This article is not about mistakes startup people make during the sale itself. You can already find a bunch of those articles.
We will not only reveal the biggest mistakes startups make in planning sales and tell you how to avoid them, but we will also guide you through an evolutionary outlook for sales in a startup.
1. Skipping Sales Altogether
The first step for successful sales within your startup is to do the sales by yourself. This will help you learn the most important thing – is your product really ready for any serious investment in sales?
The truth is if you can’t close a single deal, there is no one else who can.
You know the most about the product and have the biggest incentive to sell it.
So if you can’t convince your neighbor, uncle, best friend’s dad, colleagues or anyone from your social network, why would someone who doesn’t know a thing about you or your company buy it?
Don’t panic. This does not mean you have to sell to everyone you know.
No, the key in this little tactic is to get to know the market by yourself, as early as possible.
Find out who are your customers, what are their problems and how to discuss solving them by using your solution/ service.
It won’t be easy, but this will help you refine your product and messaging as well as setting a benchmark for evaluating future sales people.
If you had more success in contacting and closing people outside of your social network then why someone who does it for a living can’t do it?
Even when you do hire a sales team, the experience from selling can come in handy during trade shows and conferences, and it might land you a life-changing deal.
2. Not Sure Who to Target
Many startups don’t have their go-to-market strategies nor messaging set before they start selling.
They have a basic idea about who their customers might be, but it’s hard for an early stage startup to explain that to others.
This can be overcome by taking the first step and defining the Ideal Customer Profile and Buyer Personas.
Unlike “target customer” the ICP defines organisations which would give your startup the most chance of selling to, possibly of the biggest ROI. By knowing your target you will be able to create a valuable go-to-market strategy and set your 20/80 approach if needed.
3. Pushing Your Product Too Much
When having meetings with potential clients people get so caught up in explaining how great their company is and how the product does this or that.
They forget one big thing – people buy from people not from lists of functionalities.
Imagine being on a date and hearing the other person talking about how smart, funny, caring, compassionate and how much of a great cook he or she is, without giving you any chance to say something.
You’d think “my god how self-centered this person is”. And that’s how you sound on a meetings talking about your awesome product, maybe.
Instead, try to find a genuine connection with a potential client. Ask for the issues and challenges they are facing and then talk about the benefits your product can bring.
If you are talking on the phone try to pick up subtle clues and talk about something other than just work. Sell yourself first, then listen, and at the end sell your product.
4. Losing Focus of the Product & Not Hiring a Salesperson
Some people hate selling and want to be done with it as soon as possible, while others get infatuated and carried away.
The problem arises when you commit too much of your time to sales and forget about developing the product.
It seems like there are so many things to focus on while running a startup, but you have to know when you can get greater ROI out of your time.
What you need to learn before hiring a salesperson:
How to find and recruit great salespeople
How to interview sales reps
5. Hiring Too Early or Too Late
We already said that skipping sales is the first sales mistake startups make, so you need to spend some time working the sales grunt.
On the opposite end of the spectrum is hiring a salesperson too late. The more time you spend chasing deals is time lost in product development and human capital growth.
There is not a one fits all solution, but in general, you should hire your first sales reps after you have successfully closed some deals and gained enough market insight to improve sales process.
6. Hiring Experienced and Expensive Sales Rep
In theory, this sounds great and eventually, you will need one.
Why go through all the trouble when you can just hire someone who has seen it all. The prospecting, emailing, calling, rejection, follow-ups and closing.
But jumping into this decision may be a mistake which can kill your startup in no time. You won’t realize what’s happening until it’s too late.
You may be asking: How can that be? If someone has a vast experience he could recognize customers pain points and sell like crazy?
Truth is: a truly experienced sales rep is earning hundreds of thousands (even millions) of green bills a year, has no intention of dealing with startup stress and uncertainty.
That “veteran” sales rep with an expensive suit and an old Jaguar may in reality just be a “con artist” making an easy sale – to you.
Of course, there are always exceptions to the rule. Even if you really believe in that charming sales master leaving his top paying job in order to work underpriced (not to your standards) because of the passion he or she is driven by in your startup, you can do two things – test them and set the bar high with tangible quotas.
If the person does not hit it within 3 months – you should rethink your choices. Even then, hiring a star salesperson has its issues.
7. Hiring One Sales Rep (Or Too Many)
Second biggest mistake when hiring your first sales rep is hiring just one.
Having two or more people in your sales team allows more flexibility, ads room for testing different things, and provides ground for healthy competition.
It also gives you the ability to compare different approaches.
