OK, admit it.  As CEO of a growth stage technology company, when it comes to your sales team, they all have “happy ears.”  Joyce Durst, former CEO of Infraworks, an enterprise security software company in Austin, TX, used the phrase in describing the eternal sales optimism she and her VP Sales have to counterbalance every week during their Monday morning sales pipeline meetings with their sales team.  You know, this is the optimism that insists that the prospect call that just took place the week before is not only a “sure thing,” but is also a particularly big sized deal, and will surely close before the end of the quarter, with room to spare.   Unfortunately, “happy ears” are the occupational hazard of a good sales person.  These are the ones that as often as not has to take a partially completed beta product, dress it up, sell it into a market where no other solution like it has ever existed, persuade someone that the solution is a “must have,” and then also persuade the other buying influencers within the customer that doing business with an underfunded start-up with perhaps less than 12 months of cash in the bank is a capital idea.

Working with growth-stage CEOs as executive recruiters, we’re often helping to hire sales VPs that will be able to build and manage a company’s sales pipeline.  Certainly hiring the right VP Sales is an important first step in sales pipeline management.  However, once you’ve gotten the right person in the seat, we asked a dozen or so early-stage technology CEOs what other tools, processes, and mistakes they’ve used or made that have led to their “best practices” for effective sales pipeline management.

TOOLS (technology)

Regardless of which tools were the favorites of each CEO, there was agreement that data hygiene was critical

Chuck Dornbush, CEO of Athenium Software, put it succinctly, saying, “Make sure the data is well organized, and frequently reviewed.”  Another location-based services CEO added, “no matter what CRM tool you use, as CEO you need to make sure every sales person is using it, and using it the same way.” Vinit Nijhawan, former CEO of Taral Networks, emphasized that sales people hate to use a system at all; you’re lucky to get them to enter the data once, and you’ll never get them to double enter for forecasting purposes.  So you need to use the same system for lead tracking and reporting/forecasting.”

PROCESS BEST PRACTICES

Meetings 1x-week—sales people defend their new pipeline additions

One of the above CEOs stated simply– “Know the basics, and do the basics.”  In more detail, he and several others sketched the basics out.   Have a weekly sales meeting.  For sales people to have a prospect “make the pipeline report,” they need to defend their putting the prospect into the pipeline, akin to a team interrogation.

7 categories involved in qualifying additions to the pipeline

Many of the CEOs talked about the minimum information requirements for a prospect to be added to the pipeline report.  Although some CEOs had four steps, and others had up to 40, the core must-haves most often included the following 7:

1. Budget—– Is there an earmarked budget set-aside for this category of expenditure?

2. Need –Is there a compelling need driving the prospect to make this purchase?

3. Time urgency—–Is there something that creates a sense of time-bound decisioning, or is this an important-but-non-urgent agenda item?

4. Internal champion—–Is there an individual inside the prospect who’s willing to go the extra mile and spend the political capital required to “fight the good fight” internally within their own organization?

5. Decision making power–—Who holds the real “power” to make the decision?  Can a clear decision-making organization path be mapped?

6. Clear ROI—–How is the prospective customer going to measure “success” for this product or solution?

7. Trust– Both in the relationship between the individual sales person and the individual representing the prospective customer company, and the prospect’s relationship with you as a company with whom to do business… do they trust your products, your company, and your sales people?

Tim Butler, former CEO at SiteScape and now CEO of growing RFID company Tego, said that as a reminder for his sales force, they have adopted a pneumonic, BUTANE–—budget, urgency, timing, authority, need & event.

Stages of the sales pipeline

Joyce Durst has her sales team and VP Sales apply a ranking/scoring system for each sales prospect.  If the customer is 50 points or less, they remain on the prospects list only, and don’t move onto pipeline report; if more than that, 50-70, they’re pipelined for NEXT quarter; if 70-90, they’re qualified as “committed;” If 90-100, the prospect is considered “ready to close.”

