A New Support Group for CEOs Emerges

I spent Friday morning at the Sand Hill Road offices of Battery Ventures, where a dozen CEOs took up temporary residence to discuss what to do about sales cycles that have grown longer every month since September, why most no longer discuss sales leads with their VCs and some of the surprising differences between selling to a new customer versus getting an existing customer to renew.

The group was gathered by Aaron Ross, who has been an Internet entrepreneur, a Salesforce.com executive and a venture capitalist, among other things, and who recently began organizing small, monthly meetings of chief executives looking to create predictable revenue during one of the worst recessions in our country’s history.

Under the rubric of CEOFlow, Friday’s meeting was Ross’s first in the Valley (a Bay Area native, Ross now lives in L.A., where he has had similar gatherings). Judging from how much the participants seemed to benefit from the exchange — including CEOs of companies that have raised tens of millions of dollars, CEOs who’ve taken companies public, and CEOs still figuring out their product portfolios — I gather there will be plenty more.

In the meantime, though I agreed not to identify the people gathered,  I thought I’d share just some of the ideas and advice that surfaced during their get-together.

* Everyone was more concerned than ever about scaling while acquiring customers more cheaply, a tall order considering that “standard budgeting apparently went out the window in October,” according to one seasoned CEO. Said this person, “Even if a CEO tells you they’ll do something, it’s not clear that they will when push comes to shove. How do you teach your prospects that they shouldn’t wait?”

* There was lot of talk of getting from organic growth to proactive growth. Part of the issue seems to be that new CEOS often think that based on a set number of leads and a particular number of close rates, that they’ll do twice as much the next quarter or year. They don’t take into account that the metrics involved in outbound sales (owing to customer acquisition costs) makes that data meaningless.

* Everyone agreed that in days past, CEOs could add more salespeople and spend more on marketing to acquire customers but that neither works today, partly because companies aren’t able to raise the amounts of capital from VCs as they once were. A serial CEO also observed that “you had more time to prove out” your business model in years past. Now, he said, “everything has to work so much more quickly and effectively.”

* Ross suggested that more of the CEOs begin to “specialize” the employees who are touching the customer. “You want people doing outbound leads, you want people doing inbound leads, you want people [exclusively] doing renewals, deployment, support,” he said.

* Several CEOs observed that unless a board believes that a CEO can delineate between a company’s various types of leads, the pressure can be “really unpleasant.”

* Another CEO with lots of funding observed that the “manic nature” of calls from investor board members has been increasing recently, and he wasn’t alone in suggesting the calls were counterproductive. “If one of the big automakers or the government calls,” he said, “they want you to chase after it. But you meanwhile want your sales teams to focus” on the leads they’ve been working and you “have to talk [the VCs] off the ledge about why you might not pursue this thing they want you to pursue.” Said another, “I’m trying to keep them out of all my deals. It’s a huge distraction for us, having them tell us to chase [whatever sound sexiest and most profitable to them.] Then if it doesn’t close, it’s like: What didn’t you do?”

* There a lot of lead generation services that startups are using, but several CEOs convincingly argued that they’re good mostly for getting new reps up to speed. Among the Web analytics tools recommended were those of LeadLander, a San Francisco company, fyi.

 *A lot of the CEOs are trying to leverage social media to educate potential customers without “trying to sell them.” The hope is that once someone is well-enough educated about a product or service, they sort of naturally end up in a funnel, moving toward a final sale.

* In a similar vein, a couple of the CEOs observed that executives can learn a lot from open source companies. Giving people access to code and developing community around it (in the case that doing so is possible) is ideal lead generation. You essentially train your customer, then you sell them.

* There was much talk about thinking through the renewal cycle before ever landing a customer. Some of the CEOs do this by telling their customers on a quarterly or monthly basis that if they haven’t seen the expected return on investment, they don’t have to pay for the license or service. Others said they at least check in quarterly to ensure a customer is happy or to ask what the customer doesn’t like about the product. No surprise, but waiting until it’s time to renew an account is usually not the way to convince a customer that you care, said the CEOs.

*Most interesting to me were observations about why customers think they want something versus where they derive the most value from a product, and how those can be very different propositions (especially if a salesperson manages the account based on the original reason that a customer bought a company’s product or service). I got the sense that many CEOs think very differently about what customers get and how their companies sell products.

For a more detailed understanding of the conversation and to learn when CEOFlow will hold its next meetings, click here.

Find new deal opportunities, super-charge your fundraising efforts and track top managers with VCJ. Get your FREE trial! Or subscribe now!