purchase

PARTICIPATING IN THE PURCHASE

I often hear founders describe linear experiences when it comes to acquiring or the purchase pathway for new users and customers.

It’s something like, ‘they see our Instagram ad and when they arrive at our site and click the trial button, then they...’

Statements like this assume a lot about moving a person from being unaware of your product to becoming an evangelist.

The product and marketing steps to achieve this are well known. Increasing awareness usually starts with communications to friends and family, some ads and (hopefully) a well-designed referral program. It continues with retargeting prospective users and customers on social media. Then comes the sending of repeated emails and alerts in the hope that people who signed up will move to the next step in your funnel.

These tactics are the standard and while they work to some degree, they aren’t remarkable. Regardless of how clever the message is or how innovative the delivery medium, the message(s) remain a monologue. And unfortunately, despite a founder's best intentions, these tactics can easily be interpreted as pesky and overdone.

The subtle but essential nuance that often gets missed is how teams should participate in the purchase. In other words, how can founders and their teams take unusual (and sometimes unscalable) steps to move their sales process from the expected to unexpectedly awesome?

A mini purchase

Just over a decade ago I saw the remake of The Italian Job. It was brilliantly recreated and it was also the relaunch of the much loved Mini Cooper. At the time I was in the market for a new car. I hadn’t decided on what I wanted but that indecision vanished as soon as the film ended.

In the following week I, at 6’5”, developed confirmation bias for Mini Coopers. I was seeing them everywhere. And it wasn’t long before I made an enquiry at the local Mini Garage while visiting friends in another city.

While I didn’t live in that city, I often travelled there for work. On my first visit to the Mini Garage, the young sales manager and I talked about options and pricing. He loved them as much as I did and his enthusiasm was infectious. At the end of the meeting, he told me to be in touch when I was ready to make the purchase.

The likelihood of making the purchase in a different state was unlikely but that changed a fortnight later.

At the time LinkedIn had a product partnership with an app which allowed you to log your business travel. After submitting the details, the app would notify your connections and people looking at your LinkedIn profile of your travel dates. It had often inspired opportunistic meetings and I was beginning to warm to it.

Prior to travelling back to the city where I had visited the Mini Garage, I logged my business trip and thought nothing of it. When I landed I received an SMS from the Mini sales manager asking if I wanted to borrow a Mini for the weekend. I was completely surprised and delighted and the story ends with him getting my business.

Notwithstanding how organised he was as a relatively young sales manage, he participated in the purchase. He did his homework and created an unscalable and by definition, remarkable experience.

A pre-purchase tactic

You might think that tactics like my Mini experience are reserved for luxury goods or only suited for business-to-business (B2B) relationship management.

They’re not. I think participating in purchases can (and should) happen in all business models.

I am not suggesting that every customer is subjected to special pre-purchase attention. That would be impossible. It should, however, be part of a venture’s plan to acquire customers.

Delivering adjacent value

When I think about strengthening a relationship, the first thing that comes to mind is finding ways to accelerate the other parties position. In other words, I think about their motivations and incentives and try to find ways to help them secure their incentive.

The best way to achieve this involves creating value which is adjacent to what you might want to sell them.

I do this for teammates and mentees as well as prospective customers, partners and investors.

And to be clear, this isn’t about procrastinating or leaving value on the table. It’s about playing the long game. It’s also about sometimes suspending the urge to lock down a short-term sale knowing that the value you derive will be much larger in the future.

There are a number of ways that you can create adjacent value and consequently participate in the purchase journey:

  1. Provide access - This can play out in at least two ways. First, the CEO, co-founders and senior leaders can make calls to customers to see how they are enjoying the product and how they can improve it. It has always surprised me how excited customers are to receive a call from someone they never thought would take the time. Second, invite customers to events like webinars where they can learn and question specialists from your team about the problem you are solving.
  2. Send product - The unexpected delivery of a product you might like and which you can try is one of the most potent ways of making a prospective customer stop and think about the effort you went to to surprise them
  3. Offer service - Services-based companies can offer value in the form of a gift voucher for access to a defined amount of time eg a PR agency might offer 30 minutes of advice on a crisis management issue, redeemable anytime
  4. Express gratitude - Calling a prospective customer to say thank you for considering your company (not if you can answer any questions or try to re-sell to them) will not only be unexpected but it demonstrates that the company felt them reach out
  5. Recommend content - If you see content that you think is valuable to a customer (or partner or investor), send it. If you listen to podcasts and Reid Hoffman’s Masters of Scale Podcast, you will know how this plays out; he recommends other podcasts to start listening to
  6. Direct to more mature providers - This one is more controversial but I have been surprised when in the interest of a long-term relationship, a business developer has recommended a more mature product (instead of their own) that will suit my companies needs

One last thing...

