I start by attending industry trade shows and other industry specific events (i.e., conferences). Typically the upper management of the construction companies (VPs and Project Executives) attend these events since some of the events are in the day time and regular people have to work at that time. These events are great for networking and gathering new clients because the people who you meet are either the decision-maker or they can quickly introduce you to the decision-maker in their organization. One thing that I learned from selling to companies is that you should start as high up the organization as possible. A new employee or some in middle management is much less likely to pass your message along to their boss. The quicker you can get to the decision-maker, the less expensive your sales process. If you think that each person you pitch has an 80% of purchasing your product if they are the decision-maker and if they are not the decision-maker then they have an 80% of passing you to their boss. By talking to the upper management your probability of success might be (.8*.8 = .64) assuming it takes two pitches for a purchase. If you go through the lower or middle management your probability of success is significantly less (.8*.8 *.8*.8*.8 = .32). You also have to keep in mind that each passes between individuals can take 2-5 days. In the first case, you might be able to complete the sale 1-3 weeks. In the second case, it might take 3-8 weeks for the same process (these numbers are hypothetical and the real numbers will depend on your product and industry but the point is easy to prove).
The most difficult part of enterprise sales is setting the right price. Typically enterprise software does one of two things. It either (1) increases revenue or (2) decreases cost. For both situation you need to quantify the client's current process - what they are doing now without your software. I typically measure labor hour saving per year per employee or new revenue generating potential per year. Then I calculate the new condition if the client were to use my software. The difference between the current condition and the new condition is the amount of value that the software creates for the client. And finally, the price that I charge them should be a percentage of the new value that has been created. The price also needs to be high enough to cover all the cost (sales, development, marketing, and operations) and profit(20% to 60%). It has to be within their budget and less than the cost of them developing it in-house.
Basically:
If (Price < Value_Created && Price > Cost + Required_Profit && Price <= Clients_Budget && Price< Cost_of_In_House_Development){ Deal } else { No Deal }
By following the above formula you can ensure that:
(1) You do not take on any deal that is not profitable
(2) The client understands the value of your product (this makes renewals very easy)
(3) You don't waste time on clients without the right budget (sometimes you both see value but if they cannot pay for it, it is not going to work out)
(4) You software is more efficient than an in-house solution (this also helps with renewals later on).
What I have found is that most software engineers under price their products. An engineer might think along the following lines: "It costs me about $1000 to host my servers on AWS per year. If I charge $5000 then I would be highly profitable." The problem with this way of thinking is that the person does not consider the value that they are adding to the client. The client doesn't really care about how much it cost you to build your product. They only care about the value that you can add them. In a later post, I will talk further by how to set the price based on the value delivered.
Stay tuned.
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