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Sales For Founders 101: Introduction

If you’re starting a business you have to learn how to sell. You might not be the best sales person in your company, but you have to be the first sales person. The good news is, you’re not alone. Even professional sales people have to figure out the most effective way to sell a particular product or service every time they change roles.

Similarly, every time you work on a new business you’ll have to do the same thing and only after you’ve tested the process and identified your initial target customer can you start hiring others to do it for you at a larger scale.

In the first episode of our Sales For Founders 101 series we dive into the topic of direct sales and identify the most common ways that businesses sell to customers – self-service or freemium, inside sales, and outside sales. We break down the differences and overlaps amongst these distinctions, clarifying why it’s important to consider the type of sales you engage in depending on the product you’re offering and it’s value (price).

We also describe the importance in understanding your unit economics when identifying the sales process you choose and how it can impact the type of business you end up building. The rest of this series will focus on the actual process of selling, from generating initial interest, to closing the deal.

Show Notes

01:22 Vadim: You may not be the best salesperson as a founder, but the great news is, everybody, can incrementally improve their sales skills and even if you’re not the best, you can at least try to be the first salesperson for your company. 

02:04 Sergei: Learn it before outsourcing it. An aspiring founder has to deeply learn the full particulars of the selling process because you are not going to effectively recruit a sales team unless you know what their job is, and you know how to measure their success. 

Sales is an important skill to learn because you are always ultimately selling something, whether as an entrepreneur, a founder and even as a creator. 

02:57 Vadim: Sales can have many different connotations. But today, we’re talking about sales in the context of generating revenue directly for your product or service. 

03:50 Vadim: The reality is, no matter how good your product is, if no one knows about your business and you have no brand equity yet, you will have come up with strategic ways to convince people to take a chance on you.

04:26 Sergei: We hope this episode will serve as an anchor that can get you introduced to different types of the sales process you need to do as a founder. After this, you can count on our future topics to discuss deeper and incisive strategies around how to generate interest and close deals. 

With any new product you sell and business you build, even if you have been a successful salesperson before, you are essentially re-learning how to sell from scratch. 

05:23 Vadim: Now, there are three primary ways that you can sell something. For the accuracy of discussing this topic, do note that we are mostly talking about B2B although some principles may also apply to B2C. The first one is self-service selling or premium selling.

07:30 Sergei: Usually, you can implement self-service or a premium model to a product with a value that is simple, easy to understand and at least approximately cheap in price. This is when potential buyers can do their own research and have their own informed decision on whether to buy the product or not. There is essentially no human intervention. A good example of this would be LinkedIn Premium

08:45 Sergei: It’s crucial to know which model works for you and to realize that this can also evolve while your business is growing and developing. A function of your product can change over time and it can have a direct impact on the type of customer you have. 

09:22 Vadim: All direct sales fall into two buckets typically, i.e. inside or outside sales. 

09:28 Sergei: Inside sales means there is a person in a building making phone calls, sending emails and closing deals without necessarily leaving the building. 

10:01 Sergei: You will likely need an inside salesperson if your product or service needs a bit of hand-holding of the potential customer, usually when they need further understanding of the product or service than their own research can provide. 

10:40 Sergei: This type of model is relatively inexpensive because you pay a salesperson between $50,000 – $90,000 a year. If you crunch these numbers, along with the price of your product and the cost of doing business, it will give you an idea of how much sales they should be closing to add value for your business. 

11:33 Sergei: Outside sales is when there are salespeople that get out of the office premises, travel and meet potential customers face-to-face to convince them to buy what they’re selling. This is more expensive and resource-intensive. 

12:11 Vadim: Typically, this model is reserved for longer sales cycle type of deals. It takes multiple relationships that need to be built across multiple stakeholders within an organization but the deal sizes are bigger and worth the investment.  

13:01 Vadim: This sales model is also evolving due to technological advances such as video conferencing. However, there is a quintessential aspect of gaining a potential buyer’s trust when you opt for a face-to-face meeting and this has a higher chance of sealing bigger contracts.

13:18 Sergei: So how do you know which one to use? The answer is through experimentation to try and see what works for you. It’s worth keeping in mind that the more complex your product or service is, the deeper the trust you need to develop. 

13:49 Vadim: A caveat, when you’re early on starting your business, it’s likely that you will be doing both. For example, when you are just introducing your product to the market, even if it was a transactional or low-value product you may have to do the face-to-face sales method, to build trust. As a founder, you need to be open about this possibility. 

At the end of the day, you will have to figure out what is the most economically efficient way for you to sell because a multi-faceted sales process and method can be expensive and unsustainable.

15:26 Vadim: Unit economics is a crucial matter that you need to consider in your business development. How much you can spend to get one lead or close one deal is critical for how much revenue you will be making in the long run. 

15:42 Vadim: Another way to differentiate these two types of sales is transactional vs. relationship sales. Transactional sales are typically products with short-sales cycles such as calling a decision-maker to convince them to spend a thousand dollars a month. This is something you can do several times a week. (Check out our relevant episode here.)

16:18 Vadim: Relationship sales is typically reserved for longer sales cycle deals such as enterprise product to a big company like MasterCard. For this type, you need to convince high-level decision-makers such as the Vice President, Chief Investment Officer or Directors through pacing and building of momentum to earn their trust. 

18:02 Sergei: In a direct sales model type, you find a lead and have about 10-15 seconds before they hang up on you. It is very important that you start with the value right upfront. 

19:03 Vadim: In our subsequent episodes we will discuss how to conduct phone call sales on high-pressure situations and closing the deal vis-a-vis how to close a longer sales cycle type of sale with bigger stakes. 

19:32 Vadim: I’d like to share a cautionary tale about unit economics. This is a lesson learned about our company Tacit that sells software for the sales team.

20:20 Vadim: We tested it by trying to offer a certain amount of prices to see what amount people are comfortable to pay and what they considered a fair price for our product. We were selling to everyone but mostly startups. 

20:20 Vadim: We learned that it took about an average of 1- 3 months to close a deal, and a year to know what sales cycle and the process are. But, over time we found out that a couple of months was the longest that it should take and if it was taking more than that, we’re spending time on the wrong customer. So it took a bit of iteration. 

21:18 Vadim: Another reason we went after startups is that we were relatively a new company and it didn’t have a lot of functionality yet and those small organizations saw more value in what we have already developed. 

21:33 Sergei: About a year in the company, we learned that for our price point, it took us just about the same amount of time to convince a 5-10 person sales team to use that product as it did to convince a 30-50 person sales team. 

22:38 Vadim: Eventually, we did shift our focus as soon as we found out it was economically unsustainable but it took a bunch of iterations. So we urge you to think about unit economics early on. 

23:03 Sergei: To recap what we’ve learned in this episode, keep in mind that it’s going to take some time to sell your product. That, the complexity of your product or service can be proportional to the intricacies and elaboration of your sales process. Furthermore, the more expensive your process is, the amount of time you close a deal increases the cost. This is the essence of why you need to deeply understand the unit economics of your business so that over time you can learn how to optimize it. 

23:35 Vadim: Of course, direct sales is not the only way to generate revenues. There are a lot of customer acquisition strategies out there, but the focus of these series is for people that want to learn direct sales skills so they can be more effective at this particular discipline. 

24:00 Next episode we will learn the subsequent steps and the fundamentals of how you can start generating interest and leads, how to get the meetings and things you need to do in those meetings, plus some tips and tricks on inching you closer to seal the deal that will generate your revenue.

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