The ultimate guide to founder-led sales | Jen Abel (co-founder of JJELLYFISH)

Name: The ultimate guide to founder-led sales | Jen Abel (co-founder of JJELLYFISH)
Uploaded: 2024-11-24T12:00:10.000Z
Duration: 2 h 32 min 5 s

How to Master Founder-Led Sales

Introduction to Founder-Led Sales

The episode aims to provide tactical advice on sales, particularly focusing on founder-led sales, which is crucial for early-stage founders.

Founders often struggle with late-stage sales advice; the key is understanding that the founder embodies the product in its early stages.

Emphasizes vulnerability in conversations with potential customers, highlighting the importance of learning rather than immediate revenue.

Guest Introduction: Jen Abel

Jen Abel, co-founder of Jellyfish, specializes in helping early-stage founders with sales and customer discovery.

The discussion will cover practical steps in the sales process including lead generation, outreach messaging, structuring calls, and closing deals.

Jen shares actionable phrases and common pitfalls encountered during each step of the sales process.

Importance of Founder-Led Sales

Founder-led sales are essential for startups as they lack brand equity and marketing engines at their inception.

This approach helps founders secure their first customers by leveraging their unique insights and experiences that resonate with potential clients.

Aligning Vision with Market Reality

The concept of founder-led sales involves aligning a founder's vision with market needs before a formal product launch.

Founders must communicate their novel insights effectively to engage potential customers who may not yet understand or visualize the product.

Conclusion & Call to Action

Introduction to Sales and Founder's Role

The Importance of Founder-Led Sales

Discussion on the advantages of using Brave Search, emphasizing fewer ads and community-driven ranking options.

Introduction of Vanta as a platform for managing security practices and compliance, highlighting its automation capabilities.

Emphasis on the misconception that hiring a salesperson alone can handle sales; founders should actively engage in sales processes.

Competitive Advantage of Founders in Sales

Founders possess unique insights as visionaries, making them more effective in communicating their product's value than hired salespeople.

The founder's position at the top of the hierarchy attracts market interest, allowing them to share exclusive knowledge with potential customers.

Founders can identify emerging opportunities during conversations that may be overlooked by sales staff, leading to valuable insights.

Learning from Customer Interactions

Real-world example from a CMO discussing how founders' direct engagement with customers revealed critical feedback about product-market fit.

Highlighting the risk of miscommunication when relying solely on sales teams; accountability is enhanced when founders are involved directly in discussions.

Sales Process Framework

Understanding the Sales Cycle

Acknowledgment that many founders lack experience in sales but need to develop skills for effective selling.

Introduction to a structured framework for understanding key steps within the sales cycle.

Key Steps in the Sales Cycle

Overview of traditional stages: intro call, demo (second call), proposal discussion (third call), feedback gathering (fourth call), and procurement introduction (fifth call).

How to Engage Potential Customers in a Competitive Market

Understanding the Buying Process

Startups often focus on converting non-consumers into consumers, which presents unique challenges in understanding customer needs and behaviors.

Gaining attention from potential customers is crucial; many are inundated with outreach from various SaaS tools, making it difficult to stand out.

The Importance of Founder-Led Sales

Outreach from founders carries more weight and can pique interest, prompting recipients to delve deeper into the message.

Providing novel insights—whether technical or business-related—can inspire curiosity and engagement among potential customers.

Crafting Effective Messaging

Focus on relevance over personalization; messages should clearly articulate why they matter to the recipient's role.

Highlight counterintuitive ideas that provoke thought or surprise, encouraging recipients to pause and consider the message further.

Key Components of Outreach

Keep communications concise (3-4 sentences max), especially for mobile viewing. This aligns with how executives prefer to receive information.

Emphasize problems rather than solutions initially; this approach creates intrigue about what you offer without overwhelming the recipient.

Real-Life Application of Strategies

Cold calling remains an effective method alongside email and LinkedIn outreach, often yielding higher interest rates than emails alone.

An example from Jellyfish illustrates using a provocative statement like "zero to one sales talent doesn't exist" as an engaging opener in cold emails.

Conversion Rates vs. Win Rates

Conversion rates are important but should be viewed through the lens of win rates; high win rates can compensate for lower conversion rates in outbound efforts.

Understanding Sales Metrics and Product Market Fit

The Role of Interest Rates in Sales

Interest rates in sales are influenced by win rates, highlighting the importance of understanding both metrics for effective sales strategies.

A healthy conversion rate from outbound efforts typically ranges from 5% to 7%, but can vary significantly based on the founder's insight into the problem being solved.

