Although all startups are unique, when it comes to sales, the challenges they face are similar. Moreover, as many founders don’t have a background in sales, there tends to be a lot of mysticism around the topic. For this reason, we asked our growth expert Elor Pruvli to share his expertise acquired from almost two decades in B2B sales.
Elor is the founder of ScaleMode.io, a sales advisor and an ex-Googler. His specialty is growing seed stage B2B startups to over $10M ARR via predictable sales, helping them improve close rates by 2-3X and halving the sales cycle on $5-100K deals.
The article is based on masterclasses Elor held at Salto Growth Camp in April and June, 2020. Among other things, you will find out:
Let's dive right into it, shall we?
First, it’s key to understand the difference between B2B and B2C sales. In B2C, there is typically only one stakeholder and the emotional aspect of sales can play a big role. On the other hand, B2B sales is usually much more rational and a much more complex process involving a number of stakeholders.
While it might be easier to get to a revenue as a B2B startup ‒ it only takes one big customer ‒ it’s much harder to scale because many elements need to be addressed.
According to the authors of “The Challenger Sale”, there are now over 6 stakeholders involved in an average B2B buying process. (In addition to the end-user and decision-maker, they could be technical, legal, procurement, logistics, etc.) This means it's increasingly difficult to get to a “yes”.
It’s no wonder then that an estimated 60% of enterprise sales end with a “no decision" ‒ in other words, you won’t hear back from the prospects. According to Elor, the common fault is not managing the sales process properly and not getting all customers stakeholders aligned.
It's also important to keep in mind that in B2B sales customers are not professional buyers used to purchasing your solution. Therefore it’s your task to take control of the sales process and narrative instead of saying ‘yes’ to every proposition from the client.
In Elor’s experience, common challenges of startups in B2B sales revolve around 1) Messaging and communication 2) Finding the Ideal Customer Profile 3) Buyer’s journey (Sales Process) and 4) Units of economics.
Let’s look at each of them more closely.
In your communication with prospects, it is essential to focus on why your product is relevant for them, not what it is ‒ none really cares about that. Craft a narrative around what problem you’ll solve for them.
For example, in the below example, Zuora billing platform beautifully presents its case not as yet another payment provider but as a service that helps companies to change their business model by shifting to subscription-based billing.
Some suggestions from Elor as to what to keep in mind throughout your sales communication:
1. Tailor the message per stakeholder
You need to understand who you’re talking to ‒ a technical person, a decision-maker, influencer or a referring person ‒ and align your message accordingly. Focus on how your product benefits not only the company in general but the individual personally so that they would have the passion to drive it forward.
2. Educate and become a trusted advisor
Share with your prospects general industry knowledge instead of discussing your product only (though, naturally, you should eventually tie the conversation back to it). Customers love to talk about industry trends and challenges, but they don’t talk to their peers every day or share with them the information that you have.
3. Develop and build the need
Have prospects tell you about the issues they are facing and how your solution could solve these. Make sure throughout the sales process that different stakeholders understand how they can benefit.
4. Manage their risks
In enterprise sales, customers take a big leap of faith by trusting a part of their business in your hands. They have to ensure it’s not going to cause a bigger pain than the one you came in to solve. Thus you need to be very transparent, aligned and responsive to make them trust you.
5. Pricing and packaging
Big companies are usually not equipped to buy something to be paid for on a monthly basis or accept pricing changes every month. Keep this in mind when pricing and packaging your offer and make it part of the communication from early on.
An important part of the sales process is identifying your ideal customer profile (ICP) or the customer you can bring most value to. If you target very broadly, it’s difficult to build an efficient sales process.
In order to understand who your bullseye customer is, you need to go beyond the vertical and the size of the companies and explore their inner dynamics.
For instance, you’ll want to understand their key personas and teams. Which teams are you going to sell to and who else needs to be at the table? Do they have a specific function missing or are not allocating resources to it? In the latter case you might have to take care of it and offer professional services or consultancy on top of your platform fee.)
Secondly, you need to monitor the prospect’s technical maturity to see if they’re actually ready to adopt your solution. (For example, an old-school offline company won’t probably jump to the latest cutting-edge, AI-based technology.)
Finally, you need to look at their use cases and needs. Is your product a must-have or nice-to-have for the prospect? (In the latter case you’re still able to sell them but really need to communicate the value and upside.)
You want to avoid having a lot of deals with low intent in the pipeline, so it’s important to narrow down these characteristics beforehand.
Remember that it’s perfectly alright to say ‘no’. You’re not supposed to and even shouldn’t sell to every prospect who’s willing to talk to you.
In Elor’s view, you should say “no” if what the customer’s asking for requires too much support. (For example, big companies often want white label solutions, whereas you’d not want your SaaS solution to run offline, on the client’s server being a nightmare to update).
Also, the company might simply be too big for you to work with at this stage. Corporate sales cycles of 6-18 months may bleed you dry, while the sales cycles for mid-market companies are considerably shorter.
