3 Sales Tips for Startups – Creating a Burning Platform

Posted on Oct 4, 2009 | 43 comments


burning platformThis is part of my ongoing series Startup Advice.  Many entrepreneurs who start technology companies are product people, technologists or savvy business people who worked previously for a larger company.  Most start-up entrepreneurs have little or no sales experience.  I know I didn’t.  But through nearly a decade of startups I learned that sales comes down to three essential elements:

1. Why Buy Anything? This is the easiest one for most entrepreneurs.  If you sell a product direct to a customer – in person or on the phone – you need to understand what their pain points are and position your product benefits against those pain points.  I’ll do a full post on this another day.  But most good entrepreneurs do this naturally.

Even businesses that attempt to sign up customers directly on a website need to answer this question for people albeit programmatically and through good website copy.  Many, many tech companies I meet start with a set of “awesome features” and present them to me (and I suspect also to customers).  They end up building what is called a FNAC (feature, not a company) as most people won’t pay for them.  I first heard this term from the guys at First Round Capital.

2. Why Buy Mine? This one is a little harder but still quite straightforward.  Not only do I need to understand a customer pain point that my solution solves but I also need to convince them that my product does it better or most cost effectively than others on the market.

Many entrepreneurs think naively that it’s not good to have competitors.  To the contrary.  Customers seldom like to buy unless they perceive they have options.  They like to feel like they compared your solution to something else on the market.  If nobody else does what you do then maybe it isn’t really such a big market after all.  (Incidentally, VC’s hate when they hear companies pitching who say, “I don’t have real competitors” as I outlined point three in the linked post).

I’ll cover “Why Buy Mine” in a later post, but my quick answer is that referenceability is the most critical tool to solving this problem.  By having reputable people from reputable businesses listed in case studies, on the website with quotes and/or willing to take phone calls makes all the difference in the purchasing decision.

Shopping Cart buttons3. Why Buy Now? The real test of sales and the topic of my post is “why buy now.”  It’s what kills most sales cycles including raising venture capital.

Great sales leaders know that you can only sell effectively when your sales cycle matches the customers buying cycle.  That is why they qualify customers really hard and ask the sort of questions that would make us non-sales-trained people squeamish.  Asking customers directly whether they have budget this quarter for a program like your company offers takes nerve.  Great sales people are also direct about asking whether the individual that they’re speaking with controls the budget.

When you qualify a customer, if the customer has shown interest in your product but isn’t ready to buy then they get sent over to marketing.  Great sales companies manage this very effectively and have sales prospects put into 3 buckets: those ready to buy this quarter (A), those ready to buy soon (B) and those not likely to buy in the next 12 months but still interested (C).

Most companies are not good at managing integrated sales & marketing departments – particularly startups.  My old employer, Salesforce.com (they bought my company Koral), were masters at this.  They generated an enormous amount of inbound leads through PR, email blasts and heavy efforts with analysts such as Gartner Group, IDC, Aberdeen Group, etc.

Initially the leads need to be qualified.  If you’re not ready to buy then you go into an email database.  Their goal is to get you to appear in person at city roadshows that they run or to come to their annual Dreamforce conference.  Here they surround you with sales professionals, product people and, of course, lots of referenceable customers!  If you appear then they’ve increased the probability that you’re closer to becoming an A or a B buyer.

In products designed to sell directly on the web the process is no different.  Your goal as a website is to elicit my email address out of me with as little else required as possible.  With this email address you can continue to market to me even if I don’t buy today.  That’s why websites offer newsletters.

Websites are also getting much more sophisticated using techniques such as re-marketing to find a way to drive you back to their website.  If you spent time at a site you might not be aware but they’ve possibly dropped a cookie on your computer and use pixel tracking to follow you around the web.  If you were at a ladies online retail store don’t be surprised if you start seeing advertisements for that same store next time you’re reading the Washington Post or on Yahoo!.  Companies such as Undertone Networks or SeeWhy (run by my friend Charles Nicolls who’s a BI expert formerly from Business Objects) offer these products to websites.  If I didn’t get you to buy when you came to my site I know you were at least interested.  I just need to get your back and find a more compelling reason for you to BUY NOW!

