Published in the Institute of Sales and Marketing Management's magazine Winning Edge, Jan / Feb 2014. The UK economy will be heavily reliant on the private sector for job creation in the coming years. A recent study by Ernst & Young found that entrepreneurs supplied 67% of jobs created in the EU last year. Also, given that the UK now has the world’s most Internet-dependent economy, it figures that technology start-ups will play a crucial part in the recovery. In this article, I will consider the sales strategies and tactics appropriate to tech start-ups that are now looking beyond their initial foundation stage, and how they need to differ from the methods applied when selling solutions that are provided by mature-market brands.

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2. EARLY-STAGE SELLING
FEATURE
CRACKING
START-UPS
In the first of a two-part article, MIKE SMEE
looks at the sales strategies and tactics
needed to grow new technology businesses
T
he UK economy will be heavily reliant on the private
sector for job creation in the coming years. A recent
study by Ernst & Young found that entrepreneurs
supplied 67% of jobs created in the EU last year. Also,
given that the UK now has the world’s most Internet-dependent
economy, it figures that technology start-ups will play a crucial
part in the recovery.
In this article, I will consider the sales strategies and tactics
appropriate to tech start-ups that are now looking beyond their
initial foundation stage, and how they need to differ from the
methods applied when selling solutions that are provided by
mature-market brands.
COMPANY DEVELOPMENT STAGES
When a completely new technology company (or indeed any
business) starts up, it is typically born out of the vision of an
individual or small group of entrepreneurs who are passionate
about fulfilling the needs of a market in a better way. Often the
founder(s) will line-up their first client during the concept stage,
usually through existing relationships. This client (or should I
say partner and, in many instances, friend) is fundamental in
shaping the initial offering and delivery approach. The product
will be guided, shaped and modified during these early
engagements, often with a number of functional gaps being
identified and quickly resolved, and the value add will increase,
as will the applicability to other businesses facing similar
challenges. As regular revenue streams are established, a small
team is built up of development, product and operational staff.
I’ve been involved with several start-ups during the past
20 years that followed this blueprint, and in every case the
founder was the organisation’s first (and at this stage) only
‘salesperson’. As a wearer of many hats, including product
design, general management and sales, this person is usually a
multi-talented, highly skilled and driven individual.
This phase is a step in any company’s evolution, but in order
for a business to grow, sales are essential and unless a sales
capability can be effectively scaled, this will never happen.
Also, the founder’s selling style used to acquire initial clients is
often very technically oriented, preparation-resource intensive
(eg. doing speculative development work) and reliant on existing,
warm business contacts. By definition, this has inherent
scalability limitations and a finite prospect reach.
At the other end of the sales landscape you have the big-name
global brands with thousands of employees. Their products and
services tackle well-defined issues and are considered by the
marketplace to be the ‘gold standard’. These sales operations
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3. FEATURE
EARLY-STAGE SELLING
are very heavily process-driven, employing multinational,
formally structured account management.
Before a company reaches this scale, a host of complex
factors and investments need to come into play
(typically, a series of acquisitions, mergers, IPOs etc.).
But what of a company taking its first steps away from
selling by the founder alone, establishing a sales
operation and approaching the wider market?
A COMMON MISTAKE
It is a mistake I often witness, and have previously fallen
foul of, to apply established player-type strategies and
tactics while trying to make headway with a new
proposition provided by an ‘unbranded’ vendor. However
compelling you believe your ROI story is, however unique
in the market you think you are and however many
markets your offering is apparently applicable to, if you
are (a) unknown as a brand, and (b) trying to solve a valid
problem but in a new way that
maybe requires a little market
education, initially it will always
be tough.
In 2000, I was working for a
well-known provider of IT
infrastructure, but was tempted
away by the prospect of share
options to join a VC-funded
tech venture as national sales
manager. The company had built what was essentially a
social networking platform, before social networking had
come of age. As far as we could see, it made sense on
every level. It was highly cost-effective compared to
building in-house, quick to implement, had extensive
functionality, low training overhead for staff and many
other strengths. However, I had been used to selling
products and services that addressed explicit needs for a
nationally recognised B2B brand, where I had to do little
to uncover ‘pain’ before talking solutions. This was
essentially selling fulfillment on explicit needs and we
often jumped straight to just talking solutions and costs.
