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Confessions of an Ex Enterprise Salesperson by Doug Mitchell

Confessions of an Ex Enterprise Salesperson by Doug Mitchell

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Published by Doug Mitchell
Confessions is a light hearted stroll through enterprise software hell. The book takes the reader through key milestones in the enterprise sales process and provides gritty questions that expose the truth that slick salespeople often cloud very well.
Confessions is a light hearted stroll through enterprise software hell. The book takes the reader through key milestones in the enterprise sales process and provides gritty questions that expose the truth that slick salespeople often cloud very well.

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Published by: Doug Mitchell on Mar 18, 2008
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Confessions of an ExEnterprise Salesperson

:
What I Really Meant When I Said ________.
By Doug Mitchell

Copyright 2008 All Rights Reserved©

West Des Moines, Iowa, USA • 515.309.1531 office • www.mitchgroup.com

Contents
Introduction ..................................................................................................................................... 3 Glossary ....................................................................................................................................... 6 Chapter 1: My solution is the one that best meets your needs ..................................................... 7 Key questions to ask your ESS ..................................................................................................... 9 Chapter 2: My solution does not require much of your company's IT resources ........................ 10 Key questions to ask your ESS ................................................................................................... 12 Chapter 3: My solution is supported well .................................................................................... 13 Key questions to ask your ESS ................................................................................................... 14 Chapter 4: My solution will save you time and money ................................................................ 15 Key questions to ask your ESS ................................................................................................... 16 Chapter 5: That will take 2…maybe 3 weeks to develop ............................................................. 17 Key questions to ask your ESS ................................................................................................... 19 Chapter 7: Here are my prices ..................................................................................................... 20 Key questions to ask your ESS ................................................................................................... 24 Chapter 8: Here are my contract terms and conditions .............................................................. 25 Key questions to ask your ESS ................................................................................................... 26 Conclusion ..................................................................................................................................... 27 Author Biography .......................................................................................................................... 28 Reviews and Comments ................................................................................................................ 29

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Introduction The title of this book came to me as I sat in my home office planning the strategic direction of my new business RentalMetrics. Each new idea quickly summoned the "Make sure this is not an enterprise solution" mental checklist. That is, I was checking to make sure I'm not building a bloated, over-featured, and "dead before it starts" solution that would inevitably be my undoing. I've been down the enterprise solution rabbit hole a few times now. Granted, all have been tremendous learning experiences including global travel, nice hotels, and meetings with very interesting business people. But I'm confident stating that the Salespeople are not lying, enterprise solution sales sand box is a place in which I no they are simply framing longer wish to play. Please the truth in a way that accept that my irreverence and closes the deal and sardonic commentary about the enterprise stems from my own provides a big payday. personal experience over the last 14 years, and I wouldn’t trade that for anything! I'm not suggesting that I’ve lived a life of lies. There are no perfect solutions for the enterprise and never will be. It's up to the sales professional to convince the target that she's got the best possible solution, despite the facts. Is lying requisite? No. Salespeople are not lying, they are simply framing the truth in a way that closes the deal and provides a big payday. My enterprise experience crescendoed when I was asked to write a business plan asking for $1 million in venture capital funding. Thirty days later...we had a cool million in the bank. We planned on getting 6-figure

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license fees and hefty maintenance. We'd grow according to the typical Venture Capital dreamland numbers.
2000 Rev $ Exp $ 50,000 out of control 2001 we need to ramp bleeding 2002 amazingly low breakeven 2003 $1500 chairs sick cash 2004 IPO who cares cash out

1,000,000 5,000,000 20,000,000

Profit hemorrhaging (Loss) cash

It sounded great...but like many ES companies, we overestimated the market size for clients willing to pay big fees. We had NO CONCEPT of how much it costs to acquire enterprise deals. When a target in NYC says, "Can you be here at 3PM tomorrow?" you say yes. That 1 hour in-person conversation often cost in excess of $5k not including lost life minutes from doing red eyes. After 2 years of moderate success we were still hurting. When things finally turned the corner, it was because we'd figured out how to: Deliver smaller chunks of relevant content to small and medium businesses Deliver the content in a hosted environment Deliver the content in way that required almost no set up and very little ongoing maintenance for us or the client (i.e. automated process) Deliver the content for a monthly all inclusive fee that was attractive to a much wider swath of the market

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It was just a bit too late. We'd spent the million bucks trying to become the next enterprise sales company versus trying to deliver what the market wanted. We took a buyout deal a few months later. I learned more in those 2.5 years and with that $1 million than I could have living 20 years in a Fortune 500 cubicle. No regrets. After that experience, I'm sure you're thinking that my next gig would surely be something outside the enterprise. Nope. I jumped right back in again.

