Wednesday, July 31, 2013

Analytics: Sales Representative Profitability 2

Continuing with concepts related to salesforce profitability and how the analysis can lead to key decisions for small business owners.  Trending salesperson profitability over time whether it is monthly or quarterly can also enable key decisions.  

Seasonality is something that most business naturally observe, but through the lense of salesperson profitability a business owner can identify discounting rules or plan strategic time off.  For example, if there is a time when sales rep profitability dips and inventories are becoming low, then it may be a good time to conduct training or switch the sales focus to other higher margin products and services.  
Blending a salesperson’s tenure with your profitability analysis can also uncover insight.  Say you have two sales reps one that has been with you for 10 years and another that has just signed on this year.  The former sales rep is an expert in the industry and know just the discount a customer will pay for a product.  The newer sales rep on the other hand, may be taking a different approach while learning the market. Overtime, you will probably observe that salesperson profitability for you seasoned rep consistent and predictable.  

On the other hand, you may be looking for the profitability of the new rep to grow over time.  But what if the profitability of your new salesperson is outpacing that of your seasoned representative?  You may want to see if your seasoned representative has grown complacent and is used to providing deeper discounts than necessary.  Or if the new market discovered by your other representative is a sign of changing overall market conditions. The analysis then pays off.

Tuesday, July 30, 2013

Analytics: Sales Representative Profitability 1

As the owner of a small business deciding to hire a salesperson can be huge.  Adding personnel is not only a significant expense but also added responsibility to you to support them to get the most sales out of the investment.  Paying for salespeople is investing in increasing revenue; but it is important to know that how your sales is costing your business.

When implementing a sales team or sales program, measuring and tracking sales rep profitability can be key to learning what works and what doesn’t.  For startups, understanding customer acquisition costs (CAC) is essential.  Salesforce profitability analysis will help justify increasing the overall CAC and help you assess the health of that overall CAC.

What you will need for to do the analysis:
  • Sales person
  • Sales person monthly salary
  • Monthly cost of the sales person including benefits, commissions, travel expenses and other overhead.
  • Monthly revenue
  • Monthly profit

The following targets will allow you to round out your return on investment analysis:
  • Target profit on products sold by the sales person
  • Target month where you expect: monthly revenue will equal the sales person’s salary
  • Target month where you expect: monthly revenue will equal the total cost of business (breakeven)

This analysis can give you more insight than simply answering questions such as what is  the total sales for each sales person? And, which sales did each sales person make?

In that it goes beyond getting the numbers, and helps you understand if your return on investment is working as you believed.  And if you sales cost structures need to be tweaked.

Monday, July 29, 2013

Delegation in Startups

As a woman founder of a technical startup, I had the privilege of attending my first mentoring session with Femgineer lead by Poornima Vijayashanker.  This particular session addressed the topic of delegation for entrepreneurs with early stage startups.  The discussion could not have come at a more timely, as this week it became increasingly clear that I needed to manage my team more effectively.  

Since my startup is still developing our first sellable product by bootstrapping, the “employees” on my operational team consists of three four part-time professionals that can donate only a few hours of their expertise a week. Because at this time I can’t pay them I have not felt comfortable pushing nor aggressively enforcing deadlines.  This has sometimes set us back or otherwise burned me out as I tried to pick up the slack.  

The mentoring session started out with the fundamental question to ask every perspective person that your work with: “Are you interested in my business idea?”.  In my case, most would find the B2B software space compelling as there is a lot of potential.  The next excellent points included:

  1. Always be clear on what they will be working on whether it is a project or a specific task.
  2. Start by asking if they can commit to 5-10 hour a week on a non-paid basis? Because if they can’t they may not be interested enough. And, they may not have resources to give 20 hour resources on a paid basis.
  3. Make the first task very basic and see if the person takes charge. Note founders  don’t have time to check in with everyone everyday.  
  4. Layout the expectation that you will only be checking in only once a week- unless of course if they are stuck them more frequent dialogue is fine.
  5. Always attach deadlines to tasks. Ask the person to first give you an estimate.  Let them set the deadline.  Assess whether you think they are giving you an aggressive deadline or a doable one.  Ask what part of the task will be most at risk of not meeting the deadline. Then hold the person accountable for meeting the deadline.
Overall, the discussion was helpful.  In many ways I have already known these management skills, however, hearing them from another entrepreneur brought me back to basics.  

As for the shyness of being a good leader because I’m not able to pay for help at this time, I need to remember that we are really building a good thing that takes time and dedication.  All the pieces of my business plan make a very compelling argument for success.   And those that are there at the beginning and working because they believe in the vision and business idea need me to be a strong leader that demands delivery.  Those that stick it out also know that they will reap the reward as we grow together.

