Transcript of the Go-to-market workshop at the NASSCOM Product Conclave

Posted by EMERGE Editor
November 19, 2009


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The Go-to-market workshop at the Product Conclave addressed the Question that allows an enterprise to emerge from a startup – the facility that marks the coming-of-age in the life of a startup. The workshop started with Brand building, and covered the range of channels you can use to reach your customers – Direct, digital and partner. The session was rich with practical tips and specific businesses applications.

The workshop answered some specific questions entrepreneurs and managers struggle with, such as:
-    How do you launch an eCommerce engine at minimal upfront cost?
-    What incremental sales can one expect from specific eCommerce tools (such as A/B testing)?
-    How can you get a large SI to partner with you and sell your product?
-    How much should you budget for cost-of-sales? Conversely, how do you evaluate the effectiveness of your sales engine?
-    How do you build predictability in your sales engine?

The following is a transcript of the panel Q&A portion of the workshop. The panellists were:
Mark Iverson is a global eCommerce expert, with over a decade of software product sales experience. Mark heads the eCommerce business of Digital River (called globalDirect DR), a $400MM, Nasdaq-listed global distributor of software products managing over $3B in product sales. globalDirect DR provides eCommerce platforms to large and small ISVs worldwide. Mark answered Questions on eCommerce, and global diversification.

Ankur Lal is the Founder-CEO of Infozech Software, a company profiled by the Economic Times as one of the ten Cutting Edge boutique firms that will form a part of the next Indian IT wave. With 36 global deployments across five continents, has been recognized by Deloitte as one of the fast growing technology companies in Asia-Pacific. Infozech has partnered with IBM and Nokia Networks to sell their products. Ankur shed light on partnering strategies for ISVs.

Ratish Nair co-founded Interactive Avenues in 2006 – India’s No. 1 Digital Advertising Agency – funded by Sequoia Capital handling clients like ICICI Bank, HDFC SLI, DELL, INTEL, NIIT, Sony, etc. Since April 2008, he has been running Ad Magnet, a sister concern and a leading ad network in India. Ratish addressed brand building over the web.

R. Narayan is cost-accountant by education, so when a bean counter comes selling, watch out! Narayan co-founded Denave about a decade ago, and has grown it into probably the largest sales-enablement company in India, with revenues of about a 100 crore. He has achieved this by creating over a half-billion-dollars of sales for his clients, including Intel/HP/MS/CISCO, as well as niche players like Iomega/Maxtor/My SQL/Spice Phones. Narayan tackled Questions related to sales forces and field sales.

The workshop was chaired by Subinder Khurana, VP, Enterprise Analytics at Cognizant. He was previously the president of marketRx India, before its acquisition by Cognizant. Prior to marketRx, he was a Principal at Infinity Ventures, an early stage venture fund; and co-founder of EZPower Systems, a product company based in Philadelphia, now a part of Oracle. He serves as a mentor with the NASSCOM EMERGE forum.

The Q&A started with Questions on GTM planning, then on to execution, economics, and key considerations.
Question:  Should a start-up care about brand building? Isn’t it a luxury we cannot afford?
Ratish: It is extremely important to invest in building a brand. It could be right in the beginning or later in the life cycle, but it goes without saying that brand building is really key. It would seem like a luxury. However, the key thing to keep in mind is “who owns the customer” and without building your own brand you can own a customer. Also, brand building is not about spending pots of money, there are extremely cost effective ways of building a brand and using a medium like the Internet can be a very efficient and cost effective way of building a brand. There are cases of maybe brand being build with almost minimal expenditure, like hotmail.com. However, such cases are more the exception. Having said that, brand building is not extraordinarily expense.  It can be in a very cost efficient manner.

Question:  Another way to see it is: you are building a brand anyway every time someone mentions your company or product, good or bad, on the web. You might as well control and own it! What are the things one has to keep in mind before embarking on brand building activity on the Internet?
Ratish: Some basic stuff before embarking on a brand building activity on the Internet :

  1. Build a functional and easy to navigate website
  2. Ensure the websites is SEO’d
  3. Ensure the website has contact details of all forms : email, phone, fax, address, SMS, etc
  4. Ensure that there is an infrastructure to take care of the queries which come in through whichever contact form

All this of course, is after the basic thing about having created a product or service which fulfils some customer need.
Question:  What is the bare minimum needed to setup an ecommerce presence?
Mark: The simple answer is that you need a product to sell and a website.  Ecommerce service providers can assist you with the rest.  Once you have a website, you can select an ecommerce service provider to manage the purchase process for you.  There are no upfront costs so you do not need to pay anything to your provider until you make a sale.

