Selling in an Entrepreneurial Context

Editor's Notes

• #2 In a start-up, the founder assumes the roles of marketing and sales, finance, technology, training, human resources, operations …; positions that do not currently exist within a new enterprise. It takes much more than a viable product to create a sustainable and profitable business. The ability to sell effectively is critical to the success of a new venture, however the sales function within an entrepreneurial context is very different than within a corporate context where the sales professional has a clearly defined role and plethora of resources. Selling is defined as the one-to-one dialogue a seller has with a prospective buyer to determine if the proposed product addresses an unmet need or solves a problem. The marketing function by contrast drives demand for the product and builds brand equity.Entrepreneurs must be able to build a sustainable sales pipeline to ensure scalable profitable growth as they tackle other pressing issues such as financing, staffing and product development. In order to succeed the entrepreneur needs the knowledge, capabilities and the discipline to build a framework to integrate a standardized sales process which is critical to building an effective sales pipeline with quantifiable metrics to ensure scalable profitable growth. Most importantly the founder must be able to balance sales and all of the other managerial roles the founder assumes in order to successfully grow the new venture.
• #3 Opportunity is defined as an exploitable set of circumstances with uncertain outcomes requiring a commitment of resources and analysis of the level of risk exposure.Research has shown that almost all VC investments in early stage technology ventures comes down to just four key factors - management, market, money and momentum. Three of the four factors are driven by effective sales processes.
• #4 Peter Drucker (http://www.druckerinstitute.com)defined "The purpose of a business is to create a customer." It is also to "retain a customer" since marketing research has shown that it is five to ten times more expensive to sell to a new customer than to retain existing customers. Drucker also went on to say that "the two most important functions of a business are innovation and marketing" as they are the only two functions that contribute to profit while all other functions are administrative managerial and operational costs.“When an entrepreneur decides to start a business, there are typically several important tasks at the top of his or her To-Do list, such as writing a business plan, choosing a name, and obtaining financing. Once the company is up and running, most founders obsess over perfecting the product or service, and perhaps devote energy to secondary tasks such as building a website.Too often, there’s a task that’s far down this list of priorities that deserves to be much higher: Making the company’s first sale.” Entrepreneurs' Biggest Sales Mistakesby Vincent (Vini) Onyemah, Martha Rivera and Abdul Ali  July 17, 2012
• #5 Learning how to sell early in the start-up process will force the entrepreneur away from the preoccupation with the product into an understanding of the market, the potential opportunity and validating what prospective buyers’ value as well as develop an understanding of how and why they buy. Typically an entrepreneur will focus 100 percent of his/her efforts on the product development process without ever validating a need or want in the marketplace. It is imperative to identify the competitive advantage the product has in the marketplace. As a start-up it is critical to solicit input from prospective buyers early in the product development process to collect feedback regarding their problems and their perception of the new product’s benefits and advantages. The feedback is used to clarify what advantages the new product provides better than any other seller which becomes the basis of the value proposition as well as defining the go to market strategy.Start-up founder(s) need to effectively sell the product from day one in order to:build credibility in the marketplacecapture feedback respective to ongoing product development by testing the hypothesis in order to being able to pivot,provide insights on buyer behaviorgenerate a profitable and sustainable revenue stream provide testimonials and storiesserve as a basis of referrals for future sales 
• #6  An organization’s sales strategy defines the target industry and customer segments, the value proposition and how the selling function is structured. Successful sales strategies evolve over time as external and internal pressures in order to continually refine the most effective relationship between the seller’s and buyer’s respective organizations. The sales framework clarifies the structure within which the sales strategy can be executed and defines budgets, systems, staffing, resource allocation, compensation plans, quota levels and deployment structures required to deliver the specified results.Reference www.sellingpower.com for additional resources
• #7 The term 'consultative selling' describes a selling technique in which the seller acts as an expert consultant for his/her prospective buyer, asking the right questions to determine the prospect's issues and then using that information to select the best product to address those issues. The focus is on the buyer’s issues first and foremost. The critical issues are identified through a combination of research, preparation and effective probing and drilling-down into customer answers. The seller’s focus is on engaging in a dialogue with the buyer in a process of discovery to develop a viable value proposition from the buyer’s perspective. Starting with an entrepreneurial mindset, the entrepreneur needs to engage in a consultative solution based selling methodology, in order to build trust and to efficiently and effectively determine whether the product addresses a prospective buyer’s unmet needs and wants.  Most startups lack a process for discovering their markets, locating their first customers, validating their assumptions, and growing their business. However according to Steve Blank author of The Startup Owner's Manual: The Step-By-Step Guide for Building a Great Companyresearch has shown that the start-up’s which succeed build and integrate the Customer Development model and a consultative selling process.  The term 'consultative selling' first appeared in the 1970s book Consultative Selling by Mack Hanan. It describes a selling technique in which the seller acts as an expert consultant for his/her prospect, asking the right questions to determine the prospect's issues and then using that information to select the best product to address those issues. The focus is on the buyer’s issues first and foremost. The critical issues are identified through a combination of preparation and effective probing and drilling-down into customer answers. The seller’s focus is on engaging in a dialogue with the buyer in a process of discovery to develop a viable value proposition from the buyer’s perspective.
