Wednesday, December 3, 2008

Don’t be afraid to ask for help

You’re starting your new company based on extensive knowledge and experience that you have accumulated in your field. Or, if you’re not an expert yet, you will be soon as your overwhelming desire to make your company successful courses through your veins. Your know-how and energy are why you’ll soon turn prospects into customers. Except that the trees keep getting in the way.

You used to sit back and observe other business ventures from a safe distance and think, “I could do it better.” Since you’re not at a safe distance any longer, it will be hard sometimes to tell if you’re actually doing something better, or if you’ve gone completely off course. Starting now, seek periodic advice from others with similar expertise. You need someone who will listen to you and help you see the things you can’t.

My background is marketing, but the most difficult company to market is the one I’m a part of. I don’t always have an objective viewpoint on how to promote my own stuff. It’s easy to get bogged down in the day-to-day aspects of the company rather than looking at the big picture. We have bills to pay, so we spend a lot of energy ensuring that we can pay today’s bills, rather than the ones that will come due in five years. To compensate, I occasionally touch base with other marketing people whom I’ve known for many years. We meet over lunch so that we can each talk about our respective companies. We share that month’s challenges. I tell her the ones I face with mine. Often, I can offer some perspective that helps her deal with a particular obstacle. She may offer a suggestion that seems obvious to her, but is foreign to me because my mind is cluttered with small details she doesn’t have to deal with. Conversely, I sometimes get the chance to offer her suggestions that should seem obvious to her, but aren’t for the same reason.

I don’t expect to have a “Eureka” experience at these lunches, though that could happen. What often occurs, though, is that I get to hear someone I respect tell me something that I tell myself. But when I hear it from her, it sounds smarter than when I think of it. It validates my suspicions about things I, or the company, could be doing better, or a course of action we may have considered, but had never followed through on. That’s usually the greatest benefit: I know what I should be doing, but I wait until someone tells me firmly to get on the stick.

Even though you feel that you’re on your own now, you have such colleagues, too (unless you burned all your bridges when you decided to start your own business). You and your colleagues can still lean on each other a little. They can offer prescient insight into matters concerning your success that you can’t see just because you’re too close to the problem. If you’re having trouble dredging up serious prospects, for example, an associate from outside your company may offer some helpful tips. He probably knows some prospects, too.

"No" is not an ugly word

Get used to being turned down. Unless your business is selling $20 bills for only $15.99, prospects will say “No” to what you are selling more often than they will say, “Give me two of those.” Hearing "no" is not the end of the world.

When you’ve made it through the initial meeting, the demonstration, the proposal, the countless questions, and then the prospect still turns you down, the most important thing you can do is to learn why. This may not be as easy as it sounds. You have essentially extended a marriage proposal that has been met with "NO WAY". Most prospects would prefer that you go away rather than have them explain the reasons why they don't want to do business with you. It's not unusual for some former prospects to ignore your phone calls and emails.

If you do get the opportunity to ask your prospect why she said no to the incredible value of your product/service, however, be gracious. Ask her thoughts in the most non-threatening, low-key way possible. Here’s an example:

“I appreciate that you took the time to consider us, and I hope we can do business in the future. You can’t win them all, but we sure like to try. I would value your insight on how we can improve our patent-pending fiberglass-lined elbow warmer. Can you tell me what the deciding factor was in choosing to go another direction? What could we do better the next time around? Your opinion really means a lot to me.”

It is hard for any human being to resist offering her opinion, particularly if she doesn’t think you’ll take it personally. A lot of prospects will feel they owe you an answer in exchange for the time you spent meeting with them. The information the former prospect provides you, if honest, is gold. In fact, the occasional honest feedback from one or two lost prospects is almost as valuable as a paying customer, minus the whole revenue issue. In fact, it could help you turn the next prospect into a paying customer.

You may never get better information on how to improve your stuff than from someone who turns you down. It doesn’t mean you must immediately change the color of your fantastic widget from blue to chartreuse just because the prospect said so. Some prospects simply aren't a good fit. At least you will learn a little about how the prospect thinks and how she compares you to your competition. Then you can draw on that insight when applicable for future prospects.

Appreciate that kind of intelligence when you receive it. Then get back up, dust yourself off, and move on. Don't ponder endlessly what you could have done differently to win the business. It is possible you could not have done anything to sway the prospect’s decision in your favor, not lowering your price, not adding a few more bells and whistles, not changing your hair color, not upgrading your toupee or anything else. File the prospect feedback in your brain, and then focus on turning the next prospect into a customer. Otherwise, you will be wasting your time, and your bank account will not be getting any bigger.

Tuesday, November 4, 2008

Think vertically

To get more than one customer, the shortest distance between point A and point B is a vertical line. When you win your first customer, the dam will not burst open with a flood of additional ones. You will not be hit immediately with a wave of prospects waiting to sign on the dotted line. However, the first customer will make it a lot easier to get the second customer if you think vertically.

My company's first customer was part of a network of similar organizations in Indiana. The organizations did not compete directly with each other. In fact, the heads of each group met regularly. That made it a lot easier to call them and say, “We’re the company providing XYZ Company its new software.” Within a relatively short time, four of the nine similar organizations in Indiana became customers. We discovered that many other states had comparable organizations, so we began contacting the states closest to Indiana, including Michigan. “Your neighbors in Indiana are using our software,” we said. “Perhaps you would like to hear what they find so beneficial.” We soon had four Michigan customers similar to the ones in Indiana. Even if a prospect in another state had not heard of our other customers, they easily understood the similarities with their own business.

We enjoyed almost instant credibility each time we made a call. “Oh,” the new prospect would think. “These guys solved that problem my counterpart had in Michigan, which is the same problem I have here in Illinois. I should listen to what they have to say.” We milked that vertical market until we thought there was nothing left to milk. And then we returned to that niche later to milk it more.

Even if you have to limit your service to a specific area, you can still go vertical, whether it’s a city, neighborhood or even a few blocks. The vertical approach works the same whether you are leveraging your relationship with a pilot customer or a paying customer. Either way, your prospect will feel a lot more comfortable considering your company if they know someone with similar challenges already went through the mating ritual and pronounced you fit for marrying.

Wednesday, October 15, 2008

Take all prospects seriously

In the early days of my online registration software company, I called the executive director of an education organization in North Carolina. The moment I introduced myself, she said that I should arrange a demo with her assistant. I had no great expectations for the call, because, from what I could tell, the organization was not very large nor did it have a large budget. (Before making any call, my research most often consisted of visiting a prospect’s web site to see what types of events required registrations.)

The North Carolina organization seemed as though it could benefit from online registration, but I didn’t get the feeling they held a lot of events. Therefore, I wasn't expecting a huge sale that would fund my children’s college educations. However, I was encouraged that the decision maker told me to set up the demo with her assistant. It would be up to the assistant to decide if our software was worthy, but the boss given me a tiny boost of credibility by passing me along to her assistant.

The assistant--I'll call her Betty--quickly agreed to an online demonstration. About five minutes into it, however, things seemed to sour quickly. Betty began asking questions that had nothing to do with what I was showing her. Her biggest concern seemed to come out of nowhere. “How does your software identify if a person registering is legitimate?” I gave her a list of ways it could help with her problem. But no matter how I tried, I couldn’t get Betty past her concern. She was certain that people would try to register for her workshops—which were free—when they shouldn’t be allowed to. It cost a lot of money to host the workshops, she said, and she wanted to make sure entry was limited to those who were members of the organization. Understood, I said, but I wondered to myself how many persons would actually want to sneak into a workshop on new federal regulations regarding the teaching of math to 8th graders.

I quickly came to believe that Betty didn’t want our online registration software nearly as much I wanted her to have it. To me, her concern was so small compared to all the benefits I thought online registration could give her. After repeated attempts to address her worry, I finally said, “Perhaps our software simply isn’t right for you. Maybe we can talk at some other point when you’re more interested.” It was my way of saying I didn’t want to waste any more time.

I was way off the mark. “Oh, we’re very interested,” Betty assured me. “We’ve been talking about this for a long time. It’s just that one thing about rogue registrations that always trips us up when we try to get online registration.” I then realized that if we could solve Betty’s problem, we had a good shot at the business. After further exploration, I discovered the potential for the deal was a lot bigger than I had projected. In fact, Betty and her organization soon became a high-paying, low-maintenance customer.

I had made the mistake of assuming that Betty offered very little potential as customer, and approached her likewise. Even if she had turned out to be a small customer, or no customer at all, I later realized that she deserved my full attention. All prospects do.

