Digital prospecting--social networks in sales

Social network software tells salespeople who in their organization knows whom within a company they’re trying to sell to, and then they can use the intermediary to broker a sale.

By John Harney

A relatively new technology called social network software is revolutionizing the way sales are done. According to Laura Preslan, research director, CRM, AMR Research, “Social networks are basically a way to find out who knows whom in an organization—they automate the corporate Rolodex and really help a company leverage existing relationships and maximize sales.”

A social network is the sum of one’s personal and professional relationships. Using statistical analysis and powerful algorithms, social network software mines company applications and Internet sources to give users a list of personal and/or professional contacts, as well as a broader list of people who know the people they know. The software then ranks all contacts as to how likely an introduction from them will yield a sale for the user.

To access the contacts relevant for an introduction, the requester simply enters search terms in the software interface. If, for example, User 1 wants to sell a product to Company A, he would input “Company A” to pull up the members of his social network who have access to people in Company A. He then sends an e-mail to the most highly ranked contacts the software listed to ask for an introduction to a person or people in Company A who might help him make a sale. Those intermediaries can choose to give User 1 an introduction or not. If they do, they’ve immediately transformed what would have been a cold call into a warm introduction, a huge advance toward closing a sale.

And that’s the software’s value proposition. Says Preslan, “It saves lots of time, increases sales effectiveness, increases time spent selling and decreases administrative time looking up information about prospects.”

The established players in this space are Visible Path, Spoke Software and Contact Network Corp.. They differentiate themselves on whether the software is hosted—only Visible Path—or installed, and how vendors deal with the privacy of intermediaries. All are launched from inside a sales or contact application—Visible Path and Spoke from inside SalesForce, a sales force automation tool, and Contact Network from inside Microsoft Outlook. That is important, says Preslan, because “if you try to make salespeople use a different tool, they’re not going to.”

At this point, the software is used primarily by financial services and professional services firms. For instance, there is stiff competition among banks selling largely commoditized commercial lending products. Because the products are so similar, most sales have to be based on strong relationships with, say, specific commercial lending officers in prospect corporations. A social network is just the thing for cultivating such contacts.

Visible Path

According to Antony Brydon, Visible Path CEO, to mine relationship data, his software analyzes data stores like CRM and messaging platforms, as well as supply chain and human resources databases. From that data, it develops a relationship map of thousands of relationships inside and outside the company for each individual, the strength of which usually diminishes the greater the degrees of separation are between the requester and the prospect.

That’s where Visible Path’s weighting engine comes in. It assesses the strength of the relationship between the requester and potential intermediaries to a prospect. Data might come from sources like contact cards or meetings, and the weighting engine assigns different importance to different sources, based on the user’s preferences. Two people having a meeting might have developed a stronger bond than two who shared 10 e-mails, for example.

Within those data types, other factors come into play. For example, for e-mail correspondence, says Brydon, the more e-mails exchanged the better, unless it’s over too long a period of time or a high ratio of them were spam, which the engine could detect. Unreciprocated e-mails and slow response to e-mails weaken the relationship, while the people being frequently cc'd in each other’s e-mails would strengthen it. Those factors indicate the degree of familiarity and trust the two people share. Like most social network software, Visible Path takes into consideration numerous factors like those to arrive at an aggregate strength score for a relationship.

Most social network software interfaces are similar. With Visible Path, the opening screen has a search term field where you put in your term. The next screen shows the possible contacts and their strengths in descending order. To get to an intermediary, you have to deal with a privacy filter; data about intermediaries cannot be revealed without their permission. If the intermediary has you on his trusted list, you can contact him and see information about him. If not, information about him will not appear when you click on his name—you have to request that he share his data.

Brydon says his research indicates users improve close rates and shorten sales cycles by about 25% with Visible Path, which translates to significant productivity and net profit gains. Spoke Software

Spoke establishes a social network and scores the strength of relationships in the same way. For instance, Spoke crawls the Web looking for information about people and attaching it to their records. But Ben Smith, Spoke CEO, says that the software also allows users to describe the type of person they’re seeking instead of using search terms like a person’s or company’s name. “You might just know you want to connect with a certain type of person at a company that matches a set of characteristics,” he explains, “so you’d [build a search from] data like where they went to school, articles by them, where they worked before … ”

Spoke also has a centralized service that spiders 20 million people a day on the Internet because, claims Smith, 70% of the intermediaries whom sales and marketing executives in big companies tap into don’t work in the requester’s company.

The software also mines applications like CRM and SFA and, because it’s integrated with salesforce.com and Siebel, if the user is looking at a lead in either package the software will automatically pull up all Spoke data about the lead. But most intermediaries do not exist in those packages—“the average CRM system has 1/100 of the touch points that our system offers,” maintains Smith.

Spoke’s interface is accessed through Internet Explorer or Microsoft Outlook or Lotus Notes and each search yields the 10 best intermediaries ranked in order of relationship strength. The software also provides an index of intermediaries who have been helpful to company requesters each quarter.

Spoke links to known and anonymous intermediaries and offers many privacy controls so that, for instance, intermediaries can indicate they want to get requests only from certain people, or a department head can indicate that all requests to people in the department have to go through him or her.

Spoke can also rank order leads a salesperson already has based on the software’s ability to access each lead. The software qualifies the lead by noting, for instance, the number of people in the social network that work in that company or department, then passes that data to salesforce.com. Smith says salespeople pick up leads with Spoke data attached to them 35% more often than other leads, and the Spoke leads progress to the next stage of the deal 126% more often than others.

Contact Network Corp.

Contact Network software is similar to that from the other two companies and, like the others, offers some value-added features. For instance, says Geoffrey Hyatt, CEO, when users enter the name of a company to get a list of intermediaries who can help them sell to that company, they also get a list of companies with the same name-“Delta” would pull up Delta Airlines and Delta Faucets, for instance—so they can focus their search better. The software also lists similar companies in that industry that colleagues have contacts with and that the user might want to sell to—so many of the airlines would appear in a search on “Delta”.

The software then lists all colleagues with potentially useful contacts in descending order according to relationship strength. Hyatt says it identifies those intermediaries by analyzing employees’ address books and résumés in the HR database, as well as the corporate e-mail server. The system also integrates with CRM and SFA applications and can analyze them as well. The software does not find intermediaries outside of the user’s company

Each intermediary controls his own privacy settings, according to Hyatt, by simply checking off boxes on a later page to indicate what sources like e-mail traffic, address book and employment history he wants analyzed and whether or not to display his name and contact information in users’ search results. Intermediaries can also block their contact data from being associated with particular companies where users might want introductions. That said, Hyatt adds, 99% of the 21,000 people using the system participate.

Like the other packages, this one installs quickly, requires no training or administrative activity like data capture or cleansing and no data input from the users. Obviously, the system gets smarter the longer it’s used, and the more employees in the company using it, the more contact data it generates.

Hyatt claims he’s documented some impressive success—on average, 95% of searches return results and 50% of those turn into useful introductions.

Networking creatively

While social network software is great at identifying and pitching prospects within given companies, salespeople use it creatively to research prospects as well. “These tools tend to be used to find people who know a target person who can tell you more about that person’s buying habits,” observes Preslan. “So instead of being used to broker introductions, they are being used to understand who the target person is.” She predicts that vendors will start combining social network functionality with other applications like expertise location. That will drive adoption because “then suddenly you’ve got knowledge management on a whole different level,” Preslan says.

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John Harney is president of ASPWatch, a consultancy focusing on market, partner and technology strategy for ASPs, e-mail johnharney4@msn.com.