Athenium CEO Chuck Dornbush finds that it’s critical to “set entry/exit rules litmus tests for each stage.”  One CEO established the rule that “you couldn’t allow a prospect into the pipeline until at least their forth stage–qualified, demonstrated, formal price quote, and funds allocated. “

Other critical ingredients

Categorize every lead as “hot, warm, cold”

In addition to assigning probabilities as a percentage, try using some sort of ranking system.  Tim Butler uses another version– possible, likely, & probable

Add non-sales peers to pipeline meetings…

One of the CEOs stated  that it was very valuable to bring non-sales functions into sales pipeline meetings.  He added that personal accountability generated by sales people committing to forecasts in front of non-sales peers in a weekly/monthly meeting environment can do a lot to reduce the “fudge factor.”

Get the customer prospect to serve as proxy VP Sales for you…

Former Pantero CEO Pano Anthos who now is CEO of Hangout added a trick of the pipeline trade he’s found very useful– —“The customer needs to sign OFF on moving from one step to another.  Have the CUSTOMER via email play a proxy VP Sales role for you.”  Do this by having your sales person ask for a confirmation by email that the prospect has indeed passed from one stage of the sales pipeline to the next, whether confirming the ROI value proposition, or the budget allocation, or any of the other stages listed earlier.

If no date for next prospect action step, off it goes…

“Every prospect has to have an action item by date, or qualify it as ‘dead,’” another CEO offered up.

Kill the bad deals early…

Many CEOs listed this as critical to effective sales pipeline management.  Slow prospects should be turned over to the inside sales team.  Prospects that are particularly non-committal should get put in direct mail “tickler” mode.   “Stop spending the time on them, trying to actively manage them to close,” Marc Tremblay states, and adds that, “if feasible, you want to focus your sales team more on hunting than farming if you can.  You can get tied into prospects who may take two years to close… “  They may close, but “I always get my man” isn’t the most efficient proverb for sales.

Expect the unexpected…

When ending the quarter and/or the year there will be sales people who will say, “we’ll absolutely close these deals….” Even when all indications say they’re done, assume that some percentage will fall out, no matter HOW good they look.  Jim Lawton,  a veteran VP Marketing at a number of venture-backed growth-stage software companies who has seen a lot of sales pipeline management approaches states the reasons can include someone at the prospect company “getting sick, leaving the position, dog ate my homework… expect just about anything.”

“3x coverage” to mitigate the unexpected …

Continuing, Jim Lawton added, “If I’m trying to hit 3 million in quarterly sales, I want to have 9 million in the pipe.  Living on luck is tough, and you might hit a quarter or two with a thin pipe where you muscle the prospects and get a blue bird or two, but you’ll never make this repeatable.”

Consider having TWO sales pipelines

No, this isn’t two separate sets of books, nor is this a tool meant to be used deceitfully.  However, one of the CEOs offered up the fact that—–early on at least–there was a pipeline they kept internal, and one the executive team shared with investors that better illustrated the potential traction of their products.  The internal pipeline was more conservative.  As they grew the business, there was a natural convergence of the two into one.  Controversial, yes.  However, in order to manage burn-rates, and make sure you live to fight another day, it’s a survival tactic that no doubt many CEOs use, whether they admit to it or not.

Other Considerations

When to begin trying to do sales forecasting

Once you’re at what’s often referred to by venture capitalists as the “scaling stage,” most CEOs list their pipeline out and begin assigning probabilities.  However, Vinit Nijhawan cautioned that, “You rarely ever hit the forecast you set up.  After you get your 3 or 4 customers, you feel there is a market for your product, but actually what you’ve done is gotten the really early adopters.  And CEOs then start to scale too early, hiring resources, and making decisions that are difficult to undo.  Instead, you need to be in that strategic marketing role in sales longer than most start-ups might think.  Don’t even OFFER sales pipeline reports.  It’s not an issue with the start-up’s products, it’s the market.  Quarter-over-quarter projections are almost impossible.”  So where is the line, and where do you know that you have a product that the market is ready for?  “THAT is the art in sales pipeline management,” says Anthos.  “It’s definitely not a science.”