• #8 Initial customers not only generate revenue, they are a key factor in raising the start-up’s reputation in the market. Building a successful enterprise from start-up to sustainable long-term profitability demands a total commitment to providing world class customer service.  Any failure to perform in the best interests of the buyer dramatically decreases the probability that the prospective customer will take on the risk of purchasing an unknown and untried offering, and increases the probability the buyer will take the safe route and go with a proven supplier."Customer-centricity" is a business strategy that involves looking at a company from the perspective of its customers. It is an outside in view! A customer-centric approach adds value by enabling an enterprise to differentiate itself from its competitors who do not offer a best in class customer experience. Customer-centric organizations believe that intense focus on creating the best possible experience for their customers is the best way to grow their businesses. “Companies that improve their ability to consistently meet and exceed their customers’ needs will produce positive bottom-line business results.” (Mikel Harry, Richard Schroeder, Six Sigma). For additional information reference http://customer3d.com/the-benefits-of-being-customer-centric/#sthash.eCuaxRja.dpuf One of the challenges facing the founder is to build a customer centric culture which means everyone in the organization sells. Integrating repeatable and scalable sales methodologies throughout the enterprise to create the required mindsets, behaviors and processes, will significantly increase the probability of long-term success. A leadership mindset that articulates what customer-centricity means and what it looks like in practice, is critical to creating a customer centric culture.
• #9 The first salesperson in a new enterprise is you! In most cases the first salesperson in a new venture is the founder who has a deep understanding, commitment and overriding passion for the product.Success in growing the sales organization is contingent upon:Identifying the internal and external forces which may impact sales performanceEstablishing a common languageBuilda customer centric cultureLeveraging a standardized set of rules, roles, procedures and processesDeveloping the stories from the early adopters which define the value propositionDefine realistic, measurable goals and time lines The business is growing and it is time to hire someone else to lead and manage the sales process. Hiring sales people is one of the hardest tasks for any start-up. How and where do you find a great salesperson?  Identify the five to seven most important characteristics that will make a person successful in the job. When recruiting, focus on two concepts—competency (sales knowledge and capabilities) and commitment (attitude and culture alignment). Remember that you need the right combination of skills and attitude for this person to be both productive and to assimilate into the company’s chemistry and culture.For additional information reference 3 Traps to Avoid When Hiring a Salesperson http://www.inc.com/articles/201106/3-traps-to-avoid-when-hiring-a-salesperson.html and How to Hire Your First Salespersonhttp://www.entrepreneur.com/article/159540#
• #10 Management of the long-term sales cycle is called Pipeline Management and involves identifying the sales stages and what needs to be accomplished in each stage of the sales process. The sales pipelineis a systematic approach to selling which describes the individual steps followed through each of the different stages until the opportunity is closed and typically may include up to eight stages depending on the type of product and target market segments.
• #11 Qualifying the prospective buyerIn most business transactions, typically there is a decision maker, an influencer, and a user. It is critical to identify specific buying influences to begin the qualifying process that will lead to a win/win relationship between the seller and buyer using a process similar to Steve Blank’s Customer Development process. Thoroughly qualifying prospects before scheduling an appointment is critically important to a consultative sales approach. The focus needs to be on developing an understanding of the buyer’s thoughts as well as feelings by asking relevant questions and listening to ascertain the buyer’s needs, wants, motivation and ability to purchase. Only when the entrepreneur has truly listened to the prospective customer, can he/she match what his/her startup offers to what the buyer is specifically looking for. By providing a great customer service experience throughout the sales cycle there is a much higher probability of successfully closing the sales transaction. Another consideration is to select the pool of initial prospects with similar demographic characteristics based on what benefits the relationship can deliver including their ability to build credibility, to provide important usage data and serve as a source of referrals to drive future sales opportunities.
• #12 Defining and validating marketdemandOne tenet of Eric Ries’ Lean Startup Movement, advises startups to create a "minimum viable product" which is a test of a specific set of hypotheses. The goal is to prove or disprove the hypotheses by seeking feedback from a select group of prospective buyers’ to determine what their most pressing issues are and how the product can address and mitigate the issues as soon as possible.Pick up the phone!!!