Think of it like this: you have one car on the track. You change the wheels, the car goes around the track faster.
Now imagine having two cars running the same lap. Again, you change the wheels, cars go faster, but one is faster than the other.
Imagine having three cars. After you change the wheels, two of them are faster, but the third one is slower. The wheels are too big for the third car and slow it down.
What if your first car was the third one? You would conclude that changing the wheels is bad, even though it was overall successful.
One thing – don’t hire too many sales rep just yet, or you will burn your cash reserves faster than that racing fuel.
8. Improper or No Incentive for the Sales Team
Without incentives to your sales team they won’t be as determined in pursuing and closing deals.
Too much incentive and you ‘ll have them chasing every single deal whether it’s good or bad for the company.
It’s a delicate issue, and there are many steps for developing a sales compensation plan.
9. Buying Pre-Packaged Sales lists
You are probably thinking this is a tactical mistake, not a strategic one.
And you are right. While that is the case, many startups fall for buying pre packaged sales lists so we felt the need to include it.
The logic behind choosing to buy contact lists is perfectly sound when you are in your early stages of growth. You need clients – fast, so a list filled with contacts from your targeted industry sounds great. So does snake oil.
Buying an existing lead list is like buying cheap oversized pants. You ‘ll have trouble fitting into them, they really don’t match with anything and you end up looking ridiculous.
While those lists are filled with contacts from your industry, that doesn’t mean those companies fit your ideal customer profile nor the contacts may fit your Buyer Persona.
Plus these lists tend to have an issue with data quality – if you are seeing bounce rates greater than 10% there is a better option, trust us.
Even if you are selling a generic product like office chairs it’s not the same thing selling chairs to Microsoft and to a small software firm.
Imagine contacting a bigger company unknowingly, let’s say they are interested but you can’t fulfill their order. You will seem unprofessional which would effectively close the door in the future.
While your startup needs lead generation, there is a smart way and a wrong way to go about it.
Another bad idea is to overload your salespeople with data gathering and presales.
Salespeople are expensive, that is because they are good at making money. So would you rather pay them to sift through databases, websites, email verification tools (which can be done by people with far less training) or to close and earn money?
10. Starting With ABS
Account Based Selling has been one of the hotter trends in sales over the past years. So it’s natural for people to get caught up with it without really understanding how it works.
When done right Account Based Selling is very rewarding, but it’s usually impossible to implement it with startups from the get go.
In order for ABS to work, you need to be targeting enterprise level clients and to have very tight cooperation between various departments (marketing, sales, customer support, accounting).
Here you can Learn more about Account Based Selling and how to grow sales using it.
11. Not Hiring a Sales Manager
Time has passed, sales are looking good. The trend is positive and you are thinking about expanding the team.
You don’t need more sales reps, you need a sales manager (junior one).
Someone with experience who will fine-tune the process you have developed from scratch and be responsible for growing and managing your sales team.
It would be best to hire someone from a company in the position you envision yourself in a year or two. Junior sales managers are usually great at improving existing structures, but not so much on building teams and processes from scratch.
When your team consists of around 10 – 15 sales reps, you should be taking sales to the next level.
And on that point…
12. Not Hiring a Sales Leader
The next step for growing sales is to hire someone who will oversee a few sales managers.
You need a VP of Sales who was able to grow a company you would like to be compared to in a couple of years.
This person will be a true sales leader, someone who will work on strategy, scaling, reorganizing, closing larger deals and mentoring sales managers.
Once you reach this stage you are past the point of being a startup.
Is There a Quick Fix for Improving Sales in Your Startup?
Yes, there are, you just need to figure out what choices may not affect your revenue and which actually can provide great value.
When it comes to hiring a sales rep – if you are an early stage startup with a few clients and not much money on your bank account – you can actually outsource a sales expert like Market Republic and test a few approaches and vertical before going full trust ahead.
We can help you develop ICP and Buyer Personas and share our know-how into developing a variable, scalable and effective sales process.
We can also fill in your sales pipeline with hundreds or thousands of highly accurate and high-quality contact data, matching your ICP and Buyer Personas.
All of the above will cost you a fraction of a full-time employee and you will be able to kickstart your sales in no time. Just check out how we did it for Intelisale.
We don’t like to brag about our 2% bounce rate for the contact lists we custom create (cough cough), as we usually let the client’s success do the talk for us. Startups and growing companies such as Twilio, Apigate, Comtrade, Wiredrive, and Quid trusted us with their lead generation and we can help you, too.
Want to check for yourself? Let’s have a chat.