Selling in an Entrepreneurial Context
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Selling for entrepreneurs. Why it's important to every startup and the steps to successfully close new business. Content provided by Pamela Peterson, Marketing & Management at University of Nebraska at Omaha.
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Selling in an Entrepreneurial Context
- 2. OPPORTUNITY WILL THE NEW PRODUCT GENERATE PROFITABLE AND SU OBJECTIVE Determine how well the new product addresses an unmet need or want in the marketplace. FOCUS Selling is not about you! It is always about the prospective buyer and his or her organization’s challenges and/or aspirations. ACTION • • • Identify and assess opportunity Determine the financial feasability Pursuit of the opportunity
- 3. CHALLENGES IN SELLING UNKNOWN PRODUCT Creating market demand for an unknown product Reaching a deep understanding of prospective buyers, their specific issues and what they value Discovering a repeatable road map based on how and why buyers’ purchase Allocation of the time and resources required to identify, educate and sell prospective buyers
- 4. ENTREPRENEURIAL SELLING The ability to effectively sell is one of the key factors that determine whether a start-up entity will succeed or fail! Build Credibility Provide Feedback Provide Insights WHY SELL? Provide Testimonials Generate Revenue Basis of Referrals
- 5. SALES STRATEGY FRAMEWORK REPEATABLE Systematic approach to drive efficiencies and effectiveness MEASURABLE Forecasting and analysis of plans against revenue goals SCALABLE Capability to maintain efficiencies as the enterprise grows The sales strategy and function are built upon multi-step framework and methodologies which are: SEQUENTIAL Moves through a series of phases MANAGEABLE Defined rules , roles, processes and procedures CONSISTENT Customer experience is the same throughout the organization
- 6. CONSULTIVE SELLING Develop ideal client profile Generate more qualified leads and opportunities Validate product assumptions Build trust Determine whether the product addresses a prospective buyer’s unmet needs and wants Gain perspective of buying motives to improve forecast accuracy
- 7. CUSTOMER EXPERIENCE Poor customer service is the number one reason a buyer will change suppliers! ACTION : ACTION : ACTION: Build and RESULT execute : standardized sales Will create processes and integrate selling mindsets and behaviors Adopt win -win RESULT philosophy : to develop relationship Both buyer strategy and seller Exceed customer’s RESULT needs and : expectations at every Returnable interaction customer loyalty and repeated business respective interests are addressed
- 8. GROWING ORGANIZATION VALUE PROPOSITIO N Developing stories from early adopters STANDARDS Establish rules, roles, procedures and processes CULTURE Establish a common language that builds a customer-centric culture INTERNAL FORCES Identify internal forces that impact sales performance EXTERNAL FORCES Identify internal forces that impact sales performance
- 9. ENTREPRENEURIAL SALES PIPILINE EIGHT STAGES Identifying the right target buyer Defining and validating market demand Qualifying the prospective buyer Building credibility and developing value proposition From day one, it is critical to build a sales pipeline within a defined framework Negotiation and closing Post sale service Generating referrals Cross selling and up selling opportunities
- 10. STAGE ONE | IDENTIFYING THE RIGHT TARGET BUYER Develop an ideal client profile by segmenting a group of prospective buyers with • • • similar unmet needs similar problems similar demographic characteristics A viable and well-defined group of prospective buyers increases the probability of a purchase. IDEAL CLIENT PROFILE
- 11. STAGE TWO | DEFINING AND VALIDATING MARKET DEMAND WILL THEY BUY IT? Create a “minimum viable product” (Eric Ries’ Lean Start Up) Seek feedback from prospective buyers Prove or disprove Determine critical hypotheses issues How can the product solve the issue?
- 12. STAGE THREE | QUALIFYING THE BUYER Ask relevant, probing questions Listen to determine a buyer’s wants and needs To develop an understanding of the buyer’s thoughts and feelings, wants and needs Clarify issues Determine ability to purchase WHAT IS THE BUYER THINKING? Match what the product offers to address the buyer’s unmet needs and/or wants
- 13. STAGE FOUR BUILDING CREDIBILITY AND DEVELOPING THE VALUE PROPOSITION BUILD CREDIBILITY Engage in a dialogue with the buyer PROCESS OF DISCOVERY Clarify the buyer’s issues ADDRESS he prospective buyer’s unmet needs Develop a VALUE PROPOSTION from the buyer’s perspective Demonstrate how the product offering drives long-term value for the buyer’s organization SHARE EXPERIENCES Telling stories is one of the most effective tools to use in consultative sales
- 14. STAGE FIVE | NEGOTIATING AND CLOSING NEGOTIATING If the prospective customer realizes the product will be of value to their organization during the early discovery stages of the sales process, the impact on any subsequent negotiation is typically positive. CLOSING Close the sales transaction by clarifying the issues and the proposed solution. • Set realistic expectations to meet and exceed buyer’s expectations that will postively impact and generate a profit
- 15. STAGE SIX | POST SALES SERVICE
- 16. STAGE SEVEN | GENERATING REFERRALS
- 17. STAGE EIGHT | UPSELLING and CROSS SELLING OPPORTUNITIES DRIVE NEW REVENUE OPPORTUNITIES ENHANCE CUSTOMER LOYALTY REDUCE COST OF SALES SELL MORE PRODUCTS MAINTAIN ONGOING CUSTOMER CONTACT WITH EXISTING RELATIONSHIPS REDUCE CUSTOMER CHURN
- 18. KEY PERFORMANCE INDICATORS KPI Milestones that can be used to measure a startup’s progress according to Steve Blank: critical issues prospective buyers are facing? Quantifiable • How well do we understand the • Specific measurements • Define critical success factors • Measure progress toward the revenue goals How much is the buyer willing to pay to resolve those problems? Key Performance Indicators Have we found visionary Is the sales strategy and plan prospects who will buy the realistic, repeatable, scalable product early? and achievable?
