By William J. Lieberman, Founder of Xitva
One of the hardest things for a small / emerging company to do is grow sales while servicing clients (or delivering your products) while keeping control on operations, human resources, finance, and what little time you might have for a personal life and family. The way we did it at Xtiva was to develop key strategic alliance partners from the very beginning.
We sell back-office software to financial services firms throughout the U.S. Our target market includes approximately 3,500 brokerage firms that are using an in-house solution, either spreadsheets or their own legacy applications. From the beginning, we wanted to reach this target audience without having to hire a lot of expensive software sales executives. In 1996, when we had 3 employees and 3 clients, we approached one the main industry participants, Bear Stearns, that had about 200 brokerage firm clients at the time. We suggested to them that we form a marketing alliance whereby we would provide their clients with preferred pricing and technology integration.
In exchange for Bear Stearns being able to tell their current and prospective clients that they negotiated preferred pricing for Xtiva’s products, we received significant marketing and sales support. They agreed to have us attend their client conferences as vendors in the exhibit hall (the only vendor offering our solutions). We had articles in the client newsletter. We are on their web site. We trained their sales people and account managers and have regular meetings with them to keep them updated on our products and services. We developed Bear Stearns branded materials for their sales people to give away to their prospects. We even received their client list so we could do targeted sales campaigns. Lastly, Bear Stearns performs billing and collections on our behalf so we have no receivables from their clients.
We have since developed similar relationships with other major alliance partners including ADP Clearing (division of ADP), First Clearing (division of Wachovia), National Financial Services (a Fidelity Investments company) and RBC Dain Rauscher (a subsidiary of Royal Bank of Canada).
In addition, we are looking to add several other partners that would further our reach of the sales force. In addition to our channel partner strategy, we outsourced lead generation to a specialized consultant in our market space. We gave him our top 100 “wish list” of potential clients for which we did not already have a relationship. He has years of experience in cold-calling into financial services firms on behalf of software vendors, both as an employee and as a consultant. For about half of the base salary of a dedicated sales person and $250 per meeting he gets, we have a super-experienced person who hands off warm leads to our sales force who then go in and do the meetings, proposals, ROI analyses, etc. Another strategy that we have implemented recently is to have a dedicated person for performing the demonstrations. Our sales people, although they obviously know the applications’ features and benefits, are not product experts. They are paid to close business. Our demo person is someone who has been a client services rep for several years and is responsible for all new client training. We have back-filled her client support function with a cheaper resource to free her up to do all the demos so the salespeople can focus on the solution selling and, hopefully, closing new sales! The bottom line is we have 5 full-time sales people trying to get to 3,500 prospects and they are 100% productive.
A few other tidbits/suggestions:
• We have eliminated printing hardcopy sales collateral. We still generate new materials. However, everything is converted to .PDF format for e-mail distribution and placement on our website.
• We don’t do any mass mailings. They are a waste of time and money in a business-to-business market.
• We go to a few, very targeted industry shows. In most cases, we are invited to join our alliance partners as part of their booth so we do not have to pay the exhibitor’s fees (which can be as much as $15,000).
• We have retained an outsourced public relations firm for a fraction of what it would take to do that work in-house. They assist with our press releases and getting articles in front of the reporters at the industry magazines / newspapers in our space.
• When we do go to a show with our own booth, we do a raffle for an Xbox. We rent a large screen television and have the Xbox on running a demo of some sports game (baseball, football, etc. depending on the time of year). It gets us great foot traffic. We have no other giveaways / promotional items.
• We do not advertise. No one pays attention in our space to ads. Targeted selling has a much higher ROI.
• We hire sales people that have enterprise software selling experience only.
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