This series on mastering ‘B2B Sales for Startup Founders’ is authored by Himanshu Goel who has 30+ years of experience in creating & executing businesses, pricing options, and sales strategy for Motorola, IBM, Microsoft & Cisco. Himanshu is also an active angel investor on the LetsVenture platform and a mentor to startups. His latest adventure was a self-driving expedition to the Mt. Everest Base camp!
In Part 1, we addressed how you can arrive at your sales strategy & build your sales team!
In Part 2, we got into B2B Marketing and explored why sales & marketing can’t be divorced from each other!
In Part 3, we looked at how you can build a solid sales pipeline and manage it.
In Part 4, we talked about pricing options in the B2B ecosystem.
In Part 5, we traversed through the legal implications in B2B sales!
In Part 6, we will understand the key to selling in a slow down.
Gearing up to sell in a slowdown
Nothing in life remains constant and everything that goes up will come down and vice versa. Economies, businesses are also cyclic in nature just like the weather. Our businesses will also undergo ups and downs. If this is due to external issues like the economy, sectoral stress or recessions however the following step approach will always be helpful no matter what business or product and which timeframe. I have had a lot of fun delivering hyper-growth during several downturns over 3 decades for several organizations while helping the customers.
- Focus on customer’s pain point: During a recession of any kind customers will have pain points and an attempt to help the customer tide over the same will have an additional business scope.
- Revisit the offerings: Once the customer issues are understood extremely important is to examine your assets (capabilities, not products) and craft offerings tailored to be recession-friendly which could help customers reduce cost, get more revenue or profits.
- Upsell to existing customers: The most difficult during a recession is to acquire a new customer and so finding up-sell opportunities with existing customers with existing or new offerings will be a very effective strategy.
Example # 1 – While the telecom industry is undergoing major pain over the last 3 years, there is a business in helping the operators in reducing network or operations costs. Other ways to support the customer is with attractive payment terms.
Example # 2 – Let’s assume two organizations are merging e.g., what’s happening with major banks today. Approaching these banks with “cost reduction solution” by considering synergies of two banks will be very welcome by them.
Example #3 – Help customers develop a new product to sell in the market in say revenue share model which reduces upfront cost for them but helps sell more. Or partner with other organizations to jointly create new offerings for existing customers.
Summary – No matter what strategy you pick in a recession, the first and the most important sales activity you will need to do is understand your customers deeper than ever and learn everything happening with them. Get closer to your customers more than ever during their tough times and you will reap dividends.
It’s about old fashioned profitable, sustainable, reference-able growth
While rapid growth and scale are very important for start-ups and its’ investors but there is no shortcut to success much less in B2B business. A profitable, predictable reference-able, sustainable, growing B2B business has to consider the following.
- What is the RoI?: A growth mindset with a “What is the return on this investment?” for every rupee spent or every person hired will help avoid irrational expenses and/or mass firing post euphoria. The return could be cost reduction, pipeline, revenue or profitability. This yardstick should be applied whether its marketing spent, hiring salespeople or renting office space in that swanky new real estate.
Example: A decision to be one of the sponsors for an event in Africa and very little preparation led to very few inquiries. Pathetic RoI. A quick check early in the cycle would have told us not to get into it.
- Badly written proposals: will lead to scope creeps. Roles and responsibilities, assumptions, exclusions, project milestones are important sections of B2B proposals. Compliance with RFP requirements must be reviewed very thoroughly to avoid scope creeps or project failures. A great best practice is to do peer-reviews, functional reviews of the proposal before they are submitted to customers.
Example: A great example is a $ 100K software deal 15 years back led to a scope creep of more than $ 1M for a large IT MNC. An early-stage start-up will probably shut shop if something like this was to hit them.
- Improperly priced proposals: will lead to negative deals. Estimating cost properly, negotiating price and terms with suppliers with written contracts, keeping a decent buffer are areas to focus for B2B pricing.
Example: A system integration deal worth a few million dollars 15 years ago had a scope creep of integrating .Net with Java for call center components. A specialty vendor had a solution to this costing a few $ 100K’s while we finally did it in-house using a few global developers, what saved the project profitability was 3% buffer set aside in the pricing.
- Long sales cycles: B2B sales have long sales cycles and there is no shortcut. Putting 4 salespeople in place of two will not help reduce the sales cycle. This has to be kept in mind when business plans are built.
- Taxman’s kitty: Great many project’s profitabilities has been killed due to incorrect taxation and mostly due to lethargy of contracting people who won’t call the finance team and get tax clarifications.
Example: I recollect a transaction where the team completely missed that the TDS and cross-border GST which led to bleeding the project by up to 40%+. A quick restructuring keeping in taxation helped bring the deal back in black.
- Quality project delivery: Follows a contract and unless the project is delivered there is no revenue. For a start-up especially, a badly managed project could be suicidal. So, creating a strong delivery team with capacity is very important. A large sales team with limited delivery capabilities or limited total addressable market could be counterproductive. Keeping the salesperson lightly engaged during the project delivery is always a good practice as it avoids deviation from commitments made to the customer during the sales cycle.
That’s it in Part 6 – if you have any questions, our comments section is open. Also, watch out for our webinar with Himanshu on March 24. You can register for the webinar here!
In Part 7 of this B2B Sales Playbook for Startups, we will be focusing on ‘Institutionalising Sales Effectiveness’