Question:  Where all does web presence figure in the purchase cycle?
Ratish: Looking a basic purchase cycle: Awareness – Consideration – Purchase : The internet can play a very active role in all the 3 stages. Awareness creation : here the Internet operates like any other medium – communicate on the Internet to create awareness of the product / service among the users. Purchase : The Internet can operate as one more sales channel / outlet . The most important role that the Internet places and no other medium can play is in the consideration stage, when you are searching for information, or looking for comparison across products/ brands. What is better than using the Internet to get such information, either on comparison sites, reviews, etc. Before, the internet this stage was never address properly and most of the information may have been biased like pamphlets, POS etc. Therefore, the Internet has a role to play in all the stages of a purchase cycle and an especially key role to play in the consideration stage.

Question:  What are the most important things to consider before you start to sell your software online?
Mark: 1. What is your value proposition for your software and how do you want to communicate that to the world?  Your software needs to serve a purpose or a need that end users will find value in.  2.   Pricing- is your product priced competitively?  Many start ups do not charge enough for their software products.  Be aggressive in your pricing strategy, but do not discount your software too low.  End users perceive higher priced products as higher quality.  3. Distribution- As a start up company, you will not have a lot of additional marketing funds.  When selecting an ecommerce service provider you want to make sure that they have distribution channels such as affiliate networks and partnerships with download sites.  This allows you to place your products in front of incremental end users without having to pay marketing dollars.  4. Create an ongoing relationship with your end users- Do not be happy with landing a sale to an end user, take that opportunity to create an ongoing relationship.  The end users email address is important to your business.  It allows you to continue to communicate to the end user about your products, special deals, newsletters, etc.  Once you secure a sale, make sure to continue to communicate with your install base.

Question:  One will need to build a comprehensive sales engine, online and offline. What are the essential elements of a sales engine?
Narayan: Process!! Process!!Process!! The most essential element of any sales engine is to think thru the sales process, and then map the whole work flow around it. The second most important element of a sales engine is “Resource Readiness”. Most people mistake this for resources – which is sales people. Moral: put a monkey on the road, make sure he is making 6-8 auditable calls a day and is well informed on the product with all tools, and 90% chance is that sales will start flowing in.

Question:  Isn’t the most important element of sales success product knowledge and passion? What parts of sales are generic?
Narayan: Drawing from the above point, Process is a structured way of building controllable Product Knowledge and passion. Point to remember is that “unbridled passion is a runaway horse which will take your customer to a place from where you cannot rope him back”.

Question:  Another good strategy to build sales is partner with SIs. Everyone understands why they want an SI pushing their product. Why would an SI partner with a small company? How does one get their attention?
Ankur: Like any of us, SI partner also competes for business and has his own goals and targets to meet. For the SI partner domain knowledge, especially in a new area is of considerable value. By partnering with a small company it would

Above all SI is also looking to enhance his revenue – so the product from small company may help him increase his system integration or services revenue. SIs are constantly looking to enhance their business and the small company helps them achieve their goals.

Question:  How would one identify the right SI to partner with?
Ankur: To identify the right partner – you need to first know your target customer segment and the target geography. Then you need to identify who the SI or other partners with relationships with your prospective customers .
Other than geography /segment you need to look for partner strength and what he is bringing to the table – is it Account Relationship, or is it system integration resources, or it is legislation, – local presence.

Once that is known you would have a target list of possible partners. The partner will need help in learning about your system and be able to sell it.

Question:  Moving to operational Questions, what are the most common mistakes you see from companies that are starting to sell their products online?
Mark: Pricing- many new start ups price their products too low.  Take a look at your competition.  Be aggressive but do not price your products so low that they appear to add lesser value than your competition.  Relationship marketing-  Many start ups are so eager to get a sale that they forget to market back to their install base or current endusers.  Your endusers are your most important marketing vehicle.  If they are satisfied, they will recommend your software to others.

Question:  When does it make sense to outsource sales?
Narayan: Sales is not rocket science. Sales is about tracking and making constant corrections. Track anything to death and it will be successful. So if you feel that the organization DNA is not built on the above quality, then outsource, coz they are much better at this and the outsourcers entire org is built around tracking and audit engines.

Question:   How does one protect their long-term interest in a partnership? Will SIs just learn and develop the capability themselves?
Ankur: The business model of both yours and partners company should be different. For instance, It you are partnering an SI, the SI will bring in resources for execution – may also bring in the relationship – however the SI model is typically based on services revenue. You as product vendor would have revenue based on product license – you will also bring domain excellence and leadership.