Impact of Founder Insight on Engagement

Engagement rates can differ dramatically (e.g., 2% vs. 12%) based solely on the founder's understanding of market needs, emphasizing the critical role of product-market fit.

Founders often misattribute low engagement to sales problems rather than examining whether their solution addresses a widely felt issue.

Evaluating Product Viability

Founders frequently question if their product is desirable or if they lack selling skills; this dilemma complicates quick assessments of product viability.

The timeline to achieve product-market fit varies among startups, with some achieving it quickly while others take longer due to differing approaches.

Market Problem vs. Technical Insight

Companies like Vanta succeeded by starting with a clear market problem before developing their products, contrasting with others that began with technical insights and later sought market fit.

Starting with a market-first approach may lead to quicker product-market fit but could limit potential upside compared to those who start with innovative technical solutions.

Finding Quality Leads

Before investing in tools for lead generation, founders should focus on manually identifying a small number (30) of potential leads and crafting personalized outreach messages.

Insights on Targeting Prospects and Sales Strategies

Understanding Parameters for Outreach

The discussion begins with identifying commonalities among potential prospects, such as team size, industry, tenure in their role, and previous career roles. This helps in collecting parameters for effective outreach.

Initial Outreach Efforts

By sending out 30 personalized notes through various channels (email, LinkedIn, calls), one can gauge the response rate to refine future outreach strategies.

Analyzing Response Rates

If responses are low or nonexistent, it prompts a reevaluation of messaging or target roles. This iterative process is essential before investing in tools for automation.

Building Campaigns Based on Learnings

Once initial learnings are gathered from conversations with a few prospects, the next step is to create targeted campaigns aimed at similar groups to enhance engagement.

Importance of Asking the Right Questions

Effective sales requires asking pertinent questions about engagement and ensuring that the right audience is being targeted. This involves conducting small experiments to validate assumptions.

Discoverability Challenges

The difficulty in finding high net worth individuals highlights the need for clear parameters. If certain prospects are hard to identify, it may affect conversion rates and necessitate broader outreach efforts.

Recap of Key Outreach Steps

To identify suitable prospects: compile a list of 30 potential candidates who align with your offering and invest time crafting personalized emails (15-30 minutes each).

Crafting Effective Emails

A tactical approach includes using Gmail's audio replay feature to assess tone; this can reveal passive-aggressive language that might deter responses.

Structuring Outreach Messages

When reaching out:

Clearly state relevance.

Share unexpected insights.

Focus on problems rather than solutions.

Avoiding Common Pitfalls in Sales Pitches

Emphasizing "better" as a selling point can be detrimental; instead, present surprising or counterintuitive insights that resonate with potential clients' needs.

Insights from Industry Leaders

Understanding Early Stage Startup Sales

The Challenge of Selling in Startups

Founders often struggle to engage potential customers, as many are content with "good enough" solutions rather than seeking the best product.

When pitching to buyers, it's crucial to foster engagement by being vulnerable and honest about the startup's early stage status.

Building Trust Through Vulnerability

Acknowledging that you are an early-stage startup can lead to more genuine conversations; buyers appreciate transparency regarding your development process.

By inviting insights from potential customers on how they perceive the problem, founders can gather valuable feedback that shapes their product.

The Importance of Honest Feedback

Presenting a fully developed product may hinder honest feedback; vulnerability encourages open dialogue about what needs improvement.

Founders should recognize that over-promising on product readiness can limit their ability to gain critical market intelligence.

Navigating Buyer Hesitance

Understanding Market Dynamics

Insights from April Dunford highlight that later-stage companies face different challenges; educating buyers is essential due to increased risks associated with new software purchases.

Buyers often prefer sticking with existing solutions due to fear of making mistakes or incurring switching costs, complicating the sales process for startups.

Learning vs. Selling in Founder-Led Sales

The initial phase of founder-led sales should focus on learning customer needs rather than immediate revenue generation.

Gathering feedback during this phase is vital for refining products before transitioning into a revenue-focused sales strategy.

Milestones in Transitioning from Founder-Led Sales

Identifying Key Growth Indicators

Founders should consider reaching around $500K ARR as a milestone for transitioning out of founder-led sales; speed of growth influences this decision.

First Round Capital's Sales Strategy

The Approach to Hiring Salespeople

First Round Capital advised against hiring a salesperson until reaching $1 million in Annual Recurring Revenue (ARR), emphasizing support through existing sales personnel.

