Building a B2B Startup? Here are 5 of the Most Crucial Lessons I’ve Learned

Building

I hope my previous post got you more interested in taking a longer look at building a Business-to-Business (B2B) startup.

If you’re interested in plunging into one, here are 5 of the most crucial lessons I’ve garnered in building B2B’s for almost one decade now (Can’t believe it!):

incomplete

1) Doing Lean Startup? You cannot use a traditional “MVP”

If you aren’t familiar with Lean Startup Methodology, then please buy Eric’s book as soon as you finish this post. Essentially, the book says that you have to validate your assumptions about the product and the market systematically before you spend money on building.

Specifically, it suggest building a “minimum viable product.” This is basically a bare-bones version of your eventual product (which won’t cost you much) that you can show to potential clients in order for you to get valuable feedback which you can then use to develop the product further. Typically, this “MVP” would consist of just approximations of the actual product that could show potential clients. Here are 10 examples. 

You CANNOT do an “approximation” with a B2B when you’re selling to a corporation. Companies will simply not pay for anything which isn’t ready. They cannot risk it. (Unless the CEO is your brother or its a smaller company and your product is something they desperately need)

(And no, application developers, you won’t be able to fool them with a wireframe demo – they will ask you to click on everything to see whether they work)

So yes, you do need to spend earlier on product development than you would do on a B2C product.

What you could do to balance this out is to spend more time getting data on the PROBLEM you are trying to solve.

Is it really a problem? What are the specifics? How MUCH is this problem costing companies?  What price point would it get bought? Is it a painkiller or a vitamin? 

Talk to boatloads of potential customers to get problem validation. Not only does this serve as a data-gathering exercise, but its a customer development exercise as well – you are priming all these people in buying from you (once you have a working product).

mutliple

2) Remember, you are Selling to 2-3 different people

This is what we quickly found out when I started selling in my first startup, STORM.

We sold an HR product, so we built a pitch to the HR Head. After getting approval from the HR Head? Turns out we then had to present a cost-benefit analysis and present it to the CFO. Then another presentation to the CEO (with the whole EXECOM).

You will need to incorporate the paradigms of different people in the organization you are pitching to.

Usually, you have to pitch to the functional head of the department which will end up using your product. Then, there has to be a pitch to the one who will disburse the funding, which (if your product isn’t a finance product) is likely to be another person. Sometimes, the USERS of your product will differ from the functional head, so you will have to get their approval as well.

Put yourself in the shoes of each of these people and customize your pitch appropriately.

Some questions they WILL think about when doing the buying decision:

How will this help my department?

Will I look bad/get fired if this fails? (this is an underrated one – everyone is thinking of this!)

Can I trust these guys to deliver?

Will this help the bottom line? Can I just accept that proof as gospel?

Will this make me do even more work?

Can this further my career?

due

3) Be sure you ALWAYS have enough cash on hand for the next 6 months of overhead

I remember when we built STORM, we wanted to pursue a service arrangement wherein we would bill the client every month (instead of a one-time, big-time approach). We figured this was best for cashflow management and put less pressure on sales.

Never did we anticipate that we would get delays of 60-90 days for payment! While we had safeguards in the contract for late payment (stopping the service, steep penalties, etc), we  quickly found out it would be very dangerous for us to make good on these penalties, after all they would endanger our relationship with  the hand which feeds us.

As a new startup, you would seldom have bargaining power in asking clients to pay on time. As a result, cash flow would usually be worse than you expect.

Plan accordingly.

friends

4) Get a natural networker in your founding team

A rather LARGE percentage of the clients you will land in B2B will be as a result of networking. It helps a lot if you would have someone in your founding team who can network well with MANAGERS in the industry, or better yet, ALREADY has a network.

Why?

Its extremely difficult to do a B2B sale organically.

You know, something like sending an email addressed to the “HR Head,” only you need to send it around 10 times to irritate the HR Head enough that he will ask one of his subordinates to talk to you. Then you will be at the mercy of a person who is 2-3 levels below the actual decision maker. Now you have to follow up with this person around 10 times again so he can tell his boss “these guys are ok to talk to.” Then you will go back to trying to get a meeting with the boss. If you do manage to one day get the HR Head to endorse you, you will now have to do the whole shebang with another department – finance.

This looks like I’m kidding/exaggerating, right?

Easiest way to not get yourself in this pickle? Get endorsed by someone with some authority in the office.

The difference is night and day. A great endorsement can get you right to the decision-maker in your first visit.

Get a networker in your founding team. It’s worth the equity.

gold

5) References are gold. Invest in them.

Pitching to a potential client?

The following is the question companies are MOST EAGER to ask you:

Who are your other clients?

Followed by:

Can we call them?

