Czech Microsoft partner enters Australian market with global D365 rollout

Our new client – a fast growth Czech Republic Microsoft Gold Partner provides workflow automation solutions and has won a contract with a distribution business to implement a global rollout for Microsoft Dynamics D365 Finance and Operations as well as CRM modules including an Australian based site.

New market entry scope requirement:

A local Australian delivery partner with strong Microsoft certifications was required with D365 F&O skills and understanding of the local Australian accounting standards and Australian taxation rules for compliance requirements.

new-market-entrySecondly an ongoing local support engagement is required for the post implementation period as part of a Global Support contract.

The consulting engagement brief for Alchemise was to locate and identify the best fit Australian D365 partner to help fulfil the functional consulting for the rollout scope and partnership fit with right expertise and ongoing support/maintenance capability.

From our new market entry experience working with fast growth technology companies coming to Australia from UK, Europe, US and Asia we know there are many country specific nuances to consider in terms of the broader partner considerations when forming a channel alliance and partnership which needs to include the following.

Culture considerations:

Both the end client relationship and your global support model needs to be considered for a compatible cultural fit. This needs to be a seamless experience for the local client and parent client experience with compatible operating values and processes as well as how the project management structure is setup.

We understood the learnings from the current EU market that experienced Microsoft Dynamics 365 functional consultants are difficult to find amongst Tier 1 & 2 Consulting firms and a trade off between highly structured engagements versus a partner who are more flexible to suit with partnering with a growth company.

Local Australian market considerations:

The end parent client expressed preference of the physical location being Czech based without offshore but local access and fly in fly out but having a local office in Australia.

The local requirement was to arrange an in country partnership with a credible sized Australian based organisation with national presence to assist with the functional Microsoft D365 experience and also ongoing support.

Remote support considerations:

This mode is time efficient to be able to offer local business hours coverage for Level 1 support in Australia as part of the global support “round the clock” agreement required to be managed from Prague, Czech Republic in line with Contractual Service Level Agreements.

They spoke with Alchemise to assist given our technology services background, local network of Microsoft partners and understanding of the subject context from an integrated technology sales & marketing perspective.

Timeline:

There was limited time frame to arrange a local partnership as the global rollout scoping for 2019 was already in place with the Australian site.

The Czech team was flying out in two weeks for the client scoping workshop and needed the right options in place prior.

We addressed the brief requirements and qualified a shortlist of five suitably qualified potential Tier 1 & Tier 2 partners and helped to conduct shortlist criteria/ interviews within this time to deliver the client outcome required.

New market entry outcome:

Given the challenge of the local Australian Microsoft partner criteria, skills, timeline, and experience for Microsoft Dynamics 365 needed as well as the accounting background expertise required to interpret Australian accounting policies, we managed to deliver the results with just 2 weeks lead time.

We successfully scoped outcomes with the pressing urgency to find a local Australian project functional D365 consultant following market research for the correct Microsoft Partner which was suitable with Microsoft D365 skills as well as industrial and distribution sector experience.

We conducted the local Microsoft partner interviews and assessment to ensure the right fit for both current project need for client location and also ongoing support for D365 and also CRM modules. Once the shortlist was completed, we facilitated the conference call introduction with our client and was able to advise from market research around market contracting rates and local insights about the local Microsoft partner network.

Our value with ICT sector and technology domain knowledge of the market and Microsoft partners helped position the confidence and network of suitable providers for this need.

A shortlist was compiled following several discussions and interviews with prospective Microsoft partners. The learning was that current knowledge is required for D365 not Dynamics AX or previous versions that some partners might be using as a migration or training ground but the selected Australian partner has real compatible experience to meet this client need and fit.

The other shortlisted Microsoft partner interviewed didn’t have the capacity to scale with overflow work and was very dependent on 1 to 2 dedicated resources with required expertise. From a partnering risk perspective this “ability to deliver” needs to be evaluated as part of a local go to market partnership strategy. In the future this may fit with ASEAN based locations.

What our client was looking for wasn’t just the lower pricing as a criteria but the ongoing reputation and commitment to the Australian market which the Australian partner has been established for 30+ years and also a proven current track record which minimises the client risk.

The value of a flexible arrangement and value of the Australian Microsoft Dynamics Partner with their support and consulting model provided our client with the confidence to look at a back to back agreement in the first instance and a time and materials engagement for the initial functionals D365 scope consulting as part of the client’s team.

The client were happy with the outcome and has managed to meet their end clients expectations as well as a suitably qualified partner to build the relationship upon beyond Phase 1: Scoping but also for support and Phase 2: Implementation of D365 F&O and also access to strong D365 CRM skillsets.

If you would like specialised technology solution marketing and sales optimisation and help with your go to market plans, we can assist with an initial no obligation consultation and can be contacted on ….  By the way if you missed one of our other case studies for new market entry into Australia here is a good read:

New Market Entry Assessment saves 40% start up costs for UK ICT Services Provider

Alchemise Business Growth Newsletter #8 – Q2 – 2018/19

Business Growth Newsletter Edition #8 

Q2 2018-19 – December 2018

Alchemise Sales & Marketing Market Wrap 2018

Welcome to our final quarterly newsletter for the year and hope you are looking forward to a well earned Christmas holiday break!

To close off this year, we wanted to highlight our top sales & marketing insights during the year for your reflection and awareness over the break…

Measuring the right ROI is more important than ever before

Marketing-ROI

This year we have still seen many businesses not be able to measure the effectiveness of marketing spend. The typical average benchmark that seems to still be a measure is 5% spend of revenue, however this is still not enough for many digital marketing initiatives for lead generation and brand awareness.

The maturity of the local market seems to still require much awareness and reason to shift into a growth mindset. Unless you are willing to try and seek the right help, the same patterns will be repeated over and over again. Is doing nothing or not changing an option for the viability of your business model to scale?

If you can adopt a scientific approach with the right data, your insights and results will be tangible.

