Achieving your first sale can literally make or break a start-up. Many investors will delay committing significant funds until you can identify a customer prepared to pay real money for your product. It is often at this point that many start-ups fail: not because their product is not up to scratch, but because they run out of money before they can nail their first sale. There is no ‘magic bullet’ strategy for landing your first customer. However, some guidelines will ensure you do not squander precious resources pursuing the wrong approach.
START SELLING BEFORE YOU FINISH YOUR PRODUCT
Companies that are willing to adopt early stage innovations will generally want a say in refining the finished product. Some entrepreneurs perceive this as a threat to their independence or product ‘vision’, but it is an invaluable opportunity: you not only obtain critical market feedback, you also have an opportunity to lock-in a potential long-term customer and secure development subsidies.
IDENTIFY COMPANIES WITH REQUISITE CULTURE
Many companies have a risk-averse culture. They will not invest in any product or service until it has been thoroughly tested and proven in the market place, no matter how much effort you put into selling to them. Focus instead on companies with a history of undertaking ambitious or innovative projects.
FOCUS ON NO. 2 OR NO.3 IN THE MARKET
It is extremely tempting to approach the market leader, as it will have more resources and be an impressive reference for future sales. However, leaders can be difficult to sell to, as they have a vested interest in maintaining the status quo, and the mindset tends to be “We’re No.1, so clearly what we’re doing is right. Why mess with a winning formula?” The “challenger” companies, on the other hand, will be more open to innovations that will give them a competitive advantage and help dislodge the market leader.
SELL TO THE CEO
CEOs rarely close deals, but getting your product onto their radar can expedite a sale. Be tenacious. Most large companies have extensive protocols for ensuring CEOs are not “distracted” by unsolicited sales pitches. You must be thoroughly prepared for any encounter with the CEO (in person, on the phone, at a function, etc.), so memorise your “elevator pitch” (a two minute version of your product’s unique value proposition, and what it means for the CEO’s company) and be ready to follow-up with supporting documentation.
TALK THE CEO’S LANGUAGE
Few CEOs will be interested in technical details. Focus on the specific “pain” your product remedies and outline its financial and competitive benefits. Be specific and credible (e.g. “Our product will reduce the energy requirements of your production line by 23 percent”).
TARGET THE DECISION MAKERS
If you cannot reach the CEO, you will need to establish contact with someone who can refer you to the CEO (or the person who will close the deal). Identify the key decision makers, so you do not waste time talking to individuals who cannot advance the deal. Ascertain who “owns” the pain your product was designed to solve, then customise your pitch. If it is the CFO, for example, you can be confident the primary sales lever will be financial concerns, whereas the primary lever might be technical if you’re speaking with the CIO.
Signing your first sale provides crucial validation for many aspects of your ‘go to market’ strategy, but it will take time. Pace yourself and do not over-invest resources in any one customer. Set agreed timeframes for achieving a sale, and move onto the next prospect if you cannot secure commitment. Too many start-ups have collapsed waiting to make “one final presentation”.
Mark Neely is a lawyer, technology commercialisation consultant and author of ten books, including The Business Internet Companion. You can read his blog at www.infolution.com.au. You can view his LinkedIn profile at www.linkedin.com/in/markneely
