Working in one of Germany’s best accelerator programs, helping startups on a daily basis, we get a lot of insights, on how founders do or don’t do their sales job. Besides finding funding, defining their strategy and developing their product, actually selling their product is the key element for a startup’s success. And that can only be accomplished when sound sales strategies are properly integrated into a startup business plan
As writing a good business plan is still seen as the foundation for doing business, we wanted to make it easier for you to get a glimpse, what “sales” means for you as a startup founder. In this article, we break down some operational sales aspects for B2B startups to be taken for deeper understanding prior to writing your business plan as well as in your day to day business.
DO YOU REALLY KNOW WHAT YOU ARE SELLING?
Knowing what you are selling is crucial to your business. The funny thing about your startup’s product is that there are many levels of perception of what you do.
Most of the founders will focus on their solution and its set of features. From an engineering perspective, that is great. Also from the perspective of your quality management. Selling the best product available with the biggest feature set is also good for your happy customers.
But, as you might already recognize from the choice of words, you already need customers for this perspective to work as it mostly benefits your existing customer base. So, surprise: it is not the real product, you are actually selling. Nevertheless, it is the way, how your product should be defined in your business plan.
Coming back to your sales plan, you even have to take a step before and validate, that your idea (not an existing product at this point) is even relevant enough for your suspected customers. Sounds exhausting, but when it comes to customer discovery, we have got you covered.
Before fine-tuning every aspect and feature of your product, you need to define what is relevant. And you get this by talking about your idea and not a set of features, that only experts in your field of work might understand.
You should be able to answer the question “How would you describe your startup to your grandparents” in an instance and also be able to summarize your pitch in just one sentence. After trying this out, you will be able to break it down to three key elements about your startup following the value wedge strategy:
- What your startup is
- What your startup does
- What is means to the customer
The first two elements could and should be rather easy and universal for all your personas, to make it easy communicable. With the third element, you will be able to differentiate yourself from your market companions (read: competitors). And this is also, where we leave the world of transactional sales, where it is just about product features and price, and enter the world of Value-Based Selling.
Following the Value-Based Selling strategy is giving you as a founder and also a salesperson more freedom and variety on how to market your solution, based on the people and markets you try to address. When focussing on the value that your solution is able to provide, you begin to see behind its limited feature-set and see the possibilities of possible applications.
This gives you more freedom and communicating and also adds more levels of possible use-cases.
HOW TO EASILY FIND WAYS TO DEFINE USE-CASES
When pitching your startup to a company, mainly German corporates, you will be asked to provide potential uses-cases which can serve as a pilot project.
This is mostly a mean question, as you might not know their current challenges and you don’t know their daily business routines. But there is one fun exercise that helps you generate ideas and brainstorm possible use-cases for every potential customer, which you should do prior to a business meeting, but also execute with them in an on-site appointment.
First, you need to think about all the different layers and viewpoints an enterprise has, e.g. technology, culture, finances, compliance, communication, internal processes, etc. You then write them on top of a paper or the first row of a spreadsheet but leave the first column empty.
This gives you room to collect more information because for every layer within an organization you then collect the current challenges, possible approaches to solving them and solutions to the challenges, where the solutions should somehow match with your field of expertise of course.
Let’s assume, your startup is developing a new kind of knowledge management system, that gives your easily accessible overview of all the information within your company to easily onboard new employees and be less stressed when looking for something in your internal systems. Now try to fill out the above mentioned matrix with three example layers:
|Challenges||Information spread over a variety of software tools||New employees are lost in the masses of different systems||Tech department wants new tools every time something cool comes up|
|Approaches||One source of truth for all content||Easy onboarding templates for new employees||Make sure, that data is stored GDPR compliant|
|Solutions||A software solution, which integrates the existing platforms and making them searchable||a software which guides new employees through all their relevant information||One software to be used making sure that all data is stored GDPR compliant|
You will now see, that you can define some use cases from the spot and have different ways to communicate and therefore sell your solution. Maybe the aspects stated in the “solutions” row are even requirements the software or use case should fulfil.
This brainstorming exercise can be done every now and then, maybe also connected to current events and upcoming challenges, for you to see how your solution can be positioned on an ever-changing market. Your marketing plan will also benefit from this, as it should, of course, go hand in hand with your sales department.
In regards to your business plan, the brainstorming of possible use cases for your potential customers will give you a better understanding of your targeted industries and their challenges. When looking for approaches for their challenges, you will also get a broader view of alternative solutions which helps you to analyze your competition. You will then see, that for example a current challenge can also be resolved by having just a workshop instead of implementing a new software solution.
