Category: Sales and Marketing

Many more startups fail from a lack of sales than from lack of building a product. Flashpoint, the startup accelerator at Georgia Tech, follows best practices like Customer Driven Development, Lean Startup, and the Business Model Canvas. Flashpoint is different from Y Combinator and TechStars in that it focuses on having the teams test hypotheses until there’s a clear winner, and only then does work on a product start.

A key Flashpoint benefit is extensive sales training. The idea of getting 15 research interviews per week is much more difficult than it sounds. In fact, with a decent cold caller, that’s likely 500 calls to get 15 meaningful conversations (cold calling isn’t required but getting 15 meetings per week is the goal).

Here’s how Flashpoint is like sales training:

• Work through whatever means possible to get 15 meetings per week (referrals, walk-ins, cold calls, networking, etc)
• Ask a series of consultative questions to uncover pain and latent demand
• Develop rapport and establish trust with people so that you can reach out to them again with future research questions as well as establish a potential sales relationship in the event they are a good fit for the product or service
• Articulate their needs and desires so that they will sign a letter of intent to buy whatever product or service is eventually built (assuming it meets the requirements)

Sales training is a critical skill to develop on the founding team and Flashpoint provides it through a focus on customer discovery. Startups that go through the Flashpoint program will be significantly more successful, on average, than startups that don’t.

What else? What are your thoughts on the sales training benefit from Flashpoint?

The inside sales approach for startups is nothing new but as of late it’s become much more popular. Over the last few months several entrepreneurs have reached out to me specifically to learn about how our inside sales process works and what I’d recommend. My top recommendation is often something they aren’t currently doing: implement a two tiered sales process where cold calling and closing are two separate jobs.

Here’s how it works:

Business Development Rep

• Responsible for setting web demos
• Extensive cold calling
• Follows up on inbound leads that aren’t sales ready
• Quota is setting 20-30 demos per month
• Compensation is base salary plus commission for each completed demo after a certain allotment (e.g. no commission for first 15 demos and then $125 per completed demo after that)

Account Executive

• Responsible for delivering product demos, proposals, and taking the prospect all the way through to close
• Cold calling only when opportunity pipeline isn’t full (e.g. a standard sales rep might be able to work 20 – 30 opportunities at any one time and should be cold calling when their pipeline falls too low)
• Follows up on inbound leads that are sales ready and schedules a demo
• Quota, based on new annual recurring revenue, is 3x their on target earnings

This two tiered sales process for startups works extremely well for dynamic markets with a web-based application that has a price point high enough to warrant a consultative sales approach.

What else? What are your thoughts on the two tiered inside sales process for startups?

Marketing metrics are great in that they provide objective, concrete evidence as to how things are going. With the rise of digital marketing, marketing automation, inbound marketing, growth hackers, and more, marketing metric awareness is growing even faster now. Startups, with a clean slate, can measure anything and everything. Only, most don’t build a culture of marketing accountability and ingrain it into their startup ethos.

Here are some startup marketing metrics to consider:

• Lead funnel:
  Visitor
  Prospect
  Marketing qualified lead
  Sales qualified lead
  CRM opportunity
  Closed deal
• Lead channel volume and cost:
  Affiliate
  Pay per click
  SEO
  Referral
  Email
  Facebook
  Twitter
  Trade show
  Cold call
• Site traffic types:
  Direct hit
  Social
  Referral
  Search engine (branded and non branded)

Marketing is more scientific and metrics driven now, especially with the advent of online marketing. Startups would do well to build simple Google Spreadsheets and start tracking a variety of metrics. Over time, it’ll become clear what’s working, not working, declining, and improving in value. What gets measured gets done and measure what matters.

What else? What are some other startup marketing metrics you like to track?

With the rise of the Software-as-a-Service (SaaS) business model, there’s more focus on inside sales as part of the customer acquisition process due to the lower deal values compared to enterprise software. Enterprise software, having been popular for several decades, has a large number of experienced executives, even if most aren’t right to be a VP of Sales for a seed stage startup. Consultative inside sales and consultative field sales are very different.