Relax a little

Nothing scares a prospect away faster than desperation. The more pressure you put on yourself to get that first client, the more pressure your prospects may feel as well.
Here’s a story from the early days of my company, a provider of online registration software: We had only a handful of customers and were still hurting for revenue when we were contacted by a district organization of Rotary International in Silicon Valley. (Inbound plus: Uncovering new markets) The Rotary district wanted to switch to a new online registration provider for their annual conference.

At first, we did everything we could, just as normal, to win the business. This included online demos and responding quickly to a myriad of questions. Even though the prospect was three time zones away, we made ourselves available late into the evenings. We didn’t build up ourselves to sound bigger than we were, but we put our experiences with our meager pool of customers in the best light. However, it seemed apparent to us as the sales cycle progressed that we had little chance of landing the account. For one thing, our software was still relatively new, and there were a few features the Rotary officials needed that our software did not yet include.

This was nothing new; we often made key enhancements to the software based on what prospects wanted, often at little or no additional charge. However, we sensed that the decision makers with the club were only mildly interested in working with us. Because we needed revenue—any revenue—we could have tried to win the Rotary’s business by saying, “Just tell us what we have to do to persuade you to choose us. We’ll make all the upgrades you need. We’ll discount our price some more. We’ll wash your car every Saturday for the next three months. Anything you want. Please, please, please.”

Who knows? We might have landed them as a customer that way, or our begging may have turned them off. Instead, we relaxed, assuming we had little chance of getting the sale. We said we could make the enhancements the Rotary wanted, but at full price. They had another request that was a little outside our realm, but we agreed to meet that request, too, at full price. Then, rather than calling them constantly to ask them if they had made a decision, we focused our attention on what we thought were more promising prospects. Two days later, the Rotary agreed to the full proposal. At the time, they were our highest-paying customer. And once the Rotary District became a customer, we went back into mega customer service mode, trying to give them a lot more than they had paid for. Years later, they remain a customer.

Particularly in the early going, it will be natural to put a lot of pressure on yourself to turn each prospect into a customer. You will be nearly desperate for their business. Sometimes, however, you have to relax a little, and to allow the prospect to relax a little, too.

Tuesday, September 30, 2008

Five Keys to Drawing a Sales Circle

A fine line exists between convincing a prospect that you want her business and bugging her so much that you chase her away. Though you would like to do so, you can’t make the prospect’s decision for her. However, you can do the next best thing by providing her everything she needs to make an informed choice—which is to select your service.

An advertising maxim likens this process to forming a circle, which you can start, but only the prospect can complete. This applies to you first customer and your fiftieth one. Your job is to arm the prospect with key pieces of information and to make her feel comfortable in making a decision. If you’re using any phrases similar to the ones below, however, you’re trying to complete the circle for her:
- We’re the smart choice.
- Our service is simply the best.
- Our company is the worldwide leader in (fill in the blank)
- We’re so much better than our competition, it’s embarrassing.

Never tell the prospect how great you are. Rather, give her the facts to draw that conclusion. At the other extreme, there is danger in not going far enough, which means you haven’t provided sufficient information. As a result, the prospect can’t reach the conclusion you want because there is too much effort, too much left to question, and too little comfort with you or your service.

Your job is to draw a circle until it’s nearly complete and then hand the pencil to the prospect. The circle begins when the prospect realizes she has a need. The line arcs as you build her interest in your service and then reaches its logical conclusion when the prospect realizes the best way to address her need is by choosing you.

Five easy ways to form a circle
Forming a near circle requires a set of tools that you can draw on for each situation. Here are five basic ones:
1. Testimonials
As a new company, testimonials can about you, from relationships you formed in other positions. It seems like a no-brainer, but third-party validation is such a powerful, yet often under-utilized, tool. Never say anything good about yourself when you have someone else happy say it for you.

2. Mini-case studies
As soon as you've established your first customer, use them as a case study. They are another strong form of third-party validation which help overcome your company's newness. A mini-case study should contain two or three paragraphs that briefly tell how a customer leveraged your service to solve a problem.
Here’s a simple format:
Challenge > Solution > Result
Powerful case studies should mention a return on investment, such as savings in time or the elimination of stress.

3. Trials
Let the prospect give your service a brief test drive. Quite often, a prospect’s time is much more important to her than the cost of your service. If she takes time to try it, she’s serious. Another tip: Arrange with the prospect a specific stop and end point for any trial to ensure she tests your service in a timely fashion. If a prospect has an open-ended trial, she is less likely to feel any urgency.

4. Third-party information
Prospects choose you as much as they choose your service. Prospects—human beings that they are—love getting information about things that interest them. For example, you could say, “Ms. Prospect, I just came across this article that I thought you might find interesting. I know it’s a subject that’s near to your heart.” It’s another way to show you’ve taken time to understand how her business works.

5. Listening skills
It’s natural to be so excited about your service that you can’t help but talk on and on about it. But as much as you want to talk, the prospect wants to talk more. And she wants you to actively listen, which can be the quickest way to making a nearly-complete circle. If you don’t listen, you won’t know which testimonial to share, or which mini-case study compares best to the prospect’s situation. Tip: Record yourself talking to a prospect. Even if it’s just one end of a phone call, it helps to review how you conduct a conversation. As painful as it may be to hear yourself, you will know quickly if you’re listening well or possibly talking over the prospect.

In the end, relax a little. Prospects sense when you’re overly eager to gain a sale and to move them along faster than they want to move. They can equally sense when you’re comfortable enough to let your tools work for you. Soon, the prospect is ready to complete the circle, and you’ve earned the business.

Friday, September 19, 2008

Know Your Numbers, part 2

You'll likely find cold calling a necessary evil unless you already have a handful of solid leads when you start your company, or until your first customers begin to refer others to you.

Outbound plusses:
· If you reach a prospect, or at least a suspect, through cold calling, then she may not know

anything about your competitors.
· When you do your research (always do research before a call), you may catch the prospect

just as she is thinking about buying. It often happens.
· If the prospect has not thought about buying, you get the opportunity to educate her a

little, helping her to identify a business pain that she may not have realized she had. When

she pictures the solution to that pain, perhaps she’ll envision no one but you.

Outbound minuses:
· Nobody likes receiving cold calls.
· You don’t like making them.
· The sales cycle could be longer because the prospect is in less hurry than the inbound caller

to make a decision.
· The prospect, only mildly serious about buying anyway, may never make a decision, other

than the decision to do nothing.
· You really, really don’t like making cold calls.
· The prospect really, really doesn’t like getting them.

· You successfully get the prospect thinking she needs what you're offering, but she decides

to see who else out there offers something similar.

Some mix of inbound and outbound calls is essential to most any new company’s survival. Diligently track your numbers and results so you always know where and how to focus your efforts.

Here’s an example of the ratios you should track:

Inbound inquiries > Appointments > Proposals > Sales
Outbound calls > Appointments > Proposals > Sales

Also, track the sales cycle (time from call to sale) for each prospect, as well as the total initial value of the sale. For example, does it take two weeks to make a sale from inbound inquiries, but six weeks to make a sale from outbound calls? If you’re lucky, you’ll find that the inbound inquiries, though fewer, will generate more revenue in a shorter amount of time than a higher number of outbound calls.

Wednesday, September 17, 2008

Know your numbers

Many sales gurus say a customer is supposed to love you so much that they give you referrals just for the asking. Theoretically, your customers will call their friends, neighbors and the guy they haven’t talked to since high school, just to brag about how wonderful your company is. What the experts don’t mention is that it’s a lot easier to get a customer by referral if you already have a customer. It will take awhile to reach the point where a large share of your business comes via referral, unless your first customer knows everyone on the planet.

For now, you'll have to drum up businss among many prospecgts who’ve never heard of you or anyone you know. That may involve expensive outbound marketing, or ... cold calling. It’s called cold calling because there’s nothing warm and fuzzy about it. You won’t enjoy cold calling any more than the person on the other end of the phone.

There have been volumes written about how to do cold calling effectively. Go to any chain bookstore to find books offering plenty of advice. However, make sure if/when you make cold calls, you pay close attention to your results to determine if it’s worth the effort. Who knows? Maybe cold calling isn’t very effective for you. Maybe you can get customers faster and with less aggravation via other means of direct selling or marketing. You will discover advantages to either approach.

Before you decide to make cold (outbound) calls, consider the plusses and minuses of inbound efforts:

· Word of mouth, referrals, free publicity and other methods of generating a hot lead (the
opposite of a cold call) are a sweet way to start the sales process.
· You have legitimacy. You’re not just some schmuck wasting the prospect’s time with a
cold call.
· If she's contacting you, she's at least marginally interested in what you’re selling. She’s in
the market.
· You’ll uncover potential markets you might not have imagined otherwise.

