18 December 2019

The ultimate Guide for an effective start-up sales strategy

Stéphane Paillard
Coach Startup - Entrepreneur-in-Residence at Schoolab

Why do you have to make your first sale as soon as possible?

Sales in startup: test your value proposition and evolve your idea

The Amazon case: Does the Fire Phone mean anything to you? Not? That’s normal. Announced with great fanfare by Jeff Bezos himself in 2014, the Amazon-designed smartphone, which sold for about $700, promised a set of “revolutionary” features such as a 3D screen and object recognition system, returning automatically to the Amazon page of that item (in case users had a sudden urge to buy everything they saw around them). After barely a year, the Fire Phone was taken off the market, for some simple reason: no one wanted it. A waste of time and dry investment for the marketplace. 

This example illustrates a very simple truth:

there is no point in having an idea, whether it is good or not, if one wants it

This is why the sale must take place as early as possible in the life cycle of a start-up: it allows to collect feedback on the interest of the project or idea, for a given target.

Jeff, your idea sucks, that is why you fail.

Entrepreneurs, don’t get me wrong: your idea will inevitably evolve during the discussions you will have with your target audience, because it does not necessarily correspond to the real expectations of your prospects. 

Entrepreneurs: you’ll change your idea based on your customers’ feedback

Your prospects and customers are an invaluable source of wealth to evolve and prioritize your product roadmap, your business plan, but also your value proposition: you need to create an iterative process on these elements, depending on your interactwith with them. It is not excluded that these commercial conversations are the trigger for the dreaded pivot, and we should not be afraid of it! Keep in mind that it is always better to radically evolve your project rather than spend months developing a nice product that interests no one (special dedication to the Fire Phone teams).

Entrepreneur’s dilemma : Should the business value proposition be tailored to each customer?

The answer is simple: no. The value proposition is used to challenge the customer and make them understand their interest in using a product. However, the reason he will buy it is his features, which meet his need. On the other hand, if these features no longer correspond to the value proposition, it is a signal that we must start reworking it and change it (to adapt it to features). 

This is also very true in start-ups adopting the ‘SaaS’ (Software as a service) model. On a freemium business model, if you look at the list of paid options, you quickly realize that they are the ones that bring the most benefits and define the value proposition. 

The example of Pipedrive: Pipedrive offers a free CRM offer that is very useful to small teams, but the paid version brings a set of analytics and team performance monitoring services, allowing sales teams to start up to manage their pipeline more intelligently (by more detailing the probability of closing deals and prioritizing their actions): this is the real value proposition and resolution of Pipedrive’s customers’ point bread.

Selling and meeting with your customers, the best way to test its relevance and pricing

In addition to testing and evolving its value proposition, the sale also allows you to learn many things about:

  • problems that people might have to accept a product or service (how to work incompatible with your offer for example)
  • the price they are willing to pay to access this product or service

These discussions with prospects and potential buyers allows significantly to iterate and refine the reflection on its product, to rapidly evolve its prototype (or its existing features).

Sometimes startups, seeking to sell at all costs to prove their relevance in a market, agree to sell at very low cost, without thinking about their final margin. This is a big mistake because this behavior may cause them to sink quickly. Selling at any price presents two major risks:

  • losing money
  • spend valuable time with a customer without developing their business

Lowering prices is acceptable, but only if there is a commitment on the part of the customer over the long term (by having him sign a one-year contract for example). If you risk losing a client you’ve taken a long time to acquire and you end up at the starting point at any time, you’ve wasted your time. And for a young start-up, time is money – use it wisely! 

💪Pro tip: During a customer pitch, Sales people often tend to over-value their offer, claiming that their product is perfect. It is much more strategic to adopt a partnership approach when you are a young start-up, and to make your customer understand that, of course, the V1 of your product is not fully completed, but that there is precisely in a contract with you the to co-build it and evolve it according to the real needs of the customer. Always take a co-construction approach rather than selling features that don’t exist or aren’t stable in your product – you may get your customers’ dissatisfaction if you inflate their expectations. 

 

Sell, sell, sell 

It is important, from the beginning of its start-up, to enter into a sales process. Every entrepreneur has a bias when he launches: he concentrates a lot on his idea, his vision, … at the expense of its first sales. However, having an idea is good, but without money to finance its growth, it is impossible to go very far! 

💪Pro tip: as soon as possible, you have to take the next step in your life as an entrepreneur, that is, monetizing the product, to make an impact on your idea. Without funds, it is impossible to develop. Thus, it is essential to pass this crucial milestone: sell your idea beyond building it.

Moreover, a sale does not ensure the success of a company: early on, you also have to seek diversification of your client portfolio: depending on a single customer can be dangerous in the long run. 

This is also true for investors, who prefer to have visibility on your customers’ Lifetime Value rather than on your short-term pipeline. 

Entrepreneur: How do you make a successful first sale? 

To sign your first clients, there is no secret: you have to listen to your interlocutors. It is a counterproductive, even harmful attitude to arrive in front of a prospect and gin up the features of his product as if one were reading a shopping list. On the contrary, entrepreneurs must put themselves in a listening position, and learn to manage customer objections by knowing how to bounce back on them, without changing the conversation towards a confrontation that risks frustrating both parties around the table. 

It is always interesting to learn from each interview with a prospect, because from objections and learning, it is possible to create canvases and scripts, which can help on canvasing (a technique that works particularly good for b2B phone canvassing).