Over a period of 2-3 years you may lose the domain advantage and the SI could become a potential competitor to you – you need to continue to upgrade your product and offering to stay ahead – also you may use the initial relationship to move on to newer relationship with other customers and Sis.

Question:  How much sales effort will one need to expend?
Ankur: With Sis you need to expend significant effort in coaching and handholding them to their first sale. Since SI or local partner is your face – they need to understand your system /be your ambassador in front of end-customer.

Question:  What are the top sales tools available to an eCommerce business? What do these cost?
Mark: The nice thing about ecommerce marketing is that for the majority of the marketing vehicles, you only have to pay if you get a sale.  There is affiliate marketing where you have other business driving traffic (end users) to your shopping cart.  You pay them a commission after you have generated a sale.  There are other marketing vehicles such as organic search, paid search, email marketing, A/B testing and free trials.  All of these marketing tactics help you build your brand and create awareness for your software.

Some statistics on the effectiveness of the various tools:
>    Affiliate Marketing- 15%-30% Incremental Revenue
>    Paid Search- 7%-10% Incremental Revenue
>    Free Trial- 2%-5% Incremental Revenue
>    Advertising- 3%-15% Incremental Revenue
>    Email- 8%-12% Incremental Revenue
>    A/B Testing- 5%-10% Incremental Revenue

Question:  Now, moving to some financial Questions. What cost-of-sales should one expect? How much sales/rep should one expect?
Narayan: Move from mapping this from revenues to contribution. You are safe if 30% of contribution is your sales costs in start up stage. This will move down to 8-5% for a successful product /service.

Question:  As one takes their product global, how much should they price relative to competition?
Mark: As a start up company with a new product the most important thing you can do is communicate a good value at a reasonable price.  Look at your competition.  What does their software do and how much do the charge for it?  What is the largest competitor in your space doing in terms of a pricing strategy?  If your software has more features and functionality, sell it at an aggressive price but do not market down so low that it looks inferior to like products that offer the same type of content.

Question:  What channel discount should one expect?
Mark: For resellers you first should look at your competition and see what they are offering the resellers.  Traditionally, you can expect to discount your product 20%-40% off of your normal retail price.  This will ensure that your resellers have a vested interest in promoting your products to their clients.

Question:  Same Question — what can one expect as channel margins?
Ankur: What is the cost of no Sales? For several of you in early stage of startup stage – a sale can mean sustenance, keeping your moral up,and getting the knowledge to further develop /grow the business. It is absolutely critical to get the sales on an ongoing basis to keep the momentum.
So even if the cost of the initial sales is 80%, you need to work with it. Once a channel stabilizes the margin could come down to 15 – 30%. A lot depends on the value the channel is bringing and the volume of business.

Finally, some strategic considerations.
Question:  Who owns the end-client? Could the product vendor be displaced tomorrow?
Ankur: Customer ownership is also about strategic value you continue to bring on an ongoing basis. In case the partner starts bringing this value, you could be muscled out – however you need to have strong engagement with end customer – through workshops, newsletters, whitepapers and other events.

Question:   Internet penetration in India is low compared to other media – why should one communicate though the Internet?
Ratish: Internet Penetration could be low at a overall level in India – 45 mn users in a 1 bn country. However, among the people who matter / the target audience desired, the reach is fairly substantial.

Almost 5mn unique visitors on Sites classified as B2B. Therefore, the Internet has critical mass contrary to popular perception.

Question:  A golden oldie– is sales and art or a science? How do you make sales success more predictable?
Narayan: It is both. But to be a successful entrepreneur and manager, we need to be able to take the art out of selling and replace it with science. The process that I keep referring to is all about creating predictability in your sales. If >15% of your sales process is in art form, you will be miserable as a manager.

Question:  How has the global economy impacted sales of small and medium product businesses?
Mark: The recent global economy has split small and medium businesses into two groups:  Market Share Growers and the Wait and Seers.
A soft economy presents an opportunity for companies that want to grow market share.  Some companies are lowering prices to drive more traffic to their products.  By doing so they are preserving their cash flow and sustaining their businesses during these difficult times.  By doing so, they are actually increasing their install bases and building for the future.  Once the buyers come back and start spending, they will have more end users to market to.  For those companies that are not lowering prices or trying to drive incremental traffic, they are experiencing slower sales and lower revenues.  By “waiting to see” what happens, they are losing market share to their competitors.

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