David Cummings on Startups

Category: Sales and Marketing

  • The Latent Market Demand Question

    One of the questions I like to ask entrepreneurs is “Are you unleashing latent demand for your product or are you taping into existing demand?” This question is another way of asking “Do most of your clients have an existing vendor that you replace or are you the first vendor they ever use?” Here are a few questions that come up with this important question:

    • Why isn’t there more demand already?
    • What can you do to help grow the market?
    • Can you solve the problem(s) that is/are holding back the growth of the market?
    • Is it a timing issue (e.g. the market is about to explode) or is it so early that you risk not getting to scale?

    The question also helps determine if it is an innovative or replicative business. My recommendation is to think through this topic as part of strategic positioning for the business.

    Do you agree? What other questions would you ask related to market demand?

  • Lessons Learned in Writing a Business Book

    We’re getting close to the launch of our first book and it has been quite the learning experience. I sprearheaded the process and worked on it with my co-founder as well as several other great people on my team. From start to finish it took a solid eight months.

    Here are some book details:

    • 160 page trade paperback
    • Seven chapters
    • Published through a local publisher
    • Printed through CreateSpace.com

    Here are some lessons learned:

    • Plan for it to take 50% longer than expected — the post writing process is still time consuming
    • Get stakeholders involved in the editing process throughout the writing and not all at the end
    • Use the book content for company white papers
    • Prepare for several rounds of printed proofs to work out kinks in formating
    • Build a spreadsheet of people to be sent a copy at launch and ask for an Amazon.com review

    If you’d like a free copy of the book, please post a comment here and I’ll have one sent to you. Yes, the topic is a surprise until a week from Tuesday when it comes out. Thanks!

  • Proactively Offer Value as Lead Gen

    I’m a big fan of proactively offering value with little friction as a way to generate leads. The most common example of this is free white papers, webinars, and product demos/trials. There’s a newer class of this model that is even more compelling — one that is customized to the specific prospect, but completely self-service.

    Here are a few examples:

    I’m confident we’ll see more of these types of free, simple services in the future as a way to quickly provide value to prospects in an automated manner.

    What else? What are some other examples? Do you think we’ll see more?

  • The Perfect Product Challenge

    One of the major challenges with a web application is the allure of making it perfect. Who doesn’t want the perfect product? Perfect is the enemy of good. A good product gets out the door and is put in the hands of prospects. A perfect product doesn’t exist, and while it is being built, time, energy, and especially money is being consumed.

    My recommendation is to get the product into the hands of prospects as quickly as possible. And when I say prospects, I’m thinking about random ones, not just warm intros. Warm intros are definitely worthwhile and should be used, but also make things too easy that an objective buyer might not provide.

    I’ve seen too many startups never fully get a product out the door. Don’t join the crowd! Launch early and often.

  • Ways to Grow a SaaS Business Faster

    Earlier today we were talking about ways to grow a SaaS business faster. SaaS, with almost all recurring revenue, is a great business model once the machine is humming. SaaS is so desirable because it provides consistent cash flow and makes it easy to budget during growth. Thinking about the ways to grow faster, at the most basic level, here’s what we came up with:

    • Sign up customers faster
    • Sign up customers at the same rate but at a higher revenue amount
    • Up-sell existing customers
    • Reduce customer churn

    Now that we have the most basic ideas, it is time to work on different strategies for each category.

    What else? What are some other ways to grow a SaaS business faster?

  • Customer Development Challenges in Obvious Markets

    Late last week I was talking with a friend who’s thinking about launching a new product in the web application testing and monitoring market. The question he was trying to answer was “If there’s such an obvious need for the SaaS product, why haven’t more companies already purchased one?” To put it another way, there’s such a clear pain solved by the product, yet several potential customers that were surveyed knew they needed something but haven’t purchased anything without a good reason.

