Originally posted on the SoftLayer blog on January 27, 2016.
The founder of one of the startups in our Global Entrepreneur Program reached out to me this week. He is ready to start selling his company’s product, but he’s never done sales before.
Often, startups consist of a hacker and a hustler—where the tech person is the hacker and the non-tech person is the hustler. In the aforementioned company, there are three hackers. Despite the founder being deeply technical, he is the closest thing they have to a hustler. I’m sure he’ll do fine getting in front of customers, but the fact remains that he’s never done sales.
So where do you begin as a startup founder if you’ve never sold before?
Free vs. Paid
His business is B2B, focusing on car dealers. He’s worried about facing a few problems, including working with business owners who don’t normally work with startups. He wants to give the product away for free to a few customers to get some momentum, but is worried that after giving it away, he won’t be able to convert them to paying customers.
Getting that first customer is incredibly important, but there needs to be a value exchange. Giving products away for free presents two challenges:
- By giving something away, you devalue your product in the eyes of the customer.
- The customer has no skin in the game—no incentive to use it or try to make it work.
Occasionally, founders have a very close relationship with a potential customer (e.g., a former manager or a trusted ex-colleague) where they can be assured the product will get used. In those cases, it might be appropriate to give it away, but only for a defined time.
The goal is sales. Paying customers reduce burn and show traction.
Price your product, go to market, and start conversations. Be willing to negotiate to get that first sale. If you do feel strongly about giving it away for free, put milestones and limitations in place for how and when that customer will convert to paid. For example, agree to a three-month free trial that becomes a paid fee in the fourth month. Or tie specific milestones to the payment, such as delivering new product features or achieving objectives for the client.
When putting a new product in the market, especially one in an industry not enamored with startups and where phrases like “beta access” will net you funny looks, it helps to build credibility. This can be done incrementally. If you don’t have customers, start with the conversations you’re having: “We’re currently in conversations with over a dozen companies.”
If you get asked about customers, don’t lie. Don’t even fudge it. I recommend being honest, and framing it by saying, “We’re deciding who we want to work with first. We want to find the right customer who is willing to work closely with us at the early stage. It’s the opportunity to have a deep impact on the future of the product. We’re building this for you, after all.”
When you have interest and are in negotiations, you can then mention to other prospective customers that you’re in negotiations with several companies. Be respectful of the companies you’re in negotiations with; I wouldn’t recommend mentioning names unless you have explicit permission to do so.
As you gain customers, get their permission to put them on your website. Get quotes from them about the product, and put those on your site and marketing materials. You can even put these in your sales contracts.
Following this method, you can build credibility in the market, show outside interest in your product, and maintain an ethical standing.
Get to No
A common phrase when I was first learning to sell was, “get to the ‘no’.” It has a double meaning: expect that someone is going to say “no” so be ready for it, and keep asking until you get a “no.” For example, if “Are you interested in my product?” gets you a “yes,” then ask, “Would you like to sign up today?”
When you get to no, the next step is to uncover why they said no. At this point, you’re not selling; you’re just trying to understand why the person you’re talking to is saying no. It could be they don’t have the decision-making authority, they don’t have the budget, they need to see more, or the product is missing something important. The point is, you don’t know, and your goal here is to get to the next step in their process. And you don’t know what that is unless you ask.
Interested in learning more? Dharmesh Shah, co-founder and CTO of Hubspot and creator of the community OnStartups, authored a post with 10 Ideas For Those Critical Early Startup Sales that is well worth reading.
As a founder, you’re the most passionate person about your business and therefore the most qualified to get out and sell. You don’t have to be “salesy” to sell; you just need to get out and start conversations.