Venture Capitalist at Theory

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2 minute read / Dec 4, 2012 /

Education sales vs execution sales

When going to market, startups tend to pursue one of two sales strategies, either education sales or execution sales.These sales strategies are substantially different. They demand different sales cycles, pricing and market positioning - potentially even different team members.

The Education Sale

If your customers don’t know they need your product yet, then the sales process is an education sale. Education sales are common when creating a new market (TiVo inventing the DVR) or when bringing existing technologies to new market segments (CRM for restaurants).

Education sales demand great product marketing. The product’s value proposition must be encapsulated in one concrete, succinct idea. How do you explain the value of a DVR to someone who has never used one? “Watch your favorite shows whenever you want” or “Skip all the ads.” Testing the effectiveness of marketing messages is essential.

Education sales require longer sales cycles. It takes time to convince potential customers that they need the product. Customers ask questions about basic functionality. These conversations are often consultative, with salespeople asking about problems and matching the strengths of the product to those needs - also called solutions selling.

Additionally, the main goal during education sales isn’t necessarily to optimize revenue, but maximize initial customer success to win reference customers that drive additional business.

The Execution Sale

If your startup is entering an existing market and competing with a better value proposition (10x better, faster, cheaper), then the sales focus is execution.

Execution sales require great sales marketing (product differentiation). Sales pitches are characterized by sophisticated customer questions since they have already been educated by the first-to-market vendors. Instead of objection handling, conversations with customers focus on trade-offs. Many times these sales processes are bake-offs with several vendors competing for the same business.

This contrast could be much better design (Sonos in audio equipment) or much lower cost (Pure Storage in flash storage) or better technology (TideMark in business intelligence).

The main goal of execution sales is maximizing sales velocity, market share and revenue. In other words, revenue yield optimization.

Which sales process when?

To maximize the impact of your startup’s sales and marketing teams, match the sales process to the market and customer base.

Read More:

Startup playbook - Reverse-engineering Clay Christens’s market disruptions