· In many cases, the prospect is already aware of your competitors.
· By the time she contacts you, she may have already met with some of your competitors.
· It is even possible that she is using you as a measuring stick to see how good your rival
really is. She’s already made up her mind.
· If you decide to prime the pump with direct marketing and other paid advertising, your
cost per lead will be higher. Anything above a 2% response rate on a direct mail piece is
considered wildly successful. (Don’t spend a dime unless you’re going to commit to a long-
term campaign, and you can afford to pay for expert marketing help. The Internet, mail
and other venues are riddled with advertisers who are wasting their money on poor lists,
bad timing, inconsequential offers and pedestrian concepts.)

Next time, we'll look at the plusses and minuses of cold calling.

Tuesday, August 26, 2008

Be Ready with References

It’s reasonable to expect prospects to ask for references when they’re thinking seriously about choosing your company. You may not be looking forward to that time since (a slightly important detail) you don’t have any customers yet from which to collect references. At that point, you have three choices:
  1. You can begin crying uncontrollably and hang up the phone.
  2. You can say, “Sorry. We don’t have any references, yet. You’ll just have to trust me.”
  3. You can provide references.

Unless you just recently fell off the turnip truck, you must have come into contact with another human being at some point in your professional life. Let’s hope you’ve even had a relationship with someone who thinks favorably of you. Remember, people are buying you as much as they are buying the thing you’re selling. Since you’ll be developing and tweaking your product or service on the run, particularly in the early stages of your business, you’ll have to convince prospects to believe in you in other ways. Therefore, line up former associates who can say good things about YOU, since you’re the most important part of the equation anyway. Possibilities for positive references: investors, suppliers, patent attorneys, etc.

“As you know,” you can tell the prospect, “we are new. Therefore, any references I give you related to this company would give you limited insight. However, I have three customers from my last employer who are happy to talk to you.”

If your new business is in any way similar to your previous occupation, your old customers should be fantastic references. Even better, they should also be fantastic prospects that would take care of the reference challenge by itself. Don’t just think of “customers” in the traditional sense. You can also find solid references in internal customers—fellow employees or senior managers to whom you provided deliverables at a previous job.

Line up your references before anyone asks you for them so you don’t have to scramble to arrange them at the last minute. And just as if you were interviewing for a job, which you are, don’t provide the names of anyone who hasn’t already agreed wholeheartedly to say good things about you. That said, there is no need for wailing and gnashing of teeth over references. In my experience, well fewer than half of prospects ask for references anyway. And if they do, they may never call them. Just seeing the names may be enough.

Note: Once you have them, you will work very hard to keep your customers happy. In turn, you’ll build a good list of customers who will be eager to speak on your behalf. But I recommend never providing any references unless the prospect asks. It can unnecessarily slow down the sales cycle if the prospect takes time to check all the references.

Friday, August 8, 2008

Don't just sit there

Like a pot of water that you want to boil, a phone that’s stared at will not ring.

Unless you start your company knowing that you already have a customer waiting for you, you will have to generate some leads someplace. It's better to pick your first prospects rather than wait for them to pick you. Here are two good reasons:

  1. Even if you think differently, you may not be quite ready for them when your prospects think they’re ready for you. If someone calls you on the phone to inquire about the doodad you want to sell, they probably have something specific in mind. Their vision of a doodad may be quite unlike the doodad you have. You don't yet offer all the bells and whistles they’re looking for. Do not hang up on them, though. You should listen to them to develop a better picture of what the marketplace is seeking. You could use those early callers to hone your message.
  2. If you initiate the sales call, you'll be less likely to be compared to your competition. Because you are calling them, they may not even realize they have a need, let alone that you offer a solution. (Unless you are selling toilet paper, most people do not buy what you are selling so much because they need it but because they want it.) Therefore, when you initiate the conversation, the prospect is unlikely to be sitting at her desk with a spreadsheet that lists all the plusses and minuses of your service compared to the competition. She may not even be able to identify the competition. As a result, your size and newness is less likely to be a concern. As far as the prospect knows, based on how you present your message, you are the standard in your business, even though your company is only about five minutes old.

Tuesday, July 29, 2008

Look for the Curve Ball

As a new entrepreneur, you'll face the question of whether a prospect’s business is worth your effort. You're like a hitter at the plate watching a variety of pitches coming your way and trying to decide which ones are worth taking a swing at. Because you need customers, it will be tempting to swing at everything.

Types of pitches (prospects)
The first pitch is a sweet one right in your wheelhouse, which means your solution addresses the prospect’s needs so perfectly that it’s like getting the perfect pitch to hit out of the park. One easy swing and BAM you have a new customer. You barely broke a sweat as a result. These prospects don’t come around often enough.

The next best pitch, which you may see most frequently, comes in a little high and outside. You’ll have to reach a little, but it’s still possible to get some good wood on the ball. Your solution matches most of the prospect’s requirements. With a few adjustments or enhancements, you can address her needs thoroughly. You make the adjustments because

1) you need customers and revenue and

2) you recognize that the adjustments would appeal to other prospects.

Perhaps some of those adjustments can even wait until after the prospect becomes a customer, and you develop a level of trust. You may even come to appreciate this type of pitch more than the “perfect pitch” because you improved your product/service as a result.

You have to give the closest look at the third type of pitch. It is so far over your head that it will smack against the backstop unless you make contact. You can hit this pitch, too, but you’ll probably need a stepladder. The payoff might be sweet in the short term, but is it really worth the effort?

The pitches headed for the backstop come from clients who would require all sorts of enhancements in order to get exactly what they want. In fact, their requirements may change your offering in a way that bears little resemblance to what it looks like now. On the other hand, you may make a lot more money off this one deal than all the others. It may be a long time, if ever, before the necessary enhancements would benefit your other current prospects. Those changes could even make your product/service less appealing to your regular target group.

You have to decide, particularly in the early days of your company, if you should take a swing at this pitch or let it go by. You will hear a lot prospects say, “Your stuff is nice, but it would be really great for us if it just had (fill in the blank).” Yes, it would be great—for them. But would it be great for your company?

Listen closely to your prospects. Some of their suggestions could have you chasing short-term revenue at the sacrifice of long term potential for your company. However, your prospects will often have legitimate ideas to make your offering better. No one knows their industry better than they do. If their needs have been unmet for a long time, they're also be the needs of their competitors.

If you really listen to what your prospects are saying, and if you are more interested in becoming successful than in simply sticking to your original vision, you'll give your venture a better chance. Certainly, your company may not bear much resemblance to what it was in the beginning, but part of the difference could be a little thing called PROFIT.

Many ventures have changed dramatically from what they started out doing. But they are still in business.

Tuesday, July 1, 2008

…But don’t degrade them.

No matter how desperate you are to get your first customer, never talk bad about your rivals. It’s unprofessional. That should be reason enough to say nice things, or at least to remain neutral on the subject. Prospects don’t want to buy things from companies that look bad. If you try to throw your competition’s reputation down a hole, you’re likely to be chained to them when they go. You’ll get just as dirty as they do.

The second reason you should never denigrate your competition is that you may inadvertently send them business as a result. This happened my company the other day: A call came in from someone looking for online registration software. The call was quite fortuitous because it just so happens we sell online registration software. Until that moment, we did not know this person’s company needed software like ours. In fact, we did not know the company existed. Until a short time before that, the prospect did not know we existed either. We can thank one of our competitors for that.

“How did you find out about us,” we asked.

“From one of your competitors,” the prospect answered. “I asked them who their competitors were. They specifically mentioned you and went on and on about how bad you were. They got me so intrigued about you that I just had to call you and see for myself.” One hour later, that prospect became our customer. It was one of the shortest sales cycles in our history. Maybe we should have shared some of the sales proceeds with our competitor to thank them for the lead.

Maybe we should ask them to keep up the good work.

Conversely, a prospect asked us a few days ago to name a few of our competitors. “There are quite a few good ones,” we said, acting as if we just loved talking about the competition. After we named a few, the prospect asked how we differed from them. (This is a beautiful question to hear during the sales process.) “Well,” we said, “as we mentioned, they all are good companies. It’s just that we do things a little differently.” After we outlined a few of the key differentiators, the prospect said, “That’s what I thought, too. Thanks for confirming it.” We used our rivals to point out certain advantages we offered without talking negatively about them. Not only was there no need to denigrate the competition, we had the opportunity to compliment them to our advantage. We only looked better—more professional—in the prospect’s eyes as a result.

If you are comfortable with your offering, and confident that it matches up well with your competition, you should not be afraid to mention them, and to compliment them if applicable. Prospects will be much less curious about them, and that much more impressed by you.
You will occasionally get calls from competitors masquerading as prospects. These calls are a sweet nuisance. Not only does it mean your competition is aware of you, it also means they want to discover why your customers choose you. When a rival first calls you, pretending to be someone interested in your product/service, be delighted. It proves you’ve arrived because your competition is keeping an eye on you. Soon they’ll be worried about you. Later, they’ll be working for you.

