Soft Sell

Last week I revisited my student days and participated in MIT’s Independent Activities Period, a one-month intersession in which students, faculty, and affiliates offer and take classes and activities ranging from the fun (as in “Build your Own Electric Guitar”) to the thoughtful (“The Cost of Cosmic Real Estate:  Galaxy Evolution in Dense Environments”).  I took a four-hour “Sales Boot Camp” given by two fellow VMS mentors who are also successful salespeople and entrepreneurs (Camp Description), and it was quite worthwhile.  My corporate experience has been in business development which has much in common with sales, the former having a less-frequent but bigger pay off and presumes having a business (with revenue) to develop.  Because the instructors oriented their presentation toward sales for start-ups, what I learned will be useful to me in my volunteer mentoring.  I should note that the course focused on sales of technical products or services to sophisticated customers, so called business-to-business (B2B) sales, not selling to consumers.

The instructors emphasized several main themes.  The first was making sales are very important to an early-stage company, not only to generate revenue to offset expenses but also to market test and validate the product; in fact, the process of selling provides critical feed back to the company as it is developing its product and marketing materials.  In investor-backed companies, making the first sale also helps the founders manage and calibrate investor expectations.  And the first sales should be aimed at obtaining an anchor or reference customer that will be recognizable to other potential customers.  An important caution, often over-looked by start-ups, is that the sales plan and the cost of selling need to be in line with the product price; it’s possible to make lots of sales and still be unprofitable.

The second theme was that companies need to develop a sales culture.  Since the success of the company is tied to successful sales, all the employees need to recognize their roles in supporting the sales function.  In a start-up, while the founders are the lead sellers, the entire team, including the engineers developing the product, should contribute ideas and effort toward selling.  To build this culture, the instructors recommended that the lead salesperson hold weekly meetings to describe his/her progress, provide ideas from interactions with potential customers, and solicit input from the rest of the company.

Another theme was that sales is a process that needs to be managed.  The process starts with qualification and solicitation of potential customers, advances to educating and building trust, and ends with securing a purchasing decision.  It is non-linear, personality-dependent (both the sales person and the customers), and “failure-driven” in that one in one hundred contacts will lead to a sale with the other ninety-nine proving helpful feedback and new leads.  An important first step is the profiling of potential customer businesses, followed by profiling the potential buyers within the businesses (individuals responsible for a purchasing decision) and by building a rationale for a purchase for each business.  And the salesperson needs to do all this in a time-efficient way while operating with incomplete information.  It was not a surprise that the instructors described the personality traits needed for a successful salesperson as being knowledgeable of the product and industry, highly organized, methodical, competitive, a team-player, empathetic, resiliency, integrity, and having good people and listening skills.  Of course, also emphasized was the need to provide good customer support after a sale to build a relationship that may lead to up selling (selling follow-on products) or cross selling (selling to other groups within the customer organization).

The instructors also covered the differences between B2B sales and sales to government agencies.  In the latter, there are a multitude of procurement processes and each is highly bureaucratic (no surprise).  Also there are barriers to entry including the process for being qualified to bid and providers who have a built-in advantage, having the internal staff to support the bidding process and name-recognition among the purchasing agents who tend to be cautious buyers.  On the plus side is that government agencies are explicit about their needs (spelled out in requests for proposals [RFPs]) and relatively transparent in their decision-making.  The instructors also noted that a successful tactic in government selling is to include training in a proposal, to offer the agency at route to independence from the contractor (at least for that product and service).

Of course, I am not doing justice to the depth and breadth of the course.  For example, the instructors gave some time to describing the sales tool kit and its components (marketing materials, prototype/demo, customer relations management (CRM) applications, internet resources, etc.).  They also provided a number of case studies and took questions from the participants.  Overall, quite worthwhile and I recommend it to anyone contemplating starting or currently building an early-stage company.

So what were the take-home lessons for entrepreneurs starting up a technology-based global health product or service company?  The first is that it is never too early to think about sales, to develop a sales plan and run it past advisors.  Such a plan has more depth than that found in a business plan and is invaluable in helping the founders understand (or design) a path to revenue, that, although it may seem to be in the distant future, is key to a viable and sustainable business.  Such a plan also helps the founders identify key issues that need to be addressed sooner rather than later, e.g., if the plan is to sell to government agencies, what is required to qualify and if this is too challenging, what are the options for sales through intermediaries (“channel sales,” see my post, “S and M”).  Identifying potential purchasers also will help sharpen up the product specifications and features to differentiate it against alternatives and competitors.  A second take-home is that the founders should agree among themselves who will be taking the lead on building and implementing the sales function, again, even if distant, not having this as an explicit role risks missing connections and relationships that will be important in the future.  A third is that a global health start-up may need to recast its product to include a service, e.g., adapting the product to a customer’s needs or offering its (newly-gained) knowledge of its product’s market segment to customers looking for new markets.  Lastly, a sales emphasis early on pushes the founders to map a route out of a overly-long and grant-supported product development process and into the world of commerce.

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2 thoughts on “Soft Sell

  1. Thank you for the post. I understand that sales is important for sustaining the company, but at what time during the startup stage should we worry about bringing on a sale person. Especially if we are still in the R&D phase. Seems like bringing on a sale person too early would only increase the burn rate-something a startup can’t afford to do.

    • You’re welcome and thanks for the important question. While a salesperson is a key early hire (and expensive since you are paying for experience), she/he is not needed until she/he can make a credible pitch for near-term delivery of a product/service to potential customers. The first goal of a start-up is proof-of-concept/prototype/demo/reduction-to-practice of its technology, so for for a start-up with a short prototype development time (and start-ups should only do D not R), a salesperson may be the first hire. For longer times (or when a strategic customer is needed for the development), a later hire works. Also note that the cost can be defrayed or delayed using a combination of cash, equity, and commission. Hope this helps.

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