Strategic consideration in building the sales pipeline–—proper reference customer sequencing

Another wrinkle in building an early-stage sales pipeline CEOs mentioned was the proper ordering of reference customers.  There is a step before managing the pipeline process or implementing some tool to help in pipeline forecasting.  This is determining what is the optimal sequencing of customers you go to in order to create proof points and references to scale customer acquisition most efficiently and effectively. Do you sell big customers first, then the small customers, or smaller customers and build up to bigger ones?  CEOs concurred, —“It depends on capital resources available.”

MISTAKES & LEARNINGS

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Second Wind’s (http://www.secondwind.com/) mission is to advance the use of wind data to make wind energy profitable for the businesses and investors who create wind energy plants, painless for the operators who work with wind energy equipment and practical for the businesses, consumers and utilities that benefit from wind energy as a low-cost and environmentally desirable source of power.

Second Wind prides itself on technology innovation with its in-house hardware development and software engineering talent. The company continues to develop ground breaking products related to wind data.

Thirty four employees staff Second Wind’s headquarters and manufacturing facility.  The company has an industry-wide reputation for innovative, reliable technology and excellent customer support. Inc. magazine recently ranked Second Wind on its first-ever Inc. 5,000 list of the fastest-growing private companies in the country. The company’s ranking was based on its 27% revenue growth from 2003-2006 and was the only business-to-business wind organization in the energy industry category. In December 2007, Second Wind secured $4 million in second round financing from Good Energies, a leading global investor in the renewable energy and energy efficiency industry.

Second Wind has been growing steadily, with annual sales of about $7M in 2008. Their clients include the largest developers and operators in an industry with a 30% annual growth rate.

History

Second Wind was founded in 1980 by Walter Sass and Kenneth Cohn.  Engineers who have been friends since grade school, they decided the emerging field of wind energy provided an opportunity to leverage their engineering skills to benefit the environment. They recognized that, to succeed, the industry needed more than wind turbines. Wind developers also needed software and hardware to measure wind accurately at prospective sites and to monitor turbine performance at established wind farms. The company’s first headquarters was the spare bedroom in Sass’s home.

Second Wind established a presence in wind resource assessment in 1981 by introducing the first data logger designed specifically for wind energy prospecting.  In 1985, the company introduced their first wind farm monitoring system. In 2007, Second Wind launched the Triton^TM sonic wind profiler, designed to re-invent sodar for wind profiling.

Market Opportunity

Wind energy is growing at 20-30% annually.  The market is global, with 17 countries having attained over 1,000 MW via wind.  Of the $37B invested in wind energy in 2007, 2% was for wind resource assessment instrumentation and services, or $735MM. 8,000 met towers were installed for prospecting, power performance and operations.  Target markets for wind assessment include large, medium and small developers as well as services firms.

The pressing need for viable alternative energy sources that do more than just supplement coal fired power-stations is driving advances in the development of wind energy. A major hurdle in establishing successful wind farms is the difficulty of attaining accurate site evaluation data.  The Triton Sonic Wind Profiler addresses this challenge. Designed to measure wind-speed at heights of up to 200m without the need for erecting costly and less effective masts, the wind profiler utilizes a technique known as Sodar (sound detection and ranging) that measures sound wave echoes in the atmosphere. The technique is not dissimilar to Sonar detection used by submarines underwater.

In evaluating a suitable site to establish a wind farm, measurements need to be taken over a period of at least a year. This has been achieved, until now,  by using a meteorological mast or met mast – a tower equipped with anemometers and other weather instruments. These masts are limited to a height restriction of 60m; any taller tower requires aircraft warning lights, which complicates assessment of a site for a turbine 75-80m high.  Another complicating issue is the masts’ high visibility, which can raise public concerns before the site has been properly evaluated.