Here is an example of what is possible to measure ROI as a starting point by aligning your sales and marketing goals.

DOWNLOAD YOUR FREE ROI CALCULATOR

Smarter demand generation for technology marketing campaigns

It is possible to achieve better than industry marketing standard conversion rates for lead nurturing and lead generation campaigns for complex technology services/solutions.

With the challenges of reaching out to your contacts, social and content based engagement needs more personalisation of the right type of content and also context. To do this you need to understand what type of challenges they might have,  how you can provide value or help them to solve these challenges and when is an appropriate time to be front of mind to them.

If you would like to find out how you can also take a different customer centric process and approach to achieve 20%+ success rate then call us to discuss how we achieved this for our client.

Here is a snapshot of the results in just one month!
customers by lifecycle stage

Are you willing to do something different to get a different result if you feel you aren’t getting the results you need? We can share some insights around how…

Also don’t miss our latest Case Study: Digital Realty drives APAC Hyper-Scale, Multi Cloud Data Centre Campaign with Alchemise Consulting.

Inbound 2018 – HubSpot Customer Flywheel

A fundamental shift was announced to the HubSpot business model at this year’s conference. The complete customer lifecycle isn’t just a funnel but positions the customer in the centre of all sales, marketing and service/customer focused interactions.

Introducing the customer flywheel – The shift from funnel to a sales, marketing and service/customer centric focus:

Funnel-to-flywheel-hubspot

For more information about the shift published in Harvard Business Review by the CEO of HubSpot, Brian Halligan please click here.

The philosophy of shifting the traditional full funnel to a flywheel concept makes sense in putting the customer at the centre of your business.

Business partner succession and risk planning 


Our first Business Growth Workshop earlier this year featured our guest speakers from Maxsum Consulting and Macquarie Group. A real situation arising from many business owners is the lack of succession planning or risk management within the business or between partners. AlchemiseWorkshop_MaxSum Jun 18

When involved in a business partnership have you thought about planning your exit strategy or growth strategy and how to mitigate business risk?  Your hard work and wealth needs to be protected by having the right buy/sell agreements or succession plans in place. 

More information can be obtained from us about the first steps with an initial discussion – reach out to us to start the conversation.

Why did your marketing campaign fail?

If you are not achieving your ROI or wondering why your marketing efforts aren’t reaping the rewards of sales results, then let us share some insights as to why you may need to take a different approach. Alchemise Consulting-Feedback

We are seeking to hear from approximately 200 business owners or sales and marketing managers to share how they have felt and what their experience has been in their marketing campaigns’ success, failure or ROI expectations and why.

Our Alchemise Survey for ‘Why my marketing campaign failed’ is still open for your input. We will share our insights once we complete the survey during 1H 2019.

CLICK HERE TO COMPLETE OUR MARKETING CAMPAIGN INSIGHTS QUESTIONNAIRE

Strategic go-to-market and new market entry considerations

We have spoken to many start-ups and more established businesses looking to enter Australia or grow into other markets on limited capital and funding to scale, including those working with investor funding.

BLOG – Start-up businesses: Capital raising and ROI

I understand margins are tight and the drive to scale to grow in exploring other markets or new segments can be a good strategic move. However, I wanted to highlight that it’s best to get some independent help to test the go-to-market and market entry position with research and feasibility studies (across financial, sales and marketing aspects) before launching your product or services.

CASE STUDY – Go-to-market strategy – Australian telco solutions provider

There may be some pitfalls to consider and analyse first with a strategic go-to-market plan such as:

  • Testing the revenue and profit model
  • Understanding your cash burn rate and payback period of investment.
  • What is your go-to-market strategy for the local market/segment?
  • How do you develop initial brand awareness?
  • What is your sales and marketing go-to-market plan including resources, process and systems to support your growth?

We are offering a Digital Readiness Assessment as part of an initial self discovery (including digital identity risk check) if you are interested.

digital-readiness-assessment

Our Top 10 most Popular Blogs in 2018

Our top ten headline blogs and case studies this year… Alchemise-Consulting-Top-10-Blogs-2018

  1. Case Study – IBM business partner drives up lead conversion rate by 25% 
  2. Blog – My customer experience: 5 ways a major Australian department store failed to deliver
  3. Insights Video – How to turn your website into a customer centric approach 
  4. Blog – How business owners can maintain focus and discipline for success
  5. Blog – Reflections on global business: Diversity, leadership and experience
  6. Blog – Software start-up businesses: What is your sales and marketing plan? 
  7. Blog – How do you protect your business identity and digital risk? 
  8. Case Study – Sales and marketing strategy: Australian HR advisory firm
  9. Blog – 9 steps to calculate your sales and marketing ROI
  10. Case Study – What sales commission do I pay my new sales BDM hire?

Looking forward into 2019…

Alchemise-2019-calendar Don’t forget to take the opportunity to reflect on the past year, but also to kickstart and set aside time to work ON your business in 2019, not just on blue sky ideas but getting help to become clear on your business purpose and goals.

If you are looking for more information or to arrange an initial consultation with us, please contact us. Email us at info@alchemiseconsulting.com or start the conversation on Twitter @alchemise_cons, otherwise feel free to phone our Melbourne office on +61 (3) 9225 5022.

We wish our valued clients, partners and friends a
Merry Christmas and a Happy New Year!

Case study: Go-to-market strategy for SD-WAN – Australian telco solutions provider

When it comes to marketing complex technology solutions and planning, the engagement of a specialist sales & marketing provider such as Alchemise Consulting will ensure there is contextual and content understanding of the product and service to sell. Depth of understanding for the specific market dynamics to help develop an effective value proposition to develop a solid go-to-market plan both from an industry sales led and marketing perspective is a recommended investment to make.

What is SD-WAN Technology?

  • SD-WAN (software defined wide area network) is an emerging technology that offers several benefits compared with traditional, router-based WANs.
  • With SD-WAN, business decision makers with service providers can achieve cost savings, increased agility and simplification to support branch office connectivity.

