The Three Phases of Startup Sales
Earlier this week, I met an experienced head of sales. During our meeting, the candidate shared a simple way of thinking about a startup’s sales process that resonated with me.
A startup’s sales evolution contains three phases: beta, reference customer, ROI calculator.
Beta: A founder of the startup develops relationships with a handful of customers who will work in tandem with the company to design, tune and improve the product. Typically, beta customers use the software for free or at heavily discounted rates. These customers benefit by disproportionately influencing product development.
Reference Customers: The goal of the beta is to cultivate a handful of reference customers, product champions passionate enough about the startup’s product to take calls from potential clients and sing praises about the product. Of course, more customers using the product means the startup can continue to improve the product and support it - a benefit for the beta customers.
The ROI Calculator: Reference customers' testimonials and case studies should be leveraged to build a larger sales pipeline of potential customers. Some teams stop here, but the sales evolution isn’t complete.
The last step is to create a return on investment calculator for each customer segment. The ROI calculator estimates the value creation by a startup’s product based on existing customer data.
Building this calculator takes time and thought. First, many customers must adopt the product, use the product and then measure their ROI. But it’s worth the effort.
Quantitative estimates of the ROI based on customer data are powerful tools in sales meetings - and particularly if this quantitative argument complements the qualitative social proof provided by reference customers.
A startup is a machine designed to forge predictability from chaos. A critical part of that predictability is consistent sales execution and that means evolving the sales process. Like all frameworks, this three step process isn't for every business. But it’s a solid, high level plan for a sales team.