Once you’ve found your script, you have to find the right slots and the right contact scenario, and be careful, it’s not as simple as it sounds! The key word in this process? The te-na-ci-té. It’s a good thing to be patient and resilient when you’re an entrepreneur and you’re looking for your first customers: get ready to hang up 10, 100, 1000 times before making a sale – competition can be tough in some markets. 

💡Smart move: All your success depends on how you approach your prospects. As soon as you have someone on the phone or in front of you, regardless of their “grade” or status, treat that person in the best way possible, as you cannot know to what extent he or she will influence his or her superiors. Entrepreneurs, you have only one mission: to win as many allies and ambassadors as possible in the companies you target. The hierarchy in large structures is important, but the different members of a team communicate with each other and the more your name emerges and is connoted positively, the higher your chances of signing.

The goal is to show your client that they have understood

Often, start-ups have a fairly vague approach to their prospecting effort, and we sometimes see contacts, which do not address the right point and do not really arrive at the right time (for example, an InMail Linkedin invitation to an event or a mailing on topics that are completely unsuitable for targets). 

The basic rule of sales is that when you talk to prospects, you have to show them directly the value that you offer them, and you also have to prove to them that you have been interested in them specifically. When you approach a prospect, you need to make them understand that:

  • You studied who he/she was
  • You understood what he/she wanted
  • You are convinced that what you are proposing will help

What level of knowledge of your target does it take to prospect clients in startups? 

In a prospecting approach, the first step is to distinguish between B2C (Business to Consumer) and B2B (Business to Business), because the approaches are different. 

In B2C, at first, you have to target a little everyone because it is not easy to know precisely who the product is addressed to. Exploring broadly thus allows to refine its discourse according to population segments and segments, which must be defined gradually, by iterations. 

In B2B, an entrepreneur will normally have a more accurate idea from the beginning of the target he wants to address. The ideal way to start is to ask your network for introductions. Once these first interactions have passed, a good acquisition strategy is to offer value before asking a prospect for something, to establish a relationship of trust. Alternatively, partnering with companies offering complementary offers to yours allows a more global response to a prospect’s problem, but increases the risk because you have to sell not a tool, but two (at a logically higher cost).

🌟 The 4 golden rules of e-mail prospecting:

  • Never approach a company with a Gmail address: to look credible, buy a domain on behalf of your company
  • never send an email without a signature, phone number or means of contact
  • Go straight to the point: your email should present no more than three different ideas (who I am, why I contact you, how I can help you) and the description of your product should not make more than three or four bullet points
  • do not hesitate to present his product but also to give value (the person gave his time to read your email, you can in exchange give him for example useful information see a link to an article you read in the week that is suscepti interest him)

Roder its operations to sell more and sell better

As discussed earlier, the “shooting emails in all directions to get as many keys as possible” approach is not viable to ensure real growth for a start-up. 

On the contrary, sales is not something that can be improvised, it is a true art that requires in its beginnings many errors, phases of testing, and listening, but which must be formalized by a set of processes and the use of tools relevant to increase in productivity. 

It is extremely important, from the beginning of a project, to create a process supported by a CRM where everything is noted: every customer feedback, every interaction, every learning from calls or appointments, … This CRM is an essential structure to implement, because as soon as a start-up grows, the need to have centralized knowledge and information is quickly felt. This is especially true in the context of the onboarding of new talent: the existence of a knowledge base and well-established processes will allow new Sales to be quickly operational and up-to-date on existing accounts, but also on methodologies working and approaching prospects. 

Thinking about your responsibility

The pressure on the business and sales activities of start-ups is increasing. Especially in B2C: there is a near saturation of many markets, and it is increasingly difficult to differentiate its products. Moreover, regulations and controls are sometimes a blocking element for a start-up whose product has a disruptive character: “It is clear that all start-ups that launch on large-scale products are quickly confronted with legal problems or complex social situations, because they try to replace the jobs of a sector, by applying additional economic pressure,” comments Stéphane Paillard, Head of Startup Programs at Schoolab. The desire of some over-financed start-ups and the conquest of a market, leads them to operate at a loss, because the investments they benefit from allow them to hold the shock for a while, the time it takes to stifle their competitors less well-funded. This is, for example, Uber’s strategy. 

“The problem with this strategy is that if Uber declares that a race is 5 euros, all VTCs will emulate their competitor, or even offer even lower prices, which has the direct consequence of pulling the global economy down: drivers are less paid, so will obviously spend less, which has a direct impact on the purchasing power of a whole part of the population,” continues Stéphane Paillard.


Therefore, it is the responsibility of start-ups to think about their business model, because their actions have the potential to impact a country’s economy, or even a set of countries. As Deliveroo’s example illustrates, these strategies can create strong inequalities: “At Deliveroo, delivery drivers are paid low, and the direct consequence is that these people are less and less involved in the economy, which is causing the growth of social inequalities,” observes Stéphane.  

Selling is therefore a necessity to ensure the sustainability of its start-up. But that shouldn’t stop you from thinking about the price puzzle: the price at which you choose to sell has an impact on your business, on your margins (and logically, on your long-term health), but also on society more generally. “Entrepreneurs must take responsibility. Creating a business and changing the way a market is developed means having an impact on many households. This is not something to be taken lightly,” concludes Stéphane.

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