TRANSLATION: We don’t trust you! You have to prove to me I can trust you!

So – be sure you strategically gather and document references.

First and foremost thing to do here? Always keep your promises. If you do what you promise to do, then your current clients would not hesitate in giving a good recommendation.

Document these and spread them as widely as you can through different mediums. Some quick tips:

A) ASK for references. No one would volunteer them. You have to ask for them. Ask ALL your clients for references. If they delay because they say they don’t have time, then volunteer to MAKE one for them that they can then just validate and accept as theirs.

B) Be creative. You can, for example, give a discount if your client agrees to do a reference video (“these guys are so good!”) to be posted on your website.

c) Create a referral to incentivize your current clients to refer other clients. This can even be an incentive for your current service – for example, for every client they refer (and you land), you could give a 5 percent discount to their current monthly service fee.

5b. Bend over backward for your first client

The very first client is EXTREMELY crucial for a B2B firm. This is for obvious reasons – they will serve as your very first reference. In a very real sense, your survival will most probably hinge on how you perform with your first client.

They are naturally very tricky to land – to work with you means they are subjecting themselves to being the guinea pig.

So do bend over backwards for this first client. Mitigate the perceived risk for them. Give a massive discount (I actually recommend giving it for free, in exchange for detailed reference material).

But aside from pricing, give them your ALL –  your ball-busting, never-have-you-worked-this hard, absolute 1000%. Give your first reference something great to talk about.

Why Sales Isn’t Always King (when to say no to sales)

fallen king

Our Brief Fling With Payroll

More than a few years ago, when STORM was finding out first hand that we still needed to educate the market about flexible benefits, we were scrambling on ways on how to generate more sales.

I had an idea.

“Let’s offer payroll!”

My several justifications were many: to be known as both a compensation AND benefits services company, “payroll wasn’t rocket science”, and the idea that we could just use the current system we developed internally to run it.

Because there were many competitors, we couldn’t put quite a big enough margin per sale. So I figured, we could make up for it with a bit of volume. Our minimum price was around P15-20K per month for a 50-man client. I figured, if I could hire a person at P10,000 to handle 3-4 of these companies per month, well, that’s a profit of at least P35,000 per month for 3-4 monthly clients.

So we added this new business line quickly. After a few weeks, we landed FIVE new clients. I began patting myself on the back.

It was a disaster.

It turns payroll WASN’T exactly rocket science, and we struggled with maintaining the quality of this new offering we weren’t doing before. The person we hired was a total disaster.

It also turns out that the smaller companies we landed were more high maintenance than some of the larger firms we dealt with in our flexible benefits line – making us spend a lot of time and effort on these low-margin accounts.

Worse, we had one current flexible benefits client who agreed to give us their payroll to manage. Because of our inefficiencies with payroll, we were endangering the relationship we worked so carefully to foster.

While on paper, we were making a margin (a small one), in truth, we were losing money on the new business. We were losing managerial hours to it. We were endangering our relationships with the clients of our core business. It was exhausting and frustrating.

In a few months, we closed the business line, and stuck to the guns we were much more familiar with, and where we enjoyed healthier margins.

There’s a lesson here on focus, but the other very important lesson here is that not all sales are equal.

money eyesThe danger of the “ALL-OUT SALES” mentality

Prior to my startup career, I was exposed to Management/MANCOM meetings with my past corporate stints.

I remember the emphasis on SALES.

“Sell at all cost!”

I think this was something I ended up inherited.

I know entrepreneurs with sales backgrounds who think the same way, that any sale is a good sale.

The danger here is that there are some sales that you actually do not want.

I remember my brief foray in a headhunting startup.

At first, we were making money by placing executives and senior managers. Then, when the going got a bit tough, we decided to diversify a bit and accept junior management posts as well. After all, any sale is a sale right?

Big mistake.

The revenue we would generate in placing 4-5 junior managers would equal the revenue generated in placing ONE senior. Moreover, recruiting the 5 juniors required MUCH MUCH more time and effort than placing the one.

Of course, it sounds elementary as I write it down here. But again, when you come face-to-face with the actual job from the client and the short-term money involved, the SALES MENTALITY kicks in and you just say yes. Then you end up regretting it as you psyche yourself up for doing much more work for the same (or lower) payoff.

This is a mistake of many new entrepreneurs. Anyone offering ANY contract to a new entrepreneur (with likely tepid sales) will seem like an irresistible lifeline.

But you have to resist.

Study ALL angles in a potential deal, not merely the cash.

Particularly…

margin

MARGIN VS SALES

Margins are more important than sheer sales.

I would VERY MUCH rather have 10 clients with 50% margin than 50 clients at 10% margin, even if the revenues are the same. Why?

