A little over a year ago, I started at import.io as one of the first ‘revenue-focused’ hires. The challenge was to close the first deals and find out if we really had a business on our hands (it turns out we do).
The types of skills needed during this phase differ from those needed to sell more mature products. They include a facility for communicating with many parts of the organization, a tolerance of ambiguity, a deep interest in the product technology, and a talent for bringing customers together with various functional teams within the company. Salespeople must be resourceful, able to develop their own sales models and collateral materials as needed. We think of this kind of person as the “renaissance rep.” — Mark Leslie, Havard Business Review — Sales learning Curve
I’ve always had a hard time finding content about the early discovery sales stuff. So I figured I would share my lessons learned over the last year at import.io in this post:
Lesson #1: Ask your founders why they started the company
VCs are always asking founders the question, “So what was it that made you start this company?”
It sounds so simple and maybe a bit cheesy, but it’s a great question to ask. Asking it will not only help you better understand where the initial idea came from (in order to identify what gap existed in the market), but also gain a better understanding of where the founders see the company playing in the market (in order to determine how the company plans to fill that gap).
Your founders have probably been working on this idea/space for 3–4 yrs before you join, so the best way to fast-track your learning is to learn from them directly. Once you get a sense of the idea, I recommend you try to fit it into Geoff Moore’s idea introduction pattern, which looks like this:
For [target customers] Who are dissatisfied with [the current offerings in the market], My idea/product is a [new idea or product category] That provides [key problem/solution features]. Unlike [the competing product], My idea/product is [describe key features].
This exercise will really help you solidify your understanding of the gap the product fills in the market. Don’t get frustrated if you can’t complete this exercise the first time, especially if you are pre-product market fit, rather, use it as a guiding exercise that you keep returning to every few weeks.
Lesson #2: Understand what has changed in the customer’s world
Change is what creates new demand and an opportunity for your startup to serve it.
Focus on understanding what has changed in your customer’s world, how this has caused them pain or opened up opportunity, and the options they have for fixing/capitalizing on it. This is the key to having genuinely helpful sales conversations with customers and it also provides great content for your blog.
For example, after about 9 months of sales conversations, we had enough knowledge about the our customer’s issues and available solutions to write this post on the options for getting data from the web and now we share it with folks who are assessing their options for getting data from the web. We share it because we ultimately want their business, but also because we legitimately care about making their search for a solution easier, even if that might not be import.io.
At the end of the day, we know that if we can understand our ideal customer and position ourselves as a resource in their minds — a solution to their problems and pain points — then right customers will chose us for the right reasons.
Lesson #3: Focus on dollars, not buzz.
When I first came on board, we had truckloads of buzz around the import.io product. Lots of people were talking about it, all my friends were using it, and Matt Ellsworth even created a course on Udemy about us and publicly promoted it at Saleshacker meetups. It was super exciting to be working on a product that everyone was excited about.
It was great…but it wasn’t dollars.
In our case, we learned an important lesson about the relationship between buzz and dollars (or lack thereof).
It turns out most of the folks who were talking about us had been using our free tool to collect contact data from places like Yelp.
The problem was, this particular way of using the tool was typically not a reoccurring use case (it was a one-time dump of ~5000 leads), so it’s hard to justify a recurring revenue stream. In addition, it was actually a breach of our terms of service (so a no-go for us).
This is a great example of ‘buzz’ failing to line up with dollars. The good news is by focusing on finding the demand we could service, we eventually found markets that make commercial sense and that is where we are building out our business.
Lesson #4: Keep a close eye on new conversation volume (lead velocity)
Lead velocity is key to any mature sales process, but it’s also key in the early days to keep up the new conversation volume. Sales conversations (win or lose) are all valuable learnings towards finding out who IS and who IS NOT your customer.
Build processes around lead generation and shared ownership of the ‘lead to close’ funnel between marketing and sales so that you have a steady lead flow. We had the early signs of a solid inbound funnel at import.io and with a focus by marketing, it has become a solid source of leads. Now that we have a good idea of our ideal customer profile, we are turning on our outbound process.
