October 10, 2018 | Go-To-Market

Busting Myths about Startup Success in Sales

Jim Wilson

Written by

Jim Wilson

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Right now in startup sales, the current trend is to get to scale quickly. Founders rush to hire a VP, sign up huge clients, and ride off into the sunset. While this sounds like the right strategy, for many companies it can do more harm than good. Early on, sales is a process of learning about your product and how it fits into a customer’s business. As a result, there are many lessons founders need to learn before they try to grow the business quickly.

Here are the top myths and realities that startups should be aware of so they build the right foundation for future sales.

Myth: The first sales hire should be a VP of Sales

Reality: Your real first sales hires should be builders who can operate in a barebones environment.

At the early stages of a startup, a VP of Sales requires more set up, process, and infrastructure than the company can afford. Instead, the most important sales executives should be the founders and CEO. They need to close the first deals themselves so they can understand what works and what doesn’t. Hiring sales reps that know how to build a pipeline and learn the early sales motions, with minimum support and guidance, is a better path for early stage companies.

Myth: Hire athletes vs position players

Reality: Domain expertise matters for early stage companies in new markets.

Do you want a generally great salesperson, or someone versed in your field? While I’m a big believer that sales skills can be transferable, for early stage companies you need to find relevant domain expertise. People who understand the market, the buyer, and the product will ramp up faster, require less training, and gain early insight into the sales learning curve.

Myth: Everything should be data-driven

Reality: Most sales metrics, especially ones that measure efficiency, don’t matter in the early stages.

It’s better to build your understanding of the best target customer, the ideal buyer, and how companies are solving the problem that your technology removes today. In the early days, you may not find any patterns among customers. Still, you should start to look for them so you can focus on areas where you can win sales and gain market knowledge. Once you’re able to notice patterns, choose the key metrics that matter for your business.

Myth: Sell to big enterprise companies

Reality: Target companies with shorter sales cycles to optimize go-to-market learning.

Larger companies come with a higher cost of sales and more complex legal, paperwork, and validation processes. It’s generally a better idea to focus on smaller, more modern companies with swift adoption rates and shorter sales cycles. These companies are also more often looking to innovate than large enterprises, who will have a higher bar to bring in new technology.

Myth: Use discounts to win customers

Reality: Be willing to say no to excessive discounting. Customers will respect you more for it.

Instead spend more time on packaging and pricing research. This allows sales to align value with price while also testing different price points in the market. You should also focus on giving customers more choices with different entry points and price levels. Above all, be willing to walk away from deals. How a customer acts during the buying process is an indication of how difficult they will be to support. You want to avoid overly demanding customers with outsized expectations, especially early on.

Myth: Once you have repeatability you can start to scale

Reality: Spend more time confirming repeatability and building a strong foundation to support sales before you start to scale.

Most companies, often encouraged by investors, can’t wait to start scaling. In reality, companies are better off with a longer period of deal-making, more experimentation and confirming repeatability, while focusing on building a solid foundation. This includes sales enablement (to ramp up sales reps), demand generation (to build top-of-the funnel leads), and customer success onboarding (to reduce churn and build a happy customer base). Until that foundation is built, companies can’t scale in a sustainable manner.

Myth: Prospecting and cold calling are dead

Reality: The ability to research, target, and prospect are core sales skills for early stage companies.

You need to identify accounts that are most likely to have the problems your company solves. The good news is that there are tools that automate almost every aspect of prospecting, including dials, emails, research, and all aspects of engagement. Focus on a strong content strategy and market point of view, including relevant material for a prospect. Then make sure all of you salespeople can not only explain the solution, but also ask the right questions. The best prospectors sound more like industry consultants than sales people, and companies should work to get to that level of expertise.

Myth: Be frugal, conserve cash, and sell the vision

Reality: Building a top notch sales organization is an investment that will pay multiples of what you spend, so be prepared to invest.

I understand why this is hard. Founders have likely boot strapped the company, giving it a lean and mean culture. Keep the scrappy culture, but as you grow you need to spend money to make money. Attracting and retaining top-tier talent is probably the single biggest contributor to growth. The talent pool is tighter than ever, so do the research to understand market rates and have realistic expectations of the talent-pay equation. Once you build an all-star team, give them the tools needed for them to be successful.

As your company grows your sales needs will change and different rules will apply. Avoiding myths early on will help you focus on creating a solid plan, executing flawlessly, increasing sales, and ultimately building your business. Good luck and good selling!