Monday, June 16, 2008

Know your competition

Perhaps you dream that you will triumph so completely over your competitors that they will finally say, “We give up. You are the best. We’re getting out of the business.” You'll then be alone, victorious, atop the mountain. Don’t wish it to happen too fast, though, because your competition is essential to your initial success. If a prospect asks you to name your top three competitors, do not say, “Uh. Gee, that’s a good question.”
If you can't name your competitors, your prospect will likely think one of three things:
1) You’re uncomfortable with comparisons to your rivals (not so good).
2) You haven’t done your homework (bad).
3) Your product is so far off the mark that no other company has thought it worth developing (time to punt).

It's usually easier to sell something if you’re not the first to sell it. You'll need a marketing position, and it’s a lot easier to establish one if you have something or someone to position against, such as a rival.

Maybe you really are so far ahead of your time, so visionary, that you’ll have trouble finding significant competition (other than the inaction of your prospects, which is always the toughest competition). If that’s the case, sales will come a lot harder. It is tough enough if you are a new company and no one has ever bought your stuff before. It is exceptionally difficult if no one has bought what you are selling from anybody else either. You say you’re bigger, faster or friendlier? Than what or whom?

The more clearly you can understand your rivals and understand how they compare to you, the better your position will be with your prospect. Most prospects are reluctant to sail uncharted territory when their image and money are on the line. For every visionary out there, ten prospects will be timid about working with a new company. You must generate in him the confidence that he will not be GOING WHERE NO MAN HAS GONE BEFORE. That is no place for most would-be customers. It is possible to convince a prospect to take a chance on a company that has no customers. It is a lot more difficult to convince them to be the first to buy something that is an entirely new concept.

Competitors offer proof of concept. Prospects will take some comfort in knowing others are in a business similar to yours. You can take comfort in that knowledge, too.

Tuesday, June 3, 2008

"Short-sleeve dress shirt" is an oxymoron

As I was filling my car with gas the other day, I noticed a man using the pay phone nearby. He wore a black suit, cranberry-colored dress shirt (about two sizes too small around his neck) and a solid black tie, which I think was a clip-on. If he was on his way to a job interview or meeting a client, I didn't give him much chance. He looked like he didn’t belong in his clothes. He was uncomfortable, out of style, and more than a little out of sorts.

Don’t be like the guy on the payphone. Wearing a tie doesn’t guarantee you’ll look professional. Meeting a prospect in person is like going on a job interview. And since you are the most important thing you have to offer your first customer, your appearance carries a lot of weight. It’s not just your product or service that has to meet qualifications. You have to wear clothes that “fit” in more than the literal sense. You have to look like you belong in your clothes. You must have the appearance of a successful businessperson, whatever that may mean in your industry. Don't, for example, throw a tie on with short-sleeve shirt you're wearing and assume you'll look professional. Yes, business has gotten a lot more casual in recent years, but your prospect may one of last of a breef who doesn't think that's such a good thing.

On the other extreme, let’s say your business requires you to spend most of your time outside. Suppose your regular “uniform” is a pair of jeans and a plaid shirt. It wouldn’t make sense to automatically jump ten rungs on the business attire scale to a suit when you meet your prospect. If you do, you may look as uncomfortable and out of place to your prospect as the guy in the cranberry shirt looked to me. Wear clean, relatively new clothes—perhaps something nicer than jeans—but also wear clothes that look right on you. If you still have a polyester leisure suit from the 70s, don’t wear it to meet a prospect unless you’re auditioning for lead singer of a rock band and attempting an ironic fashion statement.

Appropriate “attire” applies to more than just clothing, particularly as more business is conducted on the phone or online. Attire extends to the way you speak, your printed materials, web site, etc. If you’re thinking, “I guess I’d better get some business cards printed,” you’re not taking your professional appearance seriously enough. Your business cards should be expertly designed, rather than something that appears to have been produced as an afterthought. If you’re going to launch a web site, it must be a professional web site rather than something your cousin Tina designed for you (unless Tina is a web or graphic designer).

A consistent message is equally important. If you’re going to contact prospects on the phone, practice your introduction until it’s flawless. How’s your grammar? Even the smallest slip-up can instantly turn off a prospect. Every thing from the way you dress, your hair, and the way you speak can effect the prospect’s impression of you. You’re selling yourself. Make sure you’re a great-looking product.

Thursday, May 29, 2008

The Death of the Business Phone Call

The following article recently appeared in, an e-mag for sales professionals. The article has applications for new entrepreneurs.

Supposedly, email is killing the art of letter writing. I fear intelligent phone dialogue is on life support, too. We think we're saving time by shooting off a quick email to someone. Or if we receive an email, we just assume we should answer in kind.

To read the entire article, go here.

Wednesday, May 21, 2008

How "Free" can be Profitable, part 2

At the end of our first 90 days, my company had no customers. There was no need to shop at Hallmark for client-appropriate Christmas cards. However, we continued to line up a lot of appointments, prepare proposals and arrange follow-up appointments. We were getting good reactions from most prospects—except for the reaction that mattered most: the actual signing of an agreement.

One of our angel investors served on a civic board with someone who was married to the executive director of a non-profit agency. Our investor thought the agency might have a use for our software, which was designed to help organizations request bids for products and services. After one quick meeting, the non-profit became our pilot customer. The agency wouldn’t pay us a dime the first year, but they agreed to use our untested software to help with millions of dollars in bids.

In exchange for free access to our software, the pilot customer became our super reference. They would be on call to say good things about us, and also meet in person with prospects when we asked them. We asked them often.

Putting the product to the test
Thanks in part to our pilot's customer's reference, we won our first paying customer within weeks. But our pilot customer helped in other ways. The pilot experience confirmed our software worked the way it had been designed, but it also showed us how to improve it. Our pilot customer put it through its paces in real-world situations, which no amount of experimentation could replace.

The quickest route to discovering ways to improve a product or service is to allow a customer to use and abuse it. Even years after developing your product or starting your service, your customers may want to use it in ways you never imagined. We saw how our software meshed with a company’s business practices, and how we could enhance the software to help improve those practices. Those enhancements made it more appealing to other prospects.

Working with an actual customer offers value that no amount of listening to prospects can equal. You can better anticipate the needs of subsequent customers. If a prospect brings up concerns, you'll be more prepared to address them immediately, rather than to say, “We’ll get back to you.”

More valuable than instant revenue
It would be great if your pilot customer—your first customer—actually paid you something for your goods or services. But that is not her main purpose, so let’s assume she doesn’t pay a cent. The main purpose of the pilot customer is to talk about you—to provide both references and referrals. You want her to feel so good about you and what you have done to make her life easier that she will complement you and your product at every opportunity, even without being asked. When she tells others, “Look at what a great company this is,” she also means, “Look at how smart I was to give them a chance.”

Our pilot customer has since paid thousands of dollars annually to use our software. Better yet, they asked to develop a second product, which quickly became the focal point of our company.

Wednesday, May 14, 2008

How "Free" can be Profitable

Sometimes, the fastest way to a paying customer is through one who doesn’t pay: a pilot customer. Such an idea is anathema if you believe the only thing that can come from providing something for free is the chance to provide more of it for free. I understand you may not like the idea of a pilot customer, since--I'm just guessing--you’re entering business to make money. Let’s say, however, that it’s three months since you started your company, you have no prospects ready to sign an agreement, and your spouse is starting to give you impatient looks and heavy sighs. Maybe a pilot customer isn’t such a bad idea after all.

Actually, each of us is asked to be a pilot customer nearly everyday. When I go to my neighborhood fresh produce store, for example, my goal is buy bananas and strawberries. But I have to navigate around stands offering free samples of stuff the store wants to push--stuff I don't need. This often includes salsas and spreads. But it's free, so I usually try some. One day, the salsa was accompanied by a brand of tortilla chips that I’d never tried before. I usually buy tortilla chips at a grocery store, rather than a fruit and vegetable business. But the chips were so fresh and crunchy that I started buying them at the produce place.

Pilot customers lead to paying customers. My company, ABC Signup, wouldn't exist if it weren't for a pilot customer, which not only helped us line up our first paying customers, but soon became a paying customer itself. More on that next time.

Monday, May 5, 2008

See Other Entrepreneurs as Hot Prospects

On your first day in business, you may think, “Wow. We are the newest business in the world. Every other business has a head start on us.” That may be true for about two seconds. According to the U.S. Small Business Administration, 1,569 businesses start every day. By the time you complete your first week in business, nearly 11 thousand businesses will be younger than yours. That’s 11,000 businesses trying to reel in their first customers, too. By the time you complete your first year, more than a half million companies, most of them tiny, one- or two-person operations, will be newer than yours.