- 19. ADDITIONAL READINGS The Entrepreneurial Conversation by Edward Rogoff Disciplined Entrepreneurship: 24 Steps to a Successful Startup by Bill Aulet The Startup Owner's Manual: The Step-By-Step Guide for Building a Great Company by Steve Blank The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries To Sell Is Human: The Surprising Truth About Moving Others by Daniel H. Pink Rules of the Hunt by Michael Dalton Johnson Entrepreneurial Marketing by Bjorn Bjerke Solution Selling: Creating Buyers in Difficult Selling Markets by Michael Bosworth Customer Centric Selling by Michael Bosworth Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers by Geoffrey A. Moore Consultative Selling: The Hanan Formula for High-Margin Sales at High Levels by Mack Hanan The Four Truths of the Storyteller by Peter Guber, Harvard Business Review, December 01, 2007 http://hbr.org/2007/12/the-four-truths-of-the-storyteller/es
- 20. PAMELA PETERSON | BIO Pamela Peterson has more than 25 years of diversified experience in sales and marketing at the national and global level with a proven track record of success. Her industry expertise includes professional service firms and industrial and durable goods manufacturers ranging in size from start-ups to Fortune 100 corporations including Accenture and Tyco. She has significant experience managing complex initiatives across highly-matrixed organizations with multiple stakeholders. Equally conversant in the sales and marketing disciplines she specializes in defining and executing go-tomarket strategy, identifying and capitalizing on new product and market opportunities, building brand equity and creating viable sales enablement tools. Since 2008 Pam has been teaching sales, marketing and management at the University of Nebraska in addition to consulting. From 2006 to 2007 she served as the Global Marketing Lead for Accenture’s Security Practice. Her responsibilities included managing all the marketing and business development initiatives for the Practice’s joint ventures and strategic alliances. She drove new business opportunities with Global Fortune 500 corporations and large government and healthcare organizations which led to significant increases in revenue year over year. Ms. Peterson received her MBA from the University of Chicago, Booth School of Business and a MS degree from
- 21. PAMELA SHIELDS | BIO Pamela Shields has over thirty years of experience launching start-ups, growing mature companies and repositioning branded and private label manufacturing and service companies. She is recognized for her ability to visualize a company’s potential for growth, to develop value-added solutions to exceed customers’ needs and to deliver profitable revenue. Pam’s track record of delivering profitable growth spans across the food and food packaging industries as well as professional services, contract office furniture and building products. Throughout her career she has successfully generated profitable revenue through developing innovative new products; by further penetrating existing markets through customer segmentation; by entering new channels and by implementing cross category marketing of new product lines into more profitable categories. Most recently Pam served as the General Manager at Menu Inspirations with responsibility for both the Hors D’oeuvres and Desserts portfolios of the $200MM H.J. Heinz subsidiary. She successfully designed and executed the strategic turnaround of the business, led the development of innovative products and implemented a segmented approach to the marketplace. In addition to creating profitable growth and to improving the financials of the business, she was also instrumental in selling and transitioning the appetizer portfolio to a private equity firm.
- 22. KEITH FIX | BIO “Award-winning entrepreneur and marketing connoisseur, Keith managed to raise six-figures from private investors to start his 3rd company, blabfeed, while still in college at the University of Nebraska at Omaha. He was the recipient of the Peter Kiewit Entrepreneurial Award and CEO’s Student Startup of the Year in 2012. He graduated in December 2012 with a BS degree in Marketing, Management, Entrepreneurship & Innovation. His work as a budding small business enthusiast across various tech ventures has been highlighted in Entrepreneur Magazine, Bloomberg Businessweek, articles on Yahoo, Omaha World Herald and more." blabfeed, a Perfecta Media LLC, specializes in the procurement, installation, integration and design of digital signage and marketing technology solutions that drive revenue. Since 2012, blabfeed has experienced 1551% revenue growth and national footprint with clients across the country.
Notas del editor
- 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.
- 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.
- 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
- 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
- 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
- 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.
- 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.
- 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#
- 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.
- 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.
- 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!!!
- 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.
- 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.
- 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!
- 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.
- 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.
- 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.
- 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?