This series on mastering ‘B2B Sales for Startup Founders’ is authored by Himanshu Goel who has 30+ years of experience in creating & executing business 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 the sales & marketing can’t be divorced from each other!
In Part 3 we look at how you can build a solid sales pipeline and manage it.
It’s all in the pipeline
A strong pipeline is the bedrock of any sales engine!
One should also keep in mind that only a portion of the pipeline will convert to revenue-generating deals and thus a robust pipeline should be a multiple of the actual sales target. Also, a good pipeline will be a judicious mix by size, complexity and time to close.
Earlier this year I was introduced to a young entrepreneur, fresh out of engineering college and a brilliant technologist. When I went through the start-up’s activities in detail, I decided not to invest simply because the pipeline was not validated and was made up largely of sales to government departments. In my experience, the chances of this pipeline delivering revenues are very limited and time taking and therefore a difficult nut to crack for a new start-up with close to no resources.
The nature of a start-up is to be nimble, experimental and dynamic and therefore from a sales standpoint – the go-to-market (GTM), marketing, channel partners/resellers, inside sales, commercial models can remain flexible. Think of these as dynamic tools to play with as the start-up evolves.
Validate that exciting opportunity
Aggressive marketing & your own analysis will create a significant pipeline. Validating the opportunities before engaging helps prioritize limited time and effort.
Here are some criteria which can be used for validation:
- What is the opportunity in ₹ value?
This is the first thing to do. In the absence of real data make some intelligent assumptions. This reminds me of an incident where a salesperson wanted us to put our energies behind an opportunity to provide data of Indian travellers to credit card companies who can then maximize their digital marketing spends. This appeared quite a cool thing to do but upon a quick “back of the envelope” analysis we arrived the value of the TAM was just about $30,000. Clearly not an opportunity to go after.
- What’s the customer need & does he have the budget for it?
Business customers care about three things only: cost reduction, revenue enhancement, and increasing customer experience. If the proposed solution offers one or more of the three, then it is a qualified lead. Business customers typically have a budget at the beginning of the financial cycle, and it will be a great idea to find out if the budget has room to accommodate this additional cost.
- Who’s your direct competition with the client?
I remember a situation where a customer had a preferred IT vendor and any other vendor with a new idea would spend months’ worth of sales cycle only to have the preferred vendor fulfilling the need. It is a good idea to be aware of the entrenched competition within the account.
- What’s the client’s buying process?
Vendor registration, tenders, RFP, board approvals, bank guarantees, delayed payment terms, contract signing, code of ethics, cybersecurity agreement are some of the checks and balances within the enterprise buying process. Each adds to the delay and it’s a must to be aware of the process that you will be subjected to. An innovative pricing model can help reduce these roadblocks, for example, typically a “revenue share” agreement avoids supply chain and RFP process. A typical government engagement, on the other hand, could take up to 2 years before one sees “any” revenue due to the long buying process; in spite of the great value proposition, winning chances will always be less than 30%. I know a start-up that created an awesome cost-saving offering for a government agency, secured a large tender and have been waiting for over 5 years to see the money!
- What’s the regulatory landscape?
I remember doing a deal in North Africa and after spending 6 months in the engagement we realized that the whole solution needs regulatory approval, this added 3 additional months and also twisted the entire GTM. It is important to validate if the enterprise would have to seek its relevant regulator’s approval to implement your solution.
- Are you engaging with the right decision-maker? Who will decide whether to buy from you and why? Recollecting here an incident with a leading telco where a great value proposition which would have greatly enhanced the subscriber experience was turned down by the CTO because he simply did not believe in the technology. We then had to work with his team to prove the value and this added six months to the sales process and almost derailed the opportunity.
Finally, any deal which looks too big and too profitable – too good to be true – then one should consider it to be not true at all. You may continue to work on it but dedicate minimum effort and resources to it. Deals that have high chances of win are normal-sized, require considerable hard work & innovation. The pipeline dependency should not be on these large, too-good-to-be-true deals.
That’s it in Part 3 – if you have any questions, our comments section is open. Also, watch out for our webinar with Himanshu, that’s coming soon!
In Part 4 of this B2B Sales Playbook for Startups we will be focusing on ‘pricing options in the B2B ecosystem’.