Chapter 10: Chapter 10: Marketing and Selling your Start-up
"As an entrepreneur, you cannot delegate the understanding of customer needs and selling till your start-up becomes a business." - Viktor Cheng
Now you have built your product, the next thing you need to do is to go and market it. Because the last thing you want as an entrepreneur is to have the world’s best-kept secret hidden and gathering dust in your lab.
But before you go ahead and hire an ad agency or spend thousands of dollars on social media marketing, let’s start with a clear setting of the stage.
In your start-up’s initial stage, your marketing and sales are inter-related. Generally the sales and marketing function are one. And here’s something that you may not want to know, but is absolutely essential for the long-term success of your business:
The person that handles the marketing and sales initially needs to be the founder – that’s you!
The good news is that after you have made a few sales, you can hand off this function to your sales and marketing people. But initially, you as the founder needs to do the sales and marketing.
Let me explain why this is important:
a) As the founder and creator of the product, no one knows your product at the same level that you do. It’s your baby and you have worked with it for months, possibly years. You have lived and breathed the product, so you should be able to answer all and any questions better than anyone else.
b) Your passion and enthusiasm for your product will be higher than anyone else that you hire. Sometimes at the start this is essential for people to buy it, as they may not fully believe in your product, but your energy and passion could excite them enough to make them give your product a try.
c) You need to learn to communicate the benefits and features of your products. This has been the key to creating a successful product for my own businesses many times. The more I speak to prospects, the more I am able to learn and address the needs they have, and improve my communication accordingly. This not only helps with training the sales and marketing people to take over at a later date, but it has also helped me refine and improve later versions of my product. In mentoring and supervising many start-ups, I have found that if the founder of the business cannot communicate the benefits and features of the product, no one else is able to do it adequately. There’s always a dilution effect.
d) Proof of concept. At this early stage you may have made a lot of assumptions and done a lot of research and development, but nothing speaks volumes more than when you have a few paying customers buying your product. This gives you confidence personally in your own product. It also shows your investors that you have a sellable product. This positive energy can carry through to the rest of your team and give you the momentum to get a great start.
In most cases, it is good for the founder to undergo some basic sales training from a sales coach, in order to help them improve their sales and presentation skills. This is important not only for selling to customers, but later on as the role of the founder evolves it is also an essential skill when raising funds and ‘selling’ the company to new employees.
In general I would advocate two stages to marketing and sales, the first stage being that of the ‘Hunting Stage’. The second stage of marketing and sales is what I call the ‘Farming Stage’.
The Hunting Stage
At the hunting stage of marketing and sales, this is where the founder of the business needs to take an active role in marketing and selling. The objective is to identify and sell to a few good clients that are willing to pay for your product or service.
At this stage, it is important for the founder to profile his buying clients to establish a persona for his ideal client. As mentioned earlier in this book, in marketing circles they call this a ‘customer avatar’.
Ideally, you will need to identify as many common traits of your ideal client as possible at this stage.
As an entrepreneur, here are some of the common questions you might have to answer on a macro-level:
Who is the User or Consumer of Your Product?
Is it the IT department or the HR department who is actually going to use your solution? Who specifically in that department is going to use your solution? Is it the manager, the technician or someone else?
In some cases, you may need to find out what systems they are using, including their development stack. Are there any technical adaptations your product needs to make in order to accommodate their platform?
In addition, a useful question to answer here is, ‘What about their job keeps them awake at night?’ Perhaps it is the paperwork they have to do each day; perhaps it’s the worry of making a mistake in their reporting. If your product can solve the concern that is keeping them awake at night and you can communicate this to them…then you have a good chance of them accepting your product.
If you are selling a consumer product, this is a good time to find out where they live, what age they are, and other demographic information about your buyers. If possible, find out more about where they hang out, what media they consume and what hobbies they have. The clearer the picture you get of your buyer, the better and faster your marketing can scale.
Who Pays for the Product?
This could be different from the person or department that consumes your product. In a large corporation, this may mean that you will need to tailor and communicate your benefits differently to the person who is making the decision to pay for your product or otherwise. It could be the finance department or the CEO. The technician may have bought into your product 100%, but you might need the CEO to approve the purchase.
In such cases, it will be effective to tailor your communications to ‘speak’ to the decision-maker differently than you would speak to the user of your product. Talk in terms of how you are going to perhaps make their job easier, and get better transparency in reporting or accounting. Remember, people are generally tuned in to the ‘What’s in it for me’ frequency (also known as the ‘WIIFM’ frequency). So if you tell the accountants how it will help them quantify costs, or the CEO how it will help increase profits or reduce cost, they will be more open to your ideas.
