In this episode, I talk with Jeanette Renshaw of Smart Scale Consulting. This firm specializes in working with early-stage, pre-series E, companies that are aware they could use sales help, and they want to make sure they know how to translate their funding appropriately. Jeanette works with each company in a unique way that is structured to fit the company and meet them where they are in the process.
I am excited to have Jeanette as a guest and talk with her about how she approaches the competition for the companies she works with. We have a detailed conversation about the process of figuring out where a company is, and how to identify and use their competitive advantages, and she uses Startup Competitors as an example of how to go through that process.
Topics in this episode
Different categories of differentiation from competitors
Why some differentiators need to be fixed
Approaching the marketplace a company fits within
Why did you get into this?
Describing your company in one sentence
Various personas buying the same offering
The relative importance of pricing and pricing model
Pricing is not rigid, but also should not be ever-changing
Mike Kelly: Welcome to the Startup Competitors Podcast. Today we have Jeanette Rensha with Smart Scale Consulting. Jeanette, welcome.
Jeanette Rensha: Thank you for having me.
Mike Kelly: Tell me about Smart Scale.
Jeanette Rensha: So, Smart Scale is my consulting practice where loosely we focus on sales, but there's a lot that falls under that categorical level. Our capabilities are broad, but the niche that we specialize in working with are early stage companies that are aware they could use sales help. Early stage being defined very loosely. I'll say pre-series E, which is a lot of room. They know they need help, and they may be either approaching a round of funding or just achieved a round of funding and want to make sure they know how to translate it appropriately. My engagements are unique in that they're structured, customized to fit the company based on where they're at in their process, as far as approximate length of the engagement. But more so, they're not defined by the objectives from the beginning.
Jeanette Rensha: Like most consultant engagements, you know what to expect, what you're going to receive and the deliverables. These companies have so many different aspects of what contributes to sales, the goal is to be able to have enough awareness to do all of it. Help them keep everything together and constantly reevaluate what's the biggest priority to move us forward. Let's do that next.
Mike Kelly: You said early stage company, is that any kind of company? Is that SaaS companies? Do you have any other filter that you apply to who a good client might be?
Jeanette Rensha: Yeah, certainly. There are some that are sort of known in scope, out of scope from the beginning and then, so for that, say in scope absolutely would be technology companies, SaaS based everything for the most part. I have background in life science as well but the work I do most prominently rarely translates there. I know enough to know when I can help and when I can't. I have background in B to C or non-technology based companies and the skills that I most deploy can be transferrable in a good amount of those instances but usually it becomes pretty clear about whether we're a fit or not in our initial conversation. I'm very happy to say if it's not. I usually scope things out of the norm in that initial talk.
Mike Kelly: Got it. Thanks for coming on this podcast that you're kind of a nontraditional guest because you're not a tech founder with a company. The thing I was interested in talking with you about, because we talked a little bit before about having you on the show is how you approach thinking about competition for the companies that you're trying to help sell. One of the big ways to think about competition is product road map and how you differentiate the product, how you differentiate your brand and your messaging, how do you differentiate yourself during the sales cycle, how do you differentiate yourself when you go out for funding. All of those are different aspects of understanding the competitive landscape. I wonder maybe if you could talk a little bit about as you engage with a client or as you start to wrap your head around their marketplace and specifically how they position themselves, what do you look for and how do you start to approach that?
Jeanette Rensha: Yeah. I like how you took a couple of different segments. We'll start with the one I think this is most directly asking about which is when I'm working with a specific client with their product or service or combination offering, how do we determine the strength of their assumed competitive differentiators that exist, whether they're the right ones or how do we craft it from the beginning? I think a place to start is to really ask why did you get into this. Because those answers prove to be very telling. Some people have this kind of differentiation component on their mind from the beginning and unfortunately some people never have it until I'm on the scene which is usually not a great sign unless we're really, really early. But it's a surprisingly prevalent thing. There's a lot of in betweens there, a lot of gray but it's first like, do we have any awareness that we need this or what we think we have or the health of it.
Jeanette Rensha: Then it's how actual is it. When we're looking at what's the best case scenario, is this healthy or what should it be, first think about what's the industry that we're falling into. Is it established, is it new? Is it busy and what's the makeup of who exists in there? Each of those answers takes you into different tiers of consideration although I will say there are common threads across all of them, just like B to B, B to C have different entire kind of tiers of differentiation but commonalities also across those.
Mike Kelly: Walk through an example of how you try to assess, I guess when you're first, maybe it's that first meeting or maybe it's one, probably more likely when you're doing discovery with a prospect or a client, walk through how you try to assess where they are.