Note that the “why buy now” problem exists with VCs also even though nobody will ever tell you this.  If you meet a partner who really seems to like you buy he/she is in the process of closing another deal it may be a good 2-3 months until he’s ready to look seriously at another deal.  I like to say that if a partner has recently done a deal he is often in the penalty box for a while.  Not always, but it’s your job to politely find out.  You need to qualify VCs the same way you qualify sales leads.

limited saleSo is there nothing you can do to accelerate sales? Actually within a certain margin you can bring sales forward slightly.  In sales we do this by creating a “compelling event” or as some people call it “a burning platform” (in case the reference isn’t obvious, when you’re on a oil platform that’s burning you have no choice but to jump.

It’s the reason that vendors create limited time period sales or exclusive offers only available until they run out.

If you work in enterprise sales you need to be able to not only identify the pain of “why buy anything” but why buying now is going to be a significant economic benefit.  As an example, if you’re a network monitoring tool such as Gomez and you can demonstrate that your customers performance is slow and for every second of latency they’re losing 8% of sales to abandonment resulting in $20,000 / day – you’ve got a burning platform.

There are many techniques but all involve proving that the customer will have more benefit by acting now (lose weight before Summer!), will have more pain if they don’t act (your customers are abandoning your shopping cart) or that they’re behind the competitor.

Can you express your proposition to customers in terms of a compelling event?  If so, I suspect your sales will grow more quickly.

  • http://seekingventurecapital.com jasonspalace

    “If nobody else does what you do then maybe it isn’t really such a big market after all.” or maybe it's an emerging market?

  • http://www.pipit.com david fishman

    …. or perhaps your Co. is a first mover?

  • http://www.jasonspalace.com/ jasonspalace

    “If nobody else does what you do then maybe it isn’t really such a big market after all.” or maybe it's an emerging market?

  • http://ouriel.typepad.com OurielOhayon

    Mark, just a funny coincidence about your FNAC – feature not company. FNAC is an empire in France, an huge offline Amazon (with online operation on FNAC.fr). I guess they are in a company, not a feature :)

  • http://davidfishman.tumblr.com/ David Fishman

    …. or perhaps your Co. is a first mover?

  • Gilles

    Nice article. I just wanted to commenton the part where you say: “Many entrepreneurs think naively that it’s not good to have competitors. To the contrary”. It is not that they really do think that way, it is what is told to them by VCs. When you come up with a new idea they tell you ” X,Y,Z does something similar. Why don't you come up wih something, fresh, orginal?” Others will tell you ” If you have more than 4 competitors just find a new market” regardless of how different your product may be. Competition brings innovation but the truth is that risk-averse VCs hate direct competition.And entrepreuneurs know that. Most of them know their competition, some don't have plan to beat it, some have one but just seek to ease VCs fears by saying dumb thing like “we have no real competitors”.

  • http://ouriel.typepad.com OurielOhayon

    Mark, just a funny coincidence about your FNAC – feature not company. FNAC is an empire in France, an huge offline Amazon (with online operation on FNAC.fr). I guess they are in a company, not a feature :)

  • traceyriese

    Ah, but this just takes you back to point two: Why buy from ME? New and better is often an improvement on an existing process that has yet wring all the pain from the situation. Better, faster, cheaper are still the best marketing words in the business, but they all depend on someone having done something else first.

  • Gilles

    Nice article. I just wanted to commenton the part where you say: “Many entrepreneurs think naively that it’s not good to have competitors. To the contrary”. It is not that they really do think that way, it is what is told to them by VCs. When you come up with a new idea they tell you ” X,Y,Z does something similar. Why don't you come up wih something, fresh, orginal?” Others will tell you ” If you have more than 4 competitors just find a new market” regardless of how different your product may be. Competition brings innovation but the truth is that risk-averse VCs hate direct competition.And entrepreuneurs know that. Most of them know their competition, some don't have plan to beat it, some have one but just seek to ease VCs fears by saying dumb thing like “we have no real competitors”.