The challenge was ensuring that customers bought from
us rather than one of the other two similarly accredited
companies in the UK. Therefore, by default, the chances
were that I would win one deal in every three.
In my new company things were very different.
I remember following up on a marketing mailshot to
publishers and membership organisations in parallel
with my telemarketing guy. We were spouting about how
this was the most cost-effective and quickest time-tomarket for implementing interactive, collaborative and
monetisable web communities around a publication,
event or professional pursuit, ie. trying to bridge a gap,
where a void between what they were doing and what
else was possible had not yet been identified. Moreover,
we were completely unknown, unable to leverage existing
client relationships and brand cachet as a door-opener.
Note: this was the year 2000 (before even the term ‘Web
2.0’ let alone ‘social networking’ had been invented).
As time went on, we began to realise the sheer
ineffectiveness of the approach and how far we really
were from closing the fast big-ticket sales that the
business plan demanded. Unfortunately, in 2001 the tech
market collapsed, reducing
wider market confidence and,
most importantly, drying up
sales. I parted company with
emptier pockets and a new
realisation about the world of
early-stage technology selling.
In the intervening years, I
have been involved in setting up
sales functions within several
other start-ups, launching brand-new propositions and
also spent some years as part of a global, publicly-listed
technology vendor, experiencing both sides of the coin.
I’m pleased to say subsequent start-up involvement met
with a much higher degree of success.
‘It is a mistake to apply
established player-type tactics
while trying to make headway
with a new proposition’
COMPANY DEVELOPMENT AND
SALES FUNCTION STAGES
START-UP STAGE
GROWTH STAGE
Founder selling
Leverage personal
contacts
Product development
All sales (usually)
direct
Dedicated sales
manager/director
Evangelical sales
approach
Consultancy lead-in
to product sales
Product refinement
Initial key partners/
resellers appointed
PHASE
TRANSITION
LATER STAGE
Dedicated sales
director and full
sales team
Process-driven sales
operation
Products address well
defined problems
Channels to market
expanded
PHASE
TRANSITION
THE DIFFERENCES IN EARLY-STAGE SELLING
All clients go through a purchase decision cycle (PDC)
and, depending on which recognised model you choose
to illustrate this (I have used Robin Fielder’s here), the
steps will broadly conform to:
1 Recognising a gap between what they are doing and
what they could be doing to push the business forward
2 Deciding if there is sufficient pressure forcing action
3 Creating a list of needs and wants and allotting a
budget
4 Evaluating the options available and the various
suppliers
5 Reconciling any concerns they have
6 Negotiating with the supplier for the best deal
7 Implementing the solution.
As in the story earlier, the key thing is to avoid what
I call attempting ‘blunt-instrument’ account penetration.
This is attempting to sell a proposition aimed at fulfilling
a need before a need has been recognised by the client,
or trying to find clients at steps 3 or 4 above using
classic budget/authority/need/timescale qualification
methods (BANT). These are wholly inappropriate when,
in reality, as far as your company and proposition is
concerned, the vast majority of the market will not have
even reached step 1.
To use a metaphor, it is fine to plug a wedge-shaped
gap with wedge. But using a wedge to try and fill an
unmeasured void that is hidden from view beneath the
floorboards is not going to be very effective. What is
required is a much more ‘surgical’ approach.
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4. EXAMPLE OF A CONSULTANCY ENGAGEMENT
FOCUS ON KEY VERTICALS AND LEVERAGE
YOUR ‘REFERENCEABILITY’
The first step in taking the surgical approach as a
start-up is to establish what your key vertical markets
are. This is easy if your technology has been preengineered as vertical-specific. However, if you have a
horizontal proposition then adopting the ‘anyone’s a
prospect’ mindset is a dead-end. An unknown company
selling a new proposition with limited resources and
marketing budget must focus its efforts on key verticals
or niches. It’s not only that all the good marketing texts
will tell you this, but also I know from deep first-hand
experience that it is very easy to waste a large number of
marketing pounds and valuable salesperson hours by
casting the net too wide.
I have always found it easier to land new clients by
confining prospecting activity to a specific vertical or
niche where there is some ‘referenceability’ (eg. through
working with early-stage clients). You need to have a
basic understanding of how the markets work and get
to know the communities associated with that market.