Well, I can better take care of my ten clients than I could the fifty. Moreover, I would spend CONSIDERABLY LESS money taking care of the 10 clients than managing the 50.

Look for opportunities where you can offer a differentiated product/service at a good margin.

Remember, margin is king, not sales. Apple is the most valuable company in the world not because of market share. Its because of their crazy margins.

So be careful of the “I can lower my price to get a larger client base” strategy.

Maintaining your larger client base won’t be cheap.

Think of Your Market – Who Can Give you Good Margins?

I’ve encountered a number of people who want to market their products and services to startups.

I always try to make the people reconsider. Why exactly do you want to do that?

Well, I know from first-hand experience that:

– startups are very cost-sensitive and will only spend if its the last resort

– startup founders will exhaust their considerable creative resources to get products and services for free or near free

– even of they do buy into your product or service, startup founders are going to likely be high maintenance accounts – passionate people who will likely be breathing down your neck and expect you to devote ALL your time and effort for them

These three factors make it extra-difficult for a startup to cater to other startups.

So ask yourselves:

– which market would be willing to give me the largest margins?

– how do I build my brand? (great branding leads to good margins – people’s trust does a lot to open their wallets)

– how do I differentiate my product enough to make my product seem worth the margin it seeks?

Be wary of the ALL-OUT SALES mentality. (do note that it’s hard to ignore) Think strategically and evaluate all factors involved before doing ANY deal.

What is PITCHCRAFT and why you NEED to attend it

pitchingIn my 10 years of HR work prior to becoming a full-fledged entrepreneur, I did an awful lot of presentations and gave a ton of job offers. I thought I was pretty good doing these things, so when I made my leap into entrepreneurship, I thought to myself:

“Hey whatever ‘selling’ I would need to do for my startup I can probably do preeetty well!”

Well, I was in for a rude awakening.

Pitching is Everything in Entrepreneurship

It turns out, selling (or pitching in startup parlance) is absolutely critical in startup development. ALL the major activities in doing a startup involved pitching:

Finding Co-founders:

Yep, you have to present something  very convincing to get them to say yes. I had to go through dozens of rejections before I was able to perfect my pitch and talk my first partner into investing their time and money in me. 

Recruiting Employees:

As a veteran recruiter coming into startup life, I thought this would be chicken feed.

Then I realized just how much help a brand name like “Chikka” helped me in recruiting when I was in corporate. Or how an actual office helped (and how a pseudo-office-home arrangement doesn’t help).  Or how a recruitment budget helped.

I had to learn to use other strategies to help me.

Raising Money:

If my 2013 self saw my 2006 self doing the investment pitches I did before, this is how my 2013 self would react:

“NOOOOOOOOOOOOOOOOOOOOOOOOO!”

Sales:

The lifeblood of any business. When my co-founder and I decided to split responsibilities for STORM during its first year, I took on the responsibility of being the “pitchman.”

After 7 years of selling for my startup, its really been only in the last few years (and I’m a pretty confident guy) that I can say to myself “I CAN DO SALES WELL.”

Prior to that, I was grasping at straws. I didn’t know what worked and what didn’t. I really learned about selling through trial and error. (I am hopeful you won’t need 7 years to get a knack for this.)

The Pitching Gap is Real and Needs to be Addressed

I’ve now heard literally hundreds of startup pitches, if you combine the pitches I’ve heard facilitating Open Coffee, hearing individuals out during Startup Saturdays, observing in Startup Weekend, and attending other startup-related events.

Here’s an observation:

Often, the best idea doesn’t get the best opportunities.

If you go to the next Startup Weekend for example, this is something you can quickly observe if you listen to the pitches: if you just rely on the idea’s merit and block out the pitch (you can do this by writing down all the ideas as they are pitched, try not to judge, and then when the pitching stops, you can go back to your list and then judge), you’d see a discrepancy between the ideas you find interesting and the ideas that actually get chosen by the participants.

So much depends on the pitchman and how he pitches.

And you know what? Collectively, I think we need a lot of work on our pitches.

(I just remembered someone I was talking to about this who was saying: “it gets worse when they think they’re awesome…and they’re really not.” This is partly why I keep saying self-awareness and humility are two very important traits to develop as a founder)

Post Startups Unplugged

After conversing in Startups Unplugged, Maoi Arroyo (no relation to the former president) and I agreed that our interests dovetailed and we needed to work together on…something.

During a recent meeting at the Hybridgm office in AIM, Maoi mentioned, “Maybe we could do an event on how to do the right pitch, targeting entrep…”

Ittookmeabouttwomilliseconds to say yes, realizing how critical addressing this gap was.