Somewhere in the half million or so new businesses may be the perfect first customer for you. Think about it. If another entrepreneur thinks her newness should not prevent anyone from doing business with her, why shouldn't she be eager to do business with another startup? Nobody can empathize with you more than another new company, whose founder understands all too well what it’s like to be small and desperately seeking paying customers.

If you call on any young company, the introductory call should be easier than most. “I’m Ernie Entrepreneur with Ernie’s Hi-Tech Denture Technologies. We’re a new company, too, and we may have a solution for your…” You will find instant empathy and, perhaps, an instant prospect.

Something else those companies have in common with you is a tight budget. Maybe they can't afford what you ‘re selling. Maybe—probably—you can’t afford what they’re selling either. Perhaps then, each of you could benefit from what the other has without spending your meager funds. Therefore, you can work a trade. You quickly line up a customer—one with a special understanding of your newness and customer void—who can also provide you something you need but cannot afford. Voila. You both get your first customer.

Here's a partial list of services provided by potential trade partners that might otherwise be luxuries in your early days:
· Professional marketing advice
· Advertising services such as business cards and brochures
· Computer networking and security
· Software development
· Web design
· Cleaning services
· Sales consulting
· Clerical Services
· Accounting
· Legal advice
· Office and conference space

If your trade partner has very few customers yet, you can bet she will be eager to act as your reference, provided you reciprocate. Also, it is another form of networking. Her prospects, which call you seeking a reference, can also be good prospects for you. Your prospects can be good prospects for them. You both have a lot at stake, and a lot to benefit from working together.

Even companies that are a couple years old are still new, still a startup. (Look back two years from now and see if you don’t still think of yourself as a babe in the woods.) Such near-new companies will still have a fresh understanding of what it’s like to land the virgin customer. They can lend a sympathetic ear, too. But they may also have something even nicer: money. You get the nice combination an understanding prospect and a check that won’t bounce.

Monday, April 21, 2008

New Entrepreneurs: What are your prospects thinking?

If only you could read a prospect's mind so that you would know what they really think about working with a fledgling company such as yours. Are they worth your trouble to pursue? Sure. Even the biggest companies like to work with the smallest vendors if the fit is a good one.

Did you ever work at a fast-food restaurant? If you stayed with it for a year before getting tired of sandblasting french fry grease off your clothes at the end of every shift, then you’re a rare breed. Recruiting and retaining good workers is a chronic challenge for restaurant chains. One such company with billions in revenue and tens of thousands of restaurants around the world (think tacos, pizza and fried chicken chains) sought help in finding and keeping employees for its outlets. This restaurant behemoth considered proposals from all sorts of companies, including some relatively large advertising agencies. The company also listened to pitches from firms with experience expressly in employee recruitment. But one tiny advertising agency with no such experience went after the business, too. In this case, size didn't matter.

Even a large corporation can be treated poorly--taken for granted--by its vendors. That possibility was on the mind of the company's global talent manager when she was seeking a good fit for the recruitment program. "I didn’t want someone who had so much experience in our area that they were offering a cut and paste solution," she says. "I wanted someone who could think creatively. Choosing a smaller company meant I wasn’t going to be just a number."

The small agency’s presentation showed they had taken time to think about what their prospect needed. (Don’t forget: The prospect is buying you and much as she’s choosing your company.) “The small agency showed their personalities throughout the proposal process. It let us get to know who they really were,” the talent manager says. “They took pains to understand us and how we worked. They kept doing that throughout the relationship, even after they were chosen.”

Final score
Small company: 1
Big companies: Better luck next time

Thursday, April 3, 2008

If you can't go back...

Maybe you can’t go back to your former employer. If this is a perfect time to start your own company because you lost your job after angering or alienating everyone you ever worked with, perhaps you should consider a profession that does not require interaction with human beings. Perhaps muskrat keeper at your local zoo. If that’s not the case, however, you may still have a good chance of landing customers as a result of your former employment. In fact, you may actually have multiple chances.

Let’s say that Phil was laid off from his marketing job at Dweebco, International. He had been part of a six-person marketing team that was scattered to the wind when financial setbacks forced Dweebco to eliminate its marketing department. While his team members took jobs with other corporations, Phil decided the time was right to start his own marketing consulting firm. The first prospect on Phil’s list was Dweebco. Even though they couldn’t afford to pay a full-time marketing staff, they might still need marketing help. In fact, Phil suspected, they probably needed it more than ever. Dweedco would get the service they need without paying benefits and everything else to a full-time employee. Phil would get to charge a higher rate than his old salary
Suppose, however, that things at Dweebco had gotten so bad after Phil left that the company went out of business. Phil still had five ready-made prospects: his former colleagues. Their new employers were in a much better position to use Phil’s services. They were in a hiring mode, which meant Phil was in the right place at the right time to help meet additional demand. Phil contacted his former colleagues who then recommended him to their new employers, as well as other companies that had a connection to.

When you work for someone else, you are essentially a one-person company existing to serve your employer. If that company hired you once, they should want to hire you again--as an outside vendor--if the you left on good terms.

Go back where you came from

Once you strike out on your own, it's wrong to go back where you came from. That’s admitting failure, right?

Rosie Feeley saw it differently. She was a well paid sales manager for cable giant Comcast. The thing she enjoyed most about her job was training other salespeople. But her responsibilities had become increasingly administrative, so she left to start her own sales training company called Training By The Slice. She politely thanked her former employer for the regular paychecks, said goodbye and walked out the door.

Rosie then spent her first three months in business putting together sales and marketing plans, doing research and other fun things required to get a business off the ground. Then came the hard part: getting customers. She remembers asking herself, “Where do I find these people? I was Rosie Feeley, an unknown quantity, competing against major corporations that provide sales training to other major corporations.” Rosie took the same route many other successful startups do: She went back where she started.

Rosie returned to Comcast, not as an employee, but as a vendor proposing that her new company do some of their sales training in a new way. It was a comfortable and logical fit for both sides. “I knew what Comcast was paying for sales training,” Rosie says. “They knew who I was.”

Rosie had decided early on that she would target small- to medium-sized companies as her main prospects. She couldn’t compete with much bigger sales training outfits for Fortune 500 clients, but it helped to have a recognizable name to toss out to subsequent prospects. Even if Comcast had been a small company that hardly anyone had ever heard of, Rosie was smart to go back where she had come from first. Nobody knows your abilities better than the people who once signed your paychecks.

Tuesday, April 1, 2008

Borrow Credibility

My business partner met a budding entrepreneur at a party last weekend. The guy was the marketing/sales "arm" of a start-up company that developed a web-based storage system for medical records. So far, the company consists of the sales guy, plus the person who developed the software. And neither has left his full time job yet. My partner asked a blunt question : How would the sales guy convince medical offices to trust highly sensitive information to a new product developed by someone working in his basement at night? The new entrepreneur hadn't thought it through that far.

You need instant credibility, which may mean borrowing some. That could come in the form of a strategic partnership with another person or company that is already highly respected in your industry. It may mean starting as an entrepreneurial arm of an established company. You could build your dream within a viable business, while leveraging a bit of their image--and money. A few years down the road, you could spin off into an independent company.

Another way: Grab credibility by certification from a known brand, such as the kind Microsoft offers software developers. Then you can say: "Our people are Microsoft-certified and have expertise in the latest Microsoft web hosting products.” The prospect will hear: “Blah Blah Blah Microsoft blah blah blah blah blah Microsoft blah blah blah.” And then they think, “Hmm. I’ve heard of Microsoft. These people are OK is they’re Microsoft people.” That is, unless the prospect is a Firefox nut.

Monday, March 24, 2008

Pay Attention; Look Ahead

All your prospect wants to know is, “What’s in it for me?”

His needs come before yours. If you can meet his requirements better than anyone else can, and he likes you, you both win.

You don’t have to have a bucket-load of customers to show that you understand the customer’s problem. In fact, the prospect may be more likely to think you care if your bucket is bone dry. You have to pay attention, listen, and do your homework before you say anything about how perfectly your service matches the prospect's needs.

It's possible, however, that your service doesn't match his needs. Let’s say your company develops a special type of X-ometer that will turn the X-ometer industry on its ear. You meet a prospect and develop a great rapport. You ask lots of good questions and begin to develop a true sense of the prospect’s challenges, which, come to find out, can't be fixed by even the best X-ometer. The prospect’s problem is Y. You don't know jack about Y.

You could still try to sell the prospect on the great advantages of X in hopes of prying a little revenue out of the deal. Or you could demonstrate your interest in helping him solve his problem, even if you’re not the one who can solve it.