Jeanette Rensha: Mm-hmm (affirmative). I think one thing that I typically start with, when appropriate to start into a little bit of weeds, even the first meeting is how would you describe your company in a sentence? Unfortunately most people struggle to do that.
Mike Kelly: Can we do that for Startup Competitors?
Jeanette Rensha: Yeah, how would you describe your company in a sentence?
Mike Kelly: We provide the data that founders need to help them better understand the market that they compete in.
Jeanette Rensha: If that sentence proves to be in the way yours was, human language that someone that might not have experience could understand, so it's relatable no matter the person. We know if you're speaking to just the right person they still have different backgrounds and languages. You want to make it as easy to understand and that was clear. Then do I know where you fit in my scope of any kind of vendor I might use or resource because if its an unknown even category, I've never considered needing or even exploring or knowing of a tool that would work like that. Much more difficult place to start from. In fact, some would argue very poisonous and not very effective because even if your functionality is easy to understand, if you are creating or you think you are creating your own market category, the buyers won't be able to start to understand what you do, what you solve, any of the things you're going to say after that until they first have a frame of where you fit.
Jeanette Rensha: Even if this is especially prevalent when you're commercializing an innovation. That could be an A-stage company but you're bringing something that you think is new, maybe creating a new market category. In sales, tech resources to enable sales teams, this is incredibly prevalent because there's a lot of overlapping functions and tools and things. Some of them work together, some don't but the category of sales enablement is far too broad and all encompassing but how do you differ up sales enablement? There are some subcategories and now you're seeing subcategories branch out for artificial intelligence field sales enablement tools regardless of their function. It's just really messy out there but when people try to sell those tools, if they don't have a category they knew of tools or any of that frame of reference, they can't evaluate it, they don't know how to process it and you're not going the be able to get into a really good conversation or even have them consider your offering because it's never been on their radar before. That doesn't mean you have to fall into something that exists. There's certainly new markets being created all the time.
Jeanette Rensha: Rather, it's give me a frame that's close by. If it's something completely unrelated to anything I've ever had truly all its own, well then let's start with the problem. Because if I'm familiar with the problem and I can frame that, then I can maybe entertain solutions where there has never been one before. If I'm a new kind of tangential segment for where my tool falls, start with the main segment category and get this familiarity of, "Oh are you familiar with the CRM" would be an easy entry point for an app that might come in an app store, build onto a CRM or enable that to go further or faster or something like that. That just has, okay I know CRM. Now keep talking to me. Check that, start to get my arms around it before I start to understand all the cool new stuff you do and get lost in where it will fit holistically.
Mike Kelly: Not clearly defining or understanding kind of the, what did you call it? The space that you live, right? The area of spend that you live within a company. What are some of the other common problems that you identify at that, even that first stage of tell me, give me the one sentence of what your problem is.
Jeanette Rensha: Once we get that understood, whether we fix it or it's there, then we move to why would I pick you in a sentence.
Mike Kelly: We're going to be the best fit for founders who aren't quite sure where to start or need an extra level of depth that they're not going to find if they just use a standard, automated service.
Jeanette Rensha: Okay. When you say that I hear we're going to help you start if you don't know what other automated service to buy. Like, we're for the first timers.
Mike Kelly: Maybe. Let me try it again. I don't know, I've never done this before.
Jeanette Rensha: That's okay, that's good.
Mike Kelly: I'd say if you're not sure where to start, yes first timers, I would also say if you don't have the time. I didn't say time in the first one. I would say time is a key value prop because we do all the work, you don't have to do anything. Just completely hand off. Then the third piece would be maybe a little bit extra depth because we aggregate so many different sources that, part of that goes to time right, but it's just even finding those sources, buying subscriptions to all of them, things like that. It's the white glove version that if you're not sure where to start, that's okay. We're happy to handle that for you and then even if you know what you're doing, probably go a little bit deeper and you don't have to do any of the work. We white glove that for you.
Jeanette Rensha: Mm-hmm (affirmative). Yeah.
Mike Kelly: That's not crisp. That's not one sentence.
Jeanette Rensha: It's not, which is okay for the creation of it. It's about being able to have, just like any receiver or listener, you could be the most diligent, you could take all the notes or however you intake data knowledge and then go on your way. You could have understood everything in the conversation but translating it is much more difficult. People usually leave interactions with one to three things that they can recall stood out to them, whether they're action items or not, you know but if you want anyone you're working with or a prospect you're talking with about Startup Competitors, then to walk away remembering what you do and why they should do it with you, it has to be concise and it has to be something that sticks with them.
