That's a great article on one of the key challenges for a software start up. Everyone has problems getting their sales model right. You guys have a real world approach that obviously works.
Categories: Sales and Distribution
Tip #14: Create partnership models for all partners, active and less-so.
"We put in a three-tier participation model," Luddy says.
"If you drive the sale from start to finish, you'll earn a higher percentage. If it's a joint sale, then it's a reduced fee. And we have simple referrals: If you simply recommend our technology to a potential buyer and can give us an active introduction, then you'll earn something from that as well."
And what kind of contractual protection does Service-now.com use for these deals? "A handshake and a look in the eye," says Luddy.
"At the end of the day, we view those [partner] contracts the same way we view contracts with our customers: It's not the words on the page, it's about creating a relationship built on trust. You have to be a man or a woman of your word."
Tip #15: Hire sales people according to what you already have.
"I was the company's first salesperson, so by definition the role of senior salesperson -- someone who leads the organization -- fell to me," Luddy says.
"The first rep I hired was a young kid who had almost no experience in the software industry, but he had a passion and a fire about him that was undeniable. That young man is still with us five-and-a-half years later, and is one of the top reps.
"If you're looking to hire your first people, there's a trade-off between what you're going to have to pay for the senior person -- who comes with his own Rolodex and self-sufficiency -- versus hiring someone with limited experience, no Rolodex, but a lot of passion.
"I don't know the right answer, though I can tell you that for us the latter was the answer. But if you're going to build a direct sales force, you want someone with industry knowledge, someone who is going to think on their own and just go make things happen for you.
"I think the more important question is, What is the DNA of the rep you're trying to attract? They may look great on paper if they're coming from a large company, but they may know only how to operate in a very large organization.
"Go and hire somebody who is a sales professional. They know how to manage, they know how to prospect, they know how to close a piece of business -- but you also want some demonstration of a clear entrepreneurial spirit."
Tip #16: Find your sales (and other) hires through word of mouth.
"We put everybody on the 'friends and family' program," says Luddy. "If want to work here, you have to tell everybody you know. You've got work your own internal network. I think you'll have more success doing that than placing an ad on Monster.com.
"If you look at the nucleus of this company, I'll bet 10 of us knew each other intimately for years. We knew each other, we trusted each other, we knew we could be collaborative.
"One critical question we asked with every hire: When you come to work in the morning and you see that individual's car in the parking lot, how does that make you feel?
"You have to get the right people on the bus, you have to work together as a team, because you're going to survive and thrive or die as a team."
A telling note about sales hires: Luddy says that his first rep's initial sales provided the proof he needed to hire more reps with more experience. "Nothing will breed success like success," he says.
"When [the first rep] quickly knocked down his first couple of deals -- well, no one took the time to tell him this is going to be hard. That success gave me the ability to go and recruit more senior people."
Tip #17: CEOs are very rarely sales professionals.
Luddy thinks some software startups suffer from lack of self-awareness at the top:
"CEOs ought to ask themselves, 'Am I a technologist or am I a sales and marketing person?'
"A lot of technologists are not sales people, and you need to realize that there are people who do this for a profession. You don't want to be operating under the misguided assumption that technical people can sell to technical people."
Excellent read. Clearly describes the open and honest way this company (Service-now) is aproaching its customers and partners.