Getting marketing to understand that marketing generates leads and sales, qualifies, and closes was a alignment challenge for us. Establishing a common definition of the funnel and metrics to measure it was key to getting everyone on the same page. Here are the definitions we use:
1 — Marketing Qualified Lead (MQL) is a sign-up on our enterprise page. 2 — Sales Qualified Lead (SQL) is a prospect that has budget and problem we can fix. 3 — WON Deal is signed contract for real dollars :)
We figured out that we needed to generate ~80 MQLs/month, which should convert to 8 SQLs/month to have a sales rep hit target.
I wouldn’t suggest you start off measuring this stuff in the first 6 months when you’re flying solo, but it is key to aligning sales and marketing around a common goal and one that has been SUPER powerful (and fun!) for us. I would suggest putting a focus on these metrics as soon as you start relying on a marketing team to scale lead velocity.
Lesson #5: Ideal customer profile: Economics + Product
I mentioned this briefly earlier, but it’s worth circling back on again. At import.io, our growth and success over the past year can be attributed in part to our commitment to develop and refine our ideal customer profiles and a definition of what we DO and DO NOT sell.
For me, that has meant really focusing in on two things:
The first is economics and sales complexity.
Once you have been through a few sales cycles, you will start to get feel for sales complexity — which drives up your customer acquisition cost (CAC). For example, if you need to send out a salesperson and a sales engineer to close a deal for an on-premise enterprise software solution, you have a very high cost of sale — so you need to ensure you charge enough to make it profitable. Once you get feel for sales complexity, read this blog post to get ballpark CAC numbers. Then set up your v1.0 pricing so the minimum value of a paying customer is 3–5 times your CAC (base it on a 12 month contract).
Now you have v1.0 pricing that is roughly profitable, take it to market and negotiate down on price reluctantly. I’ve found that not only is this fun to do, but it also helps you get a feel for the price the market will bear. Sure, you will lose some deals and get told that you’re crazy expensive — but just keep going until you close something.
If you can’t seem to close even one deal, you should probably reconsider your price. Remember to always map the pricing response back to the profile of the person you’re selling to: Pepsi is probably less price sensitive than a seed stage startup in San Francisco. Holding strong on a profitable price point will force you to find an ideal customer profile that will make your business profitable in the long-term.
If you can’t close deals at a price that maps to your sales complexity, you have a problem. To fix it, you need to reduce sales complexity so you can reduce your price point and still be profitable — OR reconsider the business…there is no point scaling an unprofitable business.
The second is product fit.
This is obvious, but often over-looked by pure-play salespeople: don’t sell what you can’t deliver. Yes you should push the product team in the direction of the market…but don’t sell what you literally can’t deliver. This is where there is a natural tension between product and sales:
Sales tends to lead product in the early days of market discovery when everyone in the company wants revenue…but don’t abuse this power. Spend time building a relationship with your product team — it is an important part of getting to the next stage of having a product you can build at a price the market will bear.
The risk here is you sign every deal that comes your way and after 9 months the business starts to look like a bespoke development shop (building anything for anyone that will pay).
Lesson #6: Don’t be afraid of an empty (honest) pipeline
We have a great free tool at import.io and it generates a lot of awareness (>500 new sign-ups/day). In the early days when sales pipeline was empty, it was tempting for sales to start reaching out to these folks cold in the hope of finding new business. But as a two-person sales team, we had very limited bandwidth and starting conversations with 100s unqualified leads was not going to give us the time to focus on closing the deals we had in the pipeline (priority #1).
So instead of following our natural inclination to start conversations when the pipeline was thin, we built an inbound funnel, starting with an enterprise page and an inbound qualification process. Then we worked with marketing to drive lead flow through the enterprise funnel and deliver qualified lead flow to sales (SQLs). This enabled us to focus on closing and started a really effective working relationship with marketing with the final output being revenue.
Lesson #7: Learn through closing and record why (in your CRM)
Revenue is an honest metric.
We started using a simple CRM like Pipedrive from day 1. It’s great for keeping deals moving through the pipeline and it eventually morphed into a fully fledged sales and reporting process. Arguably the most valuable use of the CRM is tracking WON/LOST deals and the reason why.
When you track this information, you can easily look back at 6 months of data start to narrow in on your ideal customer profile. This feeds back into marketing and the outbound processes.