Remember, similar businesses will be encountering
similar issues and will require similar solutions. People
talk, word spreads, decision-makers move jobs. This may
be obvious, but you would be surprised how often this
is ignored in pursuit of markets perceived to be more
lucrative. You shouldn’t go after markets that are in
deep decline or where there is no opportunity. However,
breaking a new market from scratch takes time and
start-ups rarely have this luxury.
Expansion into other verticals/niches that have
synergies will be explored in the next article.
DON’T LEAD WITH A ‘BIG TICKET’ PROPOSITION
At this stage your flagship solution is wholly usable, but
not fully formed and may not directly address what
prospects see as their explicit needs. You need to engage
a client in the education process I mentioned earlier,
which is often lengthy (especially if your proposition is a
high value one) and requires close client access over a
period of months while they work their way through the
stages of the purchase decision cycle.
A lower risk (lower-cost) yet compelling proposition
that will naturally lead the prospect through the early
stages of the process is required. They need to somehow
understand how you can increase sales, reduce costs,
and improve efficiency within their business.
SELL SMALL CONSULTING ENGAGEMENTS
The best way I have found of making an initial sale
within a high-potential account under these
circumstances is through consultancy. This initial
offering would typically consist of around five to ten
days of professional services work delivered by a
well-qualified subject matter expert from within your
business. The proposition should be engineered with
these three objectives in mind:
To offer genuine business value even as a standalone
piece of work
To act as a credibility-builder during the time you work
together and give you the opportunity to educate
further about your bigger-picture value proposition
To act as a pre-qualifier. If a client pays for your
professional services (as opposed to you doing
INITIAL PROPOSITION
NEXT STEP
Five days’ professional
services work covering
analysis of:
A. ROI of flagship solution
may be justified at this stage
and client may proceed to
step 3 in PDC
• Product proposition
• Customer base
• PPC spend
• SEO/SEM profiles
• Cost-effectiveness of online
marketing
• Options to remove
unnecessary/nonperforming costs
B. Further professional
services engagements may
arise, increasing client
exposure window and
offering further opportunity
COMPLEX FLAGSHIP
SOLUTION
Application of ‘machine
learning’ and ‘big data’ to
mass-harvest online
competitor pricing/product
promotion information and
automatically check the
viability of marketing
campaigns against those of
the competition; make
real-time recommendations
on adjustments or exclusions
to ensure competitive
advantage
speculative work free of charge) they are much more
likely to give it the importance it deserves, take the
engagement seriously, and then consider allocating
further budget to address points raised as the output
from this engagement.
A by-product of working this way is that you start to
recognise some revenue early on in your relationship,
which helps to meet the cost of sale in pursuit of landing
a big-ticket deal. It also determines the applicability of
your flagship solution to the client’s scenario. The box
above provides an example of a consultancy engagement.
OFFER EARLY ADOPTER INCENTIVES
Offer incentives in order to win some good ‘showcase’
customers. This will need to be more of a partnership
initially. This early adopter programme should set out to:
Prove that your solution will deliver significant uplift
in business performance
Gain client feedback in the system delivery process
Gain client feedback on additional or new product
development
Create a reference site.
In recognition of the client’s support, the incentives
offered could include providing reduced commercial
licensing terms for a specified period of time, or
undertaking specific client software development at a
reduced day rate.
IT’S A LONG GAME
Building a sales operation and growing a company
organically from the post-foundation stage to the point of
ripeness for acquisition is typically at least a five-year
journey. Your business model, account planning, retention
and management programme should always look to the
long term. When solving client problems I would never
advocate going for the fast buck to the detriment of
long-term aims. Recurring revenue should be the reward
of continually solving your client’s challenges.
In the next Winning Edge I will focus on how to apply
appropriate account management techniques/structures,
enter new verticals and scale through indirect channels.
Contributor Mike Smee is director of sales at Eysys, a fastgrowing technology company using ‘machine learning’ and ‘big data’
to help clients sell more, spend less and reach more customers online.
A fellow of the ISMM, he has over 20 years’ business development
experience in the software, e-commerce and technology-services sectors,
with over a decade in senior management, primarily in early-stage
technology vendors. Visit www.eysys.com
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