  • traceyriese

    Ah, but this just takes you back to point two: Why buy from ME? New and better is often an improvement on an existing process that has yet wring all the pain from the situation. Better, faster, cheaper are still the best marketing words in the business, but they all depend on someone having done something else first.

  • larrychiang
  • http://www.growvc.com valto

    agreed. when a person walks to home depot to buy a drill, they're not really buying a drill, they are buying holes

  • http://www.growvc.com valto

    agreed. when a person walks to home depot to buy a drill, they're not really buying a drill, they are buying holes

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  • http://bothsidesofthetable.com msuster

    yeah, but to build a big business you need to time the market right. People who are too early fare no better than those who are too late. Just ask GO or the Apple Newton.

  • http://bothsidesofthetable.com msuster

    Yes, I found this funny when I first heard the term because I used to live in France and bought all my electronics there. But safe to say few Americans have heard of it so I tend to still use FNAC as feature, not a company.

  • http://bothsidesofthetable.com msuster

    Any VC who is telling you this, Gilles, isn't worth working with. All companies have competitors. The key is, can you do something novel that executes on the idea better.

  • http://bothsidesofthetable.com msuster

    Totally agree

  • http://bothsidesofthetable.com msuster

    yeah, but to build a big business you need to time the market right. People who are too early fare no better than those who are too late. Just ask GO or the Apple Newton.

  • http://bothsidesofthetable.com msuster

    Yes, I found this funny when I first heard the term because I used to live in France and bought all my electronics there. But safe to say few Americans have heard of it so I tend to still use FNAC as feature, not a company.

  • http://bothsidesofthetable.com msuster

    Any VC who is telling you this, Gilles, isn't worth working with. All companies have competitors. The key is, can you do something novel that executes on the idea better.

  • http://bothsidesofthetable.com msuster

    Totally agree

  • Eric

    Jill Konrad's “Selling to Big Companies” should be required reading.

  • http://bothsidesofthetable.com msuster

    Thanks, Eric. I don't know the book so I appreciate the pointer.

  • Eric

    Jill Konrad's “Selling to Big Companies” should be required reading.

  • http://bothsidesofthetable.com msuster

    Thanks, Eric. I don't know the book so I appreciate the pointer.

  • http://entrepreneurenclave.com/ Matt

    Great post! I want to add how important sales is. As Guy Kawasaki says in Art Of The Start… sales is the most important. All too often entrepreneurs get caught up in the fancy specific details that don't matter if sales can't be made. You know, the website, the business card, the logo, the computer monitor size, etc… make sales… if you see it flies, then revisit some of the tiny details. Execution is key.

    I'd also like to add that I was taught that the best time to seek VC funding is when it is not needed. eg. company X is already making money and really doesn't need more. Additional funding will help them grow. I am always talking to an entrepreneur who has an awesome concept but they think they need $500,000 in funding to begin operations. I'd encourage them to find a way to make money and build it up. Grassroots style.

  • http://entrepreneurenclave.com/ Matt

    Great post! I want to add how important sales is. As Guy Kawasaki says in Art Of The Start… sales is the most important. All too often entrepreneurs get caught up in the fancy specific details that don't matter if sales can't be made. You know, the website, the business card, the logo, the computer monitor size, etc… make sales… if you see it flies, then revisit some of the tiny details. Execution is key.

    I'd also like to add that I was taught that the best time to seek VC funding is when it is not needed. eg. company X is already making money and really doesn't need more. Additional funding will help them grow. I am always talking to an entrepreneur who has an awesome concept but they think they need $500,000 in funding to begin operations. I'd encourage them to find a way to make money and build it up. Grassroots style.

  • http://www.lightspeedsystems.com/ Justin Davis

    I like your thoughts. Can you send me a link to your other posts?

