If CEOs of emerging technology firms spent as much time on sales as they do on getting funding, they wouldn’t need the funding.
That was the message from YOUcentric founder-turned-venture capitalist Tom Fedell, who spoke to about 100 members of the Metrolina Entrepreneurial Council (MEC) at its monthly meeting on Thursday.
“A company never has enough revenues, references or cash,” Fedell said. “And where do you get them? Sales. Sales is king. It doesn’t matter if you have a great product or service — if you can’t sell it, you won’t last long.”
To sell your product, you must understand why companies purchase technology products. Fedell says there are four basic reasons — to increase revenues, reduce costs, maintain a competitive advantage and improve customer satisfaction. “They don’t buy your product because it’s cool, they buy it for practical business reasons,” he noted. “That is your value proposition, and everyone in your company should know it.”
Fedell also recommended that companies not go after “every deal that moves,” but rather to “focus, focus, focus.
“Stay on your sweet spot that’s geared to your value proposition,” he advised. “It’s your responsibility to show the customer — with detailed spread sheets — their return on investment from using your product.”
In presenting specific strategies to sell IT, Fedell drew upon his experiences at YOUcentric, which he founded in Charlotte in 1994. The firm sold CRM Enterprise software to Fortune 1000 companies. YOUcentric went from “three guys in a garage” with an average sale of $5,000 to 250 employees with an average sale of $700,000. He planned to take the company public in April 2000, but withdrew the plans in October after the tech market fell through. In August 2001, he sold the firm to JD Edwards & Company for $86 million.
‘Treat sales like any other project ‘
Fedell’s sales strategies are based on the concept that sales is a science that can be measured, rather than an art form. When it came to qualifying prospects at YOUcentric, he developed seven categories with 35 criteria. Each prospect would receive a score on each criterion and then get a final grade.
Fedell also recommended creating seven to eight steps to track the sales process with each potential customer. “Monitor what’s going on,” he said. “Treat sales like you would any other project.”
When it came to hiring sales reps, Fedell was just as detailed and process-oriented, requiring candidates to be profiled and make a sales presentation and a cold call during the interview process.
He also advised that companies use their own technology in their daily operations and in the selling process. “Let customers see you use it,” he said.
Charlotte-focused VC firm
Soon after selling YOUcentric, Fedell, 49, met Scott Cardais at an MEC event. This spring, they founded Charlotte Capital Plus Partners, a venture capital and consulting firm. In the next six months, the two plan to fund six to 10 Charlotte- area tech firms with $250,000 and $500,000 each.
Fedell said they are looking to fill the funding gap for companies “below the radar screen of typical VC firms” and who need hands-on expertise that angel investors can’t give. Potential clients will be early stage tech companies that have an existing product or service and a customer base, but also with market potential and scalability.
All the companies they fund will be Charlotte-based. “I’ve be here a long time, and I have befitted from Charlotte. We’re trying to create more jobs here,” Fedell said. He advised his audience to also be Charlotte-centric.
“Build up the technology infrastructure in Charlotte,” he said. “Do business with each other. It keeps money here, it creates jobs, and it creates enthusiasm.”