sales Archives - NeilSoni.com

Customer Mirage: Risks of Signing A Large Company As Your First Customer

Imagine you’re in a hot, dry desert and desperate for water. You’ve been walking all day and the thought of drinking nice, cool water makes you ecstatic. Suddenly, you see it! A pool of water in the distance. You hurry towards it, running as fast as your legs will carry you. But when you arrive, all you find is sand. Damn sand!

You’ve just experienced a mirage. And this is exactly what it feels like when you’re looking for that first customer and close a whale. You’re desperate for validation and revenue. If only you could get that big name-brand customer, investors would be tripping over themselves to give you money! TechCrunch would write about you! The cash would be rolling in and all your worries would be over!

After weeks or more likely, months of emails, calls, negotiation, and nervous waiting, you finally land a deal with a WHALE, a well known publicly traded company. Not just any deal – this deal starts with $100k+ in revenue and has the potential to bring in much, much more. This is the inflection point right? It’s all #winning and *crushing it* from here!

Unfortunately it usually doesn’t work like that. If your first customer is a large company, the deal is more likely to be a mirage than the start of a winning streak.

Agile Giants Podcast Interview

My good friend Sean Ammirati has started a brand new podcast called Agile Giants. The show is inspired by his work over the past few years leading Carnegie Mellon University’s Corporate Startup Lab (CSL). In Sean’s words from his Medium post announcing the podcast:

If you already are a corporate entrepreneur, want to become one or are just looking for some advice around commercializing transformative innovation, this podcast is for you.

Sean was nice enough to interview me on the podcast. Our wide-ranging conversation was mostly focused on The Startup Gold Mine but also included stories from other projects I’ve worked on, like Estee Lauder’s External Innovation team.

You can listen to the episode below or on your favorite podcast player.

What to Do When Your Corporate Partner Says No

“Sorry, this just isn’t a good fit for us right now.”

This simple but terrifying sentence is a recurring nightmare for founders trying to close deals with corporate partners. And it’s even worse when you’ve been working on a deal for months and were banking the fortunes of your company on its success. So when you’re rejected, is it all over or is there something you can do to turn things around?

Here are some tangible next steps to take when your corporate partner says no to a deal:

Four Common Mistakes Startups Make When Selling to Large Companies

For the typical early stage startup, closing a deal with a Fortune 500 company can provide a huge boost in morale and momentum (and hopefully cash). Enterprise deals are a signal for investors to indicate traction, a common source of free media attention, and a key factor when potential employees will weigh your offer against other opportunities.

Over the past several years, I’ve sat on the corporate side in my role building the External Innovation group at The Estee Lauder Companies, where I’ve worked on 200+ deals with startups of all sizes. Before that, I sat on the startup side of the table and led growth at several venture-backed companies; closing enterprise deals with companies like Proctor & Gamble, LinkedIn, Spotify, and Honda.

With this dual background, I’ve seen (and made) my fair share of mistakes in building startup-corporate interactions. Avoiding the mistakes below just might be the difference between celebrating a deal with a new enterprise customer and sitting on the sidelines wondering what happened. To paraphrase the classic sales quote from Glengarry Glen Ross: champagne is for closers.

Mistake #1: Assuming Large Companies Have Limitless Cash

Yes, you may be pitching to a billion-dollar company but the person you’re pitching to doesn’t have a billion-dollar budget. While corporate budgets may (keyword: may) have more wiggle room than startup budgets, your corporate counterparts are still dealing with many demands on a limited budget. On top of day-to-day budget concerns, large companies, even successful ones, may implement spending freezes for specific departments. It’s entirely possible that your potential customer will be comparing your product with something in a completely different industry, simply because you’re competing for the same budget dollars.
Have some empathy for the budget concerns of your corporate counterparts and it’ll pay off by differentiating you from other salespeople they encounter.

Mistake #2: Trivializing Deep Corporate Knowledge

While it is possible that your startup is “changing the world”, the Fortune 500 companies you’re pitching to have already changed the world and know a thing or two about how things work. There’s nothing more annoying to your corporate counterpart than trivializing the deep knowledge they have of their industry.
You can also run the risk of shooting yourself in the foot by extrapolating current trends in your presentation. Do you really think you’re the first person to tell a corporate innovation director with twenty years of experience that artificial intelligence is going to take over every industry by 2030? Whether you’re right or not, the point is they’ve heard that story before and may view it as a sign of arrogance. Showing some humility and using phrases like ‘our hypothesis’ go a long way towards establishing your honesty and credibility.

Mistake #3: Using Too Much Startup Jargon

True story: the first time I mentioned the word “accelerator” in a corporate R&D lab I was consulting for, a senior scientist gave me a confused look and said he “didn’t realize particle accelerators were funding startups now”. While this may initially make you facepalm, it was a great reminder that those of us in “startup world” truly live in a bubble that most of America, and the world, are not part of. Taking the startup jargon down a notch will help you get your point across.

