{"id":9004111223061326,"date":"2014-09-12T04:00:00","date_gmt":"2014-09-12T04:00:00","guid":{"rendered":"https:\/\/www.pragmaticinstitute.com\/uncategorized\/when-sales-and-product-teams-collide\/"},"modified":"2025-07-15T18:20:50","modified_gmt":"2025-07-15T18:20:50","slug":"when-sales-and-product-teams-collide","status":"publish","type":"resources","link":"https:\/\/www.pragmaticinstitute.com\/resources\/articles\/product\/when-sales-and-product-teams-collide\/","title":{"rendered":"When Sales Teams and Product Teams Collide"},"content":{"rendered":"

4 minute read<\/p>\n

Stress between sales teams and product teams causes stress and can undermine everyone’s success. Hear how one pro experienced this problem and learn how to navigate it in your organization.\u00a0 <\/em><\/p>\n

A few years ago, I worked for a large company that acquired a series of software startups it planned to integrate into its hardware portfolio. My product team was responsible for the integration, product management and transition of the software startups. It was a painful process which taught me a lot about sales behavior.<\/p>\n

Imagine a Fortune 100 company: large, established, incumbent. Also stale, bogged down in red tape, and struggling to innovate. Large companies typically innovate by acquiring smaller companies. This often makes great sense on paper \u2013 larger companies gain access to technology and talent they don\u2019t have, and smaller companies have an opportunity to cash in on their hard work and take their products to a much larger audience using an established sales channel. But what looks good on paper can quickly go astray if you don\u2019t understand sales and the tools they use.<\/p>\n

In this case, my team was responsible for integrating the products and portfolios of the four or five smaller companies we\u2019d acquired. Luckily, these products complimented one another and the larger company\u2019s hardware devices. In essence, our new software portfolio provided ongoing systems management for hardware that was the mainstay of the larger company\u2019s business. We had a great opportunity for success by piggybacking our software on the millions of dollars in hardware deals that were in the works.<\/p>\n

To make this picture even more attractive, the larger company\u2019s hardware business was undergoing a long, slow decline in revenue and profitability. Hardware sales averaged single-digit gross margins while software sales achieved typical margins of 40 to 60 percent and higher. We anticipated an easy win \u2026 until we began training the larger company\u2019s sales teams.<\/p>\n

\"Sales<\/a><\/p>\n

Our decline wasn\u2019t this pronounced\u2026but it was close!<\/p>\n

We knew we had an issue the first time we trained one of the new sales teams at a \u201clunch-and-learn.\u201d While the sales team ate pizza and spaghetti, John, one of my product managers, explained how a new software item complimented the products they were already selling “into their accounts.”\u00a0 The Sales team was polite and listened while they ate for about thirty minutes.\u00a0 Then, everything went wrong.<\/p>\n

At the end of the presentation, the Director of the Sales team stood up.\u00c2\u00a0 He looked straight at my product manager and said:<\/p>\n

John1<\/sup>, I want to thank you for that great presentation.\u00a0 I think we all now have a clear understanding of your product, its pricing and competitive positioning, and how it can help the company.\u00a0 I understand that the CEO has identified this as a strategic product.\u00a0 And you know what?\u00a0 We are never<\/strong> going to sell it.”\u009d<\/em><\/p><\/blockquote>\n

Needless to say, that was not the reaction for which we were hoping.<\/p>\n

John tried to recover by asking the Director why he felt that way, and the Sales Director responded by saying:<\/p>\n

To your credit, this does seem like a really good product.\u00a0 But, it doesn’t match up with how my team is rewarded.\u00a0 Right now, software sales represent 10% of our quota, and hardware is 90%.\u00a0 If one of my guys blows up his software number and misses his hardware number, he is fired.\u00a0 If he blows up his hardware number and sells zero software, nobody cares.\u009d<\/em><\/p><\/blockquote>\n

Very quickly you can start to see the problem: even though the company had spent millions of dollars on this acquisition, they had not put the tools and behavior modification in place with their existing teams to make it a success.<\/p>\n

At this point, we needed to get educated (quickly) on how Sales at this company was motivated.\u00a0 Our next stop was Finance. We scheduled a meeting with someone that Finance identified as the “Genie of Sales Compensation.” When we sat down with the Genie we asked her to show us how Sales was motivated, quota, and bonused.\u00a0 That was when she opened her manila folder, and took out a taped-together 3\u00d73 matrix of legal sized paper, upon which was printed in 6-point font an Excel spreadsheet containing approximately three dozen rows representing the different sales teams, and about fifty columns representing various ways the Sales teams were measured.\u00a0 Some Sales teams had thirty or more variables to determine their quota attainment.2<\/sup> In short, you needed a Ph.D. in Sales compensation to understand this system.<\/p>\n

Many people refer to Sales as coin operated, by which they mean that Sales operates in whatever way will help them get the most coins.\u00a0 This is exactly how you want Sales to act, but it reinforces that if you aren\u2019t very clearly part of their compensation, they won\u2019t spend time worrying about you, regardless of how strategic or important to the business you<\/em>\u00a0think your product should be.<\/p>\n

In the end, we found that adjusting the Sales teams compensation models to account for our products was so fraught with politics and peril that it was doomed to failure.\u00a0 Prioritizing our products in terms of comp meant de-prioritizing someone else’s products, and every Sales comp line had an advocate in the form of a powerful executive for some other product.\u00a0 That is when we realized that we needed to sidestep the issue by creating our own overlay Sales team that was only measured on our products.\u00a0 This worked, but only after a lot of pain and suffering.<\/p>\n

This month, Pragmatic’s bloggers are going to be writing a lot about various Sales tools and ways we can enable Sales teams.\u00a0 Remember however that the number one most powerful Sales tool in the Product Team’s bucket is the compensation model.\u00a0 If you get this wrong, or your product is not represented in it, it will not matter how slick your competitive training is, or how good your positioning is, the strength of your competitive analysis, or how well you priced your product.\u00a0 As the CEO of your product, you must understand how your team is motivated and take corrective action where required.<\/p>\n

1<\/sup>\u00a0Name changed to protect the innocent
\n2<\/sup>\u00a0This is when I realized that I prefer smaller companies to larger ones<\/p>\n","protected":false},"excerpt":{"rendered":"

Stress between sales teams and product teams causes stress and can undermine everyone’s success. 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