AND WHO WILL BUY MY PRODUCT?
Of course, you do have a target market. This target market does have geographical boundaries, maybe age restrictions and limits of interests.
One strategy that makes it more visible to you, who you are developing a product for and selling to, is to define Personas. Personas are living examples or representatives of your target audience, that make it clearly visible who you are trying to address.
We covered setting up startup buyer personas in a video in depth, and defining them helps you to define your communication strategy for value-based selling, but also in researching potential customers. Here, we also have different kinds of contact points in a company.
Coming back to the above-mentioned knowledge management software example, we would target developers with the technology solution from our matrix, HR representatives with the culture solution or maybe also compliance managers with the compliance solution.
The will be the first people to talk to in the company, where you need to pitch your startup. But in most cases, they will not be the person making the buying decision, which will be done by their managers or group leaders.
You can either make a direct appointment also with them, target them directly or prepare your initial contact with all the information necessary to help you making the next steps and getting closer to a deal.
Here you need also a good social connection (yes, this might also be via a network like LinkedIn) to your champion in the company and also good marketing material to constantly nurture them.
This material has not only to be relevant for your contact but also for the decision-maker. In addition, you need to find other gatekeepers for you closing the deal and address also their needs.
This is mostly the case in B2B scenarios. So, following-up is the key, as well as asking the right questions to get the information you need. Every contact with your lead in the company should start with your idea for the next step and it should also end with a clear next step.
Wasting time here is crucial, so follow-up at the right time with valuable information, but don’t forget to have a vibrant customer database, that losing a lead doesn’t reset your whole sales strategy back to zero.
HOW LONG DOES IT TAKE TILL THEY BUY?
This is the big question we all have. Like everything, it is connected to the number of follow-ups, other solutions the potential customer is looking at, internal processes, customer buying cycle and also their internal compliance or routine, etc pp.
There are various variables here, which could be taken into consideration, but need to be somehow mentioned when writing your startup business plan and sales strategy, especially the market and therefore your concrete product-market-fit. In the end, it has a lot to do with timing and creating commitment.
The time you reach out to the customer, current events or challenges the company faces are relevant factors for the right time to reach out as well as the way you communicate.
So, do your research and make your sales story relevant and beneficial for your potential customers. Define concrete next steps together with your potential customer and get their commitment.
Also, try to find out possible obstacles and what it takes to overcome them (time, more people to be involved, more budget, …). Always close a meeting with a clear call to action with every party involved.
AND WHAT DOES THIS ALL HAVE TO DO WITH MY STARTUP BUSINESS PLAN?
As you can see, we tried to cover all the elements for the sales part of your business plan with relating events of the daily sales business.
There are many things that can be planned in advance, but will mostly take-off when you actually do your job. You will adjust your strategy along the way while getting more and more information and feedback from potential customers about your solution.
Use this information, make it analyzable as data points and see which are the relevant points which you can adjust and which effect they will have. Does the shortening the time span between follow-ups decrease or increase the time to close a deal? How many contacts does it take to get a personal appointment?
Which kind of use-cases can be used as marketing material for which kind of contact person? There are many possible ways to aggregate and track data, combining them to make use of it for an improved sales strategy.
Implementing a good CRM is crucial, to have a central point to build a customer database, take notes for every interaction of the customer, to manage your follow-ups and also implement your automated lead nurturing and marketing.
You also have to get a feeling, which element there are that might drive your costs for your sales operations. When doing this, start backwards: How much money do I need to make to operate my business? What is the average deal size per customer to achieve my needed revenue? How many follow-ups (time) to I need to close it?
What is the conversion rate in each stage from a client, to hot-lead, to cold lead? And what is the time between follow-ups for the potential customers to convert to the next stage in my funnel? And how many people do I need to contact all these people? This will then give you the first experimental timeline and a number of persons for your sales department.
Of course, these numbers are highly experimental and need to be validated with the above mentioned data points during your sales operation.
Writing your startup’s business plan is a complex task, which is not mandatory for a startup to succeed, but that might give you a first plan or overview of the different areas of your soon-to-be company and also a plan and how to work on your idea.
The information above might help you to get a first glimpse of the different layers sales has. To put it in a nutshell, you have to go out and sell but also to keep track and document what you are doing. In case, you have got any questions, feel free to reach out to us.