Zip, a procurement company valued at $2.3 billion, utilized LinkedIn outreach to engage heads of procurement for advice rather than direct selling, focusing on understanding customer needs.

Timing of Sales Hiring

There's a theory suggesting that startups should avoid hiring salespeople until Series A funding, as the seed stage is about experimentation and validating ideas.

Engaging prospects with honesty about being early-stage can foster trust and encourage feedback on product development.

Understanding Customer Needs

Asking targeted questions helps uncover "aha" moments for customers, allowing them to visualize solutions even without a product demo.

Identifying whether potential customers have previously attempted to solve their problems provides insight into their pain points and readiness for new solutions.

Signs of Product-Market Fit

Key indicators of product-market fit include recognizing if the problem is growing or widening; stagnant issues are less likely to attract investment.

Customers willing to pay for solutions indicate significant pain points; thus, understanding their measurement and management practices is crucial.

Closing Conversations Effectively

Inquiring how customers have tried solving their issues reveals their maturity level regarding the problem and potential gaps in current solutions.

When prospects start involving additional stakeholders in discussions, it signals momentum towards making a purchase decision.

Best Practices for Ending Calls

Avoid generic questions like "What keeps you up at night?" as they often yield unhelpful responses; instead, focus on specific challenges.

Co-Authoring and Customer Engagement in Technology Sales

The Importance of Co-Authoring

Expresses the challenge of communicating disinterest to potential customers while emphasizing the value of co-authoring in technology sales.

Highlights that involving customers in defining the scope of work can transform them into guides, enhancing engagement through specificity and focus.

Understanding Buyer Readiness

Discusses how assessing a customer's biomaturity is crucial; if they lack a strategy for solving their problem, they are not ready to purchase technology yet.

Emphasizes that service-based revenue, while often viewed negatively by investors, demonstrates customer intent and provides educational opportunities.

Timeboxing Service Engagement

Recommends timeboxing service engagements to 90 days to adapt to changing circumstances and avoid long-term commitments that may not be beneficial.

Shares an example where a founder successfully engaged with a traditional industry client by first educating them on workflow integration before selling technology.

Navigating Traditional Industries

Describes challenges faced when introducing new technologies to traditional industries resistant to change due to established vendor relationships.

Stresses the need for companies selling novel technologies like AI to help clients develop strategies and processes for implementation.

The Role of Services in B2B SaaS Sales

Reveals that approximately 40% to 50% of B2B SaaS companies must offer some form of service before selling their technology effectively.

Explains the distinction between user value and buyer value, highlighting complexities in navigating procurement processes within organizations.

Consulting as a Pathway to Technology Adoption

Provides examples of services offered by companies, such as helping clients craft pitches or design deployment processes for new technologies.

Sales Strategies and Procurement Insights

Selling Technology vs. Services

The speaker emphasizes the importance of selling technology directly if the market is ready to adopt it, rather than focusing on service sales.

It is advised not to conduct a demo during the first call; instead, provide a broad overview to maintain interest and curiosity.

The Role of Demos in Sales

Demos should be limited; leaving some aspects undisclosed encourages potential clients to engage further in subsequent conversations.

For high-value products (e.g., $100,000+), slowing down the sales process is crucial to ensure all stakeholders are involved.

Engaging with Procurement

When dealing with procurement, it's essential to simplify communication and avoid jargon for clarity.

Differentiation from competitors is vital; failing to do so may lead procurement teams to suggest alternative vendors.

Making Procurement Easier

Sellers must take initiative by completing necessary forms and making processes easier for procurement teams, as they often handle large deals.

Clearly explaining what your product does can prevent misclassification as high-risk, which complicates contracting processes.

Navigating Contractual Challenges

Truncating contracts into technology and service components can streamline onboarding and expedite approvals through IT due diligence.

The Importance of Entering Enterprise Sales

Getting into Enterprise Sales Quickly

Emphasizes the necessity of entering enterprise sales as quickly as possible, likening it to fundraising where accountability and project management are crucial.

Highlights that while initial efforts may require more work than expected, proving value can lead to significant deal growth over time (e.g., from $100,000 to $500,000).

Once established in an enterprise, there is a competitive advantage due to access to exclusive conversations and meetings, transforming the relationship from seller-buyer to partnership.

Understanding Company Sizes in Sales

Defines enterprise sales as targeting companies with 500 to 1,000 employees or more, noting the complexities involved due to differing roles of users and buyers.

Discusses small businesses where users and buyers are often the same person, leading to a simpler sales process but higher churn rates if expectations aren't met.

