3 questions to qualify deals for early stage companies
Who’s your perfect prospect?
I’ve asked this question of countless founders and can count on one hand the number of times I got a crisp answer. No knock on them — it can be tough for even an incredibly seasoned leader to answer. And yet, the sooner early-stage founders can pinpoint what that perfect prospect looks like, the faster they will get to product market fit.
Smart founders know that if they talk less and listen more in customer conversations, they will inevitably learn something of value. And if they ask every customer prospect the same handful of questions, very useful patterns and insights will emerge around needs and pain points that founders can then apply to establishing product market fit.
Here are three simple questions to ask a prospective buyer:
1. How big is this problem today?
Sellers fail to qualify deals — I see that all the time. They spend valuable time with prospects who don’t buy (or were never going to buy) — or they lose out to inertia, when “do nothing” seems like a safer course to a buyer.
Now imagine if founders spent just a little time helping customers share about the problems they face. Keep in mind, of course, that prospects always pad their answers (it’s human nature to want to look better!). That’s why probing more is essential. Ask for details:
- How do you quantify the problem: Can you assign an ROI? Is it a direct savings?
- What type of problem are you solving for: Cost Savings? Efficiency improvement? Improving their business or customer experience?
- How is it prioritized relative to other problems: Is it a company initiative? Is it an ongoing concern? How is it impacting the company?
Read between the lines — after all, no one wants to air all their dirty laundry. Use logic and your own knowledge of the market to cut through the sugar coating and hear what they’re not saying. This will help you avoid the all-too-common mistake of product validation when there’s no chance of making a sale. You may find investing more in selling the problem — not just your product — will be important.
2. How do you do it today?
Help a prospective customer see the future — one where your product plays a pivotal role. This question allows you to establish an “as-is” baseline: how they work today. And it helps you draw a comparison to how their work will change with your product (for the better): the “to-be” comparison.
Answers to this question form the building blocks for moving forward, establishing your product’s value proposition and benefits. They also create an opportunity to build credibility with a customer by helping integrate specifics into the comparison. You’ll want to uncover more if you can:
- Is it a new process or a better process? Is your solution a new capability or an improvement of an existing one?
- How do they quantify how it’s done today? Do they currently measure it — and against what metrics? Is it known or defined? (The best answers here are metrics that are numbers which can be consistently measured.)
The common theme? Quantifying or applying numbers to the problem today. Getting prospects to discuss or be open to numbers makes the problem real and tangible. Armed with this intel, you can determine whether you have a compelling solution and product market fit.
3. Who owns solving this problem?
Almost all sales campaigns, especially enterprise sales, involve navigating the account to get to the right person, whether it’s a user, manager, or executive.
Understanding who owns the problem, and their place in the organization, will help you work with the right people at the right level. Generally, the higher the title, the better the possibility for a sale. That said, my experience is that managers often have the most power to drive change within a company. They’re close enough to users to know what’s specifically needed and they can successfully appeal to executives for budget and adoption.
Do your best to find out:
- How many people are involved? Are they influencers? Do multiple people own the problem?
- How much power within the organization does the person have? Can they make decisions? Are they influential? How motivated are they to make changes?
- Are they change agents in the company? Will they challenge the status quo and champion a new product or idea?
Propeller, a cloud-based drone analytics company, initially believed their customer to be construction drone operators that might want to use technology to map a site. Numerous customer conversations later and it turned out the real customer persona was a construction project manager focused on optimizing project costs by accurately calculating the dirt that needed to be relocated around the site. They pivoted to solve that new pain point.
Understanding buyer personas is a fundamental part of product market fit. These questions allow you to get the information to create those personas — and then tailor your approach to focus on what each persona cares most about. Users, for example, want to know about features, managers are focused on how you’ll improve their business, and executives need reassurance that you’ll follow their processes.
Start your process by asking the same three to five questions of every prospect — and soon you’ll see how your product fits into the market with a high degree of accuracy. Just make sure you stay open and ready to pivot based on what you’re hearing.
What are the other insightful questions you’ve asked — as both a buyer and a seller? I’m looking forward to comparing best practices.
