Make Your Startup’s First Sales
Make Your Startup’s First Sales
By George Jones and Drue Freeman
Most startup founders learn quickly that they need to record some revenue before angels will invest in the company. But for founders without much sales experience, especially technical or product-focused founders, making these first sales can be a real challenge.
Angel investors like to see revenue traction because it is evidence the company has overcome some hurdles that can kill a startup. Paying customers prove there are people who want to buy the product or service. It also means the startup has likely figured out the target market, channels, and the right messaging. The product must work, or the customers would have cancelled or returned it. And having revenue means the startup leadership team has a commercial mindset, rather than “engineering delight,” holding back to polish the product and add more features.
But now that you have your working prototypes ready, how do you get started on generating those first sales? We hope the following tips will help you.
Ensure the CEO is the Chief Salesperson. In most cases it is impossible to delegate the initial sales. The company is small. The founders know the product best. The initial customers will be taking a chance on a brand new startup, and will likely require the assurances of the founders.
Read a few good books on sales. There are many good books out there to help any of us become better at selling. Some that we recommend are
Let’s Get Real or Let’s Not Play, by Mohan Kalsa (even better in audio form).
The New Strategic Selling, by Miller and Heiman, an oldie-but-goodie aimed more at enterprise sales.
For a practical, nuts-and-bolts guide to enterprise or B2B selling, take a look at Hit Your Numbers and Keep Your Job by our friend Scott Parker who has led billions of dollars of B2B sales in his career.
For a more integrated approach that includes marketing and product management, read Marketing That Works: How Entrepreneurial Marketing Can Add Sustainable Value to Any Sized Company by Len Lodish, a storied professor of marketing from Wharton. It is rich with ideas on how to segment markets while testing product concepts and pricing.
Manage your opportunity funnel. Startups will often bounce from opportunity to opportunity, chasing the latest potential customer who shows some interest in their product. But the sooner you learn to organize your opportunities and get serious about moving those opportunities through the funnel, the better. Hubspot has a very nice free CRM tool to help startups manage their funnel, but there are other tools out there as well. For example, Zoho and PipeDrive have inexpensive starter plans. You can use a spreadsheet, whiteboard, or post-it notes on a wall. It’s not about the tool, it’s about managing your sales pipeline - every day. (See related blog post: Startups Need a CRM Sooner than they Think).
Make them want to buy, rather than sell them. Many inexperienced salespeople, especially product-oriented ones, think they will make progress by listing more product features. They try to push the sales, which is rarely successful and can turn the customer off. Instead, lead the customer through a process where she becomes convinced she wants to buy, then help her understand why yours is the best choice. That can lead to a pull sale, which is often easier to close. If it’s pull-through that you want, find your customer’s customer and convince them.
Know how to close. While some founders err on the side of trying to close too early, other founders struggle with closing the first sales. They may want to hold off until they load all the features in the product, or they may feel uncomfortable committing to a price. Perhaps the best strategies are to discount the early product version, offer free upgrades to early customers, or establish a charter customer plan to get the first customers on board. Do whatever it takes to close the first ones, learn from the process, and get better as you go along.
Learn from all the “nos”. There will be plenty of rejections. It is inevitable. But the wise sales people learn as much as they can each time they hear “no”. Maybe they are going after the wrong target market. Maybe the messaging is wrong. Learn and adapt. View “no” as a gift from your potential customer - and get better as a result.
Make some sales on your own even if you plan to work with a distributor. In many cases the best channel for a startup to use is a distributor. Just the same, it is usually worthwhile to make some initial sales directly. Having some sales traction will make it easier to enlist a good distributor. In addition, you will have to guide the distributor on how best to sell the product, so your early experiences will be helpful.
Before you hire your first salesperson, close a deal yourself. And not just a sample order or a trial, but a real customer engagement where money changes hands. It’s critical for investors, your team, and your company. Closing establishes product-market fit. And, how can you expect a salesperson to close a deal if you cannot do it yourself?
Once you make your first sales, your work is only just beginning. It is still worthwhile to pause for a moment to celebrate this important milestone and success. You will likely never forget your first customer or that first purchase order, when your company transformed from an idea into a business.