This time around I felt wiser. I was in a position to grow the next company in two distinct parallel paths. I counted on revenue dollars from large enterprise clients to fund development of a non-enterprise model. My role quickly grew at the company and the high maintenance enterprise world soon engulfed me...as it always does. Three and a half years later, I exited the enterprise world yet again with the same issues: high prices, huge cost of sales, ill defined target market, heavy IT resource demand, and a bloated product requiring customization for each client. This book is the summarization of my enterprise selling experience. In it, I hope to shed some light on the truth behind the suit and tell you:

What I really meant when I said ___________________.

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Let’s get a few things clear before we continue to ensure smoother reading and understanding of my abbreviations. Glossary Enterprise Solution (ES) A software solution that is typically sold as a site license (e.g. Company X buys a single site license that allows them to run the core parts of the solution on a single server. It may be helpful to consider the site license as authorizing one single instance of software to run on one server somewhere in the company's IT department) aka "The Mother-Ship", with seat licenses for the users of the solution, aka "The Satellites" and support sold as a percentage of the total software price, aka "Payroll". The ES is often quite expensive to buy upfront. This upfront price loading is where the ES software company recovers the immense cost of sales associated with the ES including commissions, bonus payments to company officers, investor dividends, and really nice cars for the President. Enterprise Sales Person (ESS) Enterprise solutions are typically sold by very nice looking people, often dressed in suits who are willing to fly anywhere on a moment’s notice and are always "Going to be in your area anyway". The ES is often supported by nice looking brochures that are so glossy; they deflect even the strongest of coffee circle stains. Better ES selling organizations send two people on the tactical assault mission: One suit. One techie. The suit acts as translator when the techie (most often in Dockers with a company logo button down) lays out something intelligent for your consumption. That back and forth tech translation orgy is meant to disarm the prospective buyer or baffle him sufficiently into writing a check for the panacea product that will make his boss happy with him...or close out the never ending 6-Sigma project from hell.

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Chapter 1: My solution is the one that best meets your needs
When I said, "My solution is the one that best meets your needs," what I meant was that I'm going to do my darnedest to shoe horn my product into your world so that you'll buy my stuff versus the competitors. Don't get me wrong, I really did have my eye on what’s best for you...but I wanted to grow my business just like you. Our company didn't grow 60% a year by sending you to the competition so you'd be wowed by their sales team. Enterprise software is SOLD not bought. The key is having enough of what matters to you in my product to build a case for saying yes. I have told some that my product is simply not for them. But, for most, I was certain that if I stayed in the mix long enough I'd convince the target that my ES was the perfect solution. Only in rare circumstances did I try to convince you otherwise. The ESS is not lying or mistreating you. Few organizations actually have consultative sales people that conduct a real sales qualification process. Thus, most are happy to talk to any company that expresses even slight interest in their product (because that could mean a payday). In my last enterprise role, I was blessed to work with a target market of 60 companies. I immersed myself into the target market and became an "expert" in their pains...their issues...their change drivers. When you bought my ES vs. Company X's, you did so because I "got it" immediately. I spoke your language. I related to you and your teams issues when the other guys just talked about technology or features.

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So was my ES the best one for you? If your relationship with me and the product gave you what you wanted...then yes. Remember, you weren't buying a product. You were buying the way that product would make your organization run, the way you'd feel when your boss gave you a bonus next quarter for saving 20% on your bottom line. You don't buy products because they have this or that. You buy them because of what they'll do for you and the ecosystem you operate within.