Jeanette Rensha: I always think about mission statements as a good analogy because I worked at a large public company where one of our monthly activities in one of the departments I was in in my time there was to go into a big conference room with our whole department and we would volunteer to raise our hand and read the mission statement for our department which was 12 font on a full slide of text. You stood up and you read it to a group of adults. I was just wondering how we were going to walk through our lives and our careers there and remember to live by that statement that we could barely read on the slide once a month. There was nothing that you could carry around with you, a mission statement that is truly your core that you could have in a sentence that fuels the decisions that you make, day in and day out. That is what will stick with you. That is what will drive behavior back into what is your mission. All the other details about what you do and how you do it can be part of your ultimate plan but they're not going to carry them around every day.
Jeanette Rensha: A differentiator is what is going to be the most compelling thing to your audience. That is where competitive differentiators, you could textbook it for days and there are lots of ways to chop it up. They're not all right or wrong. It is about your audience and who you're talking with and what you need to get across to them and how they likely receive those types of messages, as much as it is what you're saying and what you believe are attesting differentiates you.
Mike Kelly: How do you handle that for products or companies that have multiple buyers?
Jeanette Rensha: I think especially in the segments I work with, that's more common than not. It comes down a lot of times to more specifics. I mean, it's part of why I love what I do because I get to get into the weeds and really make these textbook, high level recommendations but specific to a certain company because there are so many nuanced things that will change how you do that. When you think about how do you make a value statement for a new customer-
Mike Kelly: Just different types of buyers.
Jeanette Rensha: Different types of buyers.
Mike Kelly: Yeah
Jeanette Rensha: Complex sales. Yes, yes.
Mike Kelly: At Startup Competitors, we sell to entrepreneurs who want to get market research for their SaaS idea. We also sell to venture groups that want to use us as part of their due diligence process. Then we also sell to professional services companies who can leverage our data to better provide their services. Think a marketing services company, a PR company, who wants to better understand the market that this client is in. They want access to our data because again, we can find it faster than they can. Those are three very different sales, when we make that sale. The value props are very, in my mind the value props are very different. I love what you're saying but now you've got this extra nuance of how do you say that to three different audiences at one time.
Jeanette Rensha: Yeah, that's actually two different things now that I'm wrapping my head around it. There's the instance of various personas buying the same offering.
Mike Kelly: Yep.
Jeanette Rensha: Then there's the instance of various personas all at one prospect company considering that they need to align or reach consensus to buy the same offering.
Mike Kelly: Yes, that's different.
Jeanette Rensha: Both interesting but different. To the various personas, the Startup Competitors example, this is also something that matures as the company matures. Initially you either want to target one of those personas obviously to get your foothold and then your messaging would be aligned with them. As you expand your market to include persona two in your initial kind of ramp, then you have messaging that aligns with them and the various aspects of their persona is a reflection of how you message it and what they'd be using it for. The compelling differentiator to a startup founder that needs to make sure they're not going in too far before they know what is, is reasonably and rightfully different than selling to a venture who wants to constantly have that fueled. The messaging seems obviously different and just making sure the channels, the collateral, all of the ways that they ingest content is either high enough level that it's generic and yet specific enough so that it can be navigated, the information still makes sense and everyone can see it no matter the person and it works. Then when you get into more detailed engagements that your messaging to them and the content you use is specific to them.
Jeanette Rensha: But when you think about a company reaching a level of maturity that they have the resources to really take that to the nth degree, a classic example is P&G and laundry detergent.
Mike Kelly: Right.
Jeanette Rensha: They make all of them. It's like, most people don't think I could buy this or this or this and those are all different companies competing. It's like, no it's probably the same company but if you're the family person that has lots of laundry, you are marketing to this one. If you're the environmental friendly person, if you're the person that likes how your laundry smells, they have segmented their personas and their audience so specifically that they have entire product lines and sub-brands and companies built out for each persona. In a startup space it's not as realistic but the same concept is true about how you weight into your messaging for those personas even though you could be selling, at the end of the day, still just laundry detergent.
Mike Kelly: Now go to the complex sale. An example of that, you have a, let's say you have a SaaS product that helps one area of the business and that's who your primary user is but there are then three other areas of the business that either have to, they are stakeholders because they either have to put data in or they have to consume the output data or whatever the case may be. To make the sale you need all four of those people aligned. How do you do that?
