6 ways to not kill your startup sales

Far too many founders think of sales and marketing as the red-headed stepchild of startups. Sales legend and TechStars mentor Howard Diamond warns that mindset is killing your business.

sales

Rich Nacmias | Flickr via Creative Commons

Silicon Flatirons kicked off its 2013-14 series in high style with a crash course on sales for startups featuring Howard Diamond. How can you argue with a guy who sold $14 billion in software?

The irrepressible Diamond, who recently took the helm of TechStars graduate MobileDay, laid down the law on how and why startups fail to generate sales revenue with six crucial pieces of advice:

1. Startup sales and marketing should be as elegant and distinctive as the technology.

There’s two critical elements here that Diamond repeats frequently: Make your product/service easy to understand and give customers a reason to buy. Start your pitch with a quick, simple, non-jargony description of your product/service. Then, transition quickly into a compelling reason why your solution solves the customer’s problem.

Don’t over-think it. Don’t get cute. Just say it.

2. Listening is the most fundamental skill of sales.

Understanding a customer’s needs — in their own words — gives startups an incredible advantage. Unlike many businesses with layers of decision hierarchies and pre-established supply chains, successful startups should be nimble enough to consider customer need through the entire product development process from concept to prototype to beta.

If the term “sales” still gives you the creeps, think of it this way: you’re collaborating with a client to solve a problem with your product/service.

3. Most companies undervalue their technology or product. This is where they get the pricing wrong.

According to Diamond, when sales aren’t going well everyone blames the price. In most cases, it’s really a lack of product fit. If you truly know your customer’s needs and the problem is compelling enough to resolve, the price structure isn’t derailing your sales.

It’s also perfectly legit to ask: Why is the pricing the same for every customer?

4. Create a culture where people can say “I was wrong” to encourage innovation to meet customer needs.

The corollary to undervaluing product is overvaluing your own insights and then doubling down on faulty thinking. Diamond didn’t mention it, but The Upstart finds the Design Thinking process a great way to boost fast, creative and user-centric thinking for product development.

5. Startups shouldn’t count on sales channels until you’ve done direct sales. Other people don’t sell your stuff right.

Intermediate sales channels, like retail or resellers, are too often a shortcut for getting your own hands dirty in enterprise sales.

Diamond says he believes in “try & buy.” Hook customers with an introductory 90-day price. Then, use that time to seriously dig into understanding the customer’s problem to move them toward a new sale. You’ll never get that kind of valuable feedback from a reseller.

6. Don’t look for big wins. Close a small sale to prove your value across the customer’s internal hierarchy.

Once you’ve closed a small sale and proven your value, Diamond advises startups to find champions to help navigate the internal politics of the client company’s purchasing decisions. The fact is, as your sales grow, more people will be involved with very different needs and approval processes than your original contact. The inside folk don’t know you. They don’t know your company. And they likely don’t know the value proposition of using your product.

One tactic to help grease the skids on future sales is to demonstrate exactly how much money the company will save. Once you start selling a lot, then you can raise prices or develop customized pricing structures that align with the customer’s needs and cost capacity.