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Key questions to ask your ESS 1. What 3 companies are your fiercest competitors and what would they say they do better than you? If the answer is, “We have no competitors,” shuttle the ESS to the door. 2. The last time you lost a deal to your competition, what were the main reasons given? If the response is snotty or the ESS attempts to discredit the prospect that ultimately said no, be wary. She will probably speak of you in these terms if you don’t choose her solution. If you’re presented with truthful accounts, kind words, and reverence for the “one that got away”, put a check box in the credibility column. An ES cannot be perfect and certainly can’t be perfect for everyone.

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Chapter 2: My solution does not require much of your company's IT resources
When I said, "My solution does not require much of your company's IT resources," what I meant was that with a 95% degree of certainty, your IT department will be the biggest roadblock to success that we'll encounter in this project. Unless you're in the 5% of companies with an IT Director/Manager that "gets it", we're going to run into rough spots as we sort through myriad personality issues and resource snafus. "Get it" means that the IT Director and staff realize the company does not revolve around them and the gravitational field their large brains create. Also, we'll have to deal with the "you ain’t playin' in my sandbox little person that has no idea how hard I work or how many cockamamie software rabbit hole projects I get stuck supporting" radar. The first reaction of the 95% is, "Here we go again...another slick suit trying to add more work to my schedule". Be warned. If your company suffers from this syndrome there is no cure except removal of said IT Czar and that is unlikely. The 5% are an absolute joy to work with. They understand they’re there to serve the needs of the business with their IT services. They have quite a bit of power within the organization and command large budgets. If you encounter a rare "Five Percenter", treat them like gold. Send wine and corporate trinkets regularly. Often Fiver Percenters associate with others in this elite clan. They break down walls, make introductions, and bring you into the inner sanctum of the IT community that gets things done without claiming victim-hood. My pulse rate is actually up as I write this section thinking back to some of my encounters with Enterprise IT leaders. As I’ve mentioned my new business is distinctly outside of the Enterprise

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realm. It allows business people to say YES without answering to the ogre in the subterranean lair. I find it much more pleasurable dealing with executives, mangers, and field level folks trying to make progress versus…well…you get the idea. I’m not anti-IT, just anti-Me dealing with IT to get things done. Leave that to the enterprise folks.

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Key questions to ask your ESS 1. When (not if) you run into smoke screens, road blocks, and obstacles thrown up my IT department, are you prepared to deal with them and how? ES software firms with inexperienced project managers and “yes men” are rampant. I’ve seen the same project with identical variables take 5 times as long to execute because the project manager on the ES side simply accept what they’re told by IT. Make sure the ES provider you go with has the kind of take charge project managers that expose IT grandstanding and “resource constraints”. In my last enterprise experience, the technology deployment (integration, testing, etc.) took 3 days of having the right people made available. Typical deployment time however: 4-6 months. 2. If we cut through all of the crap, how much time does it really take to deploy this solution, excluding training? Chisel away at Microsoft Project Gantt charts with hours, dependencies, etc. Most project timelines are inflated relics used to boost the complexity, billing hours, and professional appearance of the ES firm. I’ve not been involved with a project yet that even moderately resembled the plan. Get to the bottom of what it will really take to get this solution online. Be tough. Be demanding.

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Chapter 3: My solution is supported well
When I said that, “My solution is supported well and my company hangs its hat on the best service in the industry,” what I meant was that when you call, a human will pick up the phone and get on your problem right away, delaying someone else’s due date for customized solution delivery. The bottom line with custom software in the enterprise is that it breaks. How many times have you rebooted today? A key factor in company’s minds when buying software is how well it’s supported. If the software is built well and you’re trained properly, you shouldn’t need support right? Inevitably, something will misfire since enterprise software is very complex. When you call and the person on the phone knows you have a real issue (not a “did you turn the computer on?” type deal) he’ll drop what he’s doing and get on your stuff while the other promised stuff waits. You’re saying, “You mean you mean ES software companies don’t have dedicated support staff!” Sure they do, but they get assigned to tasks and projects just like the other custom development staff. Most enterprise software companies’ make as much from customization as they do selling their stuff. The custom development is paying salaries so the company has the R&D money to plow into their “perfect rocket ship” solution.