That would mean no immediate sale for you, which is pretty painful in the early days of your business. But two things can happen:
1) You develop a reputation as a company that really knows how to listen and how to solve problems. Prospects like that. Some will become customers.
2) If you refer a prospect that needs Y to a company with expertise in Y problems, the Y people are more likely to return the favor.

Nobody can afford to wait around while prospects that might need something a year later develop fuzzy feelings for you. But you have to work on getting your next customer while you’re trying to get your first one.

Tuesday, March 18, 2008

Be a Know-it-all

We've all heard these claims in business:

“We’re number one.”

“We’re world-class.”

“We’re the experts.”

Any company that claims it's world class, isn't. If you want to convince someone that you’re the best, the worst thing you could do is to tell them so. Instead, help them discover it for themselves. That’s especially true if you’re trying to get your first customer. Who would believe you if you say you’re the best when you have no customers, yet? Even if you have a track record, people would be leery if you bragged about your greatness. Prospects want to choose a company that knows what it’s doing. But you won’t convince them by simply saying, “I know what I’m doing.”

There’s a better way.

Let’s say that after years of experimenting in her kitchen, Lucinda has developed a great-tasting salsa with a special main ingredient: lima beans. She immediately forms Sublima Lima Salsa, LLC. If Lucinda opened a small store on the busiest street in town, she might sell one or two jars of salsa a week. Her goal is to sign up wholesale customers. Not only does Lucinda have to overcome the stigma of people who associate lima beans with school cafeteria lunches, she’s never sold anything in her life. Therefore, she has to convince potential customers that lima beans really are a tasty salsa ingredient, and that she’s the expert on such things.

Lucinda sets to work by submitting an opinion piece to her local newspaper entitled Lima Beans, the Misunderstood Legume. Then she learns that the local community college is always looking for experts to teach non-credit continuing education classes. Lucinda proposes to teach a cooking class that shows students how to use ordinary vegetables for easy, unique entrees and side dishes. Her students quickly see that she knows what’s she's doing around a bean or two. On the last night of class, she gives each student a jar of her Sublima Lima salsa.

Lucinda is just getting started. She joins civic organizations and offers to speak at any opportunity about the positive health aspects of lima beans. And then she signs up for as many neighborhood and community festivals as possible where she hands out brochures on healthy eating, along with free samples of her salsa.

Eventually, Lucinda’s efforts begin to pay off. A retired teacher takes her cooking class at the college. The teacher happens to be the mother of the owner of a chain of gourmet grocery stores in town. He sees the jar of salsa in his mom’s kitchen one day and tries it. Impressed, the storeowner sees Lucinda’s contact information prominently displayed on the label, and he soon calls her to learn more about her company.

The administrator of a large nursing home facility hears Lucinda speak at a Rotary Club lunch. The administrator is always interested in new ways to provide healthy meals to her residents. After the speech, she corners Lucinda to learn more.

Lucinda begins to build her list of prospects—prospects that see her as an expert not just on lima bean salsa, but all things vegetable or legume-related. Who knows? Lucinda’s prospects may need a product other than salsa, or maybe something vegetable-based that does not include lima beans. However, they are confident that Lucinda is the expert on such matters because she’s demonstrated that fact in many settings, all without directly claiming that she is the best at what she does.

Sunday, March 9, 2008

Align yourself with their customers

If you’re having a tough time reaching out to your prospects, reach out to their customers instead.

In the late 90s, I was the vice president of marketing for an Internet-based company called Construction Zone (CZ). CZ had an idea (not mine) that helped them get over the no-customer hurdle. The company developed a searchable database of formatted building product information. Rather, they wanted to develop a database.

The people who would use such a tool were all for it. They were architects, engineers and others who sought an easy way do so side-by-side comparisons of construction product information. They were also in favor of the online database because they wouldn’t have to pay for it. That would be up to building product manufacturers, whom CZ would have to convince to put their information online where their potential customers could compare it with the competition.

The general reaction from manufacturers to the idea was, “Why should we pay you when you don’t have any architects searching your database?” At the same time, architects and engineers said, “We would love to use your site, but not until you have the product information we want.” CZ needed to produce an egg at the same time it produced a chicken. Therefore, the company began to build credibility by holding listening sessions.

Each listening session consisted of potential users (architects, etc.) and potential customers (building product manufacturers). Architects from large firms were delighted to attend because it gave them a forum to express their vision of a perfect world for finding product information. Manufacturers (CZ’s prospects) eagerly attended because it meant they could be in the same room with their prospects—architects who held the key to millions of dollars in potential business.

CZ briefly outlined its idea for the database, and then sat back and listened as the architects raved about the benefits of such a tool. Rather than promise manufacturers that architects would use the tool if the manufacturers would only put their information there, CZ allowed the architects to say so themselves. It was as if CZ had teamed up with some of the most powerful decision makers in the architectural world.

Another key to the success of the listening sessions was for CZ to LISTEN. The company did not trot out its sales spiel during the sessions. Instead, CZ asked attendees, “What do you think of our idea? How would you make it better?”

The listening sessions helped CZ foster a bit of credibility before they had many customers. When manufacturers saw their potential customers getting excited about the database, they got excited, too. By realizing that CZ was taking their interests seriously, they were more inclined to try a new concept by a new company. Many of the manufacturing companies in those listening sessions eventually became CZ customers.

If the participants in listening sessions had seen the gatherings as a veiled attempt only to generate sales, the events would have been less productive, or even counterproductive. Commit to being as neutral as possible so that you can reap the invaluable information generated.

Thursday, February 21, 2008

Take their advice

You can even semi-formalize your relationship with your early advisers. Consider putting together an advisory board filled with people who have already reached the goals that you aspire to, even if they don’t have the potential to become customers. If you can’t connect with the right people with expertise in your industry, seek out wise folks with business expertise in other areas, or a solid image in general. Maybe a senior manager with the company you just left would be interested in serving on your board. After all, your success will reflect favorably on her.

Tell your advisers what you expect from them and how much (actually, how little) of their time you’ll require. Never waste their time. Hold meetings regularly, perhaps over lunch, but infrequently. When the money starts rolling in, you can be more elaborate, if you want, by taking your advisers on a weekend getaway. But don’t pay them. You want objective advice. You want people who will tell you what you need to know, not necessarily what they think you want to hear. You want them to be unencumbered by the promise of stock options or other biases.

Types of practical advice to seek from your advisers:
- How logical is your business plan
- How best to approach others in your industry
- Thoughts on how long sales cycle is likely to be (from the time of your first appointment with
the prospect to the sale)
- Realistic expectations for generating customers
- Examples of what worked for your advisers when they started in business

Your objective with the advisory board, besides the priceless advice, is to establish in future prospects’ minds that you’re receiving regular input from reputable business minds. The idea that a bevy of well-known decision makers is willing to take the time to advise you on a recurring basis will mean a lot to your prospects. They will know that your adviser’s time is a powerful investment in you.

You can tell your prospects, for example, that even though you don’t have the level of experience enjoyed by your competitors, you receive advice from those who do. The time your advisers spend as your sounding board will engender peace of mind with your first prospects almost as much as a long list of customers.

Your advisers should help you willingly because they believe your success will increase the success of your industry or the business climate in general. Who knows? Some of them may become your customers. It wouldn’t be the first time such a thing happened. But that shouldn’t be the main reason you form a board.

You don’t have to have a Fortune 500 executive on your advisory board. Heck, you don’t even have to have an advisory board. You can ask one or two people to serve as senior advisers. When they agree, immediately put their names prominently on your web site, letterhead or other marketing materials. As long as your advisers
1) will increase the level confidence among your prospective customers and
2) can offer objective advice, nobody should be off limits as a potential advisory board member.

Wednesday, February 13, 2008

Tap the brains of wise people (without paying them)

Develop some of the credibility you need. When someone chooses to be your customer, she will prove her infinite wisdom, right? The wisest people in your industry are those who boast a long record of success. Some are your competitors, but many more are potential customers. Contact some of them, but don’t worry yet about turning them into customers.

Your immediate goal is to learn from them.
Imagine Lucas has a new ATV that he never drives because he’s afraid he will wreck it. He wishes he could think of a way to drive as fast he wants on the ATV, while guaranteeing it will never roll over. One evening, as he ponders his dilemma, Lucas watches his pet hamster speed across the living room carpet in its plastic ball. Eureka! Lucas says to himself. He will create a large plastic ball big enough for his ATV to fit inside. No matter how fast he drives, the ATV will never tip over. Better yet, Lucas figures a lot of other ATV enthusiasts would buy such a ball. Lucas builds a prototype and decides to call his contraption The Bubble Over. He’s pretty sure he’s a genius, and believes he can sell millions of Bubble Overs.

