Freddy Jose Mangum
Today’s high-growth technology companies rely on millions of presales professionals, also known as sales engineers and solution consultants, to explain the value of technologies to buyers and customers. Ultimately, the contributions of these trusted technical advisers help close sales.
But while the C-suite acknowledges presales as a necessary supporting function to sales, executives don’t look to presales when they want to yield more growth.
Instead, the chief revenue officer (CRO), who typically oversees the presales organization, will often try to brute-force growth by adding more sales reps. That’s one way, but there are other approaches, especially in a market where finding talent has its own challenges.
An alternative solution may lie in presales. According to a McKinsey & Company survey, investing in presales can improve conversion rates by five points, raise revenue by 6%-13% and accelerate sales by 10%-20%.
Rather than adding more headcount, the CRO can try something different — the presales force multiplier effect — to boost revenue.
To illustrate this concept, let’s examine three scenarios to quantify the impact of presales on growth.
Scenario 1: High volume, low contract value
Revenue models that have a high volume of transactions with corresponding low annual contract values (ACVs), say $10,000 to $50,000, can commonly have a presales-to-sales ratio of 10:1. If each sales representative has an annual quota of $750,000, this implies that one presales professional can have an annual quota influence of $7.5 million across all 10 sales representatives.
If a presales professional’s productivity were to increase 5% across the $7.5 million top-line influence, it could result in $375,000 ($7.5 million * 5%) incremental revenue without the need for additional headcount.
Scenario 2: Medium volume, medium contract value
Envision a model where ACVs could range from $51,000 to $100,000 and the presales-to-sales ratio is 5:1. If each sales representative has an annual quota of $900,000, this implies that one presales professional can have an annual quota influence of $4.5 million across all five sales representatives. If one presales professional’s productivity were to increase by 10% across the $4.5 million top-line influence, it could result in $450,000 ($4.5 million * 10%) incremental revenue without adding to the headcount.
Scenario 3: Low volume, high contract value
It is typical to see a presales-to-sales ratio of 2:1 in enterprise sales models where ACVs could range from $101,000 to the seven figures. If each sales representative has an annual quota of $1.5 million, it implies that one presales professional can have an annual quota influence of $3 million across two sales representatives. A productivity increase of 15% for a single presales professional across the $3 million top-line influence could result in $450,000 ($3 million * 15%) incremental revenue without adding any additional headcount.
In each scenario, the incremental revenue impact can be exponential as the number of presales professionals to sales representatives grows.
Increasing presales productivity will help fuel growth
While the scenarios above may help the C-suite visualize the impact of growth from presales, we still need to address a critical aspect to the equation: increasing productivity.
Both presales individual contributors and leaders perform an array of activities that have a direct influence on growth, specifically on middle-of-the-funnel tasks and performance. The more productive presales professionals are when carrying out these activities, the better the outcome.
These activities include:
- Discovery: Professionals who are adept at technical qualification can quickly disqualify bad opportunities. This allows both presales and sales representatives to focus on the good opportunities, increasing the probability of a win.
- Demonstration: Presales professionals who know how to tell a compelling story and effectively map the features of the product to the need expressed by the prospect will move the opportunity much faster through the funnel.
- POC/POV management: A critical and expensive aspect of the technical sales process is managing evaluations. You can yield significant dividends if presales professionals use a system and methodology that ensures they follow best practices and keep tabs on important tasks.
- Repeating best practices: Many presales professionals typically have a lot of domain expertise and knowledge on how to win. You can leverage that knowledge by documenting it and codifying it into a system that can help presales professionals repeat best practices, therefore increasing the probability of a win.
- Advocating for the right features: Presales professionals have the greatest number of touch points with prospects. They possess a high level of product IQ and hold a wealth of information on what prospects and the market want in the product. If you aggregate this knowledge into a presales source of record, you will optimize internal collaboration and identify feature gaps that hold up revenue.
- Right people on the right activities: A single presales source of record that allows you to track the activities of individual contributors can yield phenomenal insights. It makes it easier to see what technical sales talent is spending their time on, how they are influencing opportunities and where to allocate resources to yield the maximum amount of revenue.
You can increase presales productivity by optimizing individual contributor activities. Given the influence of presales on annual sales quotas and the ratio of presales professionals to sales, the greater your presales productivity, the higher the revenue you’re likely to achieve.
The presales force multiplier effect can be significant for most technical sellers if one only chooses to look. You can also try using this presales value calculator tool to estimate the potential presales force multiplier effect on your organization.
Comment