The service diversification and growth plan decided by the directors was to look for the right technology vendor partner for SD-WAN solution with comprehensive due diligence before taking the solution to market and testing the relevant strategy.

In building a ground up new capability, several factors internal and external needed to be considered from a resourcing, commercial, product development, sales & marketing perspective.

They spoke with us to assist, given our technology services background in the market and understanding of the subject context from an integrated technology sales & marketing perspective.

Project Scope

Our senior consultant was engaged for five months to work in the role of ‘go-to-market manager’ and tasked with helping to develop the go-to-market strategy plan as Phase 1, ahead of the go-to-market execution as Phase 2.

The scope involved determining the right value proposition and messaging with market testing as well as sales enablement preparation of digital marketing assets.


Our deliverables spanned across both sales and marketing and product components:

Market Research – Phase 1

  • Business vision go-to-market
  • Market segmentation
  • Competitive positioning
  • Definition of offering


Marketing Plan – Phase 2

  • Market position and strategy
  • Sales and marketing enablement
  • Product market launch
  • Operational requirements
  • Financial analysis

Our deliverables and value of sales & marketing experience provided:

  • Developing relevant foundation content that was needed as well as relevant targeted customer centric presentation collateral
  • Digital website content to specifically engage the right audience
  • Understanding and mapping their buyer’s journey and customer problem as the first step of alignment
  • A new website domain and trial marketing automation usage with a CRM and marketing CMS/automation tool by HubSpot
  • Sales execution and demand generation processes and activities
  • Enacting a culture shift to engage internal client resources from digital, development, sales and technical solutions (both internal and from vendor)
  • As part of the go-to-market manager role,  we highlighted the importance of focus on product roadmap, pricing, positioning and packaging research to work at tactically as well as strategically.
  • Executing a strategy requires practical testing in the market as a well as a dynamic ‘hands-on’ approach

After five months fulfilling the requirement delivering the go-to-market strategy, the clarity of market positioning and sales strategy was established as well as deliverables scoped to market test.

Key Project Learnings

When starting from a foundation level, the Directors’ commitment and team time needs to be available for this to be a joint success for Phase 1.

go-to-market-strategy

What a business has in mind or brainstormed for their service offerings may not be a match for what the market wants or is ready for, so market testing or market opportunity research needs to be completed first.

A clear vision and strategic plan is needed as well as taking the time and investment to look at sales & marketing alignment in some detail as part of the go-to-market.

For smaller businesses or niche specialists, the shift to digital marketing in a customer centric manner is important to prepare for omni-channel engagement outside traditional relationship, referral and sales channels. The value of this approach is an ability to accelerate sales and marketing engagement when the solution and services are launched.

When considering new product introductions, there cannot be a solid plan until you complete market research and feasibility analysis.

When most business owners/directors are time poor, the speed to market and right launch preparation is important to develop the team expertise required to achieve this. If you are attempting to launch too early, the opportunity window might be premature to secure customers, or if you are too late, you need to be a market segment leader not a follower generally.

Outcome

We successfully scoped outcomes for the assessment of go-to-market strategy, market research for the correct vendor which was suitable and also developed the digital presence, collateral and sales enablement components of the content plan.

Our value with extensive ICT sector and technology domain knowledge of the market and competitors for SD-WAN helped positioning a productised and managed services model for generation of revenue opportunities in the Australian market.

The value of a flexible arrangement and value as part of the client’s team allowed much further consideration for investment and market knowledge to be developed for the Australian market for SD-WAN. The completion of Phase 1 provides future clarity when Phase 2 (execution) commences.

If you would like specialised technology solution marketing assistance and sales optimisation and help with your go-to-market plans, we can assist with an initial no obligation consultation – contact us for an initial discussion on how we can help you and your business at info@alchemiseconsulting.com or @alchemise_cons or call our office on +61392255022.


CLICK HERE for another case study where we assisted and added value to a UK technology company with their APAC expansion and new Market Expansion feasibility. 

Software start-up businesses: What is your sales and marketing plan?

This blog is part of a start-up series…
Part 1 is available here, if you missed it!

Start-up founders 

This blog piece is intended for a general overview based for a broad spectrum of audience to provide awareness based on examples of many people we have spoken to over in recent years who are venturing out for the first time on their own. We are not referring to serial entrepreneurs who have been very successful in business already.

It has seems a recent observation for successful engineers or IT professionals to venture into entrepreneurship and business ownership as a start up an aspiration. Commonly in a joint business partnership or sole trader may have seasoned commercial or sales and marketing acumen in their team initially.

For some, despite initial quick success it’s still a case of a feature/benefits or referral sell with not a solid go to market plan or strategic approach considered. Are you playing the short game or long game and reverse engineering your desired outcomes over chosen timeline?

Tip: Ask for help early to build an A-team of specialist advisors around you, and be willing to invest to help you test your concept, develop your go-to-market strategy and help build your foundations so you can scale.

Capital and funding

We have seen many start-ups run out of capital very quickly as they haven’t planned out their investment and costs required. For software application development it’s a never ending sunk cost to build the platform foundation from open source platforms and constantly improvement to evolve your offering for customer experience and integrations or address functional bug fixes etc.. If you are a services business the capital requires strong cashflow, securing good resources and a solid sales & marketing strategy for short term success. 

Are you releasing a feature update every month or 3 months or 6 months, or ad hoc? How much budget is required with your onshore or offshore development team? If your sales cycles are longer without the revenue incoming and tested go to market plan, how can you sustain short term investment decisions for growth?

A large portion of costs is initially to setup and progress from concept stage to prototype or beta release for testing . Is there a market for your app and where? There are so many variables to consider in this dynamic, fast moving and crowded marketplace.

Are you aware of Government funding programs such as Austrade Export Market Grant Funding (EMDG) or Department of Innovation, Industry and Science R&D Grant Funding Options?

