Kyle James Kirwan

Startup School Notes: How to Sell

My notes from this talk

This is the process Clever used to get to first $1M in revenue

TL;DR

  1. When talking to a customer (ever): shut up and listen to them
  2. Founders do sales, ideally it’s 1 person’s full time job
  3. Expect to hear “no” a lot, prepare for a 2.5% conversion rate
  4. Use your network for your first few sales
  5. Go to conferences, use them as a sales channel
  6. Follow up religiously, can take months to close a deal
  7. Watch out for 3 hangups when closing the deal
  8. Your sales model and pricing model are intertwined

Who does sales

You do! The Don Draper imagery is bullshit…you can sell, you need to learn.

Clever had 3 cofounders and decided that 1 person had to own sales every day. The other two spent all their time building the product. He started selling before the product was actually built.

It should be as much of a full-time job as you can make it.

As a founder you should always be doing 1 of 2 things:

  1. building the product
  2. talking to users

Understanding your users is core to sales.

You must understand your users in order to sell to them. Your goal is to learn and solve their problems.

As a founder you have unique advantages for sales.

The funnel

  1. Prospecting: finding leads, who is interested
  2. Conversations: is this right for them or not
  3. Closing: completing the actual transaction
  4. Promised land: revenue comes in

Part 1: Prospecting

You’ll hear no a lot, this is ok. Here’s why:

The technology adoption curve describes 5 stages: innovators, early adopt, majority, late, and laggards. The innovators segment is estimated to be only 2.5% of the “population” you’re selling to. This means you need to find 100 companies to get 2-3 sales. Expect that you’ll need to grind hard to get those early sales, you can’t get by with 2-4 contacts, you’ll need 100s.

Part 2: Conversations

Use your network

Founder’s personal networks are almost always the earliest deals, these are the best and the easiest.

Go to conferences

Small ones not the big ones. These are usually only a few days in a hotel meeting room.

You have to go where your users are, and your users may be going to meet their peers at these. Ask your customers what conferences they go to and pick a few to attend.

These can be a few $k each ticket, so…

Get the list of attendees and know who’s gonna be there, write to organizer if necessary, don’t just show up. Email these people in advance, ask if they’ll have time to chat. Do this with as many people as possible. Aim for entire day booked in 30 minute increments.

Cold emails

These are the highest volume method, but many people don’t know how to do it well.

Bad Long, not personalized, not actionable, boring, irrelevant.

Good Short, concise, personalized, actionable.

Format: this might be relevant to you because of some personalized reasons, even if you’re not looking I’d love to talk to you about it, if you have time this week or next please let me know.

You’re on the phone

SHUT UP AND LISTEN! They should be doing 70% of the talking (this is the most important thing ever).

Sales is about listening. The battering ram approach does not work. Build a relationship and understand their problems, find out how you can help them.

When talking: Don’t practice points, practice questions for them.

Uber-conference: a tool to see how much time you each spent talking during the call.

Actual steps from a real deal at Clever

This took 2 months, and landed a $100k/yr customer.

  1. Introduced
  2. Met in person
  3. Email (no response)
  4. Email (no response)
  5. Email
  6. Schedule a call
  7. Have a call
  8. Flow 2
  9. Email (no response), email (no response), email
  10. Schedule next call
  11. Pricing call #1
  12. Pricing call #2
  13. Sent a quote
  14. Answer questions via email
  15. Send contract
  16. Send references
  17. Send financials
  18. Email (no response)
  19. Redlines #1
  20. Email nudge
  21. Redline #2
  22. Redline #3
  23. Redline #4
  24. Call with CEO
  25. Redline #5
  26. Done

It’s not over until they actually say “no” Being persistent isn’t rude, they’re busy

Getting a “no”

A quick no is a blessing in disguise Worst thing is dragging it out and wasting time

Part 3: Closing (enterprise)

They said they wanna buy, great.
Many deals get messed up here though.

3 things to watch out for:

  1. Redlining: They will want to change the agreement, redlining. Be ready to send the agreement immediately. Don’t fight over dumb shit, get it done: early customers are mana from heaven, don’t quibble, they will want some weird random shit.
  2. Avoid one-more-feature closing trap, unless it’s customer 1 or 2, this is most often a pass (there is usually actually more than 1 more thing). Can offer that we will build if we hear multiple customers need it, sometimes they will still take this.
  3. Free trials. You need commitment, validation, and revenue. Free trials are the opposite of this. We spent a lot of time building the product and doing the sale, cannot afford to give it for free. But we know there is risk and we understand. We only do annual agreements but if you cancel in the first 30 days, we’ll let you go. This creates a default-yes situation.

Sales method is intertwined with your pricing model

Five ways to get to $1M in sales

  1. $1,000,000 customer, only need 1!
  2. $100,000 customers, only need 10!
  3. $10,000 customers, only need 100!
  4. $1,000 customers, need 1000.

Is your sales pipeline appropriate relative to your pricing? If 1-2 then great, high-touch sales makes sense If 3-4 then need to find more standard, low friction, maybe self-serve

Q&A

What’s the right time between email follow ups?

A little under a week, 5-6-7 days later is polite and not over-eager

When do you feel like you’re pestering?

I like to think, if they haven’t said no, you’re right to follow up If you’ve followed up 8 times…take the hint But assume the best and that they’re busy, you’re not the top priority Keep the emails thoughtful and personalized «<— important

When you’re getting early no’s, how to tell product-market-fit issue?

You don’t discover it from the no’s, only from jesses. Too many reasons you could be getting a no. The states reason is often not honest, so ignore this, they’re being polite. Your signal is if you can’t get any yesses ever.

When prospecting, better for big names or easier closes?

YC gives advice of breadth-first search. Optimize for speed, a customer is better than nothing. Talk to the big ones though, might be surprised. Who needs it the most, they’ll be fastest. In early days don’t need big logos, just need validation.

How did you learn your pricing?

We guessed…but we got feedback quickly from the market. Most startup founders go too low. Pick a number, try to close a sale, try doubling it next time! Why was the first sale $100k? We picked a number…“THIS IS THE RIGHT PRICE! NO OTHER PRICE WOULD BE FAIR!”…but be willing to quickly iterate

How do you bootstrap sales with $50/mo?

You basically shouldn’t do any of these things. You need marketing, not sales. Email campaigns, self-service signup, etc. OR: raise the price where sales makes sense

What if there aren’t enough case studies to show off?

Many founders think they never have enough to convince people. We didn’t have them early on, it’s fine, just sell.