01/27/08

Selling High Tech

Channel Efficiency

Sales channels cost money. Worse, they can absorb about as much money as you want to spend on them. In most high tech situations, the number of customers is small (the usual OEM system companies) and the territory is large - USA, ASIA and Europe. In this case the correct model is to have regional sales managers who contact the OEMs directly or through commission-only reps that they manage. This works well for ASSPs.

For software and IP or for ASSPs where the density of customers is very low, but average deal size is high, forget the independent reps. They don't help because they don't spend enough time selling or learning about your product, but they absorb their commission for what amounts to organizing a few meetings. Go direct and use marketing tools to generate leads within the target customers.

For "jellybean" chips or other products with broad utility, low deal size and/or a large number of customers consider distribution sales or some other partner channel.

The analysis of channels is a complex tradeoff: I can help you to establish an efficient and high-performance sales channel.

Reporting and Forecasting

Sales drives the company. Without accurate forecasts, the management and directors of the company cannot make the decisions needed to manage the funds and allocate resources. They are flying blind. Sales guys are natural optimists and it's very hard to get them to separate fact from fantasy when judging whether a particular order is going to happen or not. I have a great deal of experience with generating accurate forecasts and I have the tools and techniques needed to ensure that the reporting is as accurate as possible.

FAES

In most situations, FAEs are the best sales guys in the company. They understand the product and they understand the customers. However, they are also very expensive. For each product and situation there is a different "golden ratio" of sales guys to FAEs, but it's nearly always best to err on the side of too many FAEs rather than not enough.

However, FAEs are a cost center and they are very useful to both you and the customer. It is easy for customers to get trained into thinking that they deserve free consulting from you just because you are the product supplier. I always look out for this trap and make sure that I put in place the mechanisms needed to ensure that FAE consulting is paid for by the customer in one way or another.

An approach that I pioneered at Chip Express is called "Active Design Management". The idea is that the FAEs are trained to manage their accounts so that they are ahead of their customer and pulling the customer along rather than being pushed by the customer. This changes the customer/vendor dynamic and puts the customer on the defensive with respect to delays and bugs. Particularly in a service business such as Structured ASIC, this approach is very effective for ensuring customer retention and on-time product completion.

Business Development

Business development is an aspect of sales that is very loosely defined in the High Tech industry. Sometime it means key account management, sometimes it's an adjunct to marketing and sometimes it means the development of partnerships with customers or even competitors in order to drive a standard or establish a market. I've worked my share of big deals with key accounts and I understand how to motivate a large company to do business with a startup.