Jeanette Rensha: Me being the forever gray, nothing is black and white, it would depend. The ends of the spectrum will probably give us a good high level overview. On one side, it's understanding who are the essential decision makers and purchase either enablers or limiters. If I need, let's say five people at this company are my average leadership team members that contribute or reach consensus in order to secure this sale, then maybe two of them are going the be the primary users. Maybe one is the financial buyer that is not involved but needs to have the final approval and needs the understand the business case and then maybe two others are auxiliary departments that have a small stake in making sure they understand what's going on because it will impact them but they're not every day users. You would approach a buying audience like that differently where you would involve the right people in an appropriate sense and a lot of those also where you get to be human.
Jeanette Rensha: If I'm working with you and you have a team of people you're working with say, "Hey, who needs to be here from the beginning? Who will need to be here at some point but not necessarily from the beginning? What matters to them and when do they need to join?" You're like, "I'm going to keep this easy and keep our arms around it but having you under, tell me who plays what role." Then I can help us keep in mind, "Oh hey we're talking about this now" or "You've requested a financial proposal" or "Sounds like we need to get so and so back in the mix" or introduce that person and make sure that we're aligned. A lot of times you navigate those waters, "Hey I know that you shared with me earlier that this is important to this person. I made a task to help remind us to stay on track so we don't let anything get us behind the eight ball. That makes it more about them then just, "Bring the other decision maker in here. I don't know if you're actually going to be able to say yes, bring them all in." Which unfortunately is where sales goes. The number of times I've heard people say, "Are you the decision maker" on a phone call is astounding.
Mike Kelly: That sounds very off putting.
Jeanette Rensha: Yeah. People don't warm up to that very well, especially if they're not the decision maker. Sometimes it's quite the authority boost but if you're approaching that side of the spectrum with all those different buyer personas at a single company then your goal is that you're solving the problem for the people that need the problem solved and your focused work is probably with them and the core messaging is with them. Then you're understanding when you're bringing in the other parties and how much they're going to have an impact in the decision. Some of those groups will get approval to choose a vendor and then the executive defers to them to simply bring their choice. In some groups will get to choose a vendor and will bring it to the executive team and do some secret presentation and they have a back and forth and no one is allowed in. Ultimately the executive makes the decision with no participation in the sales process.
Jeanette Rensha: That is where your differentiators have to be almost enablement both in training, your kind of white knights or key people you're working with to be prepared to sell for you as well as enabling them with content that is concise and that has the differentiators that speak to the executive team. Maybe you're solving a day to day grind but the executive way of presenting that differentiator is going to be an ROI of time savings and the bottom line of impact on the company. But for the user, that department head, it's going to be about giving your front line managers time to get back to analyzing the data and helping their team versus driving their team to enter the data or something like that, where they care much more about the details. The executive team is a different set of differentiation rhetoric that you supply to them. That's one.
Jeanette Rensha: The other side is when you are differentiating in a complex sale and it's a solution that every company or every of the major stakeholders will also have to choose and buy into. This is where the split, SDR to a closing account rep or not one rep owning the soup to nuts sales process becomes a really, really effective sales process when you have high quality people working collaboratively. What I'm referencing is, if I'm an SDR or a BER and I prospect and qualify an opportunity for my AE but it's a complex sale-
Mike Kelly: I'm just going to stop you for a second.
Jeanette Rensha: Yeah.
Mike Kelly: Unpack the acronyms just in case somebody listening has no idea what you just said.
Jeanette Rensha: Yeah. It's just an alphabet. No, it's convoluted. That's a good point. There's the prospecting leg sales development or business development rep, SDR, BDR, the account executive assigned to the closing rep, usually they own the back half of the sales process. There's a lot of other flavors and people that fold into that depending on the industry but in the most complex ones where there are those other people buying teams, selling teams, you first get someone interested in having the talk. Then you have to delicately try to stay in touch between the different sales folks helping the process along of is our person we've engaged at the target company interested in bringing other people in? Are the other people aware of our discussion? Or is the prospecting rep, the SDR, are they also still prospecting these other department heads that will either keep pointing us to the right person? It's almost like you have to find five potential qualified leads of these target personas all within the same company. That's a delicate balance to walk the line back and forth and help the AE keep track of everything and help make awareness of your offering to the whole buying audience as you wade in.
Jeanette Rensha: Then when you're doing those initial conversations is where you speak to the value prop of everyone so they understand the impact of them and that way when the group gets together and it's a busy demo and no one has time to talk and you miss all the questions because you are demoing but there's a bunch of important people in the room, they're going to hear more high level things or things that might not apply to them but you've got in a relationship with each of them so you can speak the language they each need to hear in order to understand what's in it for me. Why is this product the right one for me, specifically. These are all very, very granular differentiators deep in the sales call but they're all going to branch off of your certainty and your confidence in your company, your general offering differentiator. Why do you do what you do, why are you versus anyone else that does similar or the same thing as you.
