David Cummings on Startups

Category: Sales and Marketing

  • Have Prospects Give Top 3 Priorities Before Sales Call

    At yesterday’s Accelerator event we also spent a good bit of time talking about sales as that’s Jim’s specialty. One of the tips he had that has been working well lately is to send the prospect a list of several items prior to a call and ask him or her to pick their top three and put them in order in a response. The purpose is to make sure and address those in your call. Here’s a sample list you might send:

    • Quality
    • Best in class
    • New services
    • My involvement
    • Timeline
    • Price
    • ROI
    • Long-term impact

    In addition to making the call more productive due to aligning priorities, this also gives you a chance to see if they are solely driven by price (e.g. price is their top priority in the email response). My recommendation is to try this out and see if it helps your sales process.

  • Harness One of Four Emotions in Ads

    By now most of us have heard a simplistic yet powerful piece of advice when considering a new product/company: spend $20 on Google pay-per-click ads attached to a simple landing page and generate leads before you even have a product. The goal is to validate market demand while talking to potential prospects about your plan so as to get input at the earliest stage — pre product.

    A key part of making this successful is crafting the copy of the text ad as well as the copy on the landing page. There are four main human emotions that should be considered when writing the ad and content:

    • Fear – How many times have you seen an ad for a home security system that shows a thief breaking into a house? The ad is playing off of fear by taping into human desire to protect his or her family.
    • Greed – Every get rich quick scheme plays off the secular society goal of having more money. Think of all the ads you’ve seen to become a real estate investor, double your income, and get money for free from the government.
    • Exclusivity – We’ve all seen ads where the offer is limited to the first 100 callers. Do we really think if we’re caller 101 they won’t talk to us? I don’t think so, but there’s real power in creating an artificial sense of urgency.
    • Vanity – Who doesn’t want to be more attractive? The quantity of commercials from cosmetic companies lends credibility to the success of using vanity to help sell products.

    My recommendation is to pick one of these emotions and consciously use it when creating ads and landing pages. It will help with customer acquisition and product/company success.

  • Salespeople Should Live in Fear of Delete

    This morning I had the opportunity to attend an EO workshop on sales taught by Jill Konrath, author of the successful books Selling to Big Companies and SNAP Selling. Jill did a great job articulating how the sales process has changed over the past 20 years and effective techniques for today.

    One of the big takeaways from the event is that salespeople should live in fear of delete. What does Jill mean by delete? The biggest enemy for salespeople is having a suspect/prospect click the Delete button on a voicemail or email. She highlighted several strategies to get a “save” instead of a delete:

    • Don’t worry about mentioning your company name or job title as no one has heard of you
    • Show value immediately by referencing a pain point, competitor name, relevant customer, or referral
    • There’s a short amount of time to catch someone’s attention: 2.7 seconds for email and 20 seconds for voicemail
    • Cut out the jargon and complicated phrases
    • Pretend like you’re talking to a friend, not a prospect

    Much like the number one enemy of web customer acquisition is the browser’s Back button, salespeople should keep the Delete button top of mind when prospecting.

    What else? What do you do when prospecting for new customers?

  • The “Don’t Know All Your Customers” Milestone

    Last week I was talking to a well regarded local entrepreneur who’s on his second venture. Near the beginning of the conversation, as we were talking about sales traction with his business, he said, “For the first three years I knew every customer, company name, and user at the company. Now we’re growing so fast, I don’t know all the customers anymore.” He’d reached the “don’t know all your customers” milestone in the business lifecycle.

    A key takeaway from the statement was just how close the entrepreneur was to his customers to know every single one, and that is over 200, for the first three years of the business. Being close to the customer is a significant business advantage that startups have over larger companies, and as the business scales it becomes much more difficult, which is why hiring the right people is so critical.

    My recommendation is to stay close the customer as long as you can and recognize the milestone that occurs when you no longer know every customer. It’s a bittersweet but significant milestone.

  • Thoughts on the Freemium Model

    The freemium model is a business approach where an account, typically with limited functionality, is offered for free with the hope that the person eventually upgrades to a paid premium account. I must admit that we don’t do a freemium model for any of our products (we do have a free product, Visitor ID, but that is more of a generic freebie). With that said, I have a few thoughts on the model:

    • Many entrepreneurs think it is the holy grail of business models only to learn that many companies won’t even use a product for free
    • At its core, freemium is simply a lead generation mechanism, much like open source
    • It is incredibly difficult to get someone to upgrade from a free version to paid version
    • Offering a free version of a product often times attracts a different crowd compared to a free trial
    • Many labor intensive items like support, on-boarding, and policing (e.g. if email marketing is involved) are expensive and difficult to scale with lots of non-paying customers

    My goal is to one day have a successful freemium product, but to date the feedback I’ve received from entrepreneurs that have one is that it is much more difficult than they expected.

    What else? What are some more thoughts on the freemium model?

