Tuesday, March 15, 2011

 

The five sales mistakes most startups make

To emerge from the early stages of building a new business, start-ups need to stay focused on two things: building & selling. The first is by far the most important. You can’t sell what you don’t ship, and if it’s not built specifically with the customer’s needs in mind, it’ll be next to impossible to sell even with a great sales system.

But as start-ups begin putting a significant focus on customer growth, I’ve found that they typically make many of the same mistakes. Especially with B2B products and services, it’s easy to fall into these traps but equally easy to avoid them, and scale your sales more quickly, efficiently and cost-effectively.

Here are the five sales mistakes I find most start-ups make (and how to avoid or course-correct them in your business).

Mistake #1: Hiring a VP of Sales first. If you’re the founder or CEO of a start-up, the first head of sales is you. The first salesperson is you. You need to lead the charge to determine 1) what the customer is looking for, 2) what they’re interested in spending money on, and 3) what the sales process will look like.

Your next hire should be salespeople who hit the phones and have a quota. You need people that will sell first. Only then, when you’ve established market demand and the start of a successful sales process, should you think about hiring someone to lead. A good VP of Sales will want to build a team. And when you’re in start-up mode, just starting to sell and learn, you’re not quite there yet.

Mistake #2: Spending money on marketing too early. When you first go to market, you may have educated guesses (based on your customer insight, smarts or past experience) on what sales & marketing channels will work to efficiently drive qualified prospects and closed business. But your first few months will include a lot of learning, a lot of failures, and a lot of improvements if you’re carefully executing and measuring everything.

Despite your aggressive early sales goals, don’t throw excessive marketing dollars against channels that are unproven. Don’t scale spending in any direction until you have measurable proof that your message, offer, channel and/or overall approach is working. Instead, test frequently, quickly and then invest in channels with far greater success rates.

Mistake #3: Building a sales process that doesn’t map to how your customers want to buy. The sales process you used at your last job is interesting, but may not apply to this market, this product, this customer. You can’t build an effective sales process in a vacuum.

Successful sales processes mirror the way your customer wants to buy. It takes into account the stages they go through to develop the need, understand and prioritize outcomes, and then research solutions before a decision is made. Each customer navigates this process differently.

And if you create a sales process that conflicts with that, you’re introducing friction to the decision-making process that will distract or annoy your prospects, and impact your conversion rates. Even worse, you’ll likely blame results on the wrong factors and further delay sales process improvement.

Mistake #4: Selling beyond the early adopters. In every market, there’s a different between the early adopters and the early majority. They think different, work different, and buy different. Long-term, you have your eyes past the chasm to the bigger market opportunities. But you won’t get there until you address the most ready-to-buy prospects.

Your sales process for early adopters may be very different than what it will look like two years from now, when you’re selling to a more mainstream audience. The marketing channels and messages you use may be different as well. But in the early days of selling, stay focused on your most-likely-to-buy audience. They’re the key to growth.

Mistake #5: Building a large sales team too quickly. This lesson should be obvious by now, based on the mistakes above. Your forecast spreadsheet may show that you need 10 inside sales reps in three months, but unless you’re clear on what they’ll be doing, clear on the process they’ll follow, where they’ll get leads, and what characteristics you need from them to succeed, you shouldn’t be hiring to scale. Not yet.

You may not even know if they should be an inside sales team, or field/territory-based. Or maybe it’s best to sell purely via channels. It’s time-consuming and expensive to unravel a sales organization you built too quickly without understanding the proven dynamics of growth in your market.

Inherent in many of these mistakes (or at least avoiding them) is patience and discipline. With investors breathing down your neck and a whole blue ocean in front of you, those attributes are difficult to keep. But trust me, you’ll save yourself a ton of wasted time and money, and you’ll find yourself selling and growing faster.

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