Mike Kelly: How do you go from that, the why do you do what you do and how are you different from anybody else that does what you do to what you just described with a high functioning team that's attacking a prospect from five different angles?
Jeanette Rensha: A lot of times you'll see companies segment by vertical. As a simple example of training to personas, I'm going to learn especially persona in their language because I may have learned the company level one and then I get to go work on all accounts to target prospects within that industry and I get to learn their language and how they speak. I'm going to get good at that. Then people organize it differently but you might stay in that vertical and be the champion of that or you might continue to kind of diversify your skillset and knowledge and move between verticals so you could work any vertical or you could speak the language, maybe that's how you're pathing yourself to an account executive role from a prospecting role is you now can speak that language of the various people you might be talking to and you know how to tailor your approach depending on who is in the mix for any given company.
Mike Kelly: Got it. I don't. It's okay.
Jeanette Rensha: We're really in the weeds.
Mike Kelly: It's all good.
Jeanette Rensha: I don't think it will come across very effectively.
Mike Kelly: It's all good. All right. Let's switch gears a little bit. Let's say you've gone and you've done an initial assessment with a client keep walking me down that journey from their experience. What happens next? How do you engage with a team to start actually making these changes, whatever the changes are that you recommend?
Jeanette Rensha: Yeah. Well, whether if it's not a slam dunk differentiator, then we've got to fix it or create it. That is starting with really unpacking why but also how are we going to differentiate ourselves, because unfortunately when we're fixing it, it's usually because people believe they have a differentiator but it's one that's not going to last and they just have been nearsighted to that point.
Mike Kelly: Give me an example of one that's not?
Jeanette Rensha: One could be a small feature distinction.
Mike Kelly: Okay, got it. Easy for somebody to catch them in the market.
Jeanette Rensha: Yes. Anything that's not a proprietary secret sauce feature, you should never bank on it being-
Mike Kelly: Perfect.
Jeanette Rensha: ... a differentiator for a long time. The other one that shouldn't be thought of as everlasting or be a lead differentiator is your price.
Mike Kelly: Yeah.
Jeanette Rensha: We're not Walmart. Or if you are Walmart, I'm probably not working with you and you probably have your differentiator pretty nailed down.
Mike Kelly: Okay. Nice.
Jeanette Rensha: But I mean there's a place for price differentiation. I will say that I wouldn't just leave it at price because I think that, again, in my world of gray and the details of making things custom, I think that's a really fun opportunity. In prepping for speaking with you today, to organize my thoughts I just reviewed a bunch of different sources I like for how they attack the topic of differentiation because I wanted to see the different approaches but a lot of them miss the nuance. Like, price is mentioned all the time. People fall into it, all the common stuff but pricing structure highly undervalued and a significant differentiator with the companies I work with because software is a really easy solution or like, sample for this where people know software as a subscription model and traditionally it is. But that means a lot of things and most people interpret it to mean user based, month over month. A lot of these core or maybe legacy criteria that we used to always do or sell software by. Well, that's not applicable for all softwares. I mean, there are certainly ones where it would be nonsensical to do it by user and then it's like, what now?
Jeanette Rensha: They're lost. They try to fit into something, hopefully. Some of them are really loose, some of them are really all over the place from pricing, there's a million a la carte things. But organizing it and selling it in a way that's logical to the people that consume it, they understand that technology scales and cost scales differently. It's not one the one. You have the technology that scales and your resources scale some but they know that. They don't want you to charge one to one all the way up through scale. What is the thing that you're providing? When do they get benefit? Is your pricing model and structure aligned on that? Is it clear? Is it easy? Other major differentiators that people are really focused on today with the price of structure, with customer service or support it's this we're not everyone because we're us. It's usually also we're like you. We know you. Either you're safe here because we're like you or we're the experts and you need experts but really you're buying our software and we're going to be experts when we help you and that's an added bonus. You get more than what you sought out to buy. There's a lot of support functions.
Jeanette Rensha: Then I think the world is catching up to this trend or at least they're starting to have it more top of mind but there's a concern about ease of use, onboarding trial and implementation, how do I get to buy your product, get on it and use it? It doesn't always happen in that order but historical sales is I control the process as the sales person. You come to me and I'll tell you what comes after what and then I'll get you the proposal. We can be on the phone and go over it. I'll sell it to you and we can do that. It's very rigid and usually involves the buyer being required to talk to someone live. It's really not that way anymore. The more you can enable people to self buy, self teach, self learn, self use, the easier it is for them to buy, the less time they have to give and the more likely they are to try and adopt your product. You can even create what they're looking for in the market because they might not have tried any of them. While they're waiting for demos for other companies, they're clicking around in your stuff.