Have you checked out your local council incentive programs for small business owners starting out?

Tip: Assess realistically and budget for your capital expenditure and cashflow to get a test platform off the ground without overcapitalising, prior to getting any customer end user feedback or usability assessment.


Strategy Go To Market plan: What is your Sales and Marketing approach for B2B or B2C?

start-up-sales-marketing

As a brand new home owner or developer, would you build a house with a builder without going through a planning process first using an architect or draftsperson?

As a captain of your boat, would you set sail in a boat without knowing which direction and compass map or GPS settings are required first?

In business, especially during the start-up stage, it’s the same to plot or determine the course you wish to take and solidify it on a blueprint first. It may not be the perfect plan or at least it helps provide a targeted direction of what is required to get from point A to point B and purpose.

However the investment of time and seeking advice to formulate the right plan seems to be considered in reverse order – ad hoc first before structuring something of a business plan or sales or marketing strategy.

For any go to market consideration you need to understand your business customers first and what problem or solution you can help them solve. In order to monetise your product or services the value of what your offer and charge reflects the urgency or size/complexity of the problem you are solving for your customer.

Too often I have seen little analysis about the financials including realistic cashflow, profit margins and also sales planning and how to create brand awareness through targeted marketing investments – this often seems to be an afterthought.

Tip: We suggest utilising an ROI calculator such as ours or establishing your objectives first: 


Sales Pipeline and Revenue model


We have found many perceived valuations of a business model untested and unproven to attract a buyer is like angel investing…

No real customers = No real dollars despite future projections. Let’s be real here.

Once a external capital round is raised, the pressure is on to deliver ROI to the stakeholders, every request and return for dollar asked is scrutinised about the real viability of the business model and financial returns to the shareholders.

When I have asked many business owners for some pricing numbers about the subscribers needed for their model to break-even in Year 1, or Year 2, many seem to be a pie in the sky guesstimate or hypothesised without some solid tested projections.

business-strategy-start-up

When I further question where and who is their target market, I haven’t received many solid, thoroughly thought out answers but a more whimsical ‘kind of’ or ‘generally’ description.

Without a solid business plan and sales and marketing Go To Market strategy worked through and tested first, many start-up app ideas never will get off the ground due to lack of planning or asking for help first from a business advisor or sales and marketing consultant.

There is a saying that family and business do not mix, this is true to some extent that emotions can influence some of the initial decisions from founders, especially those without some business background or sales/ marketing experience.

At the end of the day you might want to pursue a passion or great idea like many entrepreneurs, however if you are still relying on your job and/or regular income with a mortgage over your head, some of the path to exploring this can be mitigated by being strategic and planning ahead for your financial position, capital investment plan for growth and thinking about your purpose – whether it’s to scale and build a large business or just to replace your income and eventually exit by selling your business.

Make sure you think about your profitability and revenue first as well as market test your pricing strategy for how you will monetise your great software app idea.

TIP: Spending some time for an independent sanity check with a workshop or advice for your concept and business model with the right independent business professionals and also your potential customer base might save you time and sweat equity in getting your idea off the ground or determining if it is feasible.

Here is an example of one of how one of our New Market Entry Feasibility Assessment played out.

Start-up resources

Thinking about if you hire in-house or outsource, what parts of your start-up business and investment cost are required?

The cost of hiring a team of marketing resources like a social media manager, digital strategist, copywriter, graphic designer and web designer all add to the overhead costs of the business and initial investment to build your team.

As we know, the cost of skilled labour in Australia is one of the highest in the world. However is outsourcing functionally  to Asia or other parts of the world still an answer? Are you sacrificing quality over lower costs or lack of your own process and systems? Have you thought about a scalable model to access senior experienced resources that will only cost you a fraction of a FTE hire or long term contractor?

What are the must-have sunk costs, and what are the optional non-revenue generating costs?

How will you generate sales to your customers? Will it by distribution model or direct sales? Will you be paying commissions out of the sale or from your profit margin?

TIP: Consider what sales and marketing resources you need initially and budget required if you hired internally. Can you source alternative and flexible methods to deliver the same function at lower cost and higher ROI until the business model is proven.

 In closing…

There are many practical and commercial considerations from this blog series about when start ups look at determining funding requirements and capital raising approaches. Most importantly from our perspective we can provide experience in how to utilise this funding once secured with a solid sales & marketing go to market plan and leadership from several years within the tech sector and working with business owners to drive growth.

Feel free to contact us for an initial discussion on how we can help you and your business, from start-up to growth mode, at info@alchemiseconsulting.com or @alchemise_cons or call our office on +61392255022.

Software start-up businesses: Capital raising and ROI

What prompted me to write this article is that this year alone, we have been approached by many aspiring small entrepreneurial first time start-up founders in Australia with a great vision to be the next star tech multi millionaire with a great idea and concept for app development. From a Go to Market and feasibility perspective, much more time and conscious planning of a sales and marketing plan could be developed first and knowing your target market with a strong customer value proposition. The financial elements of your sales revenue and profit model particularly with Software as a Service or subscription models to scale in say two sided marketplaces need to be considered for B2B and B2C applications.

Read about a selection of our business owners examples we have spoken to below in hospitality, retail, legal services, trades, telecoms.

Typically they have worked in the technology field, banking or finance, hospitality or trades sectors, and have clearly seen a need for doing things differently or something which has frustrated them as an end user in this digital era.

So why not build a mobile app?  We have seen successful apps like Tinder for dating, Uber for car ride sharing, and many other disruptive business opportunities and approaches.

There has been more Australian success stories such as Canva and Atlassian and well as  Australian based start-ups of recent time, however a reality check highlights many failures also in small business that may not be highlighted with their challenges and how to overcome them.

What concerned me in talking to these business owners in early stage development, many of which who have continued working their day job, or those who have 100% committed to this idea and own self-funded capital, is that many have started building their business without many key elements that any start-up business should consider from a financial and commercial perspective.

