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.