Mike Kelly: Why do you think so many SaaS products in particular still have call for pricing or fill out this form for pricing and not just enabled self signup, self purchase?
Jeanette Rensha: Yeah, it should be clear that some of those instances are incredibly legitimate and those product offerings could not be self service and that's rightfully so.
Mike Kelly: Give me some examples or what drives that maybe is a better question.
Jeanette Rensha: Yeah. It would be complexity and implementation, time, effort, resource that is unavoidable. If I have to build up a bunch of things to make it work your way and organize it and install it before you could ever try it and it's a significant effort because it's a technical infrastructure item or something of that nature, no one would want to do that with the option of not paying them back out. There's a lot more nuance. Certainly there's no way to self service that. There are many examples on that side that would eliminate that.
Mike Kelly: Okay.
Jeanette Rensha: Other reasons, one major one especially with companies that are more mature and still won't do it is because they're not equipped to do it. They don't have the right support. Their technology or their user interface, whatever capacity it's in is not intuitive enough nor do you have enough guidance to get through it. You'd get in there and even if it worked really well, you wouldn't know what you're doing and you wouldn't be able to teach yourself and then it would be crap because you just are floundering around and no one is there to help you because you let them in but you didn't enable them to be successful. Companies that are aware of this when they're early, early design are planning for it. They're looking at making sure they have usage data, guides embedded in there, tools so that you can do your own tours, support articles and things that are easy to find in specific instances so that if you appear to be stuck, it's right there as opposed to you having to go find a knowledge portal and dive in to find your answer.
Jeanette Rensha: Things like that are helping people get ahead of it. People playing catch up are struggling. Or when it comes to the pricing being customer facing or behind the wall, it used to be they were just afraid people would get shocked and run away. To some degree that's still sort of true but in those industries where everyone hides pricing, I'd like to explore what it would mean to put it out there because what people want more than anything is to trust sales people. That's a very steep hill to climb. But when you make it feel collaborative and you say, "We're here for you. We structured this pricing because we think it's how you would want to buy it because you're who we think would want to buy it and if not, we need to know but we're trying to make this reasonable and we don't want to hide it. We're not going to manipulate it, we're going to be transparent and we're going to put it out here. I think that's a really interesting differentiator as well when it's not too complicated, where it baffles people.
Mike Kelly: Yeah. How much of your process is looking at pricing when you come in to work with a company?
Jeanette Rensha: It depends on the engagement. Some of them have really well thought out pricing models-
Mike Kelly: Because I would imagine that is a big component of a sales that isn't working, right? Sometimes it could- be. I think your intuition around the pricing model might even be more important than the actual price-
Jeanette Rensha: Yeah.
Mike Kelly: ... when it comes to it not working, right?
Jeanette Rensha: Yeah.
Mike Kelly: How do you uncover that that's the problem and then what are the steps you take to figure out what the right pricing model is?
Jeanette Rensha: It becomes pretty apparent if it's a problem real early. Like, one, how certain are we about the pricing of today? If you get any wavering there, it's not good. Just in the sense that if they had any hope of confidence, they're usually like, "I think it's pretty solid." I find that people are overconfident and they want to believe in what they're made and so when it's not good they waver but when it's got some traction and people receive it well, they tend to stand on it as least lukewarm. But when you start to look at the sales data, assuming they have some, about where things fall off in the process and why people cite their reason for not choosing, if there's accuracy to that data you can start to get some idea of how many deals fall out of your funnel based on a pricing consideration or when that is a topic that is coming up in conversation and how do those go. I mean, part of my discovery process is talking with front line sales individuals, whoever that might be and they know. They know how well it's met or not.
Jeanette Rensha: There's never an offering where everyone says, "This is so agreeable. I love this price." But having a responsible conversation about price and figuring out if we can make it work is different than people saying, "Holy cow" and hanging up on you when you finally get there after you've held it close to your chest the whole time. Those are pretty indicative. When you go to approach it, you start back at the customer. Who are these people? What are they using it for? What value do they derive and what is it based on? Can we report on that value metric? Can we structure pricing around it? What would that mean for us? What would it look like? What are the other operational business considerations we need the entertain? Now let's start plugging and playing some numbers with our current customers and see what it would mean if we used this hypothesized new model and put them in there. What would it mean for our financial forecasting and then you plug and play behind the scenes but only so long. I wouldn't advocate you take a bunch of shaky pricing models to market. It's one of those things that especially once you're in market, you don't want to pivot constantly in a confusing way but that's rarely the issue, unfortunately. It's people get really rigid and hold onto their pricing.