In this customer centric and experience environment, it really surprising me why many aspiring app designers start with features and functions first before understanding who their customer is and if this is a commercial need to solve their challenge and if there is in fact a business case for their development.

The maturity of having some commercial acumen or seeking advice as an investment is an important first step. Some basic checklists should be considered first before expending any self-funded cash or investment capital cost.

Two important factors are cashflow and cashburn when you have limited funding to kick start your business. Whether it’s your own capital, crowdsourced, private or public funding sources, ROI and accelerated sales growth is needed in terms of new customers, actual revenue streams and cashflow considerations.  

We typically recommend a Digital Readiness Assessment or a Business Growth Assessment to help gain an understanding of the start-up business objectives and maturity before entering into the detail design or functional building blocks. Read our previous blog on 3 key elements on how a Digital Readiness Assessment can help clarify the right plan for you.


Some start-up and new venture scenarios we have heard from this year: 

Owner A: Hospitality Application

The two owners had come from a hospitality background and they wanted to build an app which allows restaurants and cafes to match and fill empty tables during both days and evenings, with a fee charged based on percentage of spend to onboard the vendor. Despite sharing the market with Deliveroo, Foodora and Uber Eats, they claimed their model was different. 

software start-up hospitality

The app had been built and tested already, and they wanted to focus on building the B2B marketplace to onboard customers and launch in Europe and Australia. The challenge was both marketing and sales to onboard an initial 200 customers.

It seemed to me that they had taken a back to front approach, by building the application first, before assessing if there is a valid market opportunity and developing the app to suit the market.

Upon an initial consultation, it was apparent that bootstrapping this application development cost resulted in missing key plans on the commercial go-to-market front, including:

  • Marketing and sales market analysis for each country
  • Profit and revenue model as a subscription model
  • Business strategy – how to scale and sell directly or via a referral/distribution model.

We presented an offer to look at developing their GTM strategy, however this wasn’t in their current budget as most of the funding was invested in the application development side, and therefore they could not proceed at the time.


Owner B: Industrial Equipment Hiring Application

Four business partners, all highly educated and ex-engineers, had built a two-sided marketplace B2B app to rent industrial equipment from vendors who had availability, and their platform facilitates a self-service rental catalogue listing and booking engine to connect vendor and renter.

Originally they came to us with an interest in digital marketing assistance, and upon looking at their website and type of content present, it wasn’t sufficient to take a customer centric approach as information about their target market or ability to collect customer data was unclear.

We questioned whether their pilot stage app had been tested, but they were looking to raise more private investor capital. We asked to see their pitch deck and hear about their sales and marketing plan. While there was an initial interest to engage independently first to help with their pitch deck, the subsequent response was to wait until they had raised the funds, then they can consider a marketing and digital initiative to get this off the ground.

An offer to develop a basic marketing high level strategy to include in their investment pitch deck was declined to help them secure the funding and demonstrate forward planning.

I asked how confident they felt about raising private capital and what approach they planned to take, and received a response which was unsure…


Owner C: Market Food Truck Application

A business owner saw the opportunity to setup a market food truck/vendor and customer app.

An initial consultation garnered interest from the venue event organiser. Capital was limited to build the app (to test stage) using an offshore web development team, and this was the first step to customise the app to get one initial customer to fund it.

After six months, I reconnected with the business owner and learned that due to the GDPR and tightening in data privacy using SSO with Facebook login accounts, the application development project couldn’t proceed due to many backend development changes and cost, and also the business partner had a change of course with his view.

The commercial and sales qualification of the initial opportunity with the market hadn’t been sufficiently completed firstly.

The actual go-to-market approach hadn’t been thought about because the functional design was launched first to solve an immediate idea of the perceived problem which wasn’t verified.


Owner D:  Billing Software Cloud SaaS Platform Application

A serial entrepreneur in the ANZ region has built and sold multiple tech start-up businesses previously. The latest venture has involved raising some capital funding directly at the US market and hiring a first team for technical and initial sales/SDR resource. software start-up technology

We proposed a go to market strategy engagement and market feasibility study for the Australian market, with our own network of consultant contacts and opportunities to explore.

When capital is raised from angel investors the drive is to achieve value for shareholders. The dependency is on cashflow for engaging this project, however a scattergun approach without an integrated strategy isn’t assisting to drive traction and capitalise on opportunities here in Australia.  The initial capital raised required a success model based on penetrating into the US market first.

The SaaS profit model for Telco/ISP and utilities as a pure play solution needs to consider the actually profitability and market positioning as part of a GTM targeted approach.

Overall in analysing the SaaS revenue model, I could see there being some challenges in their fixed percentage of revenue subscription model to be profitable.

Over 12 months later, since the initial conversation, the company is looking to raise another round of funding to sustain their current operations for traction developed in the US but not for Australia yet in a structured approach. It has been more of an ad hoc approach without investment in a solid business strategy and focus on ROI outside of their focus on the US market and shareholder expectations.


Owner E:  Legal Software Application

A prominent lawyer in Melbourne spent over $250K to build an online legal practice platform software over three years, to turn and sell off the IP and foundation.

His intention was for the purchaser to take it to market and commercialise it, with some software licence and maintenance projections to sell globally to be  compliant for all jurisdictions.

The request was for me to assist in pitching and presenting to HK prospective buyers but the founder had no sales experience.

The review of the business case and financial projections are only hypothetical with no real paying customers yet only a couple of small legal beta trial instances. There were some challenges I could see with this in developing a sustainable revenue model and especially the market feasibility with most of the software market moving to a SaaS – Software as a Service Cloud model.


Summary of challenges and considerations to make:

Mobile application developers – two-sided marketplace challenges

The cost of building an app warrants some business planning around the application first and customer profiling around usability and customer experience and processes for two-sided marketplaces.

How do you market to onboard users from both sides of the app?

