Besides product development, sales are the most important function in every startup. They need to be predictable and managed, so that the team can plan and optimize all other business processes – manufacture, procurement, staffing … and that it can predict future income as reliably as possible. The big possibility of rapidly increasing sales is also one of the main arguments for gaining future investment rounds. Participants of the bootcamp for Slovene Enterprise Fund’s SK200 investment listened to practical and worldly advice on how to manage sales processes in a company and how to choose and reward salespeople, presented by the established consultant and coach Matjaž Slak, former sales executive in the IBM corporation and today an active startup mentor in the Startup Clinic, which operates under the wings of Business Angels of Slovenia.

 

Do you know which goals to pursue?

When a startup company steps on the path of developing its sales function, the team first needs to realize which development stages it’s going through and which key goals it needs to pursue in individual stages:

1. Stage: customer development support. The goals of sales activities include obtaining an adequate database of pilot customers, and final validation and definition of the product.
2. Stage: sales traction. The goals of sales activities include understanding the buying decision process, understanding target groups and sales paths (price, margins …), and developing the sales system (processes and techniques for carrying out sales activities).
3. Stage: sales scaling. The goals of sales activities include creating revenues and profits, expanding markets and the sales team, and fine-tuning sales knowledge.

 

A good salesperson helps buy

When developing the sales process in startups, be aware that a good salesperson isn’t one that just sells, but one that helps the customer buy. “Nobody likes salespeople who only try to force something on us without knowing exactly what we are looking for or need. A good salesperson follows the customer, leads them with questions, and tries to discover their actual needs and preferences as exactly as possible,” explains Slak.

 
Why do you need to know the stages that a customer goes through?

The buying process and stages that a customer goes through are generally always the same. At the same time, they are very important for understanding and managing sales in startups with innovative products that solve problems in a new way and prompt customers to solve their needs differently than they are used to:

1. Problem detection (there is a big difference between “having a problem” and “being aware of the problem”; in B2B sales you can usually help potential customers become aware of the problem, you can’t create one for them)
2. Discovering and defining needs (the customer defines what exactly they need and how much money they have at their disposal)
3. Finding and preparing options (stage in which the so-called emotional buying happens)
4. Checking suitability and resolving concerns
5. Concluding the deal
6. Solution implementation
7. Evaluation of the purchase success 

 

Focus on the low-hanging fruit

Besides knowing the stages and goals of sales development, an incredibly important success factor is correctly defining the target group and market segmentation. A lot of literature is available for startups on this topic (the recommended literature list can be found at the end of the article), but Matjaž Slak still warned bootcamp teams about some most important facts:

• Give enough time and attention to market segmentation and defining who the ideal customer of your product is. If you’re knocking on the wrong doors, not even the most perfected product can help you achieve the set goals.
• When you’ve defined your market segments, find out as quickly as possible how many actual customers there are and whether there is enough of them for what you are trying to achieve.
• In the starting startup stages, when you need to be very cost-effective, divide potential customers into groups and find the low-hanging fruit among them. That means you first start with the customer segment that is easiest to sell to, then keep the focus and forget about all others (at least temporarily).
• If it isn’t realistic to attack only one low-hanging fruit segment, stick to the rule that “less is more”. Have maybe two or three segments and even if you assess that you can attack another three or four segments, leave them for later development stages of business and sales.
• If you don’t stay focused and you choose a too broad segment and too many target groups, you will find it difficult to keep the reins and quickly increase the range of sales.

 

What do B2B2C sales mean?

In view of his experience, Matjaž Slak, who defined B2B (customer and user is a company) and B2C (customers and users are physical persons), said that B2B2C sales are frequent with startups. This is a combination of sales channels and it means nothing other than that the team needs to work on production, development, and finding partners and distributers, while simultaneously getting the final user excited enough that they go to the store and actually take the product from the shelf and buy it.