  • Participating on a Panel Discussion

    Last week I participated as a panelist on a Technology Executive Roundtable discussion on mobile apps in the enterprise and this week I participated as a panelist at the Executive Sales & Marketing Association discussion on lead nurturing for revenue growth. Participating on a panel is a great way to meet new people, establish yourself as a domain expert, and learn from others.

    Here are some tips for participating on a panel:

    • Come prepared with 5 – 10 talking points that you want get across
    • Think of several stories or anecdotes in advance that will resonate with the audience
    • Have a call to action at the end of the panal discussion to get people to give you their business cards (I offered to give a copy of my marketing automation book for free to anyone who gave me a card)
    • Don’t always take the easy, agreeable positions on panel questions when you have a more memorable and debatable stance (people love to hear opposing view points)

    Panels are a great way to get involved and I recommend taking advantage of invitations to participate.

  • Dialogue with Enterprise Software End Users

    One of the challenges with product management and certain enterprise software products is creating a dialogue with end users. Often the product purchase and management is driven by the IT department, which also administers the application. Administrators then become the contact points, but don’t use the product in the same way as their end users.

    Here are some ideas to address this issue:

    • Include a prominent link in the application requesting feedback
    • Have an idea exchange for users to submit ideas
    • Do quarterly check-in calls with customers and ask to speak with end users
    • Invite admins and end user to a user conference

    My recommendation is to work hard and create relationships with the different types of product end users.

  • Finding Successful Industries for a Product

    It might not seem obvious but many entrepreneurs build a product to scratch their own itch without regard to a specific industry vertical. Of course, doing generic pay-per-click (PPC) advertising on Google for keywords (e.g. project management) will generate leads from a variety of industries. This works well to start talking to prospects and understanding their domain-specific needs.

    The challenge occurs when the PPC value dries up and, inevitably, it always does. What do I mean that it dries up? Well, PPC works as an auction so you can’t spend more money and get more clicks in a linear fashion. The cost for additional clicks goes up exponentially as you have to bid more to get to the next position higher, causing the cost for all your clicks to go up.

    We ran into this issue with our mid-market web content management product. PPC ads were cheap at the time (back in 2004 – 2005) and we started buying as many clicks as we could afford. As sales went up, we could afford more, and our bill kept rising. We peaked at a spend of more than $10,000 per month on clicks. Now, we spend a couple thousand per year on PPC. It just doesn’t have a return on investment for us anymore.

    What did work was looking at the customers we’d signed up from the PPC campaigns. After a year we identified higher education as our most successful industry so we slowly started to focus in on that industry vertical. We’d cold call campus web masters, sponsor conferences, and do whatever we could to stay top-of-mine with our target colleges and universities. We’ve been a leader in the market ever since.

    My recommendation is to start broad, do whatever you can to get customers from several different industries, listen carefully, and then double-down on the vertical that you think will be the most successful for your product. It isn’t easy, but it works.

    What else? What are your thoughts on finding successful industries for a product?

  • Value Added Reseller Plans for Startups

    Selling a product indirectly through value added resellers (VARs) is a great way to reach a broader market at a lower fixed cost. These channel partners can help augment your services, shorten the sales cycle because they already have existing relationships, and provide valuable feedback. My one piece of advice for startups is to not expect the channel to be the best way to grow your business early on. The channel is extremely hard to get up and running, gives little visibility into the sales pipeline, and follows the 80/20 rule (20% of the partners will deliver 80% of the partner deals).

    Why shouldn’t you focus on the channel when first starting out? It is so important to have clear and unfettered lines of communications with your customers that only direct sales provides. In addition, direct sales allows for more visibility into the pipeline and more ability to control your own destiny. Only after you have a repeatable sales process yourself should start putting more effort into the channel.

    Just starting out with the channel I recommend a simple revenue sharing policy. Something easy like a 10% referral fee for leads that they give to you that you have to close the deal along with a 30% referral fee if they do all the selling and close the deal handing you a purchase order. Having the 10% and 30% plan makes it quick and straightforward for VARs to do deals and sell their bread and butter offering (typically consulting services billed as time and materials).

    What else? What other advice do you have for startups and VARs?

  • Product Death by Not Enough Cuts

    In the software world, death by a thousand cuts comes from trying to make the product do all things for all people. I want to bring up another phenomenon not talked about enough: death by not enough cuts. This happens when an entrepreneur builds a product and gets it in the hands of a few customers, only then to keep customizing it further for those too few customers. In addition, it is often combined with not being opinionated enough about the product functionality, so a few companies drive the product road map.

    The next thing the entrepreneur finds out is that they have a deep and rich product, but not a big enough market to be successful. Oh, and the product is so large now that adding functionality takes significantly longer than it used to take — big problems lie ahead. Here’s what I recommend:

    • Get the product into the hands of as many prospects as possible
    • Launch early and often
    • Always ask yourself if the feature request fits into your vision for the next three years (be opinionated!)
    • After you’ve asked if it fits in with the vision, ask yourself if it is applicable to 80% of your user (e.g. will they love to use it)
    • Every 20 customers you sign up, raise the price until you can’t raise it anymore

    What else? Have you seen this happen? What would you recommend?