Sales Tales: the first sale is the hardest — it’s a trial!
By Stephen Allott, Venture Partner, Most viewed Seedcamp Sales Tale
and with special acknowledgement to Gary Butler, CEO, Harbr
“How do I get a customer to fall in love with my product? It’s a real trial”
At Seedcamp, we run “Sales Engine Buildout” workshops for the 300 companies in our portfolio. The most common question from seed stage companies is how do they close a trial and get a sale and the class at a recent workshop chose this as a focus topic. Since then I have had company after company ask me the same question. So I have distilled the learnings from the group into this Sales Tale.
Proof of Value, Proof of Concept, Pilot, Beta Programme and Trial all mean the customer tries the product without buying. It can be with real production data or just demonstration data. Mostly vendors are hoping the customer uses the product and likes it so much they cannot give it back. That’s called a puppy dog sale. Also known as a kitten sale. Sometimes vendors are hoping that the customer will play with the product and stumble across a valuable use case from amongst the many product features (“it can do almost anything”). Sometimes the vendor is doing user research and wants feedback. And sometimes desperate founders want to show some market traction to investors and push customers to trial in the vain hope they will buy.
While some customers have innovation departments whose job is to kick the tyres on new technology, others have geeky users who just want to stay up to date. Sales are unlikely in both these cases. Sadly supporting sterile trials can burn your time which could be spent on real sales.
Closing trial customers is more than closing the pipeline of trials. It does include that but starts further back.
- Qualify hard for the pain you solve, a project that could use your product, a budget and a compelling event
- Let the customer build their own baby
- Agree a one page definition of trial success which will trigger a purchase.
The first attempts at making sales are often “spray and pray”. Contacts, friends and investors make introductions to a range of potential customers. Many will take a meeting and some will do a trial. What does “Qualify hard” mean? Sales qualification is a key discipline in sales and it means excluding prospects who won’t buy. Don’t waste your cycles on people who won’t buy but spend your time with prospects who will. Sales people use qualification questions like:
- Do they have a pain you can solve?
- Do they ever buy from small vendors or just the big boys?
- Do they have a project to improve the area you help?
- Does the project have a goal or improvement target?
- Do they have a budget for the project?
- Is there a compelling event (a deadline) for delivery of the project?
If the answer to all of these is “no” you should qualify them out. In fact a “no” answer to any of the questions will mean you should qualify them out. At best you will be trying to persuade them to start a project and get it on their priority list.
Better to find prospects who are looking for improvement in an area your product delivers.
If you are doing missionary selling of a brand new category of tool that is ahead of its time, beware. If customers are not even doing improvement projects in your area maybe there is no demand or it’s going to be hard going to create demand where people had never considered trying to improve.
The first trick: let the customer build their own baby
Your prospect is doing an improvement project. It could be an internal dashboard tool. Make it about them: enable them to visualise how their internal tool will look & feel. Customers are more likely to fall in love with something they invented than your unknown unproven product. Don’t show up and throw up — in transmit mode telling them all about the 25 features of your product. Instead find out what success would be and help them build their own baby.
Find out how their improvement project will be measured (OKR, MBO or KPI) and design the trial to prove they can deliver the benefits they want. Co-invent the project plan and the timescales so you do it together.
The second trick: charge. More than you think
The wisdom of the Workshop was clear, there are many benefits of charging.
- It qualifies out the tyre kickers
- Positions you as people to be respected
- Gets you on to their approved supplier list early when the amounts are small
- You get money but a fixed amount is best
- The more you charge, the more respect you get
- You don’t waste time on a freemium user base.
Clearly there are many routes to success and free trials at the lower end can work very well but don’t default to free trials.
A trial is limited in time, unlike a freemium model. Opinion on freemium is polarised but trying to persuade a customer to buy who had only used a crippled de-featured free version sounds hard to me. You’ll still have to sell them on the full price version.
The third trick — have a one page trial success understanding document
It should set out your mutual understanding of
- Success criteria
- Team working approach such as weekly updates
- Next steps namely that they intend to buy if the criteria are met
- Signed by both parties as an understanding but not a legal contract.
Without this they are not serious.
The fourth trick — use proven commercial tactics
Create scarcity by explaining you only have limited capacity to support trials.
Note their procurement approval thresholds (typically £25k including VAT in banks).
Make sure you get on their approved supplier list.
One tactic is to close a full purchase but insert a cancellation clause if the trial fails. This is legally identical to the normal trial and then purchase but means you get everything ready in advance.
Try parallel processing of technical, commercial, stakeholder and compliance streams of activity.
Finally, hold regular Kaizen (retrospective) improvement sessions on your trial tactics to learn what works.
The first sale can be the hardest. Don’t make it a trial — let the customer build their baby.