PitchCraft: How To Develop a Killer Pitch for Raising Capital and Recruiting

pitchcraft logo

On May 25, 2013, we’re doing a seminar designed to teach participants what exactly the formula is on executing the right pitch, specifically for raising money and finding partners/recruitment.

It shall be held at the Fuller Hall of the Asian Institute of Management in Makati, from 1pm to 5pm.

This will be a paid event. Early bird rates (valid only up to May 15) are at P1000 for professionals and P500 for students (with valid ID).

Regular rates are at P1500 for professionals and P1000 for students (with a valid ID).

Here’s how the event will go:

1. Introductions

2. Keynote

3. Panel Discussion

4. Q&A

5. Post-Event: Real Pitching to Real Investors (Around a week after the Pitchcraft event, all interested participants shall be invited to do their pitches in front of real investors. This is the real thing!)

The keynote speaker for the event shall be Maoi herself. We’ll be announcing who the panelists will be soon enough. 

I think Maoi’s the perfect choice for giving this seminar (I actually can’t wait to attend this myself). Her firm, Hybridigm, is a startup incubator specializing in biotech. She’s been helping startup founders hone their pitches for more than a decade now. (And if you’ve ever met her, you’d know it’s going to be FUN).

I find that one of the VERY interesting inclusions here is the Post-Event. We figured, the best learning happens during ACTUAL pitches right? So what did we arrange? A real pitching event with real investors.  You can get to apply everything you will learn form the Pitchcraft proper onto an ACTUAL pitching process. (If you think about it…this is AWESOME)

How to Register

1. Send payment to:

BPI Account No: 0321-0230-61
Account Name: Hybridigm Consulting Inc.

2. Send a photo/scanned copy of the deposit slip to Angeli at angeli@juangreatleap.com

3. Angeli will send you an email confirmation (and an ultra-quick survey) to confirm your slot

OR

You could pay online:

1. Purchase the tickets online by clicking one of the buttons below:

RATE FOR PROFESSIONALS – P1500
buy now button

RATE FOR STUDENTS (Students) – P1000
buy now button

2. Send a copy of the Paypal receipt to Angeli at angeli@juangreatleap.com

3. Angeli will send you an email confirmation (and an ultra-quick survey) to confirm your slot

Register NOW!

If you are an aspiring/current entrepreneur from ANY field, I suggest you register as fast as possible to reserve your slot (150 slots only).

Let’s make our pitches count, eh? 

Pitchcraft: How To Develop a Killer Pitch for Raising Capital and Recruiting is being brought to you by

JGL with textand

hybridigm

with the help of our sponsors:

ayala

go negosyo

binalot

Danny Moynihan’s Brilliant Open Coffee Moment

It was around 11:30 am.

marchopencoffee

I just closed the main pitching activity at the recently-held JGL Open Coffee activity and told everyone to gather at the hallway of 47 East to take a quick group pic.

And so we did.

After that, I told everyone it was free time.

You can probably imagine what happens next.

Wondrous chaos.

People began to just talk with one another. Small groups of 2, 3, and four people began to form.

Energy filled the room.

And then, incoming senior student Danny Moynihan unassumingly enters the room.

He quickly introduced himself to me, and then apologized for being late (he was from the south and got lost).

He then asked:

“Is the pitching done?”

“Yes, it was a few minutes ago.”

“Can I try to pitch?”

“Uhm…alright, let me try gathering them”

I then tried shouting: GUYS! CAN WE JUST GATHER QUICKLY FOR A QUICK PITCH?

I shouted again.

It was no use though.

People were very much INTO their conversations.

So I told Danny: “Sorry bro, it’s going to be tough to gather them like this.”

“Can I try, though?” Danny asked.

“Be my guest.”

Danny M
Danny gathering people at the adjacent room

After around 10 minutes, Danny miraculously got some of the people sitting down in an adjacent room, with half the people still having small conversations in the hallway.

Then, he got up on an elevated part of the room.

Then he proceeded to do what had to be THE LAST THING I’D EVER THOUGHT I’D SEE IN AN OPEN COFFEE EVENT.

You just have to see it for yourself: (go full volume)

Of course, by the time he finished, EVERYONE’S EARS were glued now glued to his every word. He then calmly gave his pitch. (and got more than a few people interested)

Now THAT, I thought, was pretty entrepreneurial!

(Lesson here: NEVER miss a JGL OPEN COFFEE session 🙂

Employing The Mach 3 Strategy

Yep, this baby's 15 years old
Yep, this baby’s 15 years old

I was shaving my head this morning in the shower with my trusty Mach 3. I thought the blades needed changing. I made a mental note to myself to buy a fresh pack of blades – the woefully overpriced ones at the grocery counter.

I had been buying these blades for FIFTEEN years already – I had been paying Gillette a small fortune.