    Justin Davis
    Disclaimer: Author does not represent any legal position of
    Lightspeed Systems Inc. and is the author's opinion only, and
    Lightspeed only provides an internet filter to K-12 schools and institutions

  • Mike O'Horo

    Good, practical advice regarding the “what” of selling. As a sales trainer and -coach for the past 18 years, I've observed that most people grasp the “what” readily, but struggle with the “how.” Unfortunately, IMO most of the “how” advice out there relates to how to get someone to buy, to say “yes.”

    More fundamental, perhaps, is the mindset. Borrowing from Jim Collins's advice in “Good to Great” that the not-to-do list is more important than the to-do list, the biggest not-to-do in sales is trying to achieve a pre-determined outcome, i.e., getting someone to buy. This may sound counter-intuitive, but the harsh truth is that, even though we know our product/service can be valuable for people LIKE this prospect, we don't know whether or not this specific prospect should buy.

    Sales is not about persuading, but about conducting, a collaborative, honest, thorough investigation of the prospect's self-interest in relation to a business problem or opportunity via a process that enables stakeholders to make a well-informed, sustainable, self-interested decision. You invest in the legitimacy of the decision, not the content of the decision. If the sales investigation reveals that it's a great idea to do business together, you'll both want to do it; so much for the problem of “closing.” If the investigation reveals that it's not a good idea to do business, I would hope that sellers have sufficient integrity to acknowledge that, shake hands and move on, preserving their reputation and future welcome at the decision table.

    As the Cluetrain Manifesto said long ago, “There is no market for pitches.” When you pitch or try to persuade, the buyer is certain that what you urge is good for you. He doesn't yet know whether or not it's good for him, so he must keep you at bay until he resolves that question. That's why salespeople so often get locked outside the decision conversation: If their pitching behaviors show that they're trying to get me to buy, they've proved that they already made a decision based on their self-interest, and thereby have no credible role as objective participants in a decision process based on mine.

    Conversely, if the seller's behavior shows that their entire purpose is to help me make a great decision, trust escalates and I welcome their contribution. Even if it turns out that I shouldn't buy this time, the trust they've earned will preserve their seat at the decision table, and increase the odds that I'll refer them to others who would benefit from their decision expertise. A salesperson's most valuable asset is decision facilitation, not product expertise.

    Some ask, “But what if too many good of the “good” decisions I facilitate are not to buy from me?” That means that you're in the wrong market, positioned improperly in the right market, or aligned with a problem with too little impact to require a decision, action and investment. “No decision” has had the largest market share for a long time.

  • Mike O'Horo

    Good, practical advice regarding the “what” of selling. As a sales trainer and -coach for the past 18 years, I've observed that most people grasp the “what” readily, but struggle with the “how.” Unfortunately, IMO most of the “how” advice out there relates to how to get someone to buy, to say “yes.”

    More fundamental, perhaps, is the mindset. Borrowing from Jim Collins's advice in “Good to Great” that the not-to-do list is more important than the to-do list, the biggest not-to-do in sales is trying to achieve a pre-determined outcome, i.e., getting someone to buy. This may sound counter-intuitive, but the harsh truth is that, even though we know our product/service can be valuable for people LIKE this prospect, we don't know whether or not this specific prospect should buy.

    Sales is not about persuading, but about conducting, a collaborative, honest, thorough investigation of the prospect's self-interest in relation to a business problem or opportunity via a process that enables stakeholders to make a well-informed, sustainable, self-interested decision. You invest in the legitimacy of the decision, not the content of the decision. If the sales investigation reveals that it's a great idea to do business together, you'll both want to do it; so much for the problem of “closing.” If the investigation reveals that it's not a good idea to do business, I would hope that sellers have sufficient integrity to acknowledge that, shake hands and move on, preserving their reputation and future welcome at the decision table.