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Key questions to ask your ESS 1. Do you have an automated system or a human system when I call your support line? Human is better because they respond better than recordings to emotional pleas. 2. What bug tracking or trouble ticket solution to you use? (It’s not as important to know what the answer means vs. knowing they do have a system of some kind other than MS Outlook or a white board.) 3. What your average time from call in to resolution? Just ask. Most probably will have no clue but you’ll sound important. If the ESS answers you with real data, respect him/her and move on. 4. What is your process for escalation? Translation: How can I bypass the first few levels of support and get to someone that knows what I need? Write down these answers and get names, phone numbers, and email addresses of the escalation chain. When something goes wrong, just ping the highest person in the chain and consider your issue…escalated.

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Chapter 4: My solution will save you time and money
When I said, “My solution will save you time and money,” what I meant was that your company will probably achieve enough Return On Investment to pay for the solution…but you’ll end up using 10% of the what the solution can do and end up frustrated after the honeymoon period. Most ES solutions have evolved because complex businesses have insisted that new features be built as a condition of sale. “If you add the ability for the system to calculate blah and integrate with blah…I’ll buy it”. Let’s say today the solution has 100 great features that could impact your business positively. You were sold on the few trigger issues that matter in your ecosystem by the ESS. The other cool stuff used to sell this product to management will probably never pan out. After the honeymoon period of deployment, training, and initial ROI calculation people adapt and stagnate. This process is similar to physical exercise when gains in performance halt due to the body’s uncanny ability to adapt. I saw this process unfold before my eyes again and again. Can it be avoided? Yes. To stave off stagnation and frustration be realistic about what functions your organization will use. Then ensure that training is geared toward those functions. Next, ensure that follow up training in system utilization is scheduled. Choose real dates…not plans. In my 50+ enterprise deals a very small percentage invested in ongoing training. Sadly training is where companies save a few bucks. It’s not only important to debrief after 60120-180 days of usage. You must have trainers knowledgeable in your business processes to know how your firm is using the system. These are the best dollars you’ve spend.

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Key questions to ask your ESS 1. What percentage of features in this system do your clients typically use? If the number is higher than 60% I’d revisit the numbers used to calculate your ROI. Is the ESS being liberal in applying savings numbers to certain features that will likely not do anything for you? I hell stress realism here. No matter how badly you hate corporate green screen system X, the new system won’t make you a hero if it can’t live up to its promises. (Only this time, it will be your fault if it blows up). 2. If I want to reduce the training required by half to save money, will you let me? Hope the answer is no. If the ESS allows this to shave dollars off the price, think twice. I believe the following formula holds true:

Increased investment in ES training = chance of success²

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Chapter 5: That will take 2…maybe 3 weeks to develop
When I said, “That will take 2 maybe 3 weeks to develop”, what I meant was t I really don’t know how long your customization will take so I’m throwing out a number that will get you to bite…not balk.” Toward the end of my enterprise career, I had learned that NO deal was better than ANY deal involving open ended customization, undocumented promises, and failure to meet expectations. I would not agree to sell a solution until the potential client agreed to have the tech folks “spec out” the requested customization (NOTE: Desperation for closed deals often clouds minds’ ability to say NO). The process of documenting customization always leads to twists and turns that would have gone unaccounted for 100% of the time. TRANSLATION: Price too low and project unprofitable in every single deployment. The specification process is where developers and project managers asses resource requirements to deliver the desired outcome (new feature, integration, look and feel). This is an investment for the ES firm. Just getting a price requires time (money). Of course it’s in the ES firm’s best interest to provide this if they believe you are legitimate and qualified prospect. Much of the pain during this phase exists because the ESS has not done proper prequalification. Nothing is more frustrating for the ES firm than delivering a five page customization quote to find that the quote for customization is more than the prospect budgeted for the entire solution! It makes me wonder if anyone asks, “Hey, do you have a budget for this?” anymore.

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Smaller ES firms really want your business. If the delivery dates of complex customizations seems unrealistic…even to you, they probably are.

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Key questions to ask your ESS 1. What is your process for documenting change requests? Let the ESS speak. Listen closely to see if they’re making up the process on the fly. There should be some kind of form that requires sign off from both parties, etc. Quotes thrown out during a sales pitch are usually designed to speed the sales process, not get your needs satisfied. 2. If your development efforts fall behind schedule, what’s my compensation? We set dates for a reason. Some are arbitrary. Some are absolute musts. If the ES firm falls behind (and it will), you need to know that this matters and that something happens besides conference calls and placation.

