This article is a free resource from the TechMeetups Guru Program where Scott Schnaars is participating as our Sales Guru to assist founders of startups and business leaders though practical workshops and mentoring.
3 Ways to Think About Sales in Your Start-Up
My experience, though my whole career, has been selling enterprise software solutions to mid-size to global 2000 companies. If your product or service fits that mold, this will be most relevant to you. That isn’t to say that the post isn’t relevant to everyone, that is simply the lens that I look through.
1). Don’t give stuff away. I’m not a fan of freemium. Yes, I’ve seen it work successfully for companies like Yammer. I love Yammer both as a product and as a company. I’d argue that their model of freemium isn’t really freemium as much as it is revenue deferral. If you have a product that everyone in a 10,000 person company will use and get value out of thus forcing the CIO’s hand to a site license, this is a genius strategy.
Odds are, you don’t have that. Odds are better that you’ve spent a lot of time building a product that you perceive will add value somewhere. If that is the case, you should charge for it. You should charge as much as you can for it too. Don’t be shy.
The primary benefit of this, especially in the earlier days of a company, is that paying customers equals a higher valuation for your business. As an investor, if I have the choice between 1,000 customers and no revenue or 100 customers paying $100 per month that is no choice at all. I’ll take the revenue any day as it shows that people are willing to pay for your service, that your product has value, and helps mitigate your cash flow.
2). Teach people about the value. When you can teach people about the value that your product will bring, and tie it to real world numbers, you’ll be able to command a significant percentage of that value.
If you need open heart surgery, you aren’t going to price shop that. If someone has a £1M pain that your product can fix, they will easily justify a £100K investment in to your product.
Part of your job as a leader in a company is to help to identify that pain and then help to solve it. I have a mentor that called it ‘Scratch and Sniff’. Ask about what challenges the person has that are related to your product. Ask why that is a problem? Ask what the implications of not fixing that problem are? Ask who is ultimately going to get fired if that doesn’t get fixed.
If no one is getting fired, it isn’t a big enough issue. Keep scratching and keep sniffing. If my problem is that my print advertising budget can’t be tracked and while I spend $50,000 a month, I have no idea what value I’m getting, at some point, a CFO is going to ask why I keep wasting $600K a year. If you have a solution to help this person track that more effectively, you’ve got a winner.
3). Disqualify Quickly – For a lot of entrepreneurs, this is the first time that they are selling stuff. It is hard work, but you’ll invest a lot of money in marketing and when your website gets that inquiry and you have to have that first conversation, make sure you can tell if there is a real deal there or not.
For me, I ask a simple question – what is the business problem that you’re trying to solve? If someone can’t answer that question with a simple, unambiguous answer, warning bells go off like a 4-alarm fire. The more fluffy it is, the worse it is. If someone doesn’t know what their problems are, they are more than likely only poking around to get some idea.
A bad answer – “I’m trying to get my team to collaborate more.” No kidding. I want to be richer and better looking too. Scratch and sniff. Ask about why, what aren’t people doing today? What would you like them to do? What happens if they don’t collaborate? What happens if they do? What is the ideal outcome of more collaboration? Why is that important? And so on. If the person can’t come up with concise answers to these questions find out who can.
A good answer – “The lack of collaboration on our team means that projects stall and it costs the company 10-days of productivity per year.” From there, you can derive value: 10 days * 100 employees = 1,000 days per year = 8,000 hours per year * £50 per hour = £400,000 in measurable lost productivity. Damn. Ask more questions, why is that an issue? What would they do with that £400K. Would you get a promotion if you could show that kind of savings? Keep going with it.
This is an exciting time in your company. You’re trying to win your first customer and that is a really powerful milestone in a company’s history. You should be proud.
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