Jeanette Rensha: It's maybe a bit of both. They either change it constantly or they hold onto it forever and they think it's in stone and it should be responsible iteration through growth. Constant reevaluation and specific responsible iteration as you learn. But like anything, you're testing anew, go to the people you already have in your network and trust and get their feedback. Test your hypothesis for learnings before you take it to market and try to get revenues with it.
Mike Kelly: I'm thinking about a specific conversation we had in one of our product companies with a prospect. We had sold I think two enterprise clients, this is like a 40 to $60,000 a year spend. Not small, not massive. I want to say we had two to three clients at the time and we went to a, this would have been a whale for us. This was a big account and we were pretty far in the process. We started talking about pricing and I remember, I was the one selling this. Sitting across the table from, call him Mark, the guy I was selling and Mark was like, "Yeah, we really want this software but your pricing model sucks. I don't know how to make that work in my business." I'm like, "What do ... No it doesn't, it doesn't suck. What do you mean?" That was all inside my head. I might have said, "What do you mean?" He goes, "Well, I mean you're doing this flat monthly fee and it's just not the way my business works. I want to be able the take the cost of who is using that software and assign it out to the individual entities" think of a shell game of LLCs. It's a whole bunch of different companies.
Mike Kelly: "I want to be able to take the cost per use and funnel it into each of these companies so we can accurately account for where this cost is coming from. In a flat monthly fee, I don't know how to do that, which means it really just sits on my balance sheet here at corporate and I'm going to get looked at for that at the end of the year. That's not working for me because I don't want it to sit on my balance sheet. I want to push it out to everybody else. I can't really do that with your pricing model." Then I was like, "It seems really insightful. How would you price it? How would you want to see it priced?"
Jeanette Rensha: Yeah.
Mike Kelly: He was like, "I would want to, can you just charge me per use? Every time we create a new deal in the platform can you just charge me by the deal? Then I'll know exactly who created that deal which means I can, at the end of the month I can allocate that cost to them and all I need from you is an invoice at the end of each month of by operating entity, they did this many deals and you're charging me that much." He's like, "I'll even pay you more for that. I would pay a higher per deal cost for that then a flat monthly fee that's predictable."
Jeanette Rensha: Oh yeah.
Mike Kelly: "Turns out any time we make a deal I'm making money. It's not even something that I think about versus every month when I look at your flat monthly fee I'm going to ask myself the question, did we do any deals? Did we use this software this month? Is that worth the 10 grand?" Whatever.
Jeanette Rensha: Tit for that.
Mike Kelly: It's super insightful and I was like, "Yeah, we're doing that. That sounds great. We'll take that. Can we negotiate a per deal price now or do you want to do that later?" Now we have two pricing models because it turns out he's not representative, he is representative of about 50% of the market. Then there's 50% who work the other way and they're like, "No we don't want any cost in these individual companies. We want to carry all of that here at corporate so that they look very profitable and healthy. We want to carry as much of that as we can." Which is super interesting that market-
Jeanette Rensha: Fascinating.
Mike Kelly: Yeah, just a segmented market. So we have two pricing models that we go to market with and we early in the process, I can pretty quickly tell you which one you are without you having to tell me. Then when we go to present pricing we say, "We have two pricing models, this is the one I think you would like. We have this other one, too, if you want to talk about it but this is where we'd be at." 80% of the time they're like, "Yep that sounds reasonable." Then sometimes we're wrong and they're like, "What's that other pricing model? What would that look like?"
Jeanette Rensha: Yeah, I think that's a really interesting example and it hits the major things that I think about, like how do they want to buy, how do they get value, how do they want to pay. Same sort of thing.
Mike Kelly: Yeah.
Jeanette Rensha: Then is the way that the want metrics, in your example, the quantity of deals is how he saw the value being divvied up between the various entities that were using it rolling up to him. It's like, if it's not all thing equal, which it sounded like it wasn't-
Mike Kelly: Not.
Jeanette Rensha: ... and then the metric of differentiation is quantity of deals created and that's a trackable metric that's easy to report on, done and done.
Mike Kelly: Yeah.
Jeanette Rensha: Yeah.
Mike Kelly: It's had this great side effect, too, because we do nothing related to users, we have no per user pricing. We're like, "Yep, you can let anybody in your company in. That's cool. We're happy. You've got a maintenance person? Bring him in." True story, maintenance people. We have everybody. Lawyers, managers, maintenance people, you name it. The magic of that is without even intending to do this, I'd like to say we were super insightful and planned it this way, we weren't but we now have 50% to 70% of a company in some cases onboard our software using it. They're not getting charged for it but the magic of that is imagine replacing that software with a competitor. Right? If somebody comes in down the road, now it's not just like, the five core users who you have to train and convince, which is five is not that many. You can probably do that pretty easily. But when it's 50, when it's 80 and it's like, "Oh man, I've got to retrain a property manager out in the field?" It's just not worth it.