If it’s not the right deal to pursue, the earlier you understand it, the better. In other words, you need to get to a ‘no’ as quickly as possible. Make your own assessment if the problems you’d be solving for them will be "really worth the investment" in terms of the product price and resources they need to allocate. Often the case might be that while your solution solves some problems on the operational level, nothing bad won't really happen if they don't have your solution and it's not worth the change.
Elor suggests validating the fit with questions like “Do you think it’s something relevant for you?” or “Would you see it as something you’d take on in the coming weeks or is it more something for a few months?" This will give a clear signal if the deal should be put on a back burner.
The next question: what type of sales process do you need? Elor differentiates between two types of sales depending on the type and price of the product, the threshold being at $10K.
Below $10K you ideally have no-touch funnel. If the product is more complicated or the check big enough, there might be some interaction, limited to maximum 1-2 calls.
Usually, the sales cycle is no more than 45 days and involves no more than 1-2 stakeholders. The sales process is very standardised: for example, a customer signs up for a trial, someone reaches out to them, you have a demo call after which you take care of any friction there might be and ensure they’re ready to commit.
Typically here you are selling a commodity-type of product that is already being used by the customer, for example, an easy-to-use CRM or an email automation system.
Scaling needs to be done mostly via marketing and growth hacking, not direct sales. In other words, you push your customer with your product, advertising and A/B testing.
Above $10K, sales is much more high-touch. Even if you’re selling a standardised product, you need a tailored approach because enterprise clients come with different needs regarding invoices, contracts and terms. Typically a $10K ticket size is the limit to justify such investment into the onboarding and sales process.
In value-based sales, the sales cycle typically ranges from 1 to 24 months. The sales process is much more complex and involves more than two stakeholders. You’ll usually have at least one champion or an ally on your side who likes the product and has a vested interest in pushing the deal forward inside the company.
In a value-based sales process Elor suggests observing the following checklist:
1. Control the narrative with stakeholders and build out a step-by-step sales process instead of simply reacting to propositions by the customer. Always have a next step in place and clear goals for every meeting.
2. Build the client’s need and commitment and show the impact of having that problem, for example, losing x amount of revenue or y amount of time. Validate if your solution is really worth the investment for the prospective client, if not be honest (prospects will appreciate it) and don't be afraid to walk away to find better prospects.
3. Navigate through the client’s organisation to understand what functions need to be involved and bring more stakeholders onboard step-by-step.
4. Define sales roles and sales stages internally. If you have more than one founder, don’t copy each other but divide the roles between you (a technical, a business development person, etc).
5. Manage the “what if-s”. Be aware of what can go wrong and think about it beforehand.
As a founder, you’re also on a journey and the sales process needs to mature in time. However, Elor cautions against scaling too early and giving control over to the sales team. While every startup wants to build the best product, in B2B business it is not possible without input from the clients. Therefore it’s crucial for founders to be involved in sales and get direct feedback from the market. You are able to really scale only after you have figured out your messaging, ideal customers and sales process.
Typically, a startup will move through several stages when building its sales team and process:
1. Founder mojo phase
Initially, sales is led by the founder, perhaps with some help. This type of sales is unstructured and doesn’t scale. (You can’t expect the same text that works for you as a founder to work for the next sales hire.)
2. Firing squad phase
Here you have a number of salespeople firing on all cylinders. There isn’t yet a clear understanding of the ideal customer but some revenue comes in. Sales has limited structure and is semi-repeatable, but not scalable.
3. Sales organisation phase
In the final phase you have a structured sales process with a CRM and ownership of the pipeline. This phase is characterised by predictability – the deals in the pipeline today will define the company's revenue in the coming quarter(s).
To make sure that what you do is scalable, Elor suggests a number of metrics for benchmarking (naturally, businesses are different and exact figures thus debatable but they can provide some indication).
First, you can figure out how long your sales cycle should be relative to your deal size. For example, if your average deal size is $10K, you’d need to be closing within 1-3 months. A $25K deal should take between 2-4 months and $100K deal 3-6 months but the active sales cycle shouldn't be more than a year for a deal of this size.
If your product costs $10K and your sales cycle is one year, it’s not scalable. Something is not right ‒ either you’re charging too little, your product doesn’t solve enough pain or your sales process doesn't support customers on their buying journey.
Other control metrics Elor suggests observing:
When building a sales team, it’s good to remember that to hire a good salesperson in the UK or US market costs around $100K a year. They’d need to be bringing in 3-4 times their salary. There might be temptation to get sales guys in after raising a round. However, it’s essential that the founding team first gets the sales right so that the math works out.
To sum it up, in order to build a successful business you need a scalable product that offers high end user value. You need to be passionate about solving your clients’ problems and the only way to really grow is via customer interaction ‒ and being involved in sales.
While with smaller checks you can rely on more transactional inbound sales, the higher the check, the more complex the sales process. Hopefully the ideas presented in the article help you tackle the common challenges startups experience when scaling up sales.
#B2Bsales #salesstrategy #ICP
Elor specialises in taking seed stage B2B startups to $10M ARR through this company scalemode.io. In his previous experience as a sales team lead at Google he accelerated the EMEA team's flat growth from Enterprise accounts to over $10 million of new sales. Elor helps startups improve close rates by 2-3X and halve the sales cycle on $5-100K deals.