Artificial intelligence, one of the most intriguing technologies of the 21st century, has the power to reshape the way people live, work and play.
It also has the power to fundamentally change the way companies do business — and one of the first places it’s having impact is in sales.
AI can free salespeople from busy work, so they have more time to, well, sell.
Automating routine tasks
Eric Filipek, managing director at Kennet Partners, says AI is already starting to automate many routine tasks associated with selling.
AI-powered bots, for instance, can be programmed to answer prospect questions, respond to emails, book sales meetings and provide price quotes.
Bots can also help with routine manual tasks, like creating sales reports, completing paperwork, inputting data to CRM systems and filtering qualified leads.
Filipek led his firm’s investment in Conversica, whose AI system is designed to automate early communications with prospects and hand them off to salespeople at the precise times those prospects are likely to buy.
Conversica, which has raised $56 million in three funding rounds, also acts as a virtual sales assistant, engaging prospects with natural two-way email conversations.
The AI assistant identifies the most attractive opportunities and then collects the best phone number, time to call and purchase criteria for every prospect.
“Conversica is not designed to close sales; that’s still up to the salespeople,” Filipek says. “The key here is to free up large chunks of their time, so they can sell more.”
He argues that sales reps are buried under the mundane yet necessary activities needed to qualify leads, such as conducting research and making phone calls. Qualifying leads can take up around 80 percent of a sales rep’s time, leaving only 20 percent for closing.
“The beauty is that AI sales assistants never quit or take a day off,” Filipek says. “They pursue every lead for as long as needed and they always follow up, ultimately making it easier to the actual salespeople to close the deal.”
Drift, Gong, Tact and Clari
Another sales-focused AI-powered startup making noise in the market is Drift. The company has raised $107 million in less than three years from Sequoia Capital, CRV and General Catalyst.
Drift leverages conversational chatbots to automatically do things like qualify leads and then schedule appointments with prospects once they are qualified.
Gong.io is yet another contender, having raised $28 million from Norwest Venture Partners and Cisco Investments, among others.
Gong uses AI to record, transcribe, and analyze sales conversations. The idea is that companies can use the software to quickly analyze successful sales conversations and figure out what is and isn’t working.
Armed with the data, they can better coach their reps and new hires to replicate the words and communication styles of top performers.
And then there is Tact.ai, which recently closed a $27 million Series C funding round led by Amazon’s Alexa Fund, along with Salesforce Ventures and M12 (formerly Microsoft Ventures).
The startup uses artificial intelligence to help sales professionals control their access to data and manage customer interactions conversationally, whether on a phone, smart speaker or in a car, without having to juggle multiple windows or software applications.
“Tact is a pioneer in using chat-based communications as a computing metaphor,” Mark Suster, a general partner at Upfront Ventures and an early investor, wrote in a blog post.
“Neither voice nor chat-based communications would truly work as seamlessly without a level of artificial intelligence that powers the communications.”
AI can also help with one of the most important aspects of sales: forecasting. Sales forecasting is that quasi-scientific process of using historical data and guesswork to project monthly, quarterly and yearly sales totals for a business.
“In sales, you have lots of individuals making decisions based on gut feel rather than any hard data,” says Ajay Agarwal, managing director at Bain Capital Ventures.
“At the same time, the typical sales organization produces a lot of data, yet many sales managers still rely on their instinct to determine how much this particular account rep is likely to sell this quarter, or when that prospect is likely to close as a customer.”
That’s why Agarwal led his firm’s investment in Clari. The five-year-old startup leverages AI to help sales managers identify risks in the pipeline, focus on the right deals and deliver accurate forecasts.
Clari can take multiple years of historical data and analyze all the different variables to uncover the drivers that will cause this particular rep to sell more or that customer to close quicker, explains Agarwal.
Not a crystal ball
“I don’t think AI is meant to be a crystal ball,” he says. “Rather it’s meant to be a system to help sales managers recognize what they might be missing and ask new questions to understand where they should be spending their time.
“Sales forecasting is really about figuring out what actions managers should take if they are behind on their numbers, and what they need to do to achieve the outcomes they desire.”
Agarwal says AI is now a huge buzzword in business and every enterprise-software company, both large and small, is starting to lay claim to it, whether it deserves to or not.
“My biggest question when I was first pitched by Clari was not: Is there a market for this and is the market big enough? That was obvious,” says Agarwal.
“My biggest question was: Can you really pull this off? Can you really make this product work as advertised?”
He says the fact that the company now boasts leading tech customers like Symantec, Palo Alto Networks, Adobe, Cisco and Hewlett-Packard Enterprise proves that it does work.
Nakul Mandan, a partner at Lightspeed Venture Partners, agrees that not every startup in the space can deliver on its promise.
“I’ve looked at several different AI-related sales startups in the space. My question is: Is it a need to have or is it a nice to have?” he says. “A need to have is a system the buyer will rely on for critical decision making. But if the tool is a just an add-on to other systems you are using, I find that less compelling, because there is no stickiness in that behavior.
“You want to invest in a system in which users log into every morning and log off every night because they rely on it to run their business.”
That’s how Mandan feels about People.ai, which raised $7 million in a Series A from Lightspeed, Index Ventures and Shasta Ventures to automate sales operations for the enterprise.
Powered by artificial intelligence, People.ai can tell sales managers how much time their reps are spending on new-customer sales vs. upsell opportunities.
It can offer insights into why some reps are underperforming and how to coach them to do better. It can even help organizations decide which new sales reps to hire, Mandan says.
People.ai can also free salespeople from all the busywork like data entry. Indeed, AI is already starting to automate many of the routine tasks associated with selling.
People.ai says it can automate 90 percent of manual data entry, freeing up time for sales to actually close deals. The tool automatically captures every single sales activity and syncs it to a CRM system, without sales having to do a thing.
Mandan says AI will inevitably expand well beyond marketing and sales to every business process and every vertical industry.
But he also says sales is the logical place for AI to start in the enterprise. That’s because every company cares about revenue generation and how it can improve it.
“Customers have a lot of budget to spend on the right kinds of sales and marketing tools,” he says. “It’s no coincidence that the largest SaaS company in the world is Salesforce.com.
“So if you can prove even greater value with AI, customers will embrace you.”
Tom Stein is a VCJ correspondent from Palo Alto, California. He can be reached at email@example.com.