Jeanette Rensha: Yeah. I think about, I see pricing models getting away from metric like a user based metric that both messes with financial forecasting, especially with longer contract terms but also where the operational headache of managing, allocating and retracting licenses across business units through attrition and new employees, I'm sure you've done it. I know I've done it ad nauseam. It's not fun. It's also really not fun to go to your financial head and say, "Hey, really excited for my new hires. We need to buy five more licenses for them from these seven vendors that we use in our tech stack." They get mad at you, no one specifically but in general it's a frustration because it's a cost they hadn't budgeted for. It's like, well I got the hires approved. They're going on the team that uses the technology. We know all these things. Somehow I'm the bad guy. Companies don't like that. Everyone is too busy, no one likes that part of their day and it makes using the software, that's a friction point. Make it easy to buy, make it easy to use, expand and share. Why would my CEO not get to look at my charts over here because they don't have their own user license. This is infuriating.
Mike Kelly: Yeah.
Jeanette Rensha: I think one of the other things that's coming up a lot is make it easy to use across the business, not just in a permissions user perspective but more and more technologies are on the scene. They're more and more crowding in in a single tech stack for any given department. Just feel like there's a big wave kind of happening where at first it was a lot of all in ones trying to do rudimentary technologies and platforms and build it out. Then it became best in class so companies had an aggregation of many vendors all serving their purpose and then the breakdown of them trying to talk to one another, the complexity of training all these different solutions, all that falls into that, became so unbearable and the opportunities for new stuff kept coming in that now it's almost like, I don't want best in class unless you can easily talk to my other stuff and you prove that it's worth even trying to get you guys all to work together.
Mike Kelly: Yeah.
Jeanette Rensha: You guys being the inanimate vendor technologies. Yes.
Mike Kelly: Right. Right, right. Give me, only because I'm watching the clock and I probably, we're way over on time as it is so I probably should let you go here soon but before I do that, when you go in to consult with a company on changing the sales process, what are the biggest roadblocks you get from that company? Your client?
Jeanette Rensha: When I'm actually changing things or when I'm proposing my work?
Mike Kelly: Yeah. Start with proposing your work.
Jeanette Rensha: Proposing my work is simple. It's I get why you don't have it defined as what you do and what comes first and what I should expect because you don't know enough yet but also how am I supposed to be sure of anything. That's a very fair counterpoint. The way I structure things is meant to give frequent checkpoints, constant, not constant, that sounds tiring but comfortable frequency of alignment on what's next, why do you need to learn, do we just need to do, those kind of things. It's all about communication in flight. Helping them understand that they have outs so they can feel safe. I always let people leave. I've defined checkpoints where I say, "Here's what we've done, here's where we're going." Thankfully I'm betting on myself so this proves to just give them time to meet me and get in the flow and see how I work and how I communicate. Those checkpoint are never really needed but they allow people to enter into the unknown feeling safe. That's the biggest obstacle there.
Mike Kelly: Then once you're working with a team if they don't want to change?
Jeanette Rensha: I think a lot of teams and it's a tough thing to ask of anyone but they don't want any of the learnings we'll glean as we wade into stuff to be telling them they shouldn't go there but sometimes that's the most important message. If you go take the startup landscape or the competitive landscape. If you didn't do your diligence in evaluating it and you think that you have a certain kind of position, whether it's just you're the first person to the market or one of the early folks or you think you have some crazy differentiator and then you find out later that had you looked harder, you were wrong and that might actually be the critical piece that says, "Going further this way you'd have to do something drastically different than what you have planned or it's a bad idea and we shouldn't do it." Very, very difficult place and I wish people were more willing to see that that would allow them to figure out what they were trying to solve and if there is another way versus being upset. It's a gut reaction, natural thing but that inevitably happens.
Mike Kelly: Nice. All right. If people want to get ahold of you, how can they do that?
Jeanette Rensha: There aren't a lot of Jeanettes out there anymore but I'm easy to find on LinkedIn, my email is my full name at Gmail. Just, Jeanette Rensha. I'm a frequent responder so I'll entertain anyone with a respectful approach. I have a lot of really fun conversations and meet a lot of cool people. I'm happy to connect with anyone.
Mike Kelly: Awesome, Jeanette, thank you so much.
Jeanette Rensha: Thanks Michael.