I usually ask myself three questions when it comes to delivering adjacent value.

Am I/we likely to derive long-term value?

Is this unscalable?

Am I/we likely to learn something from our prospective customer?

If the answer is YES for each question, the outcome is typically positive.

That’s how I approach participating in the purchase. How do you go about it?


conference

INCREASING CONFERENCE ROI

I attended one conference this past year where I wasn’t speaking. There were two CEO’s I wanted to sell to, three people I wanted to meet and one presentation I thought would be interesting.

It was a two-day conference. It was expensive. And of the two days, I spent 45 minutes seated in the conference room, for the one presentation I wanted to see.

The rest of the conference was spent in corridors starting and doing deals. The return on investment (ROI) of that conference was positive and there are reasons why that was the case which I’d like to share with you. A third factor would have made for a higher ROI had LinkedIn released a new feature earlier than last week. More on that shortly.

There’s little doubt that speaking at conferences is a marketing force multiplier. And for those who pay to glean insights and network, their ROI is often a stack of business cards that join a growing pile in their office.

Hustle, network and new content

Conferences are expensive in terms of capital and opportunity cost. I can usually think of 10 other ways I could be investing time if I weren’t attending a conference. But from time to time, I can sell, network and learn from the speakers and if all three of these conditions are met, I buy a ticket.

The conference I mentioned earlier provided the opportunity to kill three birds with one stone but just turning up and hustling wasn’t the strategy.

Going into the conference I knew three things.

First, I was there to introduce and make B2B sales of a software service (inkl).

Second, people attending conferences are (usually) in sales mode. They are trying to put their best foot forward and because they are working to convince people of their value, they rarely expect to receive value.

And third, business cards are the standard form of initial value exchange, the first sign of mutual relationship.

Learn about who you want to know

I knew who I was there to sell to before I arrived and I was armed with three factors of mutual interest for each person I wanted to speak to. We either knew the same people, were connected through previous organisations or shared a love for a sport or humanitarian pursuit. Like me, those people weren’t interested in the conference content and spent much of their time in corridors on calls and doing business which made it easy to talk.

Deliver the unexpected

As far as rarely expecting to receive value is concerned, I worked with one of my fabulous team members to hatch a plan to deliver a personalised gift to each person I met and wanted to create a great first impression.

Here’s how it worked.

After they provided me with their business card, I told them they would receive a gift subscription to inkl in the next 10 minutes. When we moved on to new conversations, I sent a photo of the business card via Slack to my teammate. She immediately organised the gift and sent the recipient a welcome email.

Seven of the nine people who received a gift came back to me during the conference surprised that the gift had arrived at all and sealed the deal on first impressions.

The point here is that while I had a team member to help with the process and we had a gift that we would send virtually, you can easily achieve a similar outcome using a virtual assistant. As far as the gift is concerned, it could be exclusive content or an invitation to try your product for free.

Authentic surprise and delight mean a lot to people, especially when they least expect it.

Say goodbye to business cards

“I don’t do business cards.”

I haven’t done business cards for years.

When someone offers me a card, I offer to send them an email so they have my details. Nine times out of ten, if I want to engage with them in the future, I send an SMS thanking them for their time instead. Their number is now in my phone and my number is in theirs. And you’d be surprised how many people end up calling me to be in touch instead of sending me an email which saves time. Obviously, sending an SMS is a judgement call. There are some people I’d prefer didn’t have my number and I’m sure the reverse use case is true.

Each of these steps brings you closer to customers and influencers and consequently increases conference ROI.

As of last week, however, LinkedIn launched a feature which takes no more business cards to the next level. Here’s how it works:

1. Download the latest version of LinkedIn for iOS or Android.

2. Look for the QR code icon in the search box and press it.

3. Ask the person meeting if they have LinkedIn and ask them to do the same

4. Ask them to select ‘My Code’ and hover over it with your LinkedIn app while you’re in scan mode

5. Let the magic happen! Their profile will appear and then you send them an invite.

conference     conference     conference

How good is that?!

One last thing...

There are those who consider conferences a short vacation away from family and the office. I don’t.