    As part of the customer development process, one of the most important pieces is to come up with the right questions to ask potential customers. It is more difficult than it sounds. Here were some of the questions asked:

    • Have you looked at any webapp/website testing and monitoring products?
    • What are some issues you’ve had with your webapp/website?
    • What type of system would you be interested in?
    • How much would you pay for a system that provided xyz piece of mind?
    • Why haven’t you already purchased such a system?

    It is especially challenging since the answers he shared with me from talking to potential customers didn’t provide any clear resolution. Even with no obvious outcome, customer development is an exceptional process when launching a new company and/or product.

    What else? What other questions would you ask a potential customer?

  • #1 Difference Between Lifestyle and Growth Business

    I finally figured it out today. You know, when there’s that thing that has been nagging you for a while and you know the answer is out there, but you just don’t know what it is. There’s a continual debate between lifestyle and growth businesses, specifically, what’s the difference between the two. Here it is, the number one difference between a lifestyle and growth business:

    Growth businesses have a repeatable sales process that doesn’t involve the owner/founder.

    It seems so obvious. I’ve talked to many entrepreneurs over the years and most talk about increasing revenue, but it is solely dependent on them. The entrepreneurs with a growth business, in growth mode, are working on optimizing their repeatable sales process. There’s a fundamental difference between lifestyle and growth businesses, and the repeatable sales process is it.

    What do you think? Do you agree or disagree?

  • Congratulatory Cold Calls

    After we won an award last week for the third fastest growing company in Atlanta, my phone started ringing off the hook from service providers that I’ve never met calling to say congratulations and introduce their company. I had calls from lawyers, accountants, commercial real estate brokers, staffing agencies, and other random providers. Not a single one tailored the call to me with a strong value proposition. Let me repeat myself: no one left a meaningful voicemail.

    Here’s what I would do if I was in their position:

    • Use LinkedIn to see if we know people in common and mention their names in the email (the best would be to get one of those people to do an introduction)
    • Review my site to get a feel for what we do and come up with an example client that is related and talk about a success story with them (e.g. provide social proof)
    • Follow me on Twitter and send an intro tweet from there as well explaining how they think they can help
    • Read my previous blog posts and start to add value through comments
    • And, finally, the number one way to make their cold call effective: make an intro to a potential prospect that could use our product

    Have you had these calls before? How else can the cold caller improve his or her effectiveness?

  • Entrepreneurs and Relationship Networking

    At this morning’s Atlanta Business Chronicle Pacesetter awards event, the keynote speaker, Harvey Mackay, focused his message on the power of relationship networking and a Rolodex. Here’s some of his advice:

    • File away every person you meet and follow-up with them on a regular basis
    • Capture as much person information as possible (e.g. personal preferences, trips, likes, etc) and use that as a foundation for future conversations
    • Always seek ways to help your network and never expect to receive something in return
    • Dig your well before you need it (build your network and relationships before you need to tap into it)

    I don’t consider myself a good networker but I feel I’m decent at it. I do appreciate the value it provides and I recommend employing these concepts to other entrepreneurs.

    What do you think? Is networking important to you? What advice do you have on networking?

  • User’s Conference Planning

    We’re deep into the process of planing our annual user’s conference. I really underestimated the power and importance of user’s conferences before we put on our first one a few years ago. There’s something incredibly powerful about spending a day or two with customers, learning how different clients use your product, and talking about the future vision. It really is a great morale builder and helps nurture and deepen relationships.

    Here are a few general items we think about as part of our user’s conference planning:

    • Charge a reasonable fee that barely covers costs but still allows for a great event
    • The venue is extremely important and should be recently renovated and professional (don’t skimp on the venue!)
    • Have as many clients speak as possible — customers love to learn from other customers
    • Provide a back channel for clients to communicate including a Twitter hashtag
    • Line up the conference dates at least six months in advance and solicit speakers for the agenda
    • Get partners/resellers involved in addition to customers and employees
    • Include a happy hour or field trip to help foster relationships
    • Buy the best internet access you can afford and get backup options like 4G wireless
    • Make it fun!

    What else? Have you been to a user’s conference that was especially memorable?