Funny, because I had never wanted these high-end blades in the first place – I won this Mach 3 way back in the 1998 Christmas party in my first corporate job.

Once I got the Mach 3, somehow I just made a habit of buying the blades.

I represent recurring revenue for Gillette. They must love me.

If your startup idea can operate with a recurring, “evergreen” business model, SERIOUSLY look into trying to adopt it.

I remember lucking into this business model when we started STORM in 2005. We wanted to sell a flexible benefits system to the market. We were looking at possible business models out there. A popular one was simply selling the software. We ask the client for a huge sum of money, in return, we would develop a customized solution for them and support it for 2-3 years. We loved the idea because it gave us immediate, usable cash.

Of course, no company would be insane enough to give a startup a huge sum of money – its just too much risk. So instead, we opted for a monthly “software as service” fee. With a lower barrier, we were soon able to land our first few clients.

Then, aside from the technology monthly lease,we built even more benefits services around it – also paid per month. If your company wanted, we could use our system to service your employees directly – less hassle for you.

It became a platform.

This “evergreen” strategy has a whole lot of advantages, namely:

1) Less dependence on day-to-day sales

Do you know how nerve-wracking it is for a startup founder to sell products day after day so he could pay the bills?

In this scenario, you just need to sell to a consumer ONCE. Then, it boils down to delivery. If you take care of your business, you can expect this consumer to consume repeatedly. The caveat? Your delivery team or your product has to be kickass.

2) “Forecastability”

(Is there really such a word?)

When we landed clients in STORM, we would know EXACTLY what the monthly revenue would be. 60K a month for this client. 84K for this client. Month after month after month.

This revenue pattern made planning so much easier for us as we grew. Can we afford to hire another employee? Will we have enough to pay 13th month?  We would know definitive answers to these questions. This makes a whale of a difference versus businesses which essentially, makes guesses future sales figures.

The whole challenge of startups lies in the uncertainty of it all. Any item which adds even a smudgeon of forecastability goes a long way.

3) You are forced to be always on your heels

Our clients would pay us every month – with the usual contract provisions that if they are not satisfied with the service, we would get docked on the monthly. Guess what effect this had on our operations?

We were forced to look at the way we did things and ALWAYS improve on them. We would put supreme importance on customer servicing. We would make sure bugs would get stamped out ASAP.

Or else we wouldn’t get paid next month.

That’s tremendous motivation to always deliver what the client expects and more.

4) Smaller bites > One big bite

As I mentioned earlier, its MUCH EASIER to ask a client to pay several bite-sized payments than one big, one-time purchase. This is especially true if you’re a startup. So don’t be afraid to lower your pricing significantly – you’re after the the longterm payoff.

Another advantage with smaller bites? You create a habit. This is extremely strategic.

Does your current business model employ elements of the Mach 3 strategy? If it doesn’t, these advantages are more than enough reason to seriously consider an overhaul.

Are you setting up a consulting firm? Perhaps you could come up with a related monthly service you can offer to outsource on a monthly basis.

Putting up a local bakeshop? Perhaps you can arrange to deliver your freshly baked pan de sal every morning to nearby homes at a significantly cheaper rate.

Tech firm? Perhaps you could build a platform  on which you can deliver repeat products/services on.

Design studio? Perhaps you can find clients in industries who need to have things designed on a consistent basis (not the usual one-time website creation for say, startups). Lower your prices and go for long term contracts with monthly or weekly deliverables/payments. Just off the top of my head, you can try publishing (online or print), HR (monthly newsletters to employees), and maybe events.

Who knows, with the right model, you can develop a customer like me – a lifetime consumer. (well, fifteen years and counting)

smooth sheen like could only be accomplished by a Mach 3!
smooth sheen like this could only be accomplished by a Mach 3!

Sales Tips: How to Overcome Your Fear of Rejection

I’m not a salesman, but I’ve sold many things.

At the age of 11, I sold cellphones at my uncle’s telecom store in Makati. When I worked for GK CSI, I sold everything from kamoteng kahoy, talong, and chicharon (no relation to Lapid’s 🙂 ).

Me purchasing kamoteng kahoy from Ate Maricel at GK Enchanted Farm
Me purchasing kamoteng kahoy from Ate Maricel at GK Enchanted Farm

For my first full-time job in the States, I sold consumer banking products. I was exposed to the world of cold calls and sales scripts. My personality wasn’t cut out for a “sales” job. Back then, pitching  for me was like pulling teeth.

However, a job in sales taught me many things. It taught me how to use assumptive language, and never to make assumptions about a person based on his/her appearance.

