By: Michael Lilly, Director of Business Development
Most of the startup companies we work with at EGFS spend their early days building out their great teams and technologies. There will come a point, however, when this development must lead to sales and company growth. For many founders, this may be their first time selling a product or service, so we decided to put together a guide to help you close your first sales and start growing your business.
Setting Sales Goals
We spend a lot of time speaking about the importance of milestone fundraising, and many of those milestones have to do with a product launch, users and ultimately revenue. What’s the value of your product or service? How easily can you convert customers? What’s the retention rate? What’s the lifetime value of the customer? These are all things you should be thinking about that can help frame a monthly, quarterly, and yearly revenue goal instead of simply saying, “I want our company to make $X this year.”
Preparing for Your First Sale
Many founders eager to make their first sale forget a crucial starting step — setting up internal procedures like contracts, billing, CRM systems, etc. It’s important to spend some time planning (typically with an attorney) the terms of your product or service and to identify expectations and responsibilities for both parties involved in a sale. It’s also important to adopt a CRM tool to track referrals (both inbound and outbound), how the company or person moves from prospect to client, and how you are going to manage your relationship with your client on an ongoing basis.
Developing your Value Proposition and Pitch
Another important step to the sales process is establishing a value proposition–namely, what is it that your company does better than anyone else? In addition to the value proposition, your pitch should outline the problem you have identified in the market, how your company solves that problem, and the added benefit of selecting you as a business versus the competition. Like a fundraising pitch, you should have a few different versions of your sales pitch for various situations. A 30 second elevator pitch is a good start, and a longer two minute phone or in person meeting pitch that’s a bit more in depth is also useful.
For the first few sales, it’s important to target a very narrow market segment. You can use this to gain traction, which you can use later to expand into different markets, products or categories. The biggest tech companies today focused on one thing and did that better than anyone else before moving to other segments or markets. (I.e. Facebook–college campuses, Google–search, Amazon–online books).
Purchasing Decision Makers
Now that you’ve found the right companies to target, who’s the right person at that company to sell to? For some companies, their sales process may only call for one or two conversations with the CEO of the target company. However, other companies may have you speak to several different departments or members of the management team in order to close a deal. That said, it’s important to consider who makes the purchasing decision within the target company. For the first few critical sales, spending precious time talking to the wrong people ends up being very costly for your business.
Building a Strong Network
A good strategy in the beginning of your sales process is to build a network that can provide you with the highly coveted warm introduction. This will give you a huge head start on closing your first deal. The best way to build this network of partners is to find people who work in the same industry, especially those that offer products or services that complement your own, who can make introductions. By using this approach, you create a relationship that is mutually beneficial where they can send you business, but you’re also in a position to send them business as well.
Building Relationships with Your Champion Clients
The first sale may in fact be the hardest, but that client can be a great building block for future sales. Thus, it’s important to treat that customer (and all customers for that matter) as a relationship instead of a transaction. Check in frequently, see if you can help them beyond the service you are providing, and see if they are willing to help with case studies, references, etc. Your first customers are the champions of your business–treat them as such.
We hope these are some helpful tips as you look to onboard your first few customers. Please feel free to visit our blog or reach out to EGFS with additional questions or comments.
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