Startup Diary: Forget 'always be closing' - listen up if you want to get more sales in pipeline
As an entrepreneur I have a short list of favourite "business" films. One that you absolutely must see is 'Glengarry Glen Ross'. The film covers two days in the life of a bunch of "loser" real-estate salesmen. The cast is impressive for such an unpromising subject: Al Pacino, Jack Lemmon, Alec Baldwin, and more. The salesmen are deplorable characters one and all, and yet it gets under your skin, and helps you get into "sales" mode.
The most important lesson from the film is explained by Baldwin's obnoxious star salesman character - "Always Be Closing". He writes this up on a whiteboard as if transcribing the Ten Commandments. It is valuable advice, and yet completely useless - of course you're always trying to sell. What else would you be doing starting a company?
Rather a lot else as it happens. I see this mistake often, and I made it myself in my first company: not selling at all.
My first company, unlike the current one, was not software-as-a-service, but it was close. I sold data-processing software components for high volume data-sets. Yes, thrilling. My thinking was that large enterprise companies with a lot of data would need to process it, and my products could help. And I was right, and it could have worked as a business, but for my own mistakes.
I spent a year building the products, and only then thought about sales. The website was to do all the selling - you put it in your credit card to buy per-developer licences. This strategy had the great advantage that I would not have to talk to people.
My first price was $47 (€40.58) per developer. I'm not joking. My target market was the Fortune 1000, and I was under-charging by at least two orders of magnitude! It took me another 18 months to realise that I could charge $4,700 and that would not only generate more revenue (just a little), but would also generate more sales, because it gave me more credibility.
Here's an important lesson in business: if you're selling to other businesses, higher prices are better - it gives your customers more confidence in your follow-up support, quality, and longevity. You can always discount to close the sale, but your "list" price should be above the market.
But by the time I had worked all this out, it was game over, and I had run out of time, money, and health. I ended up back in a normal programming job licking my wounds. Where did I go wrong?
If I had only picked up the phone and spoken to a few actual customers, I would have very quickly discovered what they actually expected and what they needed, and what they would pay. I would have been able to reposition my website to match the market. You would have had to call me to buy anything, and it would have cost a pretty penny. I did have one call like this, inadvertently, towards the end.
An American chap was very insistent and made me speak to him on the phone. I made the sale (of the premium option!) - he was going to buy, he just needed to hear a real person on the other end of the line.
'Always Be Selling' in practice means 'Always Be Listening'. From day one, you need to be speaking to potential clients. This is hard. It is embarrassing. It is tough to be rejected. But the data you get, the market insights that you reach, are so valuable that they will make or break your business.
I'm not asking you to sell vacuum-cleaners door-to-door, or pitch dodgy Florida real-estate on cold-calls. You don't have to be a verbal virtuoso like Jordan Belfort (the real 'Wolf of Wall Street'). Instead, you have to work out a pathway to solid, mutually beneficial discussions with potential customers.
Most people are very flattered when you ask them for advice. More flattered than you think. A cold-email, carefully written, asking for advice, will almost always get you a meeting for coffee. It works on me - I've had many meetings based on these articles.
The key thing is to make it obviously personal. The easiest way to do that is make it actually personal - do not spam a big list of interesting people expecting much success.
Where do you start? Start with your own network. Anybody even vaguely connected to the industry you are targeting will be useful. They will know more people. Big news: people know people, and will be happy to make introductions. By asking about an industry, and how it works, you trigger a very sympathetic side of the human psyche - just shut up and listen, and you'll learn all about the pain points in your market.
You may already have a product idea, and you may already have a way to solve the problem, but you must not, under any circumstances, start selling your idea in these early meetings. You just don't know enough, and you'll kill any chance of getting insights. Don't forget, the purpose of these meetings is find out what you don't know.
I still find this hard. You have so much enthusiasm for your own product that you can't help yourself sometimes. I cringe whenever I realise that I've just shut down a vital little gem of information because I interrupted the speaker.
So you work your way along a chain that starts with your immediate network and gets closer and closer to your ideal customer. In the early days, take lots of meetings. Do this in preference to anything else. You don't need a website. You don't need business cards. All you need to do is be open and transparent: "I'm thinking of starting a new business, and I'm trying to figure out how the industry works - can you help me?"
I started voxgig, the subject of this diary, in late August 2017. Our website only went live in March 2018, six months later. You don't need a website until you have a market.
I didn't get business cards until April 2018 (we were a bit busy launching the site). When I met someone new, I just took out my phone and searched for them then and there on Twitter or LinkedIn, and sent a connection request. You would have been doing that later anyway with a business card back in the office. It's easier to "play" at business by worrying about logos and business cards than it is to get out of the building and talk to people.
Over time, the tenor of these meetings can change. They can become more like ordinary sales meetings. You'll go back to people you spoke to at the start, and update them on your product development. Guess what? Now you're pitching to friendly prospects that feel like they had a hand in building the product. That's not a hard sell.
Eventually you'll build up to the point where you have a classic pitch deck that you pull up when you first meet a prospect. That is the end of a long road. But even those first meetings are still sales calls, and you need to think about them that way in the back of your head, no matter how softly you take things to begin with.
You must have a sales pipeline tracker. You need to be able to record the details of each prospect, and estimate how likely the deal is to close, and what value it will have. If you multiply the estimated value of the deal by the estimated probability of closing the sale, you get an estimate of revenue from that one deal.
Do this for 20 or 30 prospects, and you can get a sales 'pipeline' that gives you, statistically, a good way to guess what your income will look like over the next 12 months. You then plug this into your cash-flow spread-sheet and now you know your runway (how long you can survive on present business).
Your sales pipeline is life and death. It's the first online tool you should pay for. I've used many of them, and in the early days, go for something simple. There will be time and money enough to migrate to Hubspot or Salesforce down the road. For now, stick with services like pipedrive.com or pipelinedeals.com - they are good enough. If you're really skint, just do up your own spreadsheet. It'll be clunky, but it will work.
(Newsletter update: 2,340 subscribers, open rate 15.4pc-I'm starting a new podcast to generate more subscriptions - more on that once it launches.)
Richard Rodger is the founder of voxgig. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford.