BE SMART
No matter what your startup is selling or who you’re selling it to, in order to survive, you’ll need big customers and you’ll need lots of them. But how do you land million-dollar deals with limited resources and no credibility?
When you’re a startup, your customers are buying innovation. The tricky thing is, no one needs innovation. Rather, they need the derivatives of that innovation — time, simplification, throughput, security.
In order to close a big sale, in other words, the aggregation of many, many units of that usage and value, you’re going to have to consolidate that usage and find a champion of value on the customer side.
If you’re a B2B business, then your usage is probably already consolidated within the company itself, and your champion will come from the inside. Be mindful though, that in an innovation environment, your champion might not be the leader or manager of the department or team that will bear the bulk of the usage. When it comes to innovation, your champion is probably further up the corporate chain. In fact, it’s probably the CEO.
The rookie mistakes here are plentiful, from picking a poor match for consolidation because of ease of access (i.e. social networks or college campuses) to picking the wrong champion (the super-enthusiastic person with no influence over the purchasing decision).
There are three things you have to nail on your first few sales:
- The demo/pitch has be over the top professional and great.
- The pilot has to have a 100% conversion rate to full-tier customer.
- The product or service has to overcome a much higher bar for retention.
Executing those three things at such an early stage is always more expensive than you plan for. You’re probably going to lose money on your first few customers for at least a little while.
In fact, this is a phenomenon that hurts and even kills some growth-stage startups. You need to expect a certain percentage of your customers to be unprofitable. It doesn’t matter what your offering is, where your margins are, how long you’ve been in business, or how good you are at what you do. Between fraud and squeaky wheels and mistakes and VIPs and a host of other factors, be prepared to lose money sometimes, especially early.
Adapted from the article “How Startups Close Their First Big Sales” by Joe Procopio, first published on TechCrunch: https://techcrunch.com/2019/12/17/how-startups-close-their-first-big-sales/
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