When to Sell
The time to sell is when you have a customer. That’s a line I heard in a sales talk some years ago. It’s an appropriate thought to lead off this essay.
Every founder has to make decisions about when to start selling. When should you sell some shares in the company if you need to raise money? When is your product ready to meet the test of a live customer? Better yet, when is it good enough that you can teach someone else to sell it without your personal involvement? Those are foundational questions in deciding how to turn a vision into a functioning venture.
On the flip side are questions like these: When will investors think you have a convincing story and enough proof of concept, and perhaps even traction? When will potential customers be ready to trust your product and service and be willing to pay for it? One thing is certain, both investors and customers are unlikely to respond on the very first contact. You know you have to connect the dots with investors to the point where you have a relationship and have made yourself known favorably to them. You know you should engage in customer discovery not only to identify prospects but also to get unvarnished feedback about your product so you can evolve to match their buying motivations.
It goes without saying that the content and style of your presentation is integral to your success with all audiences. In most markets you will find plenty of competitors. I’m advising one company in the ad tech space, and there’s a widely circulated infographic that shows about 5000 players in that general sector. You must decide early on to commit to defining yourself and your offerings in a way that will distinguish you above all that noise. Every nuance of your website and your social media presence matters; it costs no more to exude success and style across all channels than to look like a home-brew startup. What happens when you have a first meeting with someone you want to convince? You get looked up on LinkedIn. I have personally always maintained a LinkedIn profile but only in recent years have paid proper attention to keeping it updated. I’m now finding that more of you are accessing my posts via LinkedIn that many other avenues. Facebook has also become a necessity for business pages and merits attention. Twitter, on the other hand, even when my posts get tweeted and retweeted to 25K followers, never seems to have an effect. But, it too is something where your business needs a handle that sheds favorable light on you when you are found there. (I have personally devolved mostly to following fake football coaches, fake deities, and dead politicians. I have a pretty entertaining collection, and I applaud the creative types who make them up.)
I heard another line recently when someone said this: “I can sell bad software.” His intent was to stay he could get the sales process rolling while the good software is being finished. I’ve often said over the years that anyone can sell completed software that works as advertised. The sales heroes are the one who sell the vaporware that precedes that finished product. Those heroes have made a lot of startups successful. I’m not advocating deceit by any means, but if you as a founder are convinced you are creating a really fabulous offering and that you are going to see it through to the promised deliverable, you may want to decide to sign up your lead customers pretty early. They may not have direct substitutes for your offering at that moment in time, and, to the extent you build personal relationships with them and keep them fully informed as you progress, you’ll be amazed at how understanding they will be.
I’ve never heard someone say this “I can sell a bad deal to investors.” Most entrepreneurs can’t beat the statistics of the startup world and will have some ventures that don’t work. But, they all have deep faith that their current gig is the one that will provide the 50X portfolio saver for their investors. At the outset a deal always looks good if you have done your homework in validating the opportunity, creating a plausible financial model, and wrapping it all up in a succinct and effective presentation. There too, ongoing transparency buys you a lot of support. Informed investors are likely to stay at the table and open their contacts to you; surprised investors will, unsurprisingly, check out on you. Your decisions as to how you treat your shareholders are critical not only to your current startup but to your career accumulation of backers. I heard a former senior officer of a very successful Austin startup (IPO, then sale) say on stage that his company’s competitive advantage was the CEO’s ability to raise money. The whole story there deserves another essay, but he was dead right in that observation.
How are good are you are asking the revealing questions, and, more important, really listening to the answers? As a founder, you should decide to make yourself an expert at this process. What questions will tell you if someone you are meeting is actually a prospect? Is he or she the decider or the gate keeper? Who else might that person have to convince? Who has the budget to spend on your product? What is the normal buying process? If customers in your world only buy products like yours under SaaS arrangements, you had better offer them something that matches that practice. Attention to buying process is especially meaningful in B2C; it’s a truism that changing buying habits is very difficult. Injecting a new product into habitual spending patterns is a much shorter and higher probability road to success. More questions: How long does it take to get a P.O., if that is appropriate for your situation? Who else is competing for the business? (You’ll often get honest answers to that.) Why is your prospect interested in this product now? Is it replacing something? What was the experience with a prior vendor? (You might avoid some land mines if you ask the one.)
There are a few fundamentals that always bear repeating:
- Only ask questions that require more than a yes or no answer. Get the prospect talking. Learn something. Asking what one likes about a product will be far more revealing that asking if that person likes a product. You may eventually get to a “no” anyway, but give yourself a chance to make the sale, and don’t make it easy for the customer to turn you down.
- When you have someone giving you buying signals, like “where do I sign,” be prepared to close the sale and then quit talking. It’s never advisable to keep selling after you have a deal in hand; all you can do is say something that might cause a change of mind.
- If you are engaged in a complex sale that requires a number of conversations, decide to keep the thread moving forward with each contact. After a few pleasantries, avoid letting the discussions stray into tangential areas that impede progress toward your goal. You are there to achieve a sale, not to ponder the universe of potential interactions between your venture and that customer. If you can stay on track toward one finite bit of closure and create a paying customer relationship, you can address all those other interesting diversions later. And, always end every meeting with a list of next steps. Otherwise you may find yourself on a dreaded Mobius strip.
- Keep in mind the point of view in your sales conversations. It’s better to approach a potential customer by doing all you can to discern a specific need you are going to fill or a problem you are going to solve. You know the old rule that when you’re selling a drill the customer is buying a hole. Blasting a prospect with features and wizardry is far less effective than drawing out his or her issue that you can address. Make that the core of your pitch, and enjoy the results. It’s like slowing down your golf swing and enjoying the extra distance.
There are countless sales training books, classes, guides, consultants, and more. You will never lack for resources on this art. This essay is not an attempt to cover the waterfront. It is an attempt to get you as a founder to put your decision on when to start selling in the proper context and to be aware of some of the general principles that surround that decision. Good hunting!