Sunday, July 28, 2013

Growth Hacking Lessons Learned

The Bimotics team spent early July learning about Growth Hacking from Aaron Ginn at Stumble Upon hosted by Refresh Miami. I honestly had to Google what it meant, but I was excited to get perspective from the Valley nonetheless.  I went in thinking that the principles sounded a lot like marketing so i figured it was just another buzzword going around the geeks to make the even more exclusive.  But I learned that the Growth Hacking was much more essential than that.  And indeed it has a place between product engineering and marketing that is focused on what matters most to investors- growth.

5 key takeaways from the event:
  1. Growth Hacking relies heavily on Lean Startup Principles such as sprints and measures
  2. User Accounting:  new users + reactivation - churn - deactivations = user growth
  3. When performing experiments, aways solve for the down case. So if the test case didn’t work, then you have learned something.  You can learn why it failed.  True scientists are always trying to prove for the null
  4. The goal is to find what are the people in your channel are thinking and how they are looking and interacting with your product
  5. The data science role, assists product manager in determining areas to focus on by identifying new opportunities and communicating the long run effects of the A/B tests

For now, Growth Hacking is mainly focusing on more of the B2C business models and products that make money from ads and replay on shares and links.  This makes sense as these applications need to get as many users (millions of active users) as possible clicking through their stuff. However, the basic tenets and lessons such as creating a metrics oriented culture, running a lean organization and focusing on actionable metrics definitely apply to B2Bs as well.  

Friday, July 26, 2013

Building our first Concierge MVP

Now that there is a healthy list of early adopter hypotheses, it is time to setup the Concierge MVP experiments.  If I understand it correctly for each hypothesized early adopter, I need to ask 3 main questions:
  1. What is your initial value proposition for your customers?
  2. How do you plan to convey the value proposition to them?
  3. What are you looking to measure?
(from “Will it Launch” by  Poormima Vijayashanker)

Trying this for the the hypothesis, “SMBs that use Quickbooks but would like more analytical and reporting capability.”
  1. What are your value propositions?
    1. Provide additional visualized insight on-line with data pulled directly from the cloud (no need to load files)
    2. Use a drag and drop metrics builder, to analyze your Quickbooks data-  don’t need to know how to run a query
    3. Push button web technology that doesn’t require IT resources

(I wonder if there is a way to figure out which value proposition is most important.)  

  1. How to convey the message?
    1. Do a mini adwords campaign to see if people click on add-on reporting for Quickbooks 
    2. Create a video that demonstrates how we pull data on the cloud so you don’t have to sit there and load flat files
    3. Create a video that shows how you create a simple query through the drag and drop metrics builder
    4. Go to the next small business expo and ask people to fill out a small survey

  2. What will you measure?
    1. Use interaction in terms of adwords results.  Additionally count e-mail addresses collected from the landing pages
    2. Count video views in youtube.  I would also count e-mail addresses collected from landing pages with the videos on them
    3. Process the survey results from the small business expo

One down six more experiments to think through. The survey is probably the easiest one to tackle in considering resources and complexity. But it is time to learn landing pages too. Hopefully I will be able to reuse some of the content or landing pages for the others.  What are the easiest landing page vendors out there?

Wednesday, July 24, 2013

Hypotheses for early adopters

Late in June, I attended an event hosted by the new business incubator at Broward College.  Poormima Vijayashanker lectured on many lean startup concepts in her presentation “Will it launch?”. At Bimotics, we often pitched our startup as the “ for small and medium sized-business”.  So I have to admit; I was a bit star struck to meet the founding engineer of the business we’ve strived to be like.  Turns out she is pretty cool and down to earth.  I’m going to ask join her Femigineer mentor group.

So the main takeaway I got  from the workshop was related to coming up with the right hypothesis for customer adoption- particularly for early adopters.  Bimotics is a cloud analytics company targeting small and medium-sized business, so here are the segments I hypothesize will be our early adopters. They are:

  1. SMBs that were established in the last 5 years that already use other cloud based applications, like SalesForce and Quickbooks to run their business
  2. SMBs that use Quickbooks but would like more analytical and reporting capability
  3. Consulting companies with analysts and data scientists that need a software platform to deliver their results to their clients
  4. SMBs with more than 3 resources running their operations (non-technical)
  5. SMBs comfortable using online marketplaces and app stores to source applications for run their business
  6. SMBs whose employees have begun to use mobile technology day-to-day, whether its a smartphone or a tablet
  7. SMBs that use social media as a source for business news.

With these hunches, the next step is to confirm or deny that these are my customers in the most cost efficient way.  Since we are only in alfa, I cannot just prove usage of by these groups, I will need to try out the concept of “concierage MVP” also taught at the workshop.