Relying on precise measurements of frequency and time delay from sound pulses that are bounced back to the transmission unit by wind turbulence, Sodar technology provides a virtually invisible tool which measures wind speed and direction at heights up to 200 meters. The Triton system also overcomes some of the problems associated with existing Sodar technology by remaining effective even in poor weather and delivering easy to interpret wind data without an on-site presence.

Triton also boasts innovations such as a hexagonal transducer array and a tri-lobed acoustic enclosure that increase accuracy by improving signal-to-noise ratios and beam focus, rugged construction making the unit effective in all weather conditions and able to correct measurements when used on uneven ground.

The Products and Customers

Triton^TM Sonic Wind Profiler re-invents sodar technology for wind assessment. It captures accurate wind data from any height, in any weather, at any location, without being attended. Readings look like anemometry results, with no expert analysis required.

SODAR (SOnic Detection And Ranging  http://en.wikipedia.org/wiki/Sodar ), or sodar, is a meteorological instrument which measures the scattering of sound waves by atmospheric turbulence. SODAR systems are used to measure wind speed at various heights above the ground, and the thermodynamic structure of the lower layer of the atmosphere.

Sodar systems are like radar (radio detection and ranging) systems except that sound waves rather than radio waves are used for detection.

Sodar sends an audible “chirp” up through the air, and wind turbulence sends a portion of the sound back toward the ground. By precisely measuring the frequency and time delay of the chirp’s echo, the sodar device measures the wind speed and direction at various heights.

Sodar technology is commonly used for “site profiling” at the end of the prospecting process for potential wind farm locations. It measures above the 60-meter height of most meteorological masts, assessing wind at actual turbine heights. In addition, sodar is more portable than masts and can be moved to determine ideal turbine placement.

Current sodar products have multiple limitations for wind profiling. They require on-site support to

operate, and deliver wind data in formats that require expert interpretation. Readings must be carefully analyzed to filter out “side lobes,” or sound artifacts from nearby trees and buildings that can produce inaccurate results. Most current sodar products also must be covered in rain or snow to avoid damage to the sensitive microphones and speakers.

Benefits of the Triton Sonic Wind Profiler

Numerous Triton innovations address the shortcomings of existing sodar products for wind profi

• • More accurate data. A hexagonal speaker array (patent applied for) focuses sound beams more

effectively than previous designs, which improves signal-to-noise ratio accuracy and decreases

disruption. The array is housed in a tri-lobed acoustic enclosure, which reduces the chance of

sound artifacts disrupting data.

• • Unattended use in any location. A solar array and battery can provide adequate power for the

Triton unit to operate for prolonged periods of time, depending on available sunlight and amount

of use.  Bundled with new Skyserve satellite wind data service, the Triton profiler delivers

accurate wind data to any computer from any location in North America.

• • Ready-to-read data. Unlike other sodar products, the Second Wind sodar delivers easy-to-read

data that is similar to data read outs from conventional meteorological towers.

• • Works in any weather. The unit is made of rugged plastic with stainless steel components and

sound absorbing material that functions when wet, unlike foam. Internal temperature sensors and

a propane heater also allow Triton to operate in icy conditions.

• • More portable and less obtrusive. At six feet tall, Triton can easily be towed by a pick-up truck.

The unit has internal controls to compensate for uneven ground, and a built-in GPS and compass

identify the time and location of data as it’s captured. Because of better acoustics, it is also less noisy than other sodar products.

The Position

Reporting to the VP Global Sales Peter Gibson, the Director Eastern European Sales will be responsible for the planning and execution of sales activities for Second Wind in Eastern and Central Europe. The Sales Director be focused on direct sales of the company’s Triton SODAR device and services.

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