by Frank Gruber
Even though you're creating a brand, being human is what it comes down to. If customers like you and feel affinity for your purpose, they'll be much more forgiving of the errors, missteps, and bugs that are bound to happen along the way.
Chapter 13
Sales
You don't close a sale; you open a relationship if you want to build a long-term, successful enterprise.
—Patricia Fripp
In October 2013, the Dwolla payment network launched its new Dwolla Credit product with 47 partners. All those 47 businesses—which include Fiverr, Namecheap, Manpacks, and Tikly—were already set up to accept the new form of payment and had signed on to Dwolla's vision.
The vision was to be a business-friendly alternative to credit cards that could be used to buy everything from cheap Web design to domain names to underwear. Instead of paying a standard percentage fee, merchants accepting Dwolla Credit would pay only $0.25—or nothing for transactions under $10. How did they get nearly 50 businesses to sign on before launch?
It all started a year earlier, back in 2012. Dwolla's chief executive officer (CEO), Ben Milne, was talking with Alliance Data Systems, which now manages Dwolla's credit infrastructure, and handed them off to Alexander Taub, who worked on Dwolla's business development and partnerships. Taub's job was to continue negotiations and get a contract signed as fast as possible. They ended up inking a deal in the first quarter of 2013.
“Most of the high-level terms were agreed upon, but like any partnership with a publicly traded company, there were a million other things that needed to be worked on,” wrote Taub, in a blog post on Medium.
With that settled, now it was time to start signing up partners. Taub and another Dwolla employee created the Dwolla Credit Pipeline, a list of people they wanted to partner with. Starting with the team's personal contacts, they ended up listing 100 to 200 companies. From there, they hired a business development and research intern to find companies in sectors they weren't familiar with. The goal was to find 25 partners for launch.
After celebrating July 4, Dwolla started having calls and meetings to get the deals signed. All in all, the team probably had 200 to 400 meetings in order to close those 47 partners, Taub recounts. After each meeting, they would send a follow-up e-mail with their pitch deck, which included what Dwolla Credit is, why it's exciting, who it's for, what you need to do to get involved, the time frame, and next steps. They started with safe partners—friends whom they knew well—in order to test out and refine their pitch and process from start to close.
The Dwolla team was successful because they understood how sales works. Just like building a startup, it's an iterative process: you have to hone in on your pitch, delivery, and process over time. Over time is an operative phrase here: sales don't happen overnight. It took Dwolla more than a year to form all the partnerships necessary to make Dwolla Credit happen. And relationships are key. Starting with people you know is how you make those initial sales, and then you can use those sales as proof of your credibility to other prospects.
Dwolla's sales process involved creating partnerships for a launch to signal to the market that it was a trusted brand. After launch, it continued selling to bring on new merchants. But your sales may be different: you may be selling your software directly to consumers. Or you might be a media company like Tech Cocktail, in which case you're selling audience engagement through online advertising and event sponsorships.
For this chapter, I'll talk about sales as those one-on-one interactions where you try to gain a customer or partner. I'll go over what the typical sales process looks like and what your attitude toward sales should be.
Although sales and marketing are related, they have distinct purposes. The goal of marketing is to communicate your message to the world, building relationships and gaining attention. Marketing is a broader activity than sales; sales refers to doing deals: convincing someone they should work with you. Often, marketing teams will generate leads—for example, Dwolla's marketing team might notice which companies retweet their blog posts—then send those leads to the sales team to close a deal. The sales team also comes up with their own leads through research, also called sales prospecting.
Before diving in, take a moment to think about your higher-level goals. What role does sales play in your organization? Is your product something that users can find and sign up for (and pay for) on their own, or do you need to be actively selling it and meeting with customers? Even if you don't sell directly to customers, could you benefit from creating partnerships with other businesses or thought leaders? Do you create any secondary products (such as reports or other content) that someone might like to sponsor? These are all reasons to hone your sales skills.
Sales Process
You'll have to tweak this model to fit your startup, but here's what a traditional sales process looks like.
Lead generation: Initially, you want to figure out who your target is. Dwolla decided to focus on companies with fewer than 5,000 transactions a month (since it was launching in beta), small to medium lifestyle businesses, and funded startups. You're looking for users who have the needs you're addressing—for Dwolla, those small businesses feel the pain of credit card fees more than their corporate counterparts. One way to generate leads is to see what type of people or companies are visiting your website.
Qualify leads: This is where you take all the leads you've generated—for Dwolla, that list of 100 to 200 people they knew combined with the research from their intern—and rank them to figure out whom to contact first. Our vice president of sales and business development, Steve Kann, ranks leads based on the contact's job title, the company size, and what industry the person is in. Following are a few examples of other ranking criteria that different startups use.
