Sales v. Product Management: Why Can't We All Just Get Along
In a growing tech company, sales needs product management and vice versa, but too often, these two functions don’t get along. The result can be disastrous: Misaligned products, missed sales goals, lots of finger-pointing, and too much employee turnover. As you think about scaling your company, you should ask yourself this critical question: How do we get Product Management and Sales working from the same script?
The answer has multiple elements. The rewards for getting the answer right can be game-changing.
Intro to Sales vs. Product Management
The missions of sales and product management are very different. Sales managers and salespeople think about quarterly and annual targets and incentives. Product managers think about product-market fit, the product lifecycle, market share, and competitive positioning. As a result, salespeople describe product managers as “disconnected from customers.” Product managers use terms like “coin-operated” to describe salespeople. And that’s on a good day! In reality, your product management and sales teams need each other to build and sell successful products. Let’s define the elements you need for a successful Product Management — Sales collaboration:
Respect for the roles that product managers and salespeople play.
Create clear lines of communication and feedback loops that you can actually use.
Define the rules of engagement with customers for new products, feature enhancements, and customizations.
Bond over an intense dislike of the competition.
Align success measurements.
Candidly evaluate successes and failures.
Respect for roles
Successful scaling software companies need many different roles, and sales and product management are two of the most important. Salespeople “bring home the bacon” — providing the fuel needed to build new products and provide a good return to shareholders. In the software industry, really good salespeople make more money than the CEO — thanks to the hefty commission checks they receive for making their number. Product managers shepherd products to market and manage them throughout their product lifecycle. Without product managers, there would be nothing to sell. Product managers also have visibility into the entire market and can often maximize the success of a product in ways that benefit an entire sales force. So both product managers and salespeople bring great value. Kill the name-calling, and kill it again if it creeps back in.
Communication and feedback loops
Product managers need input from the field, and salespeople need to know what’s coming down the product pipeline. You need communication channels to exchange information. Informal communication between product managers and salespeople is good; structured communication processes are better for a specific purpose. Here are some examples of structured communications:
Add an interested and experienced salesperson who is good at articulating product needs to structured product planning sessions.
Ask for guidance from salespeople on pricing structures that will win deals. Salespeople go belly to belly on pricing with customers daily. They know the best structures, pricing levels, and payment terms. And some of them love modeling out the price.
Provide multiple channels for contributing feedback. Examples include dedicated e-mailboxes, Slack channels, and a dedicated voicemail box. Check those channels daily, route the information to the right person, and quickly acknowledge the feedback.
Put product managers in the field frequently to visit customers with salespeople. Most of the time, these meetings aren’t pitched as sales calls but as information exchange sessions. Your product managers get information to help create new and improve existing products. Salespeople see their customers and prospects at work without pressure to close a deal. And deep bonds between product managers and salespeople are forged. Salespeople love it when colleagues in other departments devote time to making them money, and they don’t forget it.
Define the promises you can make to customers
You’ve got to define what salespeople can and can’t say about your current and future products. And forget about promising those features you don’t quite have (and might not have for a long time). This only gets your company in hot water with your customers and provides excellent ammunition for competitors. Here’s a shockingly common example of what can go wrong:
A competitor releases a new product that leapfrogs some parts of your product, although your product is still highly viable.
Your next release, which leapfrogs the competitor, isn’t due for 9 to 12 months.
Your sales team proposes customizations that provide kludgy versions of the desired features.
Unfortunately, implementing those features requires developers to work on the current product instead of the next-generation product.
Sales sign a contract committing the company to custom features but neglect to tell product management and the development team.
The release of the next-generation product is delayed for all of your customers because the development team is diverted from the planned roadmap.
Competitors take advantage of the delay to steal market share.
Let me outline a better way:
You create an agreement between product management and sales about what to say about future releases. Companies always sell the roadmap, but there is a delicate balance between selling the vision and vaporware. Selling more than 3–4 months ahead of the curve almost always works against you for two reasons:
Inevitably, some of the features don’t end up in the product, and customers are disappointed.