• #13 In most business transactions, typically there is a decision maker, an influencer, and a user. It is critical to identify specific buying influences to begin the qualifying process that will lead to a win/win relationship between the seller and buyer using a process similar to Steve Blank’s Customer Development process. Thoroughly qualifying prospects before scheduling an appointment is critically important to a consultative sales approach. The focus needs to be on developing an understanding of the buyer’s thoughts as well as feelings by asking relevant questions and listening to ascertain the buyer’s needs, wants, motivation and ability to purchase. Only when the entrepreneur has truly listened to the prospective customer, can he/she match what his/her startup offers to what the buyer is specifically looking for. By providing a great customer service experience throughout the sales cycle there is a much higher probability of successfully closing the sales transaction.
• #14 Determine is there a fit between the buyer needs and wants and the seller’s product by developing an in depth understanding the prospective buyer’s goals, concerns, aspirations, challenges and constraints. It is critical to align the value proposition as closely as possible to the buyer’s issues to create a compelling dialogue using business cases, references, stories and or data which addresses the prospective buyer’s unmet needs and demonstrates how the product offering drives long-term value.Telling stories is one of the most effective tools to use in a consultative sales environment. Stories and case studies are used to connect on a personal level with the prospective buyer. Also, stories help the new enterprise create a strong culture by defining what works and what does not and to create a framework for the precipitous decision-making process which is inherent within a growing company. By listening to the prospective buyer a story/ case study can be used which that will resonate with the buyer’s specific needs and wants. On a regular basis encapsulatethe collective stories and write the stories/case studies integrating internal and external data, best practices realized and the product features and benefits.
• #15 If the prospective customer begins to realize that product will bring real tangible value to their organization during the early discovery stages of the sales process the impact on any subsequent negotiation is typically positiveClose the sales transaction by clarifying the issues and the proposed solution and setting realistic expectations in such a way that meets and exceeds the buyer’s expectations which positively impacts his/her future state and in turn generates a profit for the sellerAsk for the order!
• #16 Post-sales processes perform the numerous activities that take place following the sale. The purpose of these activities is to support the customer in the use of the product to ensure continuing customer satisfaction. Typical processes in this arena may include delivery schedules, inquiry resolution, parts inventory management, warranties and equipment maintenance.  These processes are critical to the ongoing success of the enterprise in that they have an enormous impacton the level of customer satisfaction and thereby on customer retention and loyalty. In addition the customer experience also influences additional sales opportunities.
• #17 Solicit referrals, testimonials and case studies from satisfied customers to effectively communicate the company’s value to prospective buyers’. Communicate with all current and past customers on a regular basis and always include a request for referrals. Most referrers are motivated to help because of the value they realized from the transaction and typically do not seek a lot of reward or recognition for themselves other than a thank-you.
• #18 Upselling and cross selling are sales strategies where by the seller will provide opportunities to purchase related products for the sole purpose of generating additional revenue and profit from a buyer. Upselling is a sales technique whereby by a seller exposes the buyer customer to other product options that were perhaps not initially considered to induce the buyer to purchase additional products items, upgrades, or other add-ons in an attempt to generate more revenue from the transaction. Cross-selling is a sales technique whereby the seller tries to sell the buyer additional products from other categories than the product currently being considered or purchased.
• #19 Key Performance Indicators (KPI) are those quantifiable, specific measurements which define the critical success factors of an enterprise and measure progress toward organizational goals. Early in the development of the sales pipeline one of the critical initiatives the enterprise must address is the development of appropriate milestones to enable the key interaction touch-points through the pipeline to be identified, analyzed and understood.One of the primary keys to managing customer expectations is building a clearly defined end-to-end customer experience. This enables the key interaction touch-points through the pipeline to be identified, analyzed and understood. Milestones that can be used measure a startup’s progress according to Steve Blank include an in-depth analysis of the answers to questions such as the following: 1. How well do we understand the critical issues prospective buyers are facing? 2. How much is the buyer willing to pay to resolve those problems? 3. Do the product features product a viable solution to address and resolve the buyer issues? 4. How well do we understand the buyer’s business? 5. Have we found visionary prospects who will buy the product early? 6. Does the enterprise understand the sales road map well enough to consistently sell the product? 7. Is the sales strategy and plan realistic, repeatable, scalable and achievable? 8. Do we have a clear understanding of what the enterprise needs to be profitable? 9. How do we pivot the enterprise if the hypothesis and model turns out to be wrong?