I also learned how to pitch the sale to ALL customers who met the basic criteria. In my banking stint, one of the most successful salesmen in the region was selling credit cards. He never failed to ask every customer that he encountered about applying for a credit card. He wasn’t scared to ask, and most importantly, he wasn’t scared to hear:

Invitation_NO_GLOBALTOUR-800x575

That fear of hearing no, the fear of rejection, is what cripples people. It’s that fear of rejection that bogged me down. That fear which made me tiptoe instead of pushing me to run. I cared so much about preserving my image that it hindered me from reaching my full potential as a salesman. Sure, there were days when I overcame this fear, but it wasn’t consistent. I lacked a strong sense of purpose in my work and it made it even harder for me to overcome my fear.

I’ve since learned that communicating with a sense of purpose in my work and life is a powerful tool. It enables  me to overcome my fears and move forward without dwelling on my past failures.

sales_trading_to_investment_bankingMy mission nowadays is clear – to contribute to national building in the Philippines by starting up a Philippine enterprise  to help myself while helping others. My sense of purpose gives me peace, and it can drive me to achieve highly improbable things, if I let it. While I still carry that fear and anxiety at times, my greater mission trumps the fear.

What are my sales tips, after all of these sales experiences and life realizations?

  • Embrace the power and significance of sales in your business. Without generating any sales, you’re not a business. As a result, it is very urgent that you sell.
  • Don’t feel guilty about selling. Selling is not a dirty thing. It’s a part of business. Remember, you are sharing value with your customer when you offer your product/service through a sale.
  • If you are confident in your mission, then continue to take that leap of faith everyday. In the end, we’re all flawed humans. If you compromise your mission and work because you’re trying to get everyone’s approval, it won’t happen.
  • If you possess a higher purpose that provokes you to think outside of yourself, then allow it to take over. You will speak with more confidence and move with conviction. The right people will gravitate towards that spirit that you exude.
  • Do not give in to the need to conform to the status quo. As an entrepreneur, you are a leader. As an innovator, you must distort the norm.

How To Shut Your Way Up To Sales Success

zip itBack around 2007, I remember being thoroughly underwhelmed by the CEO of a multinational company our startup competed with. Our companies were summoned by a client in a joint meeting to compete for a bid.

I distinctly remember telling Pao: “The guy didn’t say anything and just wrote down notes. He was so unimpressive.”

Little did I know that not saying anything and taking down notes were quite strategic in one on one sales, so much so in B2B sales. Stubborn that I was, it took me a year or two to incorporate the same strategies in my own sales meetings.

Back then, whenever we did sales pitches, people would always react at how young we were – and this always felt like a hurdle in the selling process. (as the years went by, losing hair and gaining pounds remedied this – ah, the perks of baldness!) This, plus our being rookies in the industry, made me feel a gap in credibility.

So in the back of my mind, whenever I’d go to pitches, I thought – “I have to prove to this person how capable I am.”

So my pitches early on became exercises in hearing all about how great we and our products were.

One BIG problem: clients don’t care about how great you are. They only care about how you can help them out.

I remember seeing this in their faces before: they WANT to say something but I was so busy wanting to blurt out my “piece” that sometimes I didn’t let them get a chance to.

HUGE mistake.

The whole pitch has to be about the client. How can the product help them out? What’s in it for them? It only becomes a great product if they can see how it helps THEM to be great.

Listening and writing down notes are great visual indicators that the client’s needs are precisely what you are prioritizing. I’m not talking about putting on a show though – you really have to listen. Authenticity is pretty easy to sniff out. The client’s needs HAS to be first.

A client who is excited, talking, and feeling good about herself and her company is a much more likely sale than the one who is repressing herself to listen to someone saying how great they are.

Putting themselves first is a great temptation especially for new entrepreneurs. Entrepreneurs are entrepreneurs precisely because they have a lot of confidence in themselves. They also usually have a chip on their shoulder – a great need to prove something to the world. Inviting them to talk about their passions could easily turn into a couple of hours of monologue.

Overall, this is a good thing. Entrepreneurs need this to go through the roughest cycles of the job.

Just remember to rein it in sales meetings: just give a concise, well-thought pitch…

And then shut the hey up.

Who Wants To Buy HOPELESS HAPPINESS? (Always Test Your Marketing Materials)

Check this ad along EDSA:

So When I first saw that sign, I was confused: wait, why would a company – in health insurance at that –  want to sell hopeless happiness?!

Then, upon, closer inspection, I saw what they were trying to accomplish with the shadow and stuff. Since I always pass by that part of Edsa, I’d always ask my co-passengers what they read or saw when they saw this sign. The results would always be:

Hopeless Happiness

I’m not so sure who did this ad for Medicard, but I don’t think the intention for this ad was:

When people see this ad, they should immediately think “Hopeless Happiness!” When they closely inspect it though, they should see that Happiness is the shadow Hopelessness casts. (whose symbolism I still can’t really figure out)

There are numerous other examples of this. (you can post more examples in the comments section!)