What dependencies are on your third party open source apps like using Facebook or Google to login or sign up? With policy changes around data privacy for third party login and user data sharing, how does this impact on your business model if a few things change both on B2B vendor or end user side?

How do you attract loyalty digitally from not just initial sign up but actual subscriber usage of your app and continued feedback from customers with marketing and support channels?

Tip: Determine your ideal customer profile for each marketplace supplier/customer, whether it’s B2B or B2C.

software start-up customers

Part Two of this blog series contains practical guidance and tips around start-up capital raising, and what to do with the funds to achieve a solid ROI both for your business and investors.

Feel free to contact us for an initial discussion on how we can help you and your business, from start-up to growth mode, at info@alchemiseconsulting.com or @alchemise_cons or call our office on +61392255022.

4 tips for sales commission in services businesses

How do I pay sales commission to sales representatives in a services business?

 

Did you miss our case study from when we assisted a full service marketing agency to set the right sales compensation plan for their first Sales BDM hire

The right sales commission plan is critical to your first and subsequent hires, particularly within a new or growing business. Some of the considerations and challenges raised in this blog are particularly relevant to business owners or directors who have come from a non sales background who might be unsure where to start.

Some practical tips for structuring sales commission and planning: 


1) Preparation and planning

  • Consider the line of business you are in and what the market rates are for your industry sector.
  • Talk to some of your industry peers about their experiences.
  • Do your research with some benchmark insights or recruitment reports.

2) Sales budget on FTE (Full Time Employment)

  • Know your financial figures first in terms of your operational and fixed overhead costs, average profit margins and revenue goals.
  • How long are your average sales cycles per service? This determines how your sales pipeline can be developed to reach your monthly required targets based on speed and size.
  • Do you know your cost of sale and what type of sale you are making – invoice upon delivery or on purchase order?
  • Have you calculated your sales revenue targets and established what is realistically achievable?

3) Individual role requirements

  • Do you receive payment on invoice or signing of a contract upfront?
  • Do you need to consider any client KPIs or credits?
  • Are you paying the commission coming out of the client pricing profit margin or from a revenue target?
  • Different structures are appropriate for different businesses and the type of services and products you are selling.
  • Is your sales hire going to be responsible for acquisition or retention business and accounts?

4) Commission considerations 

  • Is it a flat fee percentage uncapped?
  • Do you have a staged payment plan or bonus plan for the team?
  • Have you considered if a contract is cancelled or mis-sold what happens to the commission component?
  • Is there a sliding scale achievement plan based on monthly quotas and for overachievement?
  • Is there a team component to incentivise and motivate team performance around ongoing account engagement or retaining high value accounts?
  • If you are to set a foundation standard, ensure that this will be consistent with how you pay different sales people in the future.
  • Consider how to continuously keep the sales people motivated – what happens if they overachieve or underachieve depending on your sales cycle?sales-commission

Sales commission and planning – what next?


Often smaller or growing services businesses don’t have a structured sales plan, rather the sales responsibilities may be shared between the team.

There is a correlation that sales performance and behaviour is determined by the sales plan and culture created by an organisation. Leadership from the business owner or sales manager needs to develop this.

Sometimes a multi level sales compensation plan is required to guide the sales person to sell the right services, i.e. higher profit managed or retainer services versus a product based transactional model.

sales-commission-planning

If you pay commission on annual or monthly revenue targets without any breakdown then this can lead to account issues and a disincentive to cross sell and upsell with existing or new clients for the year to maximize the revenue opportunity. 

From my experience, the delicate balance of designing a sales compensation plan to support one individual may also need to consider other sales team members, either existing or future hires. The role of the sales leader and business owner here is to develop the right sales strategies and financial budgets and targets, aligned to the sales objectives. 

I don’t have, or recommend, a one size fits all sales compensation model for the purpose of this article, however I can provide some scenarios to different business models – but it’s advised to arrange a consultation and customised solution and approach as required designed to specifically to suit your sales objectives and needs.

If you haven’t come from a sales background or a business owner, this might need more elaboration…. Do I pay a base and commission split of 50 base:50 commission, 60:40 or 70:30 split, or do I consider a shared risk 40:60 (60% at risk component)? Perhaps a guaranteed commission structure or a bonus might be more appropriate.

Look out for our next article around sales commission and compensation examples and scenarios which also apply to you, “How do I pay sales people for acquisition sales or retention sales? 

In the meantime, if you are starting out building your sales team or first sales hire, please reach out to us for assistance or advice in making the right choices at info@alchemiseconsulting.com or @alchemise_cons or call our office on +61392255022 – or click below for a consultation on everything sales, including sales performance and compensation structure! 

 

Case study: What sales commission do I pay my new sales BDM hire?


The right sales compensation plan is critical to your first hire with a new or growing business. Some of the considerations and challenges raised in this example are particularly relevant to business owners or directors who have come from a non sales background who might be unsure where to start.

Overview

A fast growing leading Melbourne full service marketing agency was recently looking to hire their first salesperson to join their successful team, and  shift their focus for active sales growth.

Prior to this new sales focus, sales activity was led by one of the Directors and other sales responsibilities were shared between the Digital Strategist and the Project Management team.

To some extent this hindered their ability to service existing clients and also build a new business funnel with a targeted focus for growth. In earlier days, this marketing agency has historically had more transactional business  and strong referral leads  than focusing on generating ongoing retainer engagements and developing new business sales capability.

Growing a sales team: Making your first sales hire

The marketing agency had decided, after an initial interview and shortlisting process, to hire a Senior Business Development Manager with general market rates and to provide an offer. 

The initial challenge was how to pay them a suitable commission package in line with the direction of agency’s services and business growth plans.

Initially a flat fixed percentage plan was discuss on a high base salary. However, management were initially unaware of the many factors that needed to be considered in sales performance management. A clear aim wasto actively grow the number of new sales opportunities and through certain preferred service lines.

4 sales compensation considerations


This agency is in the process of shifting to a higher value retainer model from transactional project based or time based work. This needs to be considered in how sales plans and commission structure are determined and set.

