How to Build a Sales Floor Your Investor Will Love!
Spread the love, keep the love alive!
No doubt, many entrepreneurs out there are currently creating or dreaming about the business they are setting up, the products they are going to build, and are deeply engaged pitching VCs and business angels, to further fuel their dreams.
While in your early stages of pitching business angels, you structure your pitch-deck on your team, your product offering and — drumroll: incredible traction. Traction may be the most difficult thing to prove, as you can’t make it up. Investors want to have a proof for market demand and to generate traction you need clients or beta testers or something which proofs that the world is waiting for your offering. With the help of your network and people you have met on the way, you may be able to show results and to secure some seed investment to keep you going.
You have probably realized: It needs cash to run a business, and no matter if you bootstrap or secure an investment — at the end of the journey there needs to be a big fat payoff to everyone involved.
Larry Kim just recently published an article about how to start a tech company, and what it takes to get VC funding. Great insides in general, the biggest take away was to focus on a product which is in demand by an audience — which can be sold and produce dividends, to please and pay off the investors.
Is it safe to assume that at the beginning of your journey you focus on product development and product market fit. Many founders focus on the engineering part, which is certainly necessary to keep the whole gig going. But what is next, once you are set to go?
Beyond Larry’s wisdom, I think it is necessary to address the elephant in the room; not how to get the love from your investor, but how to stay loved? Once your product is out of its beta stage, and once your financial runway comes toward an end: How do you make money selling the damn thing?
Finding the right sales strategy for your offering
Both Larry and Christopher agree on this principle; however, Christopher is also providing guidance on categorizing your target audience into tiers. He is classifying prospects according to their size and potential contract value; comparing them to hunting animals like flies, mice, rabbits, deer, and elephants.
When you set up your sales floor, you need to pay attention to the circumstances of your product market fit and the type of prospect you are hunting.
With an almost limitless number of users — in fact, we wouldn’t call them clients as there is mostly no fee in exchange for the service — we will neglect the “flies & mice” from Christopher’s equation for now. I know it is a dream to build a product and to sit back and watch people signing up for it over night. It goes along with the false belief that all it takes is to put the finished product online and people will sign up and buy. The reality is different, though.
Single businesses, SMBs and mid tier corporations — “rabbits”
Most companies are focusing on smaller SMBs and midsize companies like the German Mittelstand. As it is impossible to address hundred of thousands or even a million potential prospects directly, most of the burden goes to the Marketing department, to generate awareness. The strategy is to produce marketing driven sign-ups or downloads.
Larger midsize businesses with an average order value of $5K to $10K may be addressed directly through an inside sales team, or through an allrounder within business development.
Larger tier corporations and enterprises — “deer & elephants”.
With companies significant larger, carrying an annual recurring revenue potential of 20k-50k or even up to a monthly recurring revenue of 100k, you would consider selling in face-to-face meetings where you can highly tailor your proposition to the need of the prospect. Rightfully though, from the quality perspective, face-to-face sales have the highest value and can even solve challenging prospecting circumstances.
You may still want to call up front to arrange a meeting, but the real spiel you plan doing personally. When it comes to Enterprises, you are mostly demanded to stop by and to spend hours if not days in meeting rooms, to work up the ranks from a lower level of decision making to the top decision maker of the company.
It’s not just compliance and dust from ancient times; whoever has the power of gods on their side may dictate the rules of engagement.
According to roles and tasks you can categorize the sales department in following groups:
Back — Your infrastructure to sales success
Marketing is a given in all circumstances and depending on the game you hunt; it may take over a more dominant role or stays more in the background. In any case, without a communication strategy, it ‘s hard to wheel in prospects and to create a lot of opportunities. A strong marketing may produce leads and legitimate your value proposition when speaking to prospects.
Account Management goes beyond the fulfillment of your sales promises; it’s all about up- and cross sell on licenses or extra services. As you spend the most money on winning the customer in the first place, Account Management can recover parts of the budget and make sure the client is renewing the original contract.
Front — sales professionals facing the prospect
Easy to spot, business developer and sales executives who are delivering the value proposition to the prospect. In case you are chasing enterprises and larger corporates, those are the people with suits and ties, the ones who talk the talk, the coffee drinkers and story tellers. Those are the expensive people, the ones with larger base salaries and expense claims, as they are having a budget for travel and taking the prospect out for dinner or coffee. The feasibility most often comes into play when hunting larger corporates and enterprise prospects carrying huge contract value, and are priceless clients.
Mostly coming in pairs, you may also count in those technically orientated evangelists, who join sales meetings to answer all technical related questions. A product expert, but sometimes even the CIO or a presentable senior engineer who is adding scientific context to a sales meeting.
