We get so engrossed in our products and features that we forget that our prospective customers have an environment and process to acquire new capabilities like ours. Before we start presenting solutions, we need to anticipate what our packaged solution will mean to our prospective customers. The budget authority, the number of other people or groups that will need to be involved, depending on the breadth of the solution how many other groups will need to buy in to justify the purchase? If we understand our target market, the problem we solve, who cares, and why they need to buy it now, we can construct a sales process that makes it easy for them to evaluate and buy our products. (Must read: We are really just animals with a thin veneer of logic)
The most important thing is price: WRONG!
The price will always be a consideration but the risk is the most important thing. It is cliche but true that we seldom go to the cheapest brain surgeon. The other major flaw with competing on price is that the competition can lower their price. We need to provide a unique solution to the customer’s problem. Some competitors will not lower prices because they do not feel they have to, but many will. Packaging a solution to a specific problem allows us to price the solution to address that problem. The ROI justification is more straightforward, is within a single decision authority and this often provides us the opportunity to upsell in the future.
The second most important factor is time, the time required for them to evaluate, fill out the appropriate forms, have all of the meetings (coordinate), etc. Approvals and certifications from internal groups like IT and security are major investments of time. Anything we can do to simplify the evaluation and acquisition process works in our favor.
We need to do a great demo: WRONG!
A great demo or mediocre demo just proves that we have a product that can be demoed. To reduce risk, as the customer, I want to see it working on my data in my environment ideally by my users. So the challenge we face is how to simplify this as much as possible.
First, we limit the problem we solve to a single problem that matters to the person or group we are working with. Note: This is a common mistake when selling a ‘platform’ that solves many problems for many groups within the company. If we do not focus on the single problem for our initial customer in the company we will start to boil the ocean and will not have a sponsor within the company. One of my startup companies had a platform that served multiple groups within an engineering design company. We started making sales when we packaged a solution to each of the groups that solved a specific problem to their group better than their alternatives. We discovered that they really did not care about the benefits to the other groups from the ‘platform’, they just wanted to solve their own problems. (CDNS)
How to make it easy to buy (address the key criteria; risk, time, complexity):
Here are some general guidelines:
- Package the service so that the person or group that is interested can move ahead independently.
- Price the service so that it can be approved either by the group that is engaged or their immediate management reducing the time and complexity for approvals. If the initial purchase can be made with a credit card and expensed even better!
- Construct the Proof of Value to use their data, in their environment with their people to reduce the risk as much as possible. Any problems that could arise later will be beyond the initial successful value delivered. Building momentum by delivering a quick success is critical to expanding within the account.
- Narrow the scope of the initial purchase to the specific problem they would like to see solved.
- Make every effort to avoid any dependencies on their IT or IT security groups. The IT security group will delay any purchase decision by at least six months based on their backlog of projects.
About us:
Part of our social mission is to mentor and guide Technology Startups in this journey. As investors, Board members, Entrepreneurs, and Operational Executives, we understand the challenges facing Founding Teams and are committed to helping them succeed. Please feel free to contact us with any questions.