FINTECH - REGTECH - HOW ABOUT SALES?
According to Norm Brodsky and Bo Burlingham, authors of the brilliant book “Street Smarts, an all-purpose tool kit for entrepreneurs”, a fairly common problem with most entrepreneurs is what they call a “sales mentality”. By that they mean the entrepreneur’s preparedness to sell a product or service at any price, with a small or even negative margin, if the only short term alternative is not selling at all. This mentality kills a business before it even takes off. No money, no business…
A different problem that we identified in talks with a lot of entrepreneurs and business managers, in particular in the fintech and regtech domain, is that they consistently overestimate the demand or need for their product or services whilst underestimating the required effort for a signed contract and for a paid invoice.
“Our investors have a huge contact network and can introduce us to decision makers”, “our product sells itself”, “we participate in conferences, exhibitions, hackatons, win prizes, leads come by themselves”…. are often heard quotes. “We do the sales ourselves!”
It looks as if in many business plans, no cost of sales is to be found…or possibly as a percentage of the revenue to be allocated to a so-called “agent” or “referrer” who is supposed to “open the door and we take it from there”. He or she will be rewarded after successful signature of a contract and when invoices have been paid by the customer. “no cure, no pay, right?” Of course the agent can only hope and pray that at the end of the cycle there is money or even a business left to pay that reward….
After a year or so, the order book is smaller than forecasted , the revenue comes in much slower than foreseen and the costs of development and service delivery and support grow higher and faster than expected. The reasons are quite obvious. A sales process, certainly when the products are complex and highly sophisticated, often takes a really long time. Awareness needs to be created and potential opportunities detected. A trusted relationship between the prospect and the tech provider needs to be developed and a lot of people are involved in or influencing a final decision. Receiving feedback and inside information is key. Avoiding misunderstandings or remediating them immediately is a must. Language borders and cultural differences easily result lead to wrong perceptions and assumptions. And last but not least, very often there is other players in the game, called “competition”. In other words, somebody needs to be creating the awareness and managing and driving the opportunities. Opening the doors is the easy part. It’s only after the first and second introductory meetings that the real work starts. The larger the prospect, the more politics in play and the more a strategic approach is essential. That is where you need a talented and experienced sales representative, talking and understanding the prospect’s language and business.
It is fair to say that sales requires a combination of natural talent and taught skills. In particular in the world of peak technology that fintech and regtech belong to, a salesperson should possess the unique combination of passion for finance and technology and sales. He or she has to navigate in the financial eco-system on the compass of financial business knowledge and on the instruments of financial technology. This was also confirmed by a survey conducted by students of the Artevelde College in Ghent, Belgium, who interviewed executives from both the buying and the selling sides of technology deals.
These people are rare!
As a natural consequence these sales experts have their price and are, seen the lack of sufficient sales budget, often unaffordable for a lot of fintechs and regtechs. Yet, they are an absolute key to success!
The good news is that compelling events such as a growing demand for regulatory compliance and digitalization are triggering and driving many new procurement initiatives within the financial institutions.
The bad news is that purchasers, influencers and decision makers get overloaded with requests for meetings and presentations by numerous candidate suppliers.
The apparent conflict between the interests of young technology companies and the overloaded and stressed end-user prospects and clients, resulted in the emergence of a new type of business: the technology brokerage or in other words: companies providing shared expert sales and account management services, on an international scale.
With this new model, working with the rare species of expert financial technology sales becomes affordable for the technology company. At the same time the end-users can interact with a trusted but independent account manager that interfaces with different technology providers. A decentralized international team operates in different countries with different people and with different core expertises. The common denominators are sales, finance, technology and last but not least : huge experience!
This new model creates a win for both sides of the negotiation table, not only in efficiency but maybe even more financially and certainly in terms if credibility, thanks to the independence of the sales rep.
How about the idea of a human “sales-cloud”?