If you can sell, network and learn (in that order), then go but go with a plan to maximise the ROI.

And take a look at LinkedIn's new feature, it's brilliant!


hiring

HIRING YOUR FIRST SALES LEADER

Hiring someone who specialises in selling is tricky. They can create wonder from ordinary ideas and convince people to act in ways they wouldn’t ordinarily consider. They (I mean we) are known as hustlers because they can’t help but see and get excited by opportunities.

Most you can see coming a mile away while. They are urgent. Their bravado and ego overwhelm and polarise audiences. They fuel the used car salesman persona.

And there are those people who balance the delicate tension between nurturing relationships and closing sales. They also balance urgency with patience. They look, sound and act nothing like a used car salesman or woman.

In both cases, however, their gift of the gab can land them in situations where they don’t live up to the expectation they consciously (or inadvertently) set.

This isn’t a beat up on salespeople because I’m one of them. The truth is hiring the first ten roles in a startup is fraught with risk. Making a mistake with any one of them can be terminal for a business. This is as true for hiring the Chief Technology Officer as it is the first sales leader.

But don’t take my word for it. The 2017 First Round Capital State of Startup's survey has this to say:

For the first time, sales leaders take the title of hardest to hire.

In 2015 and 2016, engineering leaders were far and away the hardest executive hires to make. But this year, the tables turned, and sales leaders became the most coveted and difficult hires (with 26% saying sales was the hardest vs. 24% saying engineering). This looks like the start of a sea change as more enterprise companies enter the fray, compete for talent, and see firsthand how costly a bad VP of Sales hire can be.

I have been thinking about hiring plans a lot lately for a number of reasons. Here is the framework I use to think about hiring sales and business development people in a growing venture. I have shared this with mentees this past month and I hope it helps you too.

We need a salesperson

Accelerating momentum is the main reason why founders start the hiring process to find a sales leader. The reality is that one of three underlying circumstances trigger the decision to start looking. And each one should be understood because it informs the type of sales leader you’re trying to find.

First, the product is stable and the founder who has led sales to date needs to focus on market-facing activities. These might include opening new markets, strategic partnerships and managing investor relations. Second, the founders are deeply technical and need help convincing the market of their product’s value through sales. Third, previous sales hires haven’t lived up to expectations but there is still a need to build out a sales organisation to support growth.

Each reason is legitimate.

What happens next is a flurry of controllable activities.

Job ads are written (and by written I mean drafted based on other companies’ ads for similar roles), posted online and then the vetting begins.

Some applicants may come from professional networks who saw you share the post on LinkedIn but for the most part, you’ll be running the ruler over quick-to-respond albeit under-qualified candidates.

I call these actions controllable (and the outcome relatively predictable) because each step is known and can be executed with ease.

The uncontrollable aspects of hiring a sales leader are the unpredictable factors, the ones that if not carefully understood can bring a business to its knees.

The following nine factors help move these factors from the unpredictable column to the predictable one.

1. Why?

Do you know why you’re hiring a sales leader? No, really. Do you?

The punchline is that growth and momentum come from different inputs. Sales is one of them but it’s not the only one.

B2B ventures face long sales cycles with a relatively small number of potential customers. In the early years of a venture, founders handle these deals and relationships. B2B sales also attract the label of complex sales because of the number of stakeholders that need to be understood and corralled to get deals done. A sales leader might be able to engage with each of these people more effectively and engage with more clients but could a founder(s) do that if they were a little more organised?   

A sales leader may not be the right choice for a B2C business facing shorter sales cycles and customers with a potentially shorter lifetime value and higher churn rate. In this case, and particularly in software businesses, a growth leader who can bring analytics and marketing to the challenge is a better choice.

Alternatively, the founders may be poor at sales and business development and want to focus on their strengths. In doing so they bring in a sales leader who quickly establishes sales disciplines, begins attracting new customers and stems attrition.

The point is to know why you’re hiring a sales leader. You may not need one for now. If you do, it’s important the person you’re introducing into the business knows why they are there.

2. Rate of momentum

How much momentum a sales hire can add to the business in their first 30, 60 and 90 days will be telling. And depending on the business, this may or may not involve a closing sales to match your spreadsheet that demands exponential growth. Momentum should equal sales but it can also include the rate of:

  • Assessing current sales processes
  • Introducing sales disciplines eg establishing sales and CRM processes and providing visibility of sales activities across the business
  • Learning through sales experiments e.g. cold calling vs email campaigns   
  • Learning through customer relationships e.g. engaging with customers. This is particularly important in B2B businesses where customer perspectives may not have been updated for some time
  • Filling the funnel e.g number of new leads for an existing product as well as a new product.