    As the Cluetrain Manifesto said long ago, “There is no market for pitches.” When you pitch or try to persuade, the buyer is certain that what you urge is good for you. He doesn't yet know whether or not it's good for him, so he must keep you at bay until he resolves that question. That's why salespeople so often get locked outside the decision conversation: If their pitching behaviors show that they're trying to get me to buy, they've proved that they already made a decision based on their self-interest, and thereby have no credible role as objective participants in a decision process based on mine.

    Conversely, if the seller's behavior shows that their entire purpose is to help me make a great decision, trust escalates and I welcome their contribution. Even if it turns out that I shouldn't buy this time, the trust they've earned will preserve their seat at the decision table, and increase the odds that I'll refer them to others who would benefit from their decision expertise. A salesperson's most valuable asset is decision facilitation, not product expertise.

    Some ask, “But what if too many good of the “good” decisions I facilitate are not to buy from me?” That means that you're in the wrong market, positioned improperly in the right market, or aligned with a problem with too little impact to require a decision, action and investment. “No decision” has had the largest market share for a long time.

  • Mike O'Horo

    Good, practical advice regarding the “what” of selling. As a sales trainer and -coach for the past 18 years, I've observed that most people grasp the “what” readily, but struggle with the “how.” Unfortunately, IMO most of the “how” advice out there relates to how to get someone to buy, to say “yes.”

    More fundamental, perhaps, is the mindset. Borrowing from Jim Collins's advice in “Good to Great” that the not-to-do list is more important than the to-do list, the biggest not-to-do in sales is trying to achieve a pre-determined outcome, i.e., getting someone to buy. This may sound counter-intuitive, but the harsh truth is that, even though we know our product/service can be valuable for people LIKE this prospect, we don't know whether or not this specific prospect should buy.

    Sales is not about persuading, but about conducting, a collaborative, honest, thorough investigation of the prospect's self-interest in relation to a business problem or opportunity via a process that enables stakeholders to make a well-informed, sustainable, self-interested decision. You invest in the legitimacy of the decision, not the content of the decision. If the sales investigation reveals that it's a great idea to do business together, you'll both want to do it; so much for the problem of “closing.” If the investigation reveals that it's not a good idea to do business, I would hope that sellers have sufficient integrity to acknowledge that, shake hands and move on, preserving their reputation and future welcome at the decision table.

    As the Cluetrain Manifesto said long ago, “There is no market for pitches.” When you pitch or try to persuade, the buyer is certain that what you urge is good for you. He doesn't yet know whether or not it's good for him, so he must keep you at bay until he resolves that question. That's why salespeople so often get locked outside the decision conversation: If their pitching behaviors show that they're trying to get me to buy, they've proved that they already made a decision based on their self-interest, and thereby have no credible role as objective participants in a decision process based on mine.

    Conversely, if the seller's behavior shows that their entire purpose is to help me make a great decision, trust escalates and I welcome their contribution. Even if it turns out that I shouldn't buy this time, the trust they've earned will preserve their seat at the decision table, and increase the odds that I'll refer them to others who would benefit from their decision expertise. A salesperson's most valuable asset is decision facilitation, not product expertise.

    Some ask, “But what if too many good of the “good” decisions I facilitate are not to buy from me?” That means that you're in the wrong market, positioned improperly in the right market, or aligned with a problem with too little impact to require a decision, action and investment. “No decision” has had the largest market share for a long time.

  • Rishi

    It seems for an entrepreneur who has done his/her homework before building the product, sales strategy should be easy (compared to one who hasn’t). Your three questions align with the product strategy….
    – Why buy anything? (easy to answer if the start-up had thought of “What is that problem we are solving?”)  
    – Why buy mine? (easy to answer if the start-up had thought of “What is our target market?”, “Who are our competitors?”)
    – Why buy now? (easy to answer if the start-up had thought of “Is the timing right for the launch of the product?”, “Are customers ready for it?”)

    the real test lies in whether a start-up can execute this sales strategy…that’s where the second half of your post is very helpful. Please keep it coming. :)

  • http://www.wesource.com/ Josh at WESource

    I like the partnered conference technique.  I have worked with a company that compliment Gartner and went to all of the Gartner conference, now I know why. 

