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Startup Sales Complexity

David Skok has an outstanding article on a topic I love: Startups and Sales Complexity. I think about sales complexity a lot when brainstorming new products. It is very important to understand sales strategy from day 1 to make sure you have the sales resources to match the sales model. I think most startups tend to be overly optimistic about the level of sales required for new products. Even worse, I think many times this planning is pushed off until after the product is built. It is a shame to build a great product when you will never have the resources to sell it properly. This is especially true if you are entering a defined market where competitors exists with a good sales process. It is very hard to compete against companies who have established sales channels in large companies if that is your target market.

Also, I think people underestimate the complexity of the freemium model. Viral growth is great, but rarely spontaneous. Startups have to put in large efforts in the sales/marketing of the free product in order to get enough market share to be profitable on the small percentage of premium buyers.  Our company, FitDay, had a great freemium model, but it took years of building the free user base to the point where this was viable.

Sales complexity also affects your financing model. Bootstrapped startups tend to be tech heavy. If the product is going to require a hefty sales process, raising capital becomes more necessary. The company will need the money to bring in the sales resources. Also, having competent investors who understand sales is a great balance for a tech heavy startup. I do love bootstrapping, though. Whenever I end up down the path of designing a sales heavy product, I start dreaming about fully outsourcable sales.  Does that exist in a usable form yet? Its tough, because you need your sales group to be experts in the domain, but wouldn’t it be great to have on-demand sales?

  • rdeterman

    Very cool article! Most tech entrepreneurs have a very good eye for disruptions. We see a new technology and start looking for new ways to apply that technology to solve existing problems. But I like the perspective of using new technology to disrupt the established sales complexity in an existing market.

    For bootstrapped tech startups with weak sales skills, there are opportunities in the freemium/no-touch space. A small startup can disrupt an established market using these models. And often the disruption doesn't cut into an existing market as much as it opens up new markets. The SaaS to SMB market is a perfect example of this.

    But it takes real focus on this strategy from the earliest product conception. In "No Touch" sales, the software is compelling enough to sell itself. And that decision affects every part of product development and marketing. You can't build a product and once it's built decide "ok, let's sell this using freemium or no-touch". Rather, when you notice that there's an open opportunity in the no-touch space of an existing market, you build the right product to own that space. And every part of the product and marketing mix is designed to fill that market gap.

    Outsourced sales? I just searched and found some freelance sales sites: (oDesk.com/leaseasalesrep.com). I wonder if these work at all. It's hard to image. Maybe these work for "Light Touch" sales. Or for generating qualified leads into a sales funnel. Instead of paying a freelance sales rep, does anyone have a service that allows freelance sales people to claim bounties on leads they generate that eventual close?

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