I also look at how quickly the new sales leader starts getting in front of customers by themselves. The quicker the better.

3. Discipline in execution

It’s one thing to plan sales activities. It’s quite another to do them and follow up leads to their natural conclusion (which is hopefully a sale).

I can tell a lot from the follow-up tempo of a sales leader. It takes discipline, skill and organisation to follow up a large universe of leads and engage with them appropriately and personally given their stage on the decision journey. It’s different for B2B, B2C and direct to consumer businesses but ask each candidate for their philosophy and concrete examples of how they have managed follow-up.

4. Sales and business development are different

Salespeople sell products. Business development people create relationships to open new businesses. Both require expert relationship management and resilience. But each one demands a different psychology.

Salespeople (often) follow a well-established method to identify, approach and convince prospective customers. There is an expectation that a proven method will deliver results in a relatively short timeframe. The approach to business development is more opaque as you navigate uncertainty to identify and open industries that will buy your product. This requires playing the long game. And while it can be slow going to generate results in both sales and business development, it is often frustratingly slow in business development due to the lead-time in building and capitalising relationships.

The same person can do both sales and business development but they will often prefer one over the other. Understanding this early is important to reduce lost time.

5. Crowd-vet talent

Key hires, including sales leaders, should be vetted by people outside the business. Ask board members and investors to meet with people who are nearing the end of the hiring process. At least one board member or investor should have deep sales and business development experience. Use them to identify the pretenders.

6. Focus on a number

The business, regardless of business model, should have a clear idea of forecast annual revenues. That might sound obvious but I always find it amazing how many new sales hires enter a business not knowing what they’re up for.

The bottom line is that sales leader candidates should be aware of these targets as you vet them and as they size you up. This is because the quantum of the targets will attract (and dissuade) people from applying. And those who express an interest are likely to be in the capability ballpark.     

7. Have a clear proposition

The best sales leaders are excellent at soliciting customer needs but they aren’t there to manage product development, their job is closing sales and partnerships. In other words, make sure you have a clear product to sell before you bring on a sales leader. Otherwise, the business runs the risk of losing focus on sales while the product evolves.

8. Understand incentives

Know why the sales leader is deciding to apply and join your team. There will be the obvious reasons like career development and developing skills or credentials in a new industry.

Look beyond those reasons. Appreciate their ‘why’ because that’s where their incentives live. As Charlie Munger says, incentives are a superpower. Understanding why someone is doing something is the quickest way to develop an alliance.

‘You’ll be get paid and get access to equity and you’ll have a chance to be a key part of our mission, but what’s really behind you wanting to join [company]?’

I often ask this of candidates, and particularly sales candidates who have tried to convince me of their suitability using an elegant explanation. I’m asking them to be vulnerable. Not to be uncomfortable because at this point they almost have the job. I want to know their incentives for joining me and the team.

And for the most part, this question unlocks a conversation about how they are trying to get their mojo back after a business they were leading failed. Other explanations can include they were let go due to their performance or that they are trying to find their way and they have skills, they just don’t know exactly how to apply them but they are drawn to the company’s vision.

These reasons could be cause not to proceed with the appointment but that’s not my perspective.

These explanations form the basis for how I can build incentives with a new ally. And the logic is simple. We (and the company) will be more successful if we can help one another achieve their ambitions over a two to a three-year term. This simply won’t happen if the normal financial incentives are offered.

Incentives are powerful. Get to know them for each of your people and anyone thinking of joining the team.

9. Go with paid auditions

There’s an excellent chance you won’t get this hiring process right the first time. I’m a big fan of getting really good at paid auditions and here’s why.

One last thing …

Don’t underestimate the importance of great sales and business development leaders. And never underestimate how difficult they are to hire. Take time to understand pedigree, incentives and fit. It will help your business accelerate momentum while saving it from making decisions that could be terminal.


customer

6 STEPS TO REPAIR CUSTOMER RELATIONSHIPS

I hate losing customers.

And it’s one thing to lose customers if you sell to consumers where the universe of potential customers is high and attrition is expected. It’s quite another if your business sells to other businesses. In these companies, a relatively small group of customers create the majority of the value and it can take months, if not years, to develop those relationships.

