it is not uncommon to see a company with lots of sale guys and no
developers at all. The reason for this is reasonably intuitive: The
product is no longer moving toward the customer. Closing the gap
requires us to constantly be dragging customers over to the product.
(I am dying to name a few examples of this phenomenon, but my
editors at Microsoft have been working very hard to teach me some
manners. I'd like them to get the impression that their efforts are
having some sort of an effect.)
The "No Sales Guy" Approach
Most small ISVs are better off not having any sales guys at all.
I realize that this opinion will be considered heresy in the church
of conventional business wisdom, but I'm sticking to it. The bishops of
that denomination already don't like me very much anyway. If I could
ever find out where their cathedral is located, I plan to grab some
Groucho Marx glasses and go dance on the altar.
As usual, I am happy to admit that there are exceptions to my rule.
However, too many companies start looking to hire a sales guy before
they should do so.
Moving customers is very difficult to do, especially for a small
company with very little clout. Customers are heavy and unwieldy. They
don't want to be moved, and they often get offended when somebody
tries. It is easy to spend a lot of effort trying to push the customer
toward the product without ever successfully closing the gap.
All that effort is better spent on the other side of the gap.
Improve your product. Moving your product toward the customer is a lot
easier. Listen to your customers and give them what they want. Keep
your customers happy (they'll tell all their friends how great you are).
Focusing your efforts on the product side of the gap is an approach with two very nice features:
- It is entirely within your core competencies.
You know how to make your product better. More specifically, if you
don't know how to make your product better, your ISV is going to fail
anyway, and the presence of a sales guy will not save you.
- It is a leveraged activity. When you make your product better for one customer, you are making it better for others as well.
The Bottom line
Somewhere along the way, somebody is going to tell you that you're not a real company because you don't have any sales guys. Horse hockey. Don't get forced into this until you're ready.
Next month, in Part 2 of my "Closing the Gap" miniseries, we'll talk about the importance of making it easy to buy your product.
Eric Sink is the non-legendary founder of SourceGear,
a developer tools ISV located in Illinois. Eric is not a sales guy,
although he has at times tried to imitate one. Eric's weblog is at http://software.ericsink.com/.
This article originally appeared on the MSDN website.