There’s a lack of experienced inside sales management talent for startups.

Here are a few thoughts around inside sales management for startups:

• Look to develop a leadership pipeline internally on the sales team through training, mentoring, and coaching
• Remember that the top sales person isn’t usually the person you want to be a sales manager since selling and sales management are different skills (and the best sales people should make more money than sales managers)
• Consider two different types of sales managers: inspirational/motivators vs analytical/quantitative (not mutually exclusive, but often different types)
• Find managers who aren’t from a sales background, but are excited about coaching people, and consider them for sales management

Inside sales management isn’t easy to find but the right talent makes all the difference in a startup. Work hard to find the right person and don’t settle.

What else? What are some other thoughts on inside sales management in startups?

Sales is the lifeblood of startups. Getting a sales machine humming along is one of the most difficult things for an entrepreneur to do, especially if they haven’t done it before. Assuming the VP of Sales temptation was defeated and a few sales reps are on board delivering results, how do you know when to hire the next sales person?

Here are a few things to keep in mind when determining when to hire the next sales person:

• What percentage of sales reps are currently making quota? Typically, 60 – 80% of reps should be making quota for any given quarter once you have product/market fit. With higher quota attainment, you likely need more reps.
• What percentage of deals are from marketing-sourced leads vs sales-sourced leads? If sales-sourced leads are higher than 25%, you likely can support more reps.
• How fast is the market growing relative to the startup’s revenue? Markets that are growing faster can often support more sales reps.

There’s no magic formula for determining when it’s the right time to hire another sales person. Often, there will be diminishing marginal returns with each additional sales rep and it becomes clear when you have reached the limit.

What else? What are some other things to think about when determining if it’s time to hire the next sales person?

In a small, fast-growing market, one of the best and easiest things to do with an inside sales team is to make it a free-for-all such that the sales reps can aggressively go after any business they want that isn’t already being called on by a co-worker. The idea is that there’s huge potential and the reps should have the autonomy to figure out what works best for them, especially in a situation with no cap on commission.

As the market and the team grows, many times it becomes necessary to delineate the sales team based on one or more factors. Here are some of the more common examples to segment sales reps:

• Geographic territories (e.g. regions, state, cities, zip codes, etc)
• Industries (e.g. technology, healthcare, government, etc)
• Company size (e.g. companies at or below 250 employees and companies above 250 employees)
• Deal size (e.g. deals at or below $10,000 and deals above $10,000)

One of the worst things a sales rep can hear is that their comp plan is changing and their territory is shrinking (often happens when a startup is growing fast and adding more reps). My recommendation is to keep things simple as long as possible and introduce more complexity and specialization as feedback and data make it painfully obvious that there’s a better way.

What else? What are some more ways to delineate and segment sales teams?

Sales and marketing are tightly linked, complementary disciplines. Too often in startups I hear that the one sales guy also does the marketing. Now, if the startup can’t afford to separate the functions that’s one thing, but sales and marketing are two distinct functions. When I see a single person with the title VP of Sales and Marketing it often means the company takes a German approach — beat down the door with sales people and don’t bother with marketing.

Here are a few reasons sales and marketing should be separate functions in startups:

• Lead lifecycles are so complicated with visitor, prospect, marketing qualified lead, sales qualified lead, opportunity, and closed deal stages that it requires specialized knowledge to optimize each one
• Marketing is often more measured in their approach which provides a nice yin to the yang of sales people that tend to embellish what can be done
• Sales managers tend to be more sports-coach-like with an emphasis on motivating sales people while marketing managers tend to be more creative with an emphasis on project management
• Marketing should be charge of messaging, content, events, positioning, etc while sales should be in charge of helping leads through the sales process

Historically marketing was viewed as a sales support function, but with the advent of marketing automation, marketing has all the accountability and credibility of other major departments. Sales and marketing should be separate functions in startups.

What else? What are some other reasons sales and marketing should be separate functions in startups?