It sounds cliché but knowing your audience is the key to effective communication. When pitching to individuals who’ve spent their entire careers in large companies, avoid using startup words that they won’t understand and connect with. It’s not the job of the audience to figure out the presenter – but it is the job of the salesperson to make sure their pitch isn’t going over the audience’s head.

Mistake #4: Ignoring Implementation Costs

In the omnichannel world we live in, any large company with a physical retail presence is constantly pitched new in-store technology concepts. While the startups offering these technologies are charging reasonable prices (often as low as $30/location/month), what is often ignored is the cost a company must incur to implement a new technology. For example, a technology that provides customer intelligence via iPad to in-store sales staff so they can sell better requires an extensive training program, troubleshooting, and potentially even in-store hardware upgrades. So even though a technology like this may only cost a total of $6,000 per month (200 locations x $30/location/month), the implementation costs (for things like hardware and training) across 200 locations could easily exceed $100,000.

Implementation costs are difficult to avoid entirely but there are steps startups can take to help their clients reduce costs and get themselves closer to signing a deal. These steps include negotiating reduced hardware pricing with manufacturers, assisting with or even providing free training, and offering to troubleshoot software issues for sales staff. Whatever you do, the important thing is to make it feasible and simple for the large company to say yes to working with you – and that doesn’t always involve the price of your actual product.

*****

Once you’re able to snag a meeting with a decision-maker at a large company, it means you’ve got their attention. They are interested (albeit at a very high level) in what your product can do. That said, these decision-makers are looking at dozens of other companies who are competing for the same budget. The easiest thing for a decision-maker to do is say no and any of the mistakes above give them an easy out. By always keeping your audience in mind, being empathetic to their concerns, and avoiding critical mistakes, your probability of closing a deal goes way up. And that’s ultimately the outcome that both large companies and startup salespeople are after.

This post originally appeared on the Global Accelerator Network blog. Thanks to Joe Benun for feedback on an earlier version of this post.

Sales Prep: How Do You Get In The Mindset To Sell?

On the surface of it, selling something is pretty weird. You’re basically using words, Jedi mind tricks, and (occasionally twisted) logic to convince someone that they should do something, which usually consists of them giving you money.

Oh and if you’re about to skip this post because you’re not a “salesperson”, let me ask you something: have you ever had a job interview? Have you ever pitched an idea? Have you ever asked your teacher for a deadline extension? Yea…you’re a salesperson. Don’t be ashamed, we’re all salespeople. Own it.

So if we absolutely have to do the uncomfortable act of selling something, we might as well do a good job right? The art of selling is first and foremost about confidence. If you don’t believe in what you’re selling, you can be damn sure no one else will either. Salespeople require a similar level of unshakeable confidence as athletes do and just like athletes, salespeople tend to have a “sales prep routine” to get into the right sales mindset. Here’s one that works for me:

Step 1: Watch these 2 videos (language NSFW) featuring Vin Diesel and Ben Affleck from the movie Boiler Room. Awesome demonstrations of sales techniques in here too:

Best quote from these videos: “There is no such thing as a no sales call. A sale is made on every call you make. Either you sell the client some stock or he sells you on a reason he can’t. Either way a sale is made”. Word.

Step 2: Review your plan – why should this person give you what you want?

I’m not a big believer in sales scripts. In my opinion, scripts are a great way to make yourself seem robotic and unlikeable (unless you know the script really, really well – so well that it’s second nature and you don’t have to think about it). That said, it’s still important to have a gameplan in place – where do you want the conversation to go, how you want it to flow, and what you want them to do. Most importantly, you have to be able to answer the question: why should the other person do what you want them to do?

Step 3: Review objections – why would someone say no to what you’re selling?

Inevitably when selling, someone is going to say no to you. The key is how you handle their objections. Obviously you need to know what the objection is in order to respond to it and improve in the future, so make sure you make the effort to find out. It amazes me how many people take “no” at face value in the sales process and completely miss the opportunity to iterate on their product/pitch. By understanding objections, at the very least you know what you can improve for next time. And yes, you should be writing these objections down.

Step 4: Watch Alec Baldwin motivate you to sell in Glengarry Glen Ross (language NSFW)

Remember: Always be closing!

On a more serious note though, the AIDA (Attention, Interest, Decision, Action) framework that Baldwin talks about is really, really effective. Learn it and use it.

Step 5: Go make the sale

You got this. Have fun with it – what’s the worst that’s gonna happen? They say no? Their loss.

Step 6: Drink some coffee (because coffee’s for closers only)

If you want to go deeper into learning sales skills, I highly, highly recommend buying Jeffrey Gitomer’s Sales Bible book and getting tons of real life practice. There aren’t any shortcuts to getting good at this stuff. It just takes confidence and hard work.