Habits of Hyper-growth Sales #2: Think Even Bigger

(This post appeared originally on LinkedIn here)

In 35+ years in sales I rarely came across ideas that where too ambitious, but often ones that were jumping too short. When digging into detail I found two factors at play here: planning for a too short time horizon and starting from the status quo.

Let’s look at the time horizon as the first limiting factor. If we extend the planning horizon far enough, we must ask the question what the maximum revenue we can have with a market segment or individual customer looks like. We call this Total Addressable Spend or TAS and measure this in the share of wallet a customer spends in the area we address.

Let’s take a customer for example we currently have $250K in revenues with and who spends $1B on IT whereof we can address $100M. To gain a dominating market share at this customer we need to have annual revenues of 30+% or $30+M. Growing revenue at a rate of 100% will take us there in less than 7 years, an ambitious yet resonable target.

If we now plan over a two-year period, we look at building a $1M business, slightly above 3% of our strategic target. If we extend the period to 5 years, we plan to build an $8M business or about 27% of our target.

By extending the planning horizon we look at larger goal. This automatically makes us challenge the fundamental assumptions we have built our current model on and drive the bold decisions required to achieve our strategic target.

Here is a real-world example from some years ago:

One day we asked a customer about the reason for not buying our SW though they were highly interested in using it. The answer was that it was too hard for them to quantify the demand and that they had to get a commitment from every single project manager to be able to determine the count by license we required from them for an enterprise agreement.

We resolved the deadlock by taking the customer’s budget (in the 7-digits) in return for providing them an unlimited number of all licenses for a three-year term.

The deal achieved two things: The customer put the license costs into their overhead budget, so every project was burdened with it whether they used it or not which immediately unlocked the latent demand for our solutions. And our competition was blocked from selling any of their SW for 3 years effectively establishing a single vendor situation for us. When renewing the contract after the initial term the volume was tripled.

Thinking longer term and thus much bigger means we are willing to challenge our own assumptions and come up with better solutions for our customers!