Lesson here: it’s not enough that we triple-check our marketing materials and copy. We have to TEST them with other people.

It’s not enough that it passes our own paradigm. Oftentimes, we are too close to the material that we don’t get to see what the everyman will get to see.

No need to hire an expensive marketing research firm. You can start by sending the copy to 20 different friends through email and ask for suggestions (people love to give their opinion in stuff like this). Post it in Facebook for a few friends. Grab a projector, project it on the wall and let the whole office comment without you rendering judgement.

Test. Test multiple versions and make people choose.

More importantly, try to simulate the actual medium the copy will be reflected in. If it’s website copy, don’t show it to people in Word format, plug it in a Powerpoint presentation which simulates the website to be developed.

(so if you have a 50-foot bllboard, don’t post it in EDSA first. Unravel the thing, hang it by a wall, and see how people take it – and yup, I think it’s worth the hassle)

ADDENDUM: Apparently, it’s not the only MEDICARD sign of its kind. There’s another sign, also along EDSA. The same idea but with these two words instead: “ANXIETY ASSURANCE” 

Anyone with a pic? 

 

STARTUP SALES TIP: Generic is geriatric, make it human instead

Everyday, we experience getting bombarded with “above the line” sales pitches: from TV, print and radio. This is mass market/media advertising: a singular ad which hopes to reach millions and convince thousands to buy. Large corporations spend billions on advertising to convince a small percentage of the reached audience to make a purchase.

Of course, startups typically have a limited advertising budget, so they have to be sneakier, employing “below-the-line” techniques such email, direct marketing materials, and social networks. Here, the thinking is that we can be more “targeted” with our sales correspondence, because we can go more “direct” to the consumer.

You know what, from what I’ve seen, a lot of SME’s and startups, and sadly, even larger corporations, shoot themselves in the foot doing “direct” sales correspondence – the material and strategy used is still for mass consumption.

Aren’t we all tired of all the loan offers, the generic training course emails, the same condo brochures, the same scripted credit card “you have been selected” calls – these get old quite fast, don’t they?

Again, with the amount of information we are fed, from literally everywhere we look, mass strategy/one-ring fits all material is getting less and less effective.

Generic is geriatric.  

Let’s take email blasts for example. Isn’t this just a better way to name spam?

We tell ourselves it isn’t spamming, because there’s a way to “customize” it, right? For example, you can add the person’s first name in every other paragraph (so it sounds more personal), have different templates per market segmentation, or making the first two lines “personal.” Sadly, it isn’t. Each time you send what is largely the same material to a large number of people, that is spam.

You can spam through social networks as well. For example, salespeople even go through the process of “friending” me through the social networks, and then (to my dismay), proceeding to send me a generic sales letter inviting me to a generic training course.

My least favorite spam invite is the headhunter who asks me in Linkedin if I were interested in an HR Manager job.  Uhm…so you didn’t have time to look at my profile a bit to see that “job inquiries” and “career opportunities” are not ticked, and that I haven’t handled HR for nearly 5 years?

Perhaps I’d pause in immediately deleting your email and finish reading your correspondence if you start with something like…

“Hi Peter, I found your profile through a common friend, Mark Reyes. Based on a brief look at your profile, it’s obvious that you haven’t worked in corporate HR for a few years now. So I might be reaching a bit, but would you happen to be currently thinking of a career shift, coz’ I’ve a great opportunity you might want to explore….”

Then, I’d see you invested a bit of time getting to know me a bit through my profile. This counts.

It’s amazing how so many sales processes from so many companies can be improved only if the salesperson just realized she was conversing with a fellow human being.

No one wants to be treated in generic fashion. No one wants to deal with automated responses. Take a look at your literal and email trash bin. They are littered with spam. 

In Linkedin, I reject almost all invitations to connect made by A COMPANY. I want to talk and  engage with PEOPLE, I will not be friends with a firm. I want to know who I am conversing with, at the very least.

Forget spamming.

What’s the success rate anyway? 3%? 1%?

Sure, you will reach that small amount, but: a) your time could have been used for activities with higher yields, and b) you are basically telling the 97% majority that “we treat our clients in a generic fashion.”

How can you ensure more human sales correspondences?

Here are some suggestions for startups:

1) Never “templetize” sales correspondence.

People can smell generic letters a mile a way and will delete/shred them faster than you can say “spam.” Sure it would be much slower to TRULY customize correspondence (yep, this means a whole letter created just for the person you are sending it to), but your success rate would be much higher per client mailed.