Challenges in Small Business and Mid-Market Sales

Points out that mid-market sales can be tricky due to varying definitions between lower-end small business and upper-end mid-market segments.

Warns about high churn rates in small businesses; dissatisfied customers may cancel services abruptly without warning.

Navigating Procurement Processes

Advises on identifying who will sign contracts during procurement stages—key figures include CFOs or heads of procurement—to streamline processes.

Shares a personal anecdote about failing to prepare for a CFO's questions during contract signing which delayed the process significantly.

Final Steps Before Approval

Stresses that payment is contingent upon finance approval; no work should commence until signatures are secured on contracts.

Sales Strategies and Insights

The Importance of Buffer in Pricing

Small businesses should maintain a buffer in pricing strategies, as they often operate on tight margins. This allows flexibility when negotiating discounts.

Discounts can be beneficial if the client provides significant value beyond just using the product, such as acting as a design partner or reference.

Navigating the Sales Process

Celebrating milestones like obtaining signatures is crucial; it acknowledges progress in what can be a daunting sales process.

Effective project management significantly influences the sales cycle duration. Keeping calls concise helps shorten this cycle.

Factors Influencing Sales Cycle Duration

The complexity of an organization affects sales timelines, especially in regulated industries where processes may take 20-30% longer.

Understanding budget constraints and seniority levels within organizations is essential for navigating potential pitfalls during negotiations.

Value Perception and Negotiation Tactics

Enterprises are aware that the effort to finalize deals often exceeds technology costs, which impacts their willingness to invest.

Be cautious about stripping value from deals; significant reductions can lead to undervaluing your offering.

Ideal Contract Values for Startups

A good Annual Contract Value (ACV) range for startups targeting enterprise clients is between $50K to $200K, depending on the business unit involved.

Early-stage startups should assess whether their product is designed for enterprise needs or small business markets before proceeding with sales strategies.

Challenges of Mid-Market Sales

Founders must clarify whether their product targets enterprises or small businesses since each market requires different approaches.

Selling to mid-market companies can be challenging due to resource limitations for heavy integrations, often necessitating third-party involvement.

Audience Questions on Market Fit

How to Decide on Market Focus?

Evaluating Market Entry Strategies

The discussion begins with the question of how to choose between focusing on small businesses (SMBs) or moving upmarket, noting that both strategies have seen success in various companies.

Emphasis is placed on understanding who the product is built for and identifying where the most significant problems are felt, which influences go-to-market strategies.

Founders should consider their own experiences and preferences when deciding whether to target enterprises or small companies, as this will shape their professional journey.

Addressing Customer Engagement Challenges

A common issue raised is slow customer responsiveness despite initial interest; understanding the reasons behind this can be complex.

Potential causes for slow momentum include miscommunication with buyers who need to sell internally or a lack of clarity around the problem being solved.

It’s noted that sometimes customers may express interest without genuine intent, complicating sales efforts.

Improving Sales Conversion Rates

Identifying Key Areas for Improvement

The speaker identifies qualification as a critical area for improving conversion rates in sales processes, emphasizing its importance over bottom-of-funnel issues.

Misalignment in targeting leads often results in wasted time; it’s crucial to ensure outreach is directed at the right audience with appropriate messaging.

Creating an Engaging Sales Experience

Sales should feel enjoyable for potential buyers; engaging presentations can significantly enhance customer perception and willingness to buy.

Founders are encouraged to maintain passion during sales interactions, as energy can positively influence buyer engagement.

Overcoming Sales Hesitations

Building Trust Through Authenticity

Selling becomes easier when founders genuinely believe in their product's ability to solve customer problems; authenticity fosters trust.

It's important not to oversell capabilities just for immediate gains; maintaining honesty about what can be delivered helps build long-term relationships.

The Value of Trust in Sales

Trust emerges as a vital currency in sales; trusted salespeople receive referrals and recommendations more readily from satisfied clients.

Navigating Early Sales Challenges

The Role of Founders in Sales

Founders often face significant challenges when trying to achieve their first million or even 500K in Annual Recurring Revenue (ARR), particularly in enterprise and mid-market sales.

The speaker emphasizes the importance of founders being directly involved in sales, rather than outsourcing this critical function. This approach allows them to engage with their market firsthand.

Many successful companies have utilized coaches or consultants early on to learn effective sales strategies, highlighting the value of mentorship in navigating these challenges.

Community and Support

The discussion touches on the "pay it forward" model prevalent in the technology space, where individuals help each other grow and succeed throughout their careers.