  • Sales goals for the financial year sales-compensation
  • Services priority – retainer-based, projects and renewals
  • Cashflow and encouragement of team based culture
  • Not having an open ended commission plan initially, until aligned with business and financial objectives.

Proposed client solution.


The agency’s initial view was to offer a flat rate percentage commission.
 

Upon review and with additional market insights, that suggestion didn’t quite make sense given the focus of revenue and profit required in the business to make this successful for both short term with the sales person, and also for establishing a foundation for business growth. The other consideration was to create the ability to scale the sales team in the future beyond Year 1. 

Considerations

When you are looking at sales compensation structures you need to look at the sales function of either retention focus (account management) or acquisition focus (business development) as both of these have an intrinsic mode of sales behaviour and associated type of sales approach.

From a sales structure typically the behaviour of your sales team is based on the incentive you set them. If you are a products or transactional business then sometime this top heavy loading on revenue on order might work from metrics focused on volume and size of revenue.

sales-hire-compensation-balanceIn the professional services area, this principle doesn’t apply and a delicate balance needs to be achieved between blending in gross profit margins for healthy financial considerations, a realistic and achievable individual target (particularly for a growth focused SMB/SME), the balance of acquisition and delivery capabilities, and the consideration of which types of services are best placed to sell during the customer buying lifecycle.

Different compensation plans need to be considered for acquisition mode sales and also retention sales plans, or perhaps a hybrid if the sales resource is responsible for both.

Being a full service marketing agency, most of the business’ client work is project based, and in recognising this, there was a discussion about the risk of setting targets too low – if the Senior BDM were to overachieve easily based on revenue early in the year, then there is always a risk that little motivation and monetary incentive exist for the remainder of the year. This can greatly degrade the productivity of the sales function if rewards for consistent performance aren’t put into place.

Our Sales ROI review highlighted that by aligning the sales strategy, a split commission element needed to be put into place, based on the expected contract renewals focus whilst helping the project team with securing the additional business, cross selling and up-selling.

Aligning the sales targets in line with a tightly linked compensation plan needed to be formulated realistically with the considerations in mind.

We provided some sales based guidance around reverse engineering their sales revenue target and direction of sales and marketing activity required to hit their sales goals for the next financial year.

Improve Your Performance Concept in Flat Design with Long Shadows.

The process of determining a break-even ROI on a sales hire is important as they will typically (depending on the industry) generate about three times the sales pipeline value of their individual sales target.

The challenge of ramp-up time and a comprehensive onboarding process is often not considered, with unrealistic expectations on the sales representative to successfully close business within their first month to justify their hire.

We provided a compensation calculation based on the right behaviour in line with the suite of services to be sold based on setting the right targets and appropriate commission elements to suit the individual’s needs and agency’s business focus.

Recommendations and Outcome

After sending through a compiled market survey from leading recruitment reports to validate market rates, the appropriate sales commission plan needed to be structured correctly and fairly to meet short term and longer term sales goals and a foundation which can scale. 

For sales representatives, typically a base salary component and a OTE (On Target Earnings) is provided based on their sales target.

For Year 1 there was more importance on setting up the foundation, then progressing to Year 2 when the commission plan could be reviewed based on performance in Year 1.

After consideration and analysis of the business’ services and financial plan, our proposed plan consisted of:

sales-hire-next-steps-plan

A commission plan tied into three elements:

  • Revenue for all project and services (Total Contract Value)
  • Retainer Profit (Gross Profit)
  • Team component for new business renewal and contribution (End of FY Team Bonus)

This equals the Year 1 target to hit their new business sales goal.

The structure for Year 2 can be negotiated depending on initial performance and tracking of realistic achievements, as well as a review from Year 1 to determine the success or challenges faced with this method. 

Key takeaways and summary

For SMEs unfamiliar with how to compensate experienced sales people, I would suggest to not just think or assume that the simple plan or flat rate or % commission is sufficient, particularly in small business where cashflow is tight and profit margins are slim. You need to know your market and territory to assign as well as which market segment you are trying to sell into.

If you aren’t diligent in this approach to paying to a sales commission plan and target setting, whether it’s a junior or senior hire, you could risk exposure to overpaying your individual sales resource. A secondary effect is further reducing profit margins to keep them sufficiently motivated if they can achieve their sales target too quickly and easily. 

In highlighting this, it is critical to understand where you are paying commissions from, are this cost built into your service contract and deal, or overall based on your gross profit margins.  Your ability to scale and grow your sales teams requires some analysis on where your ROI can be generated from.

You need to know your business figures thoroughly, such as individual overheads and sunk costs, and impacts on GST and superannuation payments. Fundamentally you need to know your financial forecast of revenue and profit margins first to determine whether you can onboard the right investment in sales headcount and budget to start with. 

The other tip is to ensure that you mutually review the goals regularly and separate commission plans with performance reviews to ensure your growth plans are in line with business needs.

As you grow the sales function within your team and business, building that consistent foundation is recommended with the right sales performance advisor until you are ready to hire a sales manager. Consider the temporary impact of sales resource turnover or ongoing challenges to grow future sales hires.


For more information or an obligation free consultation or guidance please contact us at info@alchemiseconsulting.com or call our office +613 9225 5022.

 

Alchemise Business Growth Newsletter #7 – Q1 – 2018/19


September 2018

Business Growth Newsletter Edition #7 – Q1 2018/19 

Current Market Trends and Observations

It’s increasingly concerning that busy professionals are not making the time or effort to plan in the business. It seems many sales managers and business owners are busy chasing immediate deals and sales revenue without thinking how to scale or systemise their business beyond the next month or quarter.

At the heart of this sales behaviour consideration for customer success and experience needs to be thought about. Can you integrate the sales process and enablement into customer success and with your marketing awareness to service clients holistically to ensure that retention rates and reduction for the cost of acquisition can be achieved? 

