15 Oct Hyper-Scale or Fail: Scale Your Sales and Become a Market Leader
Why So Many Technology Companies “Fail” and What Can Be Done to Improve the Odds of Success
It is a well-known truism that 8 out of 10 VC backed companies struggle to live up to expectations, if not fail outright. Mattermark, in a recent research report, found that after receiving a round of financing, approximately 50% of the companies wind up failing before they have the opportunity to conclude their next institutional round. Making this statistic even more disturbing was that this did not just happen after the seed or A series round but continued through the D round of financing. What makes these statistics even more scary is that these companies are the are among the crème-de-la crème of start-ups as they were able to secure institutional financing. As such, one can postulate that companies that are unable to raise institutional funds have an even higher failure rate.
With the publication of the ground-breaking book, Play Bigger by Al Ramadan, there is finally empirical evidence on why this happens so frequently. After researching 500,000 companies that engaged in 52,000 financing rounds, they discovered what has long been suspected but never proven. Their researched showed that in any technology market, within 4-5 years, one company, known as the Category King or Marketplace Gorilla, will dominate the market. This company will garner 50% of the category’s revenue and 75% of its profits. In this “high-stakes, winner-take-all poker game” except for one other company most of the other market participants will eventually fail.
Based on the above, the Marketplace Gorilla, will not necessarily be the company that was first to market, had the best product or even had the most innovative technology. Instead it is the first company that can hyper-scale and achieve a 40% market share. In other words it is the enterprise that can dramatically outsell the competition in the shortest amount of time. With this in mind, the primary determinant in the contest to become the market leader is what sales engine is used by the emerging enterprise.
Unfortunately, it has been mathematically proven that a direct or inside sales seller will not be able to acquire enough customers in a quick enough time period to become a Marketplace Gorilla. Their sales throughput and close rate are simply not high enough. Therefore, unless the B2B seller tries a radically different sales approach, the chances for failure rise substantially.
One approach that has been shown to work is for a seller to build and employ a high-velocity sales assembly line. By using many of the same techniques that traditional manufacturer use, including labor specialization, employment of repeatable best practices and the use of the specialized technology, a seller can dramatically improve its sales output while lowering the costs of production. In other words, the company can mass produce sales!
A sales assembly line (SAL) seller can double its close rate and experience a 6X increase in sales throughput. When taken together, this will allow them to acquire between 8X-13X more customers. This powerful method of force projection can serve as a catalyst that can help the seller to not only stave off failure but propel it to the all important market leadership position!
For information on how ASSEMBLY can help your company become a market leader, visit our website at www.AssemblySales.com.