Let’s say I have a marketing mobile application I want to sell. So I found a way to get the email addresses of 1000 marketing manager here in the Philippines. There are actually some people who would do an email blast with one generic letter to be used for all 1000 people. Way to send a message of how special each client is, right? What would be the outcome? You get 50 people interested? 30? Out of this, how many would meet you? Ultimately purchase?

Anyway, more “strategic people” would probably  segment it, say, by industry. Then i’d create an industry-specific letter. I’d sent one letter to 150, a different letter to 200, and so on.

Here’s an idea. What if you study the profiles and pick out 100 managers in companies which you’d think would most likely find your product useful. Then, why don’t you CREATE ONE LETTER EACH for each of the 100 selected people. If I were writing the marketing manager of Coke, then I’d make a letter imagining she’s the only one I’m trying to land. It would be completely different from my letter to the marketing manager of Avis, and so on.

Sure, this is undoubtedly hard work, but which among these strategies do you think would produce the highest yield?

(oh, and while you’re at it, stop sending generic Christmas gifts to clients and send a thoughtful gift on their birthdays instead – if you we’re the recipient, wouldn’t you remember that better?)

2) Google people. (yep, stalk em)

It pays to know who you are talking to. (Literally pays.)  What is her background? interests? Career progression? It is here you can find things which you can use to customize your correspondence with.

This also applies when you manage to secure a sales meeting with someone you’ve never met before. Google her. Do your research.

You’d google someone if you were going on a blind date right? A sales meeting has the same basic objective: the need to create a mutually beneficial relationship.

This personal knowledge of the person will make small talk and rapport-building much easier and will make you more likeable.

What is the primary characteristic firms look for in salespeople? Likeability. All things equal, people buy from people they like. How can you be likeable? Show an interest in the person, for starters.

3) Think of and treat ALL your business correspondences as your close friends.

Meeting a client tomorrow? Imagine your client as an old friend whom you haven’t spent time with in a long while. Then greet your client (seriously, try this).

How do you talk with close friends? You are yourself, right? You are less formal, you make jokes, you ask them how their family is, you ask them how they are doing with their current project. You care.

Human beings tend to like this.

4) Get to know your clients.

There’s no other way around it. You have to invest the time and energy to get to know your clients, what makes them tick, their birthdays, what motivates them, what they like, what irks them. That is, if you want repeat business with them.

Just know that as you are doing all these that you have to absolutely…

5) Be authentic.

We just KNOW when someone’s faking it right? To be successful in sales, you have to be TRULY be interested in people. Your authentic need for a long-term partnership has to be conveyed. Talking with clients and getting to know them mustn’t feel like a chore.

If it is, or if what you’ve read so far seems really tedious and time-consuming?

Get another person to do sales.

STARTUP SALES TIP: The Product Itself Is the Best Marketing Tool

A few years ago, I would always pass by Wilson street and then take a right at Jose Abad Santos street to go home. One day, I noticed a new tea place was being constructed along J. Santos.

As a huge milk tea fan, I was highly intrigued. I dropped in for a visit as soon as I saw the “OPEN” sign. I was an early adopter. It was the owner herself who was at the counter. I immediately noticed the concept was a bit different from anything being offered locally. This wasn’t Struan and Tang, nor was it another Quickly wannabe (delighted it wasn’t).

They were using fresh tea and there was a clear system: tea bag repository (a wide variety), some sort of a “tea espresso machine”, a “topping” selection (which they now aptly call “sinkers”), then a martini shaker. While they are more hi-tech now (with those circular buzzers), this basic system still holds.

And what does the system create?

A great product. Something I always came back to, tried new variants of, and told ALL my friends about.

Soon, there was always a line whenever I’d visit. Soon, they had other branches. Soon, they had copycats.

How did it grow? More than anything, pure word of mouth supporting a consistently great product.

Raise your hand if you got onto Facebook because you heard it from an advertisement. What about Dropbox? What about your I-phone or I-pad, did you buy them because you were convinced to do so by a TV commercial,  a direct email, or a radio jingle?

How about eating in restaurants like Conti’s or Banapple? Starbucks even?

How about that consultant or consulting firm which helped your firm recently?

Although marketers will tell you otherwise, in this era of social media and connectivity, a great product WILL get found, it WILL be posted on Twitter and Facebook, people WILL talk about it and recommend it to their friends and business acquaintances, and it WILL get found. Great marketing can push process to another level, but I think the insight is crystal- the very foundation of great marketing is a great product. Otherwise, the entire thing crumbles, and people will think they’ve been had. Great marketing only works if ultimately, the product is great as well. Authenticity matters.

Thinking of your great marketing and sales strategy?

Think very very carefully about your product first.

The rest will follow.

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