We can all relate that New Year’s Eve resolutions can only be kept if there is commitment and intention first, once it is written down commitment turns into an actionable item if you put a date by which the goal or action needs to be achieved.

If I look at the recruitment sites, we have also seen a higher turnover of sales staff between vendors and suppliers. I think an average of 12 months to 18 months in the ICT sector can be experienced for some companies.

Perhaps a glue to all this comes back to leadership teams deciding to align sales and marketing objectives first then seeking some strong management business cases presented to obtain the investment that is needed to grow a business consistently.


Business Owner Challenges

Our recently released information video outlines some key challenges faced by business owners which we consistently hear. 

Well there is a way forward!

  • Mindset – Willing and wanting to make time
  • Having a good idea doesn’t mean commercial success
  • Have no plan isn’t a wise move if you want to scale and attract the right customers without investing in a strategy.

Business Owners – Does this sound like you?
How to address your sales & marketing challenges with growing your business
… Watch the video here:

Business owner video_play


Inbound 2018

Inbound2018-1

In recently coming back from Boston US with 22,000 people attending the Inbound 2018 conference with end users, marketing agencies and digital agencies attending, this is front of mind with this newsletter.

At Inbound 2018, the concept of the flywheel was explained as a shift away from the traditional marketing and sales funnel:

Funnel to full flywheel

Source: HubSpot 

Customer, Marketing and Sales flywheel to shift away the full marketing and sales funnel. The customer is at the core of everything an organisation does but you need to remove the friction to deliver a smooth customer experience including sales engagement and also connected to your marketing activities.

The emphasis is all about customer first at your core with delight, then being able to continue to engaging and attracting customers within the sales and marketing functions.

Reducing customer or buyer friction will help build growth momentum that builds up energy and if you think of it in terms of a three ingredient growth engine that is what help drive forward this growth approach.

To me this makes sense as a continuous feedback integrated approach between customer service first connected to marketing and then sales engagement with building synchronous energy and focus on the customer from a 360 degree view.


Inbound 2018-2
Inbound 2018 – Key Topics of Focus

Content Marketing – why this is a key to effective customer engagement:
When I look at investment in digital marketing, more emphasis needs to be made for quality and relevant content that is going to engage the prospective buyer. 

The use of video content and investment in analytics is even becoming more important for effective prospect engagement.

Without personalised and relevant content, other secondary digital marketing spent isn’t effective to deliver a tangible ROI.

Account Based Marketing (ABM) for small and larger B2B business now applies:
Account Based Marketing and Personalisation is even more important as part of any inbound or outreach approach for B2B clients.  It’s not just limited to Enterprise clients but a “lighter” implementation of the ABM process can be used.

Sales Enablement and development to drive more sales qualified leads:
If you don’t have a content plan or asset list of where all your content is to make available to your sales teams, then you aren’t able to engage effectively.

Having real time response with the right information to send is vital to connect these days. A generic email follow up isn’t good enough. However using a level of sales automation and process can greatly increase the effectiveness and productivity of sales reps.

The increasing challenge of sales is getting customers still getting new contacts to connect and understanding where they are at in the buying journey or cycle.

ROI in 2012 isn’t the same ROI in 2018 as Account Based Revenue is required to deepen the success of Sales Development team

Some useful tips provided about managing sales enablement with teams…

  • Start small – Elevate the outreach and deepen the call to action
  • Balance your financial measures and leadership levers.
  • Know the difference between an Account Centric and Account Based approach
  • To traditional career path of a Sales Development Rep is no to just move them into an Account Executive field sales role as the failure rate is high as many as 1 in 3 should the right nurturing and mentoring not be provided from sales leaders.

The role of the CMO: Insights from Forrester Research CMO
In hearing the CMO at Forrester Research present he raised some important points from a business perspective to consider.

As organisations as under more pressure and budget to deliver projects like digital transformation, the way return on investment is measured or needs to be justified now is more required than before.  Generally a marketing budget of 10% of revenue isn’t sufficient to drive the results expected in the business.

Customer Experience and Success – why it’s more important than ever before:
Some CMO strategy areas to consider to address:

  • Digital Outsourcing – turning technology debt to technology leverage, RPA (Robotic Process Automation) is the current mode and can help digital transformation. 
  • Digital Vanilla – Nearly every company will pursue digital transformation but it’s about where the core is at. How can organisations differentiate through digital and marketing?
  • Crisis of customer loyalty – What is a rational expectation?
    The expectations and evidence varies vastly with Gen X, Y and Z behaviours and mindset for loyalty particularly with the choice of Digital Service Providers as well as new constant offerings always being introduced to the market.

Other Alchemise Consulting News

3D people competing in a race with arrows - isolated over a white background

We have just kicked off a strategic campaign with an account based demand generation campaign for a global data centre provider within the APAC region.


A leading Australian logistics company has benefited from the value of our Digital Readiness Assessment and why a strategic view is so important to consider first with your web and digital strategy:

Great questions, really made me think about what we have existing and what we should, but don’t. Biggest conclusion I got from the whole exercise is to prepare a proper business proposal to the Directors about online and website strategy across the global business rather than an ad hoc approach.”


 Our recent blogs… 

Throughout the quarter we took an in depth look at Sales Enablement and Inside Sales, as well as two different user experience perspectives of marketing automation: 

We also published a blog on exit strategies and wealth protection – How do you ensure your exit strategy from your business partnership has your personal finances protected?

Philip Karlsson, our Alchemise Consulting intern from earlier in the year has also shared a white paper reflecting on global business inspired by his experiences:


3D guy leaning on a calendar - isolated over a white background-1
As we approach the end of 2018, now is a great time to set aside some planning time to strategise and assess your pipeline and situation for this next quarter and looking ahead to 2019. For a complimentary, holistic Business Growth Assessment to independently review your business, sales and marketing performance and operations, please register below.

We’ll assess where your business is at, by collecting meaningful and relevant data and reviewing your goals and strategies.