  • bva100

    Excellent article. So, what is the best way to deliver the burning platform value proposition to a potential buyer or investor? The trick is not a “show up and throw up pitch” as many people outside of sales believe. Instead, plan out a few key questions to ask the potential buyer. In the Gomez example a couple questions might include:

    “What would it mean for your business if you could add another $20,000 to your top line every day?” (burning platform)

    “If you found a way to increase next quarter’s revenue by $1.8 million, how would it affect your reputation within the organization?”
    (champion creation and the formation of personal value. A good trick for “acting now” when integrated with the burning platform)

    “Who normally makes the decision to buy with you?” (power/budget control)

    If your timing is just off and the budget truly is dry:
    “If you found the perfect solution to your problem, would you be able to fit it into the next cycle’s budget?”
    (truly a qualified buyer?).
    “What does Gomez need to demonstrate to you to reserve a place in the budget for the next cycle?”
    (cycle)

    Notice that none of these directly state “this is how we reduce your latency by 8%…” The demonstration of the sales person’s awesome product/solution should only come after he or she understands the answers to the questions above.

  • http://twitter.com/chrispainter Chris Painter

    I second that. Having learned from my own startup experience, timing is critical. Too early or even being first, is just as bad as too late.

  • Peter

    What I find appalling is that many VCs like Mark sound very reasonable and hands-on in their blogs, but when you look at their actual funding decisions (hint: Color — 42 MM for a photo sharing app) you must come to the conclusion that they are either schizophrenic, spineless, or else. 

    If VCs were actually doing their part, as described in the blog above, why do we get dozens of kockoffs and mee-toos funded that no one seems to use or be interested in outside the Silicon Valley bubble?

    Another explanation might be that in reality, only a certain group gets these ridiculous fundings, and most of the time, through the same usual suspects.  Are they part of a hidden network (of a certain ethnicity) that tabs
    into millions of pension contributions from unknowing working people and funnels them via their buddy VCs to their
    buddy entrepreneurs of similar ethnicity?

  • http://whoat.net/ Lee Blaylock

    Companies don’t make a decision unless there is a consequence.  The more negative the consequence, the more likely they will make a decision in your favor. Think selling firewalls to a company for the firs time.  Or think about why you put gas in your car.  If you can find the consequence, real or political, exploit it and you will close more deals.

  • http://www.giftsspace.com/blog Online Strategies

    Sales happens when people are excited about your solution. Creating that excitement and converting it to sales is everything a good sales process is all about.

  • http://www.alexandrefournel.com/ Alexandre FOURNEL

    Absolutely loving this comment!

  • Mike O’Horo

    Thanks, Alexandre.

  • http://www.DesignA.ws/ Design A

    Good read! I believe you can accelerate sales (decrease time delay) buy using remarketing. I also have a theory that if you re-enforce and align marketing with sales to prospective opportunities, targeting by their exact zip codes, with dedicated budget that this will reduce comparison shopping significantly because you’re always top of mind, literally top of page for those individuals making decisions. – I’m referring to using AdWords by the way. They key here is that your CLV has to be high enough to warrant being super aggressive with leads in the later sales stage(s) or else you’re just spinning your wheels.

  • http://www.huntshire.com/ Shankar Ganapathy

    “Why now” is a big problem. But when one is selling a concept, there is hardly any data to substantiate the value. In this case one needs lead users who believe in the idea and are ready to take the plunge. Any suggestions on what are the parameters to find such customers?

  • http://www.rainmakervt.com Mike O’Horo

    You can’t substantiate value with data. Value is perceived subjectively. Your biggest competitor is “do nothing.” Most of us don’t give much though to the cost of doing nothing. A knowledgeable seller can facilitate a buyer recognizing and expressing the buyer’s perceived cost of doing nothing, and can even get the imputed economic impact expressed in dollar terms.