Estimated time provided by ES firm X 2.50 = actual delivery date

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Chapter 7: Here are my prices
When I said, “Here are my prices”, what I meant was “My price is totally flexible and within reason I’ll probably say yes to lowering them because we need your upfront money and recurring revenue more than I need my pride.” Pricing ES solutions is far more art than science. Often it’s more about discovering the target’s pain tolerance. Too high and you’re shown the door. Too low and those “big dog” clients will laugh you out of the building. (Yes…there is such a thing as too cheap). Most skilled ESS’s begin high and move lower as they discover more about the client’s price pain/tolerance. That model is inefficient and wasteful. It’s also the most prevalent methodology in the market. Often times the pricing configurator (most likely a spreadsheet with lots of nifty variables and options) is specifically designed to flummox you into spending more. This tactic is also critical to the ESS’s ability to charge you LESS without actually telling the greater industry that her employer will take what they can get for the solution. In one of my ES tours of duty, I fought the company owner constantly on the pricing model. I took all of the “features” and “add-ons” and simply wrapped them up into a single price. Then, I discounted that price. Done. This left my variable pricing component as “Number of users requiring support.” This worked because it didn’t put the client in the position of feeling nickel and dimed. It comforted them to receive every possible benefit the software had to offer. Using Software as a Service (SaaS) has become far more attractive to the enterprise. So have “all inclusive pricing” models. Even if your solution is not hosted the model can be adapted. During the last couple of years

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before starting RentalMetrics, I found target clients excitement about a fixed price model escalating. I was encouraged to wrap up XX number of users into a fixed monthly investment inclusive of support, updates, upgrades, etc. Not only does the model increase the short term cash flow of the ES firm…it allows the client to budget accurately for the next XX months. The hosted application world has really begun to take hold in the enterprise. IT departments are working through their security concerns (in many cases getting over themselves) and deploying hosted apps successfully. My counter to the security concern with 3rd party hosting situations usually falls back to the “Lost Laptop Syndrome.” How many times have we heard that 50,000 clients from Mega Banking Corp., U.S.A. had their personal information compromised by a lost laptop? Compare that to how many times your hosting company or software solution provider has been hacked with the same result. I’m sure it’s happened…but I’ve not heard of it. Another pricing model that doesn’t work often is the Percentage of ROI model. In this model the target client will be asked to pay a Deployment Package price upfront. Then after agreeing on metrics for success or failure, an agreement is struck on what percentage of savings will be given to the ES firm and for what duration. We’ll pay you $20k up front and 20% of the dollar savings we receive as a result of deploying and using your ES. We’ll judge the savings numbers on reduced overtime and gasoline expense.

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Example Pricing Configuration Tool

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Note that the deployment package price is a cost covering maneuver. The ES firm won’t take a chance on losing money on a deployment because they’re overcommitted and behind on custom development. If they go for the percentage of ROI model after pummeling the ESS into saying YES, be warned. That probably means that cash is tight and they’re saying yes to at least get your deposit for cash float. Bad.

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Key questions to ask your ESS 1. “How much does the solution cost?” If you get an answer in the first meeting before the ESS has asked you a bunch of qualifying questions …be afraid. Be very afraid. The salesperson that gives you a price on an enterprise solution without knowing what you’ll actually buy is dangerous. I have used the “It costs anywhere from nothing to (insert ludicrous price here) but price is completely irrelevant at this point compared to my need to discover what my solution can do for you.” I’m not sure if that’s correct in sales guru circles…but it deflected the question. Don’t focus on price. You’d be surprised how inexpensive some software solutions are relative to their savings for your company. 2. “What’s the typical payback or return on investment you’ve measured when companies like mine have deployed your solution and can you provide me case studies? This question is designed to see how your ESS thinks and what experience he/she has in quantitatively assessing results. This question will demonstrate how serious the company is about results. Firms without real case studies typically don’t conduct business the way you’ll want to. I’ve worked in places where these did not exist. It should be a first step rather than a marketing afterthought.