Lesson #8: Be wary of Logos in the pipeline
In the early days — when deals aren’t closing as fast as you’d like and you don’t fully know your ideal customer — it can be tempting to get excited about big brands in your sales pipeline. You might feel the need and desire to immediately report on the logos/brands that have entered your pipeline: “We have just signed BMW and we are in talks with Virgin and Sony…”
Big brands look great on a website, in a pipeline, and in board reports…but the risk here is everyone latches onto these deals and gets very disappointed when they don’t close or yield the expected revenues.
My advice is this: don’t be dazzled by big brands — treat them like every other deal. Stay focused on learning what it take to close paying customers — not on collecting shiny brands for your website. The best investors won’t hang you out to dry if Sony doesn’t close, they will be focus on pipeline velocity and CAC/LTV.
This First Round review is article on closing your series A is great reminder to focus on revenue related metrics.
Keep in mind: big brands are painful! They often have complex buying processes and they negotiate really hard — no one wants to be the salesperson who lost the Sony deal. I think we fell into this trap at import.io — we recovered well, but it added a lot of stress and noise that could have been avoided if we had just focused on funnel metrics and reported logos as a side show.
Lesson #9: Do it first and then automate/outsource quickly — keep focused on the next mystery
In the early stages of participating in the growth of any startup or venture, I’ve found it to be both helpful and important to personally perform tasks like inbound qualification, outbound list building and email sending…but once you have figured it out it becomes unsustainable and unproductive.
When that happens, don’t be afraid to automate/outsource (assuming you have budget). You want to make sure you have the systems and processes down yourself first, but once you do, figure out a way to take repetitive tasks off your plate so you can focus on cracking the code on the next thing. You will get buried in lower value work and burn out if you can’t outsource.
Once you do, you’ll have much more time to work on things that can’t be outsourced — the tasks, strategies, and ideas that actually result in growth.
Side note: I strongly suggest working with folks in the Philippines, companies like TaskUs make this easy.
Lesson #10: Optimize for iteration cycles
As you build and grow your startup, you’re going to make a bunch of decisions that seem really big (eg: pricing, deal structures, etc). But the truth is, when you’re small (and until you get bigger)…they aren’t that big of a deal.
If you close 2 deals with a bad price/deal structure, it’s important to remember that it’s really not a big deal: all you need to do is fix it, learn, and reset. We did 2 deals last year with a pricing plan that is causing us some pain now…but it’s only 2 deals. We learned our lesson and changed the pricing plan quickly and no one died :)
Instead of torturing yourself over decisions or being too afraid to try something else, my advice is this: move fast, find best practices, apply them to your business, run tests, see what happens, learn, and adjust. There is a an organizational sluggishness that creeps in as teams grow.
You’re small — move fast while you can, it’s a massive competitive advantage.
Make decisions, make mistakes, and fix them.
Lesson #11: Keep the right mindset
The biggest lesson I’ve learned over the past year is keeping the right mindset through everything is key.
Here are few thoughts on mind-set I keep returning to:
- You are pre-product market fit, just accept that your sales effort won’t result in revenue initially. Don’t compare yourself or your business to folks who are at post product-fit companies.
- Finding out who is NOT your customer is just as valuable as finding out who IS.
- You can and must learn by closing deals. Revenue is an honest metric.
- Be curious. Curiosity is a powerful mindset that can counter the debilitating effects of anxiety.
- When things get hazy and you feel like you are stagnating…stop and ask yourself the following:
a) Have I got a steady lead velocity? If not, work on that.
b) Am I closing deals as WON/LOST and learning who my customer profile is/is not? If yes, then you’re doing fine. Just keep going, one conversation at a time.
Close deals. Get more leads. Document learnings. Relax and repeat.
One Final Note: Seth Godin’s book, The Dip on delayed gratification is worth a read (it’s really short!).
We have by no means hit a home run at import.io (yet), but we have most definitely hit initial traction. The past 12 months has been really a challenging and satisfying process and I hope this post had a few useful nuggets for the ‘starter salesperson’ in a startup with zero revenue — good luck!
Got any other advice/experiences to add about getting early traction? Please share in the comments below, I’d love to hear!