Middle — In between is where the magic happens (in prospecting)
Once you have identified a prospect, qualified the decision maker and established the first contact and created a new opportunity, you have accomplished the most difficult part of the sales process. It is the hardest job in your sales org, as the team is dealing with a lot of rejection from the prospect
- rejection for being called
- disbelief in regards to need and benefits
- veto in regards to Product Market Fit (Features & Benefits)
- dissent in regards to budget
No wonder no one likes to get stuck in that role and function. Imagine your job is to set up appointments for other sales executives who make up to 4–5 times as much as you do, without the frustration of getting rejected. How much will you love this job?
Sometimes the line between inside sales and business development is very slim, as there is no general definition of tasks and responsibilities. An enterprise sales executive may also be responsible for prospecting own opportunities. The other way around, inside-sales can also conduct sales meetings via the web, and deliver sales presentations online, substituting the need for travel.
The road to faster revenue generation: Shorten the sales cycle as much as possible, without burning leads or losing too many prospects.
Given the three departments within sales, it is the sales functions in the middle who will speed up the sales process. No one can create and qualify an opportunity better and faster than an educated sales professional on the phone, pro-actively reaching out to the prospect. Without time and budget needed to travel, the inside sales executive can also qualify needs and present value on the phone or in an online meeting to the prospect. Getting a signature on a contract is only a blink away, compared to the effort it took until that point.
But while the inside sales person is quicker and overall more productive, the field sales executive may react better on not communicated or unforeseen objections. However, this benefit comes with a huge markup on the price tag.
How to recognize talent: When you hire your first sales people, it is most likely that their strengths lie in the Frontend part. Especially if they “wow” you in the interview, don’t forget that they have already created the opportunity, and they are very convincing to close you on the career availability. There is nothing wrong with having a show man in the team, but your prospecting pipeline should not depend on it. Instead dig deeper on resilience and structured work ethics and pair them with charisma, quick thinking on the feet and happiness. You can teach many skills in the job, but you can never learn the given traits mentioned above.
How to combine both functions in the best possible way: A combination of both characters fulfilling each part in the process sound to be most complete, if you need a face-to-face sales force for your business. In many cases, you may set it up in a wrongful way.
While field sales are seeing clients is expensive, you may want to make the best use of their time and fuel them with a lot of sales opportunities, and sales meeting. That’s why many companies let someone else do the prospecting, a team of appointment setters, mostly getting minimum wages working part time, to offset the costs for the field salesman.
The results may vary, but in general, the appointment setter is benchmarked on quantity and measured on the number of generated sales meetings. A bonus program most often offers only a fraction of the commission a field sales executive is making.
To no surprise, the staff retention for appointment setters are among the lowest in almost every company, and the generated meetings also lack the AAA quality as anticipated.
To be seen as irony, the inside sales team, a department with the largest potential in creating revenue generating opportunities, the life, and blood of any business, are getting the least attention, the lowest salaries and the smallest share of personal development.
I have seen field sales people complain about weak pre arranged sales meetings as a result of inadequate qualification from the appointment setter. I have experienced inside sales people complain the other way around. It had been hard to create an opportunity, and after many calls, a relationship has started between prospect and the appointment setter. It is now difficult for the field guy to continue at the same level. When a prospect buys, the appointment setter is getting denied the victory of closing the deal himself. If the opportunity gets lost, then the appointment setter may get blamed for a weak meeting.
Challenge: If you need well-qualified opportunities, to increase chances of closing — why don’t you let inside sales finish the deal and let them close prospects themselves?
The better way: Instead of offsetting costs for field sales with an inexpensive appointment setter, you better focus your resources on the inside sales. Do not hire dull appointment setter — concentrate on an inside sales team who owns the entire sales process from opening new opportunities until it closes or blows. Your development budget is much better spent on people who can address many more prospects in a day, and therefore can get more contracts signed than any other internal sales function.
Keep field sales as a supplement, or even allocate them to fulfillment positions in the backend and only use them when necessary. If you have to see a client in person, as it is inevitable, or simply because this is what your prospect expects, then let the inside seller conduct the meeting and take the sales director or a business developer along for the additional experience.
In this scenario, you keep up the motivation for the inside seller, as he still owns the victory of closing, and mixes up his usual routine. It also carries a lot of cost savings, as you can limit the positions in field sales.
• Depending on your offering, your product market fit, your prospects and contract value — your approach to the market differs.
• Choose a setup of your sales channels which reflect the given circumstances
• As time is money — invest in shortening the sales cycle as much as possible
• Allocate time and resources in setting up the best inside-sales organization possible
• Invest in staff development and staff retention, development of your sales teams, to open more opportunities.