For consumer products, you need to find out if there are other influencers or decision-makers in the buying process. For example, if the husband wants to buy your gadget, will the wife and children have a say in the decision-making process? Will the wife say there is no space in the apartment? Will the children have a positive or negative influence on whether the father buys your gadget? A good marketer will acknowledge and address these influencers’ desires to facilitate the buying process.
Elements for Successful Hunting
To be successful at the hunting stage, I would suggest that you adopt the following tactics and strategies:
1) Be Passionate
2) Target Early Adopters
3) Handle Objections
4) Adapt Your Solution
Let me explain each of these items briefly.
Be Passionate
As I mentioned earlier in this chapter, often it’s your passion and enthusiasm for your product that is the key to making your first few sales. Your passion and enthusiasm in your product can be the most important factor in getting someone to give your unproven product a go. Your belief and energy in the product can be the sole factor that convinces someone to give your product a try.
When I launched my documentation software with Singapore Computer Systems, it definitely wasn’t my polished sales presentation or a super product that sold a product costing tens of thousands of dollars (which incidentally, was a lot of money back in those days). It was my raw enthusiasm and unwavering belief about my product that got a few companies on board.
Target Early Adopters
It is absolutely critical and important that you target the right crowd at the start. It doesn’t matter whether your product is targeting businesses, corporations, government or consumers. The fact is that there is a crowd that are more willing than others to try out new products. Then there is the majority of your marketplace who will adopt a ‘look and see’ attitude towards any new product.
If you aim for the majority in the marketplace who are generally more cautious in adopting new products, you will end up getting very frustrated. You might even end up thinking that your product is no good. That’s why you need to make sure you target the early adopters in your marketplace.
In general, the early adopters in any market are those who are willing to try out new things; they are often the opinion leaders to whom their peers look for direction. Overall, they are more on the ‘cutting edge’ of things and generally are more accommodating of flaws in early products, and are willing to provide you with feedback. Identify where the early adopters in the organisation or in the market are, and hunt for these people to pitch your product to them.
With all my start-ups, I was able to find several early adopters to purchase my product, and their feedback was instrumental in helping us refine our product and processes even further. It was a learning experience because the installation of the product was slow and cumbersome at the start, and we still had a few bugs to iron out. Thankfully, the early adopter crowd are generally very accommodating. You are unlikely to find the same attitude with the later majority crowd.
A marketing tactics that may be helpful in gaining early adopters is to have ‘foundation member’ benefits which means they pay less of an annual fee. Most times the satisfaction of ‘being ahead’ of the rest is something that appeals to this market segment.
Handling Objections
Objections are often one of the hardest things for entrepreneurs to deal with. The good news is that the more objections that the potential customer brings up, the closer she is to buying your product; provided those objections are properly handled. If you take this correct perspective, rather than the perspective that objections mean your product is bad, then you have taken a giant leap towards handling objections in a better way.
A good way to handle objections is to think about all the objections your prospects might come up with beforehand, and have a strategy to handle each of them. You will need a strategy to handle common objections such as price, competing products, concerns that your product won’t work and so on.
The next thing is to practice handling those objections with one of your team members; do some role plays so that you are comfortable handling the objections. Furthermore, if your budget allows, I would suggest hiring a sales coach who can help you handle objections in a professional manner.
Adapting Your Solution
At the Hunting Phase of your sales and marketing journey, you might find that certain adaptations are necessary for your clients. This is particularly important if you are providing a B2B solution where each client may have their own requirements that are slightly different from the rest.
You need to be willing to adapt and customise your solution to the client’s needs. Document these processes so you can repeat them for future clients. In many cases, it has also helped me refine my core product to become better and more sellable. At the same time, this process will help you understand what is required for successful installations, and will give you the insight as to what people you need to hire and what skills they need to possess in order for you to customise and install your solution for future clients.
This comes back to the point I made about targeting early adopters. In many businesses where I provided a B2B solution, sometimes the software would not work on their computers; we would have to request them to come back 30 minutes later for the presentation. This was totally acceptable for early adopter types.
On the other hand, when we were selling to companies such as Compaq, they would not allow for such events. In fact, we had to submit our software to them to install beforehand. They would then test the software to make sure it would work before we were allowed into their auditorium to present to them. If the software failed to install, we would not have a second chance to present to them at all!
Finally, I must say that while you plan and target your customers to the best of your ability and take these 4 essential elements into account during the Hunting Stage, there is also an element of luck in meeting the right early adopters who are willing to take a chance on your new product. While that is the case, it is still important to go out, meet and greet as many prospective clients as possible, and sometimes you might just create your own luck.
Once you have acquired your first few customers, validated your product and you feel you have profiled your customers well enough, it’s time to move on to the next stage: The Farming Stage.
