How to Find Your First Customers When Your Startup is Ready to Sell

The place you should start any Complex Sale is the place where you have the greatest degree of credibility. – Robert Miller and Stephen Heiman, Strategic Selling Authors

You met with a lot of stakeholders in the business. At what level do you start selling? Do you sell high to executives? Or low to the management staff? How many people in the organization need to say yes in order to make a sale? In what order do you need to contact these people?

To analyze which prospects are more likely to buy, you must understand their company’s situation. There are four situations an organization can be in:

  1. The company is in growth mode. They seek optimization looking for more, better, faster, nicer, etc.
  2. The company is in trouble. They wish to bridge the gap between reality and their business objectives.
  3. The company is satisfied with their current solution. They — wrongfully or not — perceive that their current solution meets their objectives.
  4. The company is over-confident. They over-estimate the situation they’re in, misreading the trouble they’re in.

People buy when, and only when, they perceive a discrepancy between reality and their desired results. – Robert Miller and Stephen Heiman

Although it is possible to sell to a company satisfied with its current situation, your first customers are more likely to come from companies seeking growth or a way out of trouble.

You must understand the roles of your prospects to avoid barking up the wrong tree. Would they be the ones buying the solution or would they help influence others to buy?

Why Your Early Pricing is Wrong (And It Doesn’t Really Matter)

“Pricing is all about setting the right perception.”Neil Davidson, Don’t Just Roll the Dice Author

A pricing model is one of the business assumptions that changes the most.

The price you choose initially will certainly be wrong, but it won’t be final. You can mark this loss of profitability as a tax on learning.

Early on, your real goal with pricing is to make sure that money changes hands in sufficient quantity to validate that a business is worth building. Once you have that, you’ll work your way to a more just value-based price, based on the perceived or estimated benefit to the customer rather than the cost of the product.

Your pricing sets the value (or the perception of value) of your product. In the same way that luxury products use price to brand themselves above the market, B2B pricing determines who your economic buyer will be and sets the expectations for the Return on Investment (ROI).

Taleo, for example, used pricing to position its product as a high-end recruitment solution, pricing their products at a level that almost only large companies could afford.

But, pricing above market adds complexity to your Product-Market validation. In general, you should target budgets that your company feels comfortable pitching for.

If you were able to collect information about the purchase authority during the Problem interviews, you can already tell if your pricing will be within range or if you need to go higher up in the company.

In general, the lowest level of signing authority — the amount that can be purchased without asking for special approval — in a company is $500 to $1,000. If you’re priced just $1 too high, sometimes it requires the next level of management to sign off.

EXAMPLE OF SIGNING AUTHORITY IN A LARGE COMPANYExample of Signing Authority in a Large Company

Companies have formal structures with many stakeholders controlling budget to avoid fraud.

Based on their roles, levels and responsibilities, the people you’ll interact with may have very different signing authorities ranging from $500 to $25,000 and above. Selling above the signing authority of your prospects typically complicates and prolongs sales cycles.

Beware, start with one product, one benefit and one pricing model before you start thinking about how it should evolve. Early on, it’s usually best to keep things simple.

Download Neil Davidson’s Don’t Just Roll the Dice here.

How Much Money Can You Charge for Your B2B Product

As a rule of thumb, you can only capture a portion of the value that your customers get from your product.

In other words, if your customers save $500k a year with your solution, you can only ask for a fraction of that amount.

To understand the value of your solution means understanding its organizational impact. Will only one person be impacted? A whole department? The whole company? How much time can be saved? How much more revenue can be generated?

TASK / TIME INVESTMENT MATRIX

Products that can generate a high Return on Investment (ROI) have the most impact, and solutions that can make an economic buyer or someone influential look good or reach their annual objectives are the easiest to sell.

If your solution is not moving the needle, it’s not worth pursuing. Your target customer must be able to benefit from your product.

To understand the impact of your product, fill out a solution impact grid as follow:

SOLUTION IMPACT GRID

As your customer base grows, ask yourself:

  • How did the world change for our customers after we solved their problem?
  • What kind of ROI did they receive?
  • Who benefits the most from the solution?
  • Who looks good in the process?

In B2B, we’re looking for a big pain or a big gain that can be tied to a budget, a problem that will deliver a big ROI. Looking at the impact of your product on organizations is a great way to set the price tag for your solution.