Lucas is business-savvy, so he wants to prove the practicality of The Bubble Over before he spends a lot of money manufacturing it. He gets in touch with Carl, the owner of the local ATV dealership, to ask if he can pick his brain. From research, Lucas knows that Carl has been selling ATVs for 25 years and that he is well respected in the industry because he understands what ATV owners want and need. Sure, Carl says to Lucas’ invitation. He is always willing to hear about new products that might benefit his customers. Like most of us, Carl loves it when people ask, “Can I get your advice on something?”

Lucas brings his prototype of The Bubble Over with him to the meeting so that Carl can try it. Based on Carl’s feedback, Lucas starts to get an idea of how well the marketplace will receive his product. Carl also offers suggestions on how Lucas might make The Bubble Over better. As Lucas starts a relationship with Carl, he is also starting to show that he is committed to solving a problem in Carl’s industry. He knows Carl’s experience is the most important thing he can tap into at the beginning of his venture. Simultaneously, Carl is turning into Lucas’ prospect. If he should become the first distributor of The Bubble Over, his good reputation in the ATV industry will make it easier for Lucas to land subsequent customers. Lucas has just taken a big step toward credibility.

Because Lucas is a smart guy, he wants feedback from lots of people in the ATV industry to ensure he’s getting an adequate picture of the potential for his product. Therefore, he contacts other ATV dealers, too. The first words out of his mouth when he calls the other dealers are, “You know Carl, right? He’s been advising me…” The other dealers will be happy to offer their input as well. Every bit of feedback Lucas receives helps him better understand the viability of The Bubble Over. As he improves his product and prepares it for market, he’s also building a sales pipeline.

You can probably find plenty of movers and shakers in your chosen industry that can offer you advice on the viability of your business, particularly if you demonstrate an interest in providing a new or better solution to their problems. Nothing is more freely given than advice, especially when the results of the advice may help the adviser as much as the advisee.
“What do you think?” are sweet words that your advisers (first prospects) will love to hear.

Monday, January 28, 2008

Design the Perfect Customer

Complete this sentence: “My perfect customer is (fill in the bank) and spends gobs of money with me.” The right time to begin imagining your perfect customer is before you have any. Right now, you may define your ideal customer as anyone who is willing to pay you, which means you haven’t established many standards. It’s possible that some customers will actually be more trouble than they’re worth, no matter how much they pay. If you spend a little time now imagining your best customers, you can better identify them when they come along. Better yet, you can avoid the ones who don’t meet enough of your criteria.

Because your shriveling bank account is ever on your mind in the early going, it’s natural to accept and hang on to customers even if the hassles they create seem to outweigh their benefits. You’ll say to yourself, “We can stomach them as long as they pay.” Just don’t stomach them too long if they distract you from getting better customers.

Put your business plan to work
Your company’s business plan is supposed to serve a greater purpose than to help you obtain funding. It is supposed to serve as your road map to success, which should involve finding a paying customer or two. Take a fresh approach to your plan and begin to flesh out the description of your target customers. How would you define your ideal client? Even if you’ve never sold anything before, somewhere in your life you have had customer-vendor relationships, even if it goes back to selling lemonade when you were ten years old. Picture in your mind the best customer you’ve ever had and try to remember what made him so great to work with:

- Did he pay his bills on time?
- Did he trust that you knew what you were doing?
- Did he have the confidence of his boss, or was he the boss?
- Did he acknowledge the times you went to extraordinary measures to meet his needs and demands?
- Did you hurry to pick up the phone when you knew he was on hold?
- Would you find him likeable even if he weren’t helping to pay your mortgage?

Maybe it’s easier to form a picture of the worst customer and then to avoid him:
- Did your worst customer think he could do your job better than you could? (Makes you wonder why he was spending good money for your help.)
- Did you sometimes get the sense that you were talking to a brick wall, as if the words that came out of your mouth were not making it past the customer’s glazed look?
- Did he often seem unhappy with your work, even though he could never adequately explain why?
- Did he end the relationship with the equivalent of the boyfriend-girlfriend breakup: “It’s not you. It’s me”?

With such questions in mind, you can begin to look for important signs from prospects, such as:
- Does she clearly express her expectations?
- Does she answer your questions with, “Uh, let me think about that” or “you figure it out?”
- Does she recall promises you’re pretty sure you never made?
- Does she give a realistic timeline for you to develop a proposal or presentation on your product/service?
- Does she listen when you speak?
- Does she “get it” when you talk about your product/service?
- If you are not dealing with the top dog, do you sense that your prospect has the ear and the confidence of her boss?

Most customers will fall someplace in between the ideal and the worst case. Don't be ultra-selective when you are trying to sign up a customer—any customer. However, it would help if avoid a bad one as your first customer since you will have your hands full as it is. You should try to identify prospects who will help you validate your decision to give up the finer things in life like premium cable just so you could start your own company. It’s easier to cut someone loose when they’re a prospect than when they are already your customer.

As you begin to develop your customer base, you can periodically return to your list of ideal-customer characteristics. If you’re lucky, you may have one of two customers that come close to your ideal early on. Possibly, the concept of the perfect customer that you develop will change a lot once you have a few clients under your belt.

Don’t ask; don’t tell

Imagine that you are firmly ensconced in the prospect’s rust-colored vinyl visitor’s chair (design circa 1972) after having spent the past 30 minutes deftly explaining how wonderful your stuff is. By asking intelligent questions, you have collected a lot of good information to help capture the customer. You have also demonstrated a good understanding of the prospect’s challenges, answered her questions sufficiently, and have begun to develop a nice rapport. This could be the one, you think—the first customer. Then, just as you are putting your notes back in your genuine faux leather briefcase and discussing a follow-up appointment to go over the details of the multi-million dollar agreement, she asks, “How many customers do you have?”

You pause for a second, looking at the prospect as if the issue had never occurred to you. You respond with something like, “ “None, yet. So, you’ll have our full attention. And I won’t have to go through 27 layers of management to get things done on your behalf.” You have just answered the question succinctly and reinforced it as a positive. Then you say, “Now, about that follow up appointment. How about next Wednesday?”

You may be surprised how seldom prospects ask about your company’s size and background. They are more interested in what you can do than how big you are. Should the question arise, try to emanate confidence that the size of your company matters only in that you will be ultra-responsive to the prospect when she becomes a customer. Your prospect will be more inclined to share your confidence at a result.

In cops and lawyers shows on TV, the hotshot attorney always prepares his witness by saying,
“Just answer the question. Never offer any more information than you have to.” You can use the same approach when the “How many customers do you have” question arises. Answer the question and then direct the conversation toward more important stuff.

This is the more important stuff: When you tell the prospect that she would be your first customer, make her feel comfortable about it. Let her see your confidence.

You: I will be just as dependable as anybody else you might choose as your provider for this service. In fact, I will be more reliable.”

Your prospect: Really? How so?

You: When I go to bed at night, I will dream about how my company can address your needs. I will think about it last thing at the end of the day and first thing in the morning, too. Now tell me more about your expectations so that I can explain how we will meet them…

Your prospect: That’s not necessary. You’ve dazzled me with your sincerity. Let me get my pen so that I can sign this agreement. In fact, I think I’ll take two of what you’re selling.

OK, it may not go exactly that way, but just because a prospect asks you how many customers you have doesn’t necessarily mean it is big issue for her. A prospect may be simply running through a mental list of questions she would normally ask in trying to separate the pretenders from the real thing. (Remember, you’re the real thing.) It’s also possible, if she’s not the ultimate decision maker, that she’s anticipating what her boss will ask her. She may have already made up her mind, and she’s ready to go to bat for you. Or, perhaps, she’s just leading up to what she feels are more important questions. Whether you have one or 100 customers wouldn’t break or seal the deal in her mind. It may just be one item in a litany of things she wants to note. If a prospect wants badly enough to buy what you have, she may even help you along in providing the right reasons to make it a smart decision.

If your lack of customers makes her decision a questionable move, she may probe further until she finds sufficient justification. Perhaps the newness of your company will be a bigger deal to you than it will be to her. Should such details be a concern to the prospect, however, they will probably come up relatively early in the conversation, which gives you plenty of time to address them.

In your company’s early days, you may occasionally have conversations like this one:

Prospect: How many employees work specifically on making improvements to your product?

You: One, give or take.

Prospect: Just one? Small companies make me a little nervous.

You: First, let me show you how the product works. If you think it offers a solution to your needs, I would like to discuss further how my company’s size could be your advantage.

Prospect: OK.