The Farming Stage
Once you move on to the farming stage, you as the founder need to pass on the day to day sales and marketing activities to specialists in this area.
If you want your business to grow fast, you cannot afford to be stingy on your sales and marketing, because as a start-up you need sales not just for cash flow, but to give confidence to your team, your investors and your shareholders. Slow sales will demoralise everyone, whereas good sales will help boost confidence and energy in the business.
At this stage, you need to systemise your sales and marketing function based on your experiences during the Hunting Stage, so you can scale up and acquire clients at a faster rate.
As with the Compaq example I provided earlier, this is when your sales and marketing function needs to adopt a more professional and systemised approach. The ad-hoc approach that you had adopted earlier during the Hunter Stage simply cannot work in the Farming Stage if you want to scale fast and grow your business.
If you had put in the hard yards and done your sales and marketing at the previous stage well, you should be able to train your new sales and marketing team properly. A few of the key things that are important to pass on to your team are:
a) Your passion and enthusiasm for your product
b) A clear profile of the ideal client and a clear articulation of their fears, pains and desires
c) An outline of the sales presentation and/or demo
When I landed in the US with my business intelligence software (more commonly known as data analytics software today), my philosophy was that if we can convince US customers that our product works, we can make the business successful. I was staying there for just under 183 days per year and I was presenting our software to prospects. We made some good inroads at that time with big brands like Burlington Coat Factory, Xerox Corporation and Wells Fargo Bank adopting our software. These were known to be early adopters in their industry.
This gave assurance to people who I was working with that our software was something that the market wanted. This also gave investors the confidence to inject more money into the business.
Once we had that proof of concept with the sales and marketing, I reverted back to my role in engineering. I stopped hunting and passed on the sales and marketing function to experts that we hired. But without the initial stage of doing the sales and marketing myself, it would have been a difficult task for any expert in sales and marketing to take on the product and sell it all by himself. The expert would probably have been frustrated with the lack of information and precedence from which he could work from. I would have gotten equally frustrated with the lack of results from the expert.
So what does scaled-up marketing and sales during the Farming Stage look like compared to that of the Hunting Stage?
Firstly, sales and marketing in the Farming Stage should be systemised and professional. For example, professional sales scripts should be put into place to ensure that you address the fears, wants and desires of your market, so that more salespeople can be put into place quickly.
Secondly, marketing strategies and activities put into place are geared to rapidly acquire new customers at the least cost possible. In many of our businesses, I often used resellers and JV partners to help me expand to new markets rapidly. It is also important to measure your marketing activities and refine them.
For example, in one tradeshow you might employ the strategy of giving away trial demo software. In a second tradeshow you might not give out the trial demo software but give out a DVD explaining your software instead. In each case, you might want to measure and see which approach gets you better results.
Thirdly, marketing and sales activities need to be focused around a few or a single marketing objective. There is the tendency for many start-ups who have received a new round of funding to spend their money on unnecessary activities that don’t necessarily contribute to the business’s bottom line.
Extravagant lunches with clients, celebrity endorsements and a laser show at your trade show booth may all be very cool, but is it moving your closer to your marketing and sales objectives? Is it making a positive contribution to your sales figures?
Get clear about your marketing and sales objectives at the start and make sure every dollar you spend on marketing and sales are going towards helping your business fulfil those objectives.
Fourthly and finally, over time your sales and marketing team should create a reliable marketing and sales system, whereby you can almost predict your sales figures based on the activities and how much you spend on it.
With a refined marketing and sales system, you should be able to predict how much each dollar you spend on various marketing and promotional activities will yield. For example, each $1 you spend on an ad on Google might give you $1.35 back over time. Whereas each $1 spent on a trade magazine ad might give you $1.58 in returns.
Both activities result in a positive return on your marketing investment, but the magazine ad in this case will give you a better return. The only downside is that you might only be able to advertise in this magazine once a month, so you will need to have more than just the magazine ad to keep your company’s sales growing.
Creating this measured and scientific marketing/sales system will give you the confidence to know how much to invest and what activities to conduct in your marketing, and help you plan out your marketing and sales activities. Having this knowledge can only come from experience over time. In addition, this information can help you to scale up your marketing and sales activities as you have some certainty on your returns.
Conclusion
I hope this chapter has given you some insight as to what is required for your marketing and sales in the early stages and what is required in the latter stages as you grow. The key to success is to carefully time your exit from the Hunting Stage to the Farming Stage. If you exit too early, you will end up getting lots of frustrated and unproductive sales and marketing people in your company. Exit too late and you will stunt the growth of your business. As with many aspects of a business, timing is key to your success in marketing and sales.