 

Have realistic expectations toward distributers

Considering the role of sales channels (distributers and retail) and what realistic expectations towards them are, Slak emphasized that in most cases they “take your box and put it on a shelf or into a catalogue, and wait for someone to come buy it.” You generally shouldn’t expect them to actively promote on their own initiative and create enthusiasm among customers. Be aware of the fact that in most cases, you will be responsible for final customers to take exactly your product from the shelf.

 

Be where your customers are!

Mass and general forms of marketing are not (yet) suitable for startups. It is necessary to foster other forms, such as actively and innovatively appearing on social networks, writing blogs, actively addressing influencers and media relevant for your target group, and so on. Find as many opportunities as possible to virtually or physically appear where the representatives of your target groups are, visit fairs, connect with associations, go to specialized events, be active on forums, and so on.

Help yourself, creatively and proactively

When finding a distributer or retailer for your product, it is very recommended that you try to find one that will be prepared to actively help you promote your product. “In this, I would still advise you to develop your creative idea for promotion and all the necessary materials for it, such as stands, banners … and offer all this proactively to the distributer and retailer. When doing this, it’s useful to nicely ask a question such as: how can we help you with this,” advises Slak.
 

 
Sales successes need to be repeatable!

“Sales successes in a startup need to be repeatable, and the sales function in a company should be elaborated for all key steps, flexible depending on the reactions from the market, and scalable,” said Matjaž Slak in his introduction to the chapter of sales management. The journey to predictable and managed sales can be rather complex, you need to be systematic, persistent and consistent, so that at the end, you can cover all key areas in your startup:

• sales process (lead to contract),
• pipeline or list of sales opportunities – who, how much, when and where we currently are,
• key performance indicators, measuring the speed and success of your activities,
• process organization – who, what, when, and writing it down,
• improvement process (getting feedback, implementation). 

 

How to define clear steps with tools and verifiable records

The final goal of writing down the sales process is an exact scheme where, depending on the customer stages, there are sales steps that have their own tools and verifiable records (records in the CRM system). The picture of the generic sales process that Matjaž Slak worked through with bootcamp participants nicely illustrates what exactly this is about:
 
 

 

Why you can’t have salespeople on minimal wage

Understanding stages through which a customer goes in the sales process is also important for startups to decide about the kind of a salesperson you are looking for and wish to employ, how to manage the relationship with them, and how to pay them so that they don’t deal with questions of basic survival and existence or run away because a competitor offered a 100€ higher salary. Below, we give the key advice and recommendations that Matjaž Slak summarized for bootcamp participants for this purpose.
 

#1 Define the sales process before you employ salespeople

When you are expanding your team with salespeople, you need to have at least the basic sales process defined and written down. “If you aren’t yet far enough to explain all the stages and steps of the sales process, and supplement them with tools and instructions on how to carry out every step, you need to give at least a common base, a set of steps to the salespeople. If they don’t work in unison, your sales will never be predictable and scalable.
 

#2 Success of sales isn’t in implemented activities

The success of a salesperson in individual stages isn’t measured with them doing something or ticking off their task, but with them achieving some movement with the customer, a switch to a new mental level.
When the salesperson moves through individual steps of the sales process, they shouldn’t let themselves realize that the customer has no intention of buying only at the end, when an order should already happen.
 

#3 If you don’t define the way of working, you can’t improve it

Sales activities in every startup can be condensed into five key points: we meet the customer, find out their needs, prove that we can deliver a product that suits their needs, prepare an offer, and close the order. We systematically repeat these activities and improve the way we work. Only when we see that our way of working is successful in practice can we start looking for and scheduling new people to sales positions.  
 