After the prospect sees the product, you can anticipate one of two results:
1) The prospect will worry less about the size of your staff because he really likes the product.
2) He wasn’t very impressed by what he saw, and so the size of your company would not matter anyway. His feelings about the actual product ultimately mattered more than the number of people working on it.

The prospect may not care so much if you have one or more persons working on a job, as long as you can demonstrate good results. You can devise ways to prove that the smallness of your company is no liability.

Tuesday, January 22, 2008

Breaking the news that you’re new

Now that you’ve begun to warm to the idea (I hope) that having no customers will not prevent you from lining up a few, you have to prepare yourself to share that fact with your prospects. I suggest two honest ways of addressing your newness. One is rather low-key and the other is head-on.

The pre-emptive strike
What if you told the prospect up front that you had no customers? Would the world suddenly come to an end? Would the prospect abruptly end the conversation and summon a couple of 300-pound security goons to remove you from his office? Would you be so embarrassed by your admission that you would suddenly shrink to the size of a bug and scurry away? Nine out of ten times or more, no physical harm would come to you. You would survive. If a prospect were to end the discussion immediately, that would just give you more time to find a more suitable prospect.

It's likely your prospect, unless it’s his first day on the job, will have encountered new companies before. You will not be forging new ground in that regard. Certainly, some companies will think twice about doing business with you because you have no customers. In fact, there will always be plenty of people who don’t want to be your first customer, and for a multitude of reasons.
Your newness may be low on the list. It may not be on the list at all. There is no need to imagine obstacles to the sale when plenty of real ones already exist. You also don’t need to carry the fact of your newness around like a deep family secret, particularly if you do not know how the prospect will react.

This does not mean that you must stride into your prospect’s office with your jaw set tight and, even before shaking his hand, say, “I’m the only guy who works for the company. I have no customers. You would be my first. What do you think about that, Mister?” No need for True Confessions. However, if you regard your newness and eagerness as advantages (they really can be), then consider making those qualities part of your marketing strategy. If you think your newness will be an issue, get in front of it before it gets in front of you and blocks the prospect from seeing your many qualities.

Position yourself on your web site, literature and other marketing vehicles as a new, different kind of company. When you make an introductory call, you might start with, “I’m Reginald Rookie with Fresh Off The Farm Technologies. We formed out company to distribute an exciting new cure for eyebrow baldness…” Then you’re on your way without causing the world to end. As the prospect listens to you from that point forward, words liked “innovative” and “fresh ideas” will float around the back of his mind because you put them there.

When you say, “We are a new company,” you are not admitting to something. You’re simply stating a fact. Even better, you are stating an advantage. You are using it as a selling point. In the case of your company, newness is synonymous with innovation and flexibility. You are a company with a fresh approach to a particular product or service. Or maybe your product or service didn’t even exist until you thought of it. You are starting a company because you identified a need that no one else is meeting quite the way you can. You are so passionate about the wonderful world of widgets and solving age-old widget problems that no other company but your own could contain your ideas and energy. That is a heckuva marketing differentiator.

Let’s say you detect a bit of concern by the prospect regarding your newness. Acknowledge her anxiety and then suggest ways to alleviate it. For example, you can take small steps in the first stages of your relationship that give her chances to opt out before her budget or image take a big hit. You’ll never let your relationship get to that point, but you can provide the prospect a little peace of mind:

You: Two weeks from today, I will present detailed plans showing how we will double your magna-diode output. The plans represent ten percent of the first year cost of our program.

Your prospect: What if I don’t like the plan.

You: I’m confident you’ll love the plan, but we would welcome your revisions. If it happens that we can’t please you, however, you won’t owe us anything beyond the first ten percent of the program.

Your prospect: Let’s say I approve the plan. What happens next?

You: You’ll get to sign off on every stage of the process. You can tell us to take a hike at any time before we make a full commitment to each other.

Your prospect: You are an incredible company. I think I love you.

Next time, we'll talk about the Don't-ask-don't-tell approach.

Monday, January 14, 2008

Compelling Reason #2: Your First Customer

Because I lack the ability to see into the future, I can tell you little about your first customer, except this: She is no dummy. Let’s say you are introducing the shiny new ultra-sleek TrashSmasher 3000, which competes directly with the well-known but less-sophisticated TrashCrumpler made by Humongous Conglomerate, Incorporated (popularly known as Humco, Inc.). Your first customer knows you will treat her as though she is the only customer in the world, because that's what she'll be for a while. If she has a problem, you will address it before her phone hits the receiver. Conversely, she knows that the highfalutin powers-that-be at Humco, Inc. will respond to her requests at a glacial pace. That gives you an advantage. And she knows your advantage is to her advantage.

Your soon-to-be first customer wants you to succeed, partly for business reasons, because you can make her look good to her boss or customers. But she also wants to see you succeed for emotional reasons. Everybody wants the chance to say, “I gave that successful guy his first break.” Everybody likes to pull for the little guy. Right now, there is nobody smaller than you. If you establish a good relationship with a prospect-cum-customer, she will root for you to become the best in your industry. She will say that she knew you back when, and that she was prescient enough to take a chance on you.

The day your first customer chooses to do business with you will be the luckiest day of her life, because you will treat her like the center of the universe. You will name your first child after her, even if your child is already in college. You will speak dreamingly of her to your spouse or to your pet. You will love your first customer as you have loved no near stranger before. She knows it.

Realize your advantages
To say you can use your size and newness to your advantage is not just a bunch of hooey. You really do have advantages. Let’s say your first customer calls you with a problem. How long would it take for you to respond? A split second? Less? Think how many times you’ve called someone, as a customer, and waited for what seemed like an eternity for someone to get back to you. You are resolved not to let that happen to your prospects and customers. You are going to do things the right way. Express that resolve to your soon-to-be first customer at every opportunity.

Tuesday, January 1, 2008

Compelling Reason #1 that Being a New Business is an Asset: You

Your main advantage over your competitors—an asset they can never offer—is YOU. You’re not starting a company because you want to be second best. You're doing it because of something that distinguishes you from any other venture in your industry. Maybe you have a great idea. Or maybe you know how to provide a particular product or service in a way no one else is. It may be that your experience or level of expertise is unique. Perhaps you have a knack for finding solutions to tough problems.

Was your previous employer getting the job done the way you knew it should be? Perhaps you were the reason your previous employer was successful. Maybe you left your former company just so you could build a better mousetrap. And now here you are, ready to show your future customers how to catch mice. Perhaps you have lots of great ideas about how to better serve customers, ideas that languished at your old company because they had to be filtered through too many levels of bureaucracy filled with people who lacked your vision. Unless you have a lot of split personalities, your ideas will get implemented in warp time at your new company. Whatever your reason for going into business, it should make a compelling story for your prospects. One of your first jobs is to identify that story to help you turn a prospect into your first customer.

Even when your business is 20 years old and you are able to take three-week vacations to Acapulco, one thing will never change: Your new customers will buy you more than they will buy the thing you're selling. All the gadgets and gizmos in the world will not make them want to do business with you if they don't think they can count on you. You will convince them that you can listen and react to their needs in a timely fashion. They know you will pay attention.
You are selling them a relationship with you. Sure, it sounds like a cliché, but it’s true. Even if you are the sum total of your company, you amount to a lot. You are the most important part of your company. Embrace that fact even if you set up shop in your utility shed and use the riding lawn mower as your conference table.

If honesty isn’t the best policy, it is a close second.

OK, I lied. Honesty is the best policy when you try to land your first customer. Telling the truth may seem like such a simple thing, but it's often overlooked. You’ll hear lots of advice about working hard, working smart, never giving up, and so on. But a commitment to the truth often gets left out.

We all want to be truthful in our business, but honesty can become an early casualty as we try to persuade a teetering prospect to commit. We start hedging the length of time we’ve been in business. We count our spouse and children as staff. We include the UPS guy as an employee. We set steaming mugs of coffee at empty desks when visitors come. We suddenly have phantom customers. I mention honesty at the beginning of this blog for a good reason. The integrity of your venture will color everything else you do. If that’s not enough reason, truthfulness can also help you land Customer #1.

Before you call on your first prospect, make a pact with yourself to accurately represent the depth of your company. This does not mean you have to loop a sign around your neck that says “We are a tiny company.” In fact, you should always present your story in the best possible light. The best possible light is the truth: You’re new and you’re small. Being a small, new company does not have to be a liability. More than a half million new businesses open their doors each year in America. If the rest of us were afraid to become their customers, commerce in this country would grind to a halt.

If you convince yourself that your company’s size is one of its strengths, and in fact may be one of your greatest assets, many of your prospects will believe it, too. No, not all prospects will want to do business with a company that's just two minutes old, but many will be open to it. And why not? By golly, your size is your strength. If you need convincing, I can give you two compelling reasons without having met you. More on that next time.