In this Chief Sales Officer interview, we will describe how Andrew Somoza constructed a perfect go-to-market sales strategy for Vendormate, Inc. The result was a 25% market share and a doubling of revenue every year over a 5-year period. Earlier this year, the company received the surest sign of validation when a venture capital firm acquired the company at a higher than normal valuation. In the story below, Andrew shares many of the best practices that he used to grow revenue at an accelerated rate.
Question – Can you provide some background on the company?
Answer – In 1995, our CEO and a couple of other co-founders set out to solve a big problem in the healthcare space. Hospitals were struggling with the management of thousands of outside parties and a laborious process to certify and track the employees of these 3rd parties. We spent the better part of a year interviewing our potential customers and built a Software as a Service solution that met their exact needs
Question – How did you form the initial go-to-market sales strategy?
Answer – Our goal was to gain maximum reach and coverage and do it as fast as possible. Unfortunately, we didn’t have the luxury of hiring a large sales force on day one. So, we leveraged a dual pronged strategy. To keep our initial burn rate low, we used 1099 subcontractors as our first sales people. They had deep rolodexes and existing purchasing vehicles to expedite the sale. We also built partnerships with leading Healthcare Group Purchasing Organizations (GPOs). It was easy for them to recommend our solutions as they were satisfying other Hospital procurement needs
Question – Were there any issues with that strategy?
Answer – The challenge with 1099’s is that you cannot tell them to drop everything and show up for the company sales meeting in June. We did not anticipate the difficulty of keeping them dialed in to our latest branding and messaging. The extra effort we had to apply to keep them aligned was an acceptable trade off given their revenue impact in the early years
Question – What else drove your go-to-market strategy decisions?
Answer – In healthcare, the denominator is 5000 Hospitals and there are not that many new ones built each year. Our success required that we call on the hospitals that had the highest probability of buying our solution. We came up with a crystal-clear definition of our ideal customer and focused exclusively on these prospects. If it was not on our list, we ignored it. Our research had even found a correlation between cities with major league baseball teams so those were the first geographies we attacked
Question – How did this clear definition of your ideal customer profile influence your lead generation activities?
Answer – We knew exactly who we wanted to market to so all of our MarCom, trade show decisions and email marketing were directed at these targets. We used email marketing and inside sales to generate initial interest and then used our field sales people and partners at the ground level to engage in direct conversations. Our trade show strategy involved inviting people who matched our profile to side events at the show. This additional investment made all the difference in the trade show budget ROI
Question – You have executed so well in the first few years of operation, do you see any changes in your go-to-market sales strategy going forward?
Answer – Yes, we have captured most of the larger hospitals now so as we begin to move into the smaller bed count facilities we plan to alter the ratio of inside sales to outside sales. Today, we have 1 inside rep for every 2 outside reps. That model will likely flip soon and we have plans in place to carry out that transition.
Best Practice Summary
This company applied several channel management best practices right from the outset, which contributed to their eventual success:
- Thoroughly research and define your Ideal Customer Profile (ICP)
- Focus your sales efforts exclusively on the ICP
- Align your Channel selection process with your overall go-to-market sales strategy
- Utilize your ICP to drive targeted, multi-pronged lead generation activities
Does your organization exhibit this amount of focus and alignment? How much are you leaving on the table as a result?