Social Tables, mentioned earlier in the book, was a consumer product that decided to go enterprise and sell its event planning solution to hotels and other venues. With a sales team of about four people, they spent 2013 signing up venues. They used the popular BANT criteria for ranking leads, which stands for budget, authority, need, and timeline. In other words, they looked for contacts who had a large budget, were in charge of making the purchasing decision, desperately needed the product, and might sign a deal soon.
One helpful tip from HubSpot is to analyze past leads who converted into customers and figure out what actions they took before they converted. How much interaction did they have with you before deciding to buy? That way, you can figure out the best time to approach a lead and try to make a sale without wasting your time or annoying people.
At Curbed Network, which owns the three blogs Curbed, Racked, and Eater, sales involves getting paid to syndicate their content out to other sites. Curbed is quite successful, reaching more than 5 million unique visitors per month, so it actually gets a lot of inbound requests to syndicate content. Then, it's the team's job to rank those leads. To do that, cofounder and vice president of strategic development Alexis Juneja relies on her strict syndication criteria. She tells the lead what those criteria are—such as guidelines for how the content must be displayed—and then simply says no to everyone who won't comply. Part of qualifying leads is figuring out whom to delete from your list.
Alexis Juneja
Alexis Juneja was the cofounder of Curbed Network, a media company that includes three sites: Curbed, showcasing real estate and design; Eater, featuring dining and nightlife; and Racked, focusing on shopping and fashion. Curbed grew to more than 35 million page views per month and 50 employees before being acquired by Vox Media in November 2013. Juneja is now a vice president at Vox Media. She comes to the startup and media world from a background in finance.
Research: Always know your audience. The pitch to one person isn't the same as the pitch to another. The last thing you want to do is get a big meeting with an important sales prospect and come across unprepared or try to sell the person something that's not relevant. So before you contact your leads, do some research so you can tailor your pitc
h. Create a profile of all leads. This is where you store any and all information about interactions they've had with you: which forms they completed, which e-mails they opened, how they interacted with you on social media, and which pages they visited on your site.
Initial contact: When you first talk with a lead, your goal is to listen—starting with the moment the person picks up the phone. Learn about the person's needs, wants, reservations, and obstacles. Only then can you figure out if your product or service will be a good fit. But don't hide the fact that you're looking to make a sale. Instead, build rapport by getting the person to agree with you. For example, you might say, “I'm sure you care about improving in this area”—who could say no to that? When the person talks, make sure that you've understood correctly by paraphrasing the ideas and confirming your interpretation.
As the call winds up, try to set up another appointment for a more formal proposal. And be clear on what the prospect's goals are. “Always ask what success means to the ‘decision maker.’ If you don't realize or ask what wins look like to your customers, then you will never understand how to create ROI [return on investment],” says Clarisa Lindenmeyer, vice president of public relations at the accelerator Tech Wildcatters. Show that ROI clearly when you make your formal proposal.
Sales Tips
Sales is a delicate dance of building relationships and doing business transactions. Even if you're an introverted techie, you have to do it yourself early on. Here are some principles to keep in mind along the way.
Start by selling yourself. Before you sell your product, you have to sell yourself as someone who's likeable and trustworthy. That starts the minute you tweet or shake hands with someone. Be friendly and interested, and don't dive right into your pitch.
Focus on the prospect. It's all about your prospect. Find out what the prospect is really looking to do. What are his or her goals? One of Tech Cocktail's early business development leads, Mary Ellen Delaney, reminds herself to be present in the moment, listening and focusing on what the other person is saying while figuring out how she can help him or her.
Steve approaches sales by caring. I know that probably sounds simplistic, but the person you're talking to can tell when you don't care. Listen to the words the person uses when describing his or her needs and problems, and articulate your value in those words.
In the end, he says, you also feel better about doing sales. You aren't the greasy car salesperson: you're the respectful collaborator who isn't afraid to say when your product isn't a good fit. “If you focus on relationships and not transactions, you'll get both,” Steve says.
Show testimonials. In sales, as in many other domains, we need social proof. Trying out something untested is scary; trying out something that famous people recommend makes good sense. Particularly when you have a small startup, prospects won't want to take a chance on you, have it turn out badly, and be held accountable by their bosses. Offering testimonials and explaining who else uses your product eases their concern.
For example, .CO was starting a completely new top-level domain, and they knew it would be a huge challenge to get the first customers to join. Why would anyone want a .CO when no one knew what a .CO was? So they started looking for anchor tenants who would prove the worth of .CO to everyone else. And they got them, including Twitter (t.co), AngelList (angel.co), and 500 Startups (500.co). “The ROI on getting early adopters that are notable and credible is exponentially higher than anything else we've ever done,” says founder Juan Diego Calle. Obviously Tech Cocktail (tech.co) was a pretty smart partnership, too.
Volume, volume, volume. Once you've qualified and ranked your leads, it's time to get down to business. Often, the way to win in sales is just to contact as many prospects as possible.
