Blake Borgeson, in blog form

Geoffrey Moore, author of Crossing the Chasm, one of the most famous startup marketing books ever, spoke at Texchange Austin (AustinStartup blogged about it pre-event here) last night about selling to your first business customers as a startup with a new technology product.

His talk was great in my opinion, and was really insightful for me since my exposure to business sales strategy is fairly limited.  His advice ranged from the highest level ideas about your strategic approach to sales down to how to best look the person in the eye to tell if they’re really a qualified prospect.

The general theme was how to break into a b2b market in a downturn as a new startup.  Below I’ve recounted the overall flow as best I could remember–next time maybe I’ll remember to bring a small paper notepad to an event like this.

• In good times, as a tech company you’re usually targeting the head of IT.  Usually you’re making a product for particular users in the company within a specific zone of the company, for instance you’re salesforce trying to break into supplying companies’ sales teams with saas crm.  IT in good times has maybe 15-25% of their budget to play with.  I can’t remember the term he used for that money.  But they’re basically supposed to use that to the best of their ability to make the company better equipped to be more productive and efficient.
  • In those times, you buy leads, and do any form of lead generation you can think of to dredge up lists of the IT heads who might be interested in buying your stuff.  A good indicator, for instance, is if they currently have a product of one of your competitors, and you think you have a strategic advantage for that organization.
  • Big established companies are extemely good at all this.
• In bad times, the excess money in IT gets cut before almost anything.  So now, there’s no money left to spend on new tech.  You have to have some method for getting money taken from somewhere else.
  • Big companies aren’t as good at this–it takes a more manual, methodical, personalized approach for each potential customer.
  • You’re still hoping to provide something of value to a particular zone of the company, say sales, but now, in order to make the sale, you have to target someone with the power to reallocate budget.  That person is generally going to be a top-level executive, tasked with profit-loss responsibilities.  In other words, only someone who’s responsible only for the profits they generate, regardless of how they’re generated or where they spend their budget, is going to be able to reallocate in bad times to buy something new.
  • You can’t find these people using lead generation.
  • You have to directly target the company, learn about the executive, then get referred for a meeting.
    • You must have a direct connection to the person.  Find one.
    • Convince that direct connection that you’ve got a hunch that this company could greatly benefit from your product for these reasons, and tell them how grateful you’d be if they could recommend to the target that a meeting be set up to discuss the solution.
    • Your highest level person (founder/head of sales) has to be the one doing this.  They need to get this first meeting and go to the first meeting, otherwise there’s basically no way to get a meeting with the top executive you’re shooting for.
  • The goals of the first meeting:
    • Sell them on the fact that they have a serious problem; read what kind of person they are
      • conservative: clearly beyond a doubt you have to save them tons of money
      • pragmatic: give them the symptoms you believe they might have in their company of a serious problem your product solves
      • visionary: show how your product will set them apart and open up tremendous new opportunities to pursue
    • Qualify them by getting a completely convincing confirmation that, if you do a week-long study with their people to figure out their situation, then present a convincing proposal for your solution, they’ll follow through and go to the mat for you to make it happen.  If you’re not convinced, they’re not qualified.  Don’t waste your time. Follow your gut.
  • The research period and proposal delivery
    • Learn as much as you can about everything you could use about the company and how they’ll benefit from your product.  That will help you in this sale and in honing your product and pitch for later sales.  Get a green light to speak with basically anyone.  This is when you send in your salespeople and I think work with them as well on site, helping them learn the lay of the land for your target customer and see how to put together the proposal.
    • Drag out the delivery date as long as absolutely possible.  Send an outline when you finally send something, not the final proposal.  Keep them wanting the proposal until they really need it and are ready to sign that day, because if you send it before they’re ready, they’ll hold onto it, and that will quite possibly be the end, but you’ll kill yourself waiting to hear back.
  • Close with your top guy.
• Once you’ve made a few good sales in this way, you have far more knowledge of your potential customers and their problems, and you have momentum to talk about, so you should be on the way to scaling up.  That’s about as far as the talk went.

Lots of great visual descriptions scattered throughout, like describing the barrier to entry in a new market as a membrane, with self-defense mechanisms built in to keep people exactly like you out until you’re a proven solution, made the talk entertaining and memorable.  If Geoffrey Moore is speaking at an event you can attend some time in the future, take advantage of it.

If you’re reading this and have a favorite book of all time on selling to businesses as a startup, please post a comment. Thanks!