#4 Don’t forget about the head of sales

When you start organizing sales in a startup company, it’s good to name a head of sales as soon as possible. For starters that can be someone from the founding team, but as soon as possible, you should designate a head of sales who isn’t a salesperson, but rather someone who only supervises, develops, and polishes sales processes, and mentors and trains salespeople. The head of sales needs to be a manager whose salary and bonus motivates them to make their team sell well. It’s enough for a company to have two salespeople and one head of sales. It’s dangerous to set the best salesperson as the head of sales. They will keep the best customers and won’t spend a lot of time on dealing with their salespeople, but will rather try to work the entire sales result by themselves.
 

#5 Who is the correct choice for a salesperson?

Usually, former successful salespeople from big companies and corporations aren’t the best choice for startups. Their ego is usually too big, they don’t realize that in the field, they don’t have the advantage that an established brand of a global multinational brings in opening doors. A better choice than an “ex corpo guy” is someone who was or still is in the role of the person they are selling to. 
 

#6 What about the salary?

When you are employing a salesperson in a startup, you shouldn’t expect them to take on the risks that accompany the sales of an innovative product on an untested market. If you want them to take these risks on themselves and their salary, it is understandable that they expect share ownership in exchange. Until sales risks normalize and there is proof that the product can repetitively be sold successfully (meaning the startup is in the 1. or 2. development stage), Matjaž Slak advises the salesperson to have a solid fixed salary and an additional bonus directly linked to sales figures. In this stage, the salesperson is in the role of a partner who helps in the process of establishing and discovering the sales approach. Find someone who is prepared to do intense field work and has the capacity for empathy and identifying with the customer, someone who wishes to understand how customers think and which problems they actually have. You can recognize a good candidate from their character: they are good listeners and actually interested in what the potential customer is telling them. When the startup enters the 3^rd development stage (scaling sales), pay salespeople with partially fixed and partially variable salaries – dependent on them achieving sales goals. If we’re talking about the starting, pure net salary of a salesperson in Slovenia, we vary between 1,000€ up to 1,500€ at the most. If they exceed the sales figures, the variable part of payment needs to grow proportionately. 
 

#7 How many salespeople do we need?

If at all possible, try to employ two salespeople at the same time to create some healthy competition. They can help each other, they will understand each other, and for the entrepreneur, it’s crucial that he motivates, mentors, and encourages them well. Statistics tell us that in the general population, only about 10% of people are suitable to be salespeople, and only 1% of people are natural or born salespeople who have sales in their blood, no matter what they actually do in life. Try to keep salespeople in your company for at least two years. Fluctuation in sales tends to be large, but realize that a salesperson achieves their full capacity after about 6 months and covers their employment costs after a year and a half. The main reason why salespeople are not successful (beside wrong staffing choices) is in an unfinished sales approach. Until founders themselves know exactly how to sell successfully (based on their own sales practice), they can’t demand success from salespeople. 
 

#8 What about CRM?

And finally this: when you’re looking for a suitable CRM application, don’t look for the pinnacle of technology, look for practical usability that is adapted to your type of sales. At the same time, it should serve as an element for managing the sales process and introducing improvement. At the beginning, a well-prepared Excel table is worth more than an incorrectly set and used complex CRM.
 
 

List of recommended literature:

• Startup Selling: How to sell if you really, really have to and don't know how (Scott Sambucci)
• Traction: A startup guide to getting customers (Gabriel Weinberg, Justin Mares) or the newer edition by the same authors, entitled Traction: How any Startup can achieve explosive customer growth
• The Startup Owner's Manual: The Step-By-Step Guide for Building a Great Company (Steve Blank, Bob Dorf)

 

Interesting fact: story from the Wild West

The first record of the sales process comes from way back in 1880 when company NCR – National Cash Register in the US was selling cash registers. Back then, retailers kept their sales records in a notebook, which of course enabled store employees to cheat. “When NCR founders realized how to successfully use this argument for sales, they wrote down the sales approach (work system) and that’s how we got the first sales manual,” told the lecturer as an interesting fact.

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If you want Matjaž to help you establish or regulate sales processes, write to him at matjaz@slak.cc or call him at +386 41 743 087.