Customers keep their money in their pockets and wait for the new product.
Build your product to accommodate some level of customization. With enterprise software products, there are generally three areas where customizations occur: UI/UX, workflow, and integration with third-party products. If you can accommodate these three types of customizations without breaking your product, you can accommodate between-release feature demands. You also give salespeople the ability to respond to customer needs, AND you get great feedback on what customers want to do with your product.
Make sure product management owns the release of next-generation product information to customers, but let sales play a key role. Plugged-in salespeople know which customers will likely want a sneak peek at new functionality as Beta testers. They also know who might evaluate competing products and need reassurance. Therefore, it’s in the best interest of product and sales management to collaborate to seed information on new releases to strategic customers.
Competition is a uniting force
Your competitors steal money from the pockets of your salespeople and make your products look stale. Beating back competition is central to growing a successful business. Salespeople are natural hoarders of information because knowledge is power and makes them look good relative to their peers. You should create incentives for salespeople to share competitive information with product management in an easy way. Remember those e-mail addresses and Slack channels? They can be used to funnel info about competitors, too. One competitive nugget per month per salesperson should do the trick.
Align your measurements
Product managers are generally measured based on a total revenue goal for their product. Salespeople often have a total revenue goal, which, for larger companies, can be spread across several products. Therefore, product managers face a significant challenge: Getting enough attention from the sales force so that customers will buy their product. It’s a hard but necessary problem to solve. Your company needs to decide which products are the most important for growth and profitability based on the following factors:
Projected market demand and competitive dynamics
Revenue and profit per product
Projected length of the sales cycle, which could vary widely by product
Skills available in the company to sell and deliver the product
Which products are in highly profitable maintenance mode and don’t require intense sales effort
It’s a safe bet that most of your new products are in the “most important” category.
Next, create targets for each product in your portfolio based on this screen. Then translate product targets into a plan for your sales team that aligns product and sales goals.
Here are some things to consider as you attempt to align your product and sales goals (Hint: A lot depends on how you compensate your salespeople):
You should pay more in commission for new products that are strategic to the company.
You should consider both the length of the sales cycle and the Annual Recurring Revenue when you create the targets. Higher economic value + longer sales cycle = higher commission payments, especially for new products.
You should also pay more for new sales than renewals.
You should pay the minimum amount necessary to keep salespeople interested in high-margin products in “maintenance” mode. These margin calories fund the development of new products.
In a growth company or above, a high-performing sales force makes 80 percent of the total quota. Weak sales forces make 50 percent. Therefore, you need to set goals that are at least 120 percent above your company's actual revenue goals.
Generally, a product manager has a revenue goal equal to what’s in the company’s strategic plan, NOT the total target for the sales force. Nevertheless, when both the product managers and salespeople have some form of aligned revenue goals, your products will perform better.
Evaluate success and failure
Once a product is launched, it can take many months or years to determine its success. Product managers are graded based on the product's overall success, and salespeople are graded on quarterly and annual sales of new and existing products. You need frequent check-ins between product management and sales to gauge the performance of your products. The check-ins can come in several ways:
Periodically include product managers in pipeline calls, where they can hear what’s happening in the sales cycle.
Once a product has been released, convene feedback meetings with the appropriate product manager and a select set of interested salespeople, where you track the performance of products at different stages of the sales cycle.
If you get negative feedback or other suggestions that might drive more sales, don’t wait till the next release to act on them. Salespeople are the voice of the customer in your company, and you need to listen to and act on their feedback.
Finally, you’ve got to be brutally honest about the performance of your products. The market changes constantly, and what works today won’t be viable three years from now. How many companies still use Siebel for CRM or Netscape servers to deliver web pages? Not many. Product managers will love their products till they die, but they should love replacing them with better products even more. And there’s no better way to alienate a sales force than to deliver unsellable products while flogging them to the market.