Steve recommends keeping track of your performance and setting a goal for a certain number of calls to make per day. For example, say that out of every 100 outbound e-mails, you get 11 responses. Five of those have a real interest and request a proposal, and one ends up buying your product for $1,500. If your goal is to sell $7,500 per day, you know that you need to send 500 e-mails. Once you have those goals, share them with your team—and try to beat them!
Be patient. Research by Gleanster suggests that 30 to 50 percent of leads are not ready to buy when they enter your sales pipeline. Getting a yes can take months. When I talked to Mary Ellen about this chapter, she had just closed a deal that was a full year in the making.
Iterate. As we saw with Dwolla, tweaking and changing your pitch is the way to perfect it over time. You can even collaborate with the marketing team on iteration. For example, say that most of their leads from e-book downloads end up becoming customers, but few of their leads from Twitter do. That can help the marketing side refine their own initiatives and experiment with new ways of generating leads.
Create a sales culture. Everyone that the team meets could be a potential prospect or friend of a prospect—and the business will make more money if all employees keep that in mind. Everyone knows other people; if you create a sales culture, then there should never be a shortage of leads that could turn to sales.
Cofounder Neil Patel of KISSmetrics recommends hiring salespeople who are comfortable with change and uncertainty. He says they should be “hunters”: people who can find their own leads rather than just attacking the ones you feed them. They should also be “mavericks,” trailblazers who can educate prospects on your innovative idea and come up with their own processes.
For a list of sales tools, check out http://tech.co/book.
The Harsh Reality
Sales is a skill you will use across all aspects of your company. As soon as you decided to become a founder, guess what? You became a salesperson. You are selling your concept continually, whether it's to sell product directly, gain the best employees, bring on partners or investors, or pitch press. Get used to it. It's now a part of your daily job.
“I always looked at sales as such a foreign thing…I never considered I would have anything to do with it. But when I started working with Frank to build Tech Cocktail, it was the first big challenge I had to take on. We had to—there wasn't anyone else and we didn't have any funding,” reflects my chief operating officer Jen. She continues:
I started testing pitches everywhere. I remember reaching out to this great guy I had met at one of our events who suggested we might be able to work together. He introduced me to someone who introduced me to someone else—eventually I got to understand their needs and got a proposal in the right hands. It seemed like it took forever. I was in a San Francisco hotel with terrible reception when I got the call that they liked my proposal and would sponsor four of our major events. I was literally running around the lobby trying to get signal. When I closed that deal, I almost cried. I did a happy dance right there in the lobby.
The reality is, sales is a complicated process, and it will be a big learning curve for most people. And the difficulties start the moment you begin.
The problem with sales is that you're dealing with human beings, human relationships, and often complex organizations. You may be talking to someone, only to realize that that person doesn't have the authority within the company to approve the deal. But you can't just come right out and say, “Are you allowed to sign off on this? If not, who should I talk to?” That would bruise egos and ruin your chances of an introduction. So probe and ask polite questions, even if you feel impatient.
Testimonials are crucial, but how do you sign on your first customer? It's the same problem as getting your first job: you need experience, but you can't get experience because you have no experience. That means you might have to give things away for free in the beginning.
“I've been shut down many times or have been told to just ‘leave a business card’ when cold-pitching to companies to solicit our services. They needed to see proof of our work, and we didn't have anything but our passion and promises,” says Jeromy Ko, a social media strategist at the Social Firm.
When you do sal
es, you'll need to thicken up your skin. “You are going to get nine nos before you get a yes—you're going to get 99 nos before you get a yes,” says Mary Ellen. Now is not the time for big egos or pride; it's the time to recognize the harsh reality that people aren't as interested in your product as you think they should be.
Since you get so many nos, it's absolutely crucial that you're constantly pushing forward. Always be hungry. The worst thing for a sales team is stagnation—a problem Social Tables faced in early 2013. Ram Parimi, who leads sales for Social Tables, was alarmed to notice that the team wasn't moving fast enough; somehow, they had created a culture where it was okay to make fewer and fewer calls per day.
“What we were missing out on by lack of effort—that's something that is very dangerous in sales and needs to be corrected quickly,” he says. He was forced to set ambitious goals and make it clear to everyone that minimal effort wasn't cutting it; they each had be making 60 to 80 calls per day.
Part of the problem was the small sales team. Without a room of 20 people buzzing with phone calls, you just don't feel that competition to beat your peers. So in a startup, you have to cultivate a sense of urgency yourself. “You can't be comfortable doing whatever it is you're doing—you have to triple that,” Parimi says.
One way that sales teams slow down is by getting tunnel vision. It's when the team gets the slightest hint of an opportunity, holds onto it for dear life, and stops focusing so much on all their other leads. Joanne Black, author of Pick Up the Damn Phone!, made this mistake when she was one of two finalists to sign a million-dollar deal. And she lost it.