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Chapter 8: Here are my contract terms and conditions
When I said, “Here are my contract terms and conditions”, what I meant was “This is pretty much a boiler plate agreement that no one reads so if you challenge some terms…you’ll probably get what you want.” Most small to medium ES companies don’t have in house legal representation. In fact, most don’t leverage outside legal help either. Instead they opt to purchase agreements online or worse, just rip a legal doc from some Google search. Perhaps they even steal a competitor’s agreement and tweak it to match what they believe makes sense. The bottom line is that most ES firms don’t even know what the terms in their own contract mean. If something appears strange to you or is unclear, challenge it. Don’t be afraid. You’re the target that the ESS is attempting to separate from his money.

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Key questions to ask your ESS 1. “Is this agreement flexible and negotiable?” Who knows if you need to change terms, but inflexibility in contract terms could be a bad omen. 2. “What’s the one contract term that clients challenge the most?” This can start a great conversation. The collaborative ESS will be honest and give you hints as to what you might consider. If he/she says the agreement usually goes through like a greased pig, dig harder.

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Conclusion
I hope you’ve taken some lessons and tools away from this book. Although the enterprise is not a place I’d like to be now…it was an excellent proving ground. The enterprise teaches and holds valuable lessons. If you’re a college graduate and don’t have a career path in mind, I’d highly recommend you spend time in enterprise sales and marketing. But take notes! You’ll soon identify much of what I discussed on your own. If you’re being courted by an enterprise software firm, don’t show them your “Guide to causing them emotional trauma” until you’ve signed the deal. Then pass this book on. Let them in on the secret. The enterprise model has a purpose and is needed…but its value is shrinking. Technology has opened the door to myriad software applications that empower business and require far less developer expertise. I’m able to do things today in publishing, websites, blogging, form creation, survey generation, and database management with simple tools that required big money a few years ago. Remember that enterprise software is sold…not bought. They key is to be sold the right solution by the right company and the right salesperson. Cheers!

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Author Biography
Doug Mitchell lives in Des Moines, Iowa with his family. Doug escaped the coastal rat race in 2005 by executing Geographic Arbitrage. That is, he sold his California home and began working remotely from the heartland reaping its economic and social benefits. Since 1999, Doug has largely been in leadership roles with startup software firms. In late 2007, Doug hung his shingle on RentalMetrics. RentalMetrics is a management consulting firm serving the construction equipment rental ecosystem. The company boasts an innovative subscription based “Independent Learning Environment.” (ILE) This ILE provides project management tools, templates, product research, analysis, and interviews with industry thought leaders…all produced in a rich media environment. The RentalMetrics ILE exposes even the smaller rental or construction company to the high power tools often reserved for industry heavy hitters. With weekly updates and additions by RentalMetrics research engineers, the ILE is designed to be a lifetime subscription with an ever greater value proposition over time. Doug Mitchell maintains a personal blog where he muses on business, family, and life in the Midwest at Moments of Clarity. The Mitchell Group, LLC 6750 Westown Pkwy #200 PMB 330 West Des Moines, IA 50266 515.309.1531 office doug@mitchgroup.com www.RentalMetrics.com www.MitchGroup.com

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Reviews and Comments
Doug Mitchell’s Confessions exposes the realities of buying and selling enterprise software in a humorous, straightforward way. He dispels any remaining notions that the process of selling enterprise solutions is done on the up-and-up and translates the vocabulary of the enterprise salesperson into something the buyer (“target” in sales-speak) can understand and, more importantly, act on. The list of questions he suggests that the buyer use is the real goldmine here. With them, Doug helps the enterprise solution buyer unmask the salesperson on the other side of the table and avoid many potentially expensive pitfalls in the acquisition and the implementation of large systems. --Will Herman, Former CEO of way too many companies to list, Corporate Director, and über blogger.

“Confessions” was very insightful and full of topics to really make one think! Great job of putting your ideas and thoughts in writing regarding the Enterprise Solution market! -- Malcolm Goodwin, CEO, PromiseIT Solutions, Inc.

Mitchell offers up insider insight into the well-guarded minds of Enterprise Solution salespeople, insight that just might end up saving your enterprise from a million dollar mistake. -- Brett Trout, Attorney, Law Offices of Brett Trout, P.C.

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