Losing one of these customers can be devastating. And in worse case scenarios losing a customer can start a chain of events that can be terminal.

This issue came up in my slack channel where I support 37 entrepreneurs.

The loss of the customer came about through a growing company experimenting with using sub-contracted talent to scale the delivery of its work to customers.

When done well, this can be a very effective solution but in this case, the result was damaging to the companies brand and they had lost the customer.

I have been in this situation before. Many have too. Losing a customer comes with shock, disbelief and a grieving process. These emotions also (usually) come with a lack of perspective as the founders are left to quickly diagnose and repair the issue by themselves.

That didn’t happen this time.

In a matter of hours, members of the slack community contributed valuable insights to quell concern, exercise compassion and set the founders on a path to repair the customer relationship.

Pre-repair thinking

The community offered three observations as part of level-setting before we talked about the repair process.

First, it’s happened to all of us (and we're here to help).

Second, it is impossible to understand all the contextual and environmental factors that led to the customer disengaging. It is easy for founders to believe they are the singular point of failure (which is exacerbated by processing the event of loss by themselves in an echo-chamber). The reality is that this is often not the case.

And third, some customer relationships cannot be repaired. Be OK with this.

Repairing customer relationships 

Here are the six battle-tested steps I shared with the founder whose business had been impacted.

1. Identify how far short you've fallen

A lack of perspective makes it easy to think we have fallen a lot further short than is actually the case. As a result, conversations that can unlock perspective with people at the customer organisation is the essential first step.

The effectiveness of these fact-finding conversations hinges on asking carefully crafted questions, for example:

I understand that we may have dropped the ball. I'm here to help take your [talent/process/product/technology] to the next level. How can we help you and your team with that?

From your perspective, what would you like to see from my company as the next step?

2. Apologise and acknowledge that you've fallen short

Once you understand how short your product or team has fallen, offer an authentic apology. Apple does this well, and personally.

Here is an example.

3. Own it

There might not be a way to repair a customer relationship but I’ve found that to rarely be the case if founders act quickly to re-establish credibility.

This comes down to proposing a detailed strategy to rectify the issue. And by strategy I mean doing (re)work for free that is hyper-clear, specific, time-bound and measurable.

4. Get stuck in immediately

Issues aren't like wine, they don't age well with time. Move to understand the context (step 1) and exercise the plan (step 3) as quickly as possible. Delaying will only put the customer relationship further at risk.

This step is usually where people stop. Don’t stop here because you’ll be leaving value on the table.

5. Add adjacent value

Making amends for whatever the issue is will help but make sure you're adding other value to the people impacted by whatever the shortfall was. This will help your true value and values shine through and help them be reminded of why your team or product are awesome.

This can involve sharing content, providing specific advice (for free) about topics that are important to them based on your domain expertise and inviting them to events as your guest, to name a few.

6. Get the issue out of your head

You don't have to post it publicly but write about the issue, how and why it came to be and the steps you're taking to sort it out.

The consequence of not doing this is that it will fester in your mind and you will be the only one who learns from it.

And IF you do decide to publicly post it somewhere, it will help others to avoid the same mistake. And it might just help your client see how humbling the experience has been for you.

One last thing …

Losing a customer is hard but don’t lose them alone. Ask for help in repairing the relationship regardless of whether it is B2C or B2B.

We have all been there. At the very least you will learn from the experience. At best, you will recover the relationship, generate more value (for them and you) and turn that customer into an advocate.


Scale

WILL IT SCALE?

“Yes”

That’s the default answer from soon to be founders and entrepreneurs.

It’s obvious to them that a need exists and the prospect of reaching millions of users and customers is intoxicating.

But as my colleague Jeffrey Tobias says, it’s a mistake to think that a startup is a small business.

His point, quite rightly, is that small businesses have limited growth potential.

Startups, on the other hand, are limited to the size of the addressable market.

And it’s this nuance that first-time founders rarely consider.

At the heart of the difference between a startup and a small business is the number of units of value that can be generated per person over time.

The small business reality

The punchline is that a small business relies on people to create value.

Cafes, hairdressers, professionals service firms and hotels to name a few need people to make them work. The business models are relatively well known and because people can only work a limited number of hours each day, the value they can create is also limited.

Small businesses can optimise processes to give their people more time to create value but this only goes so far. And of course some people can generate more money than others but at some point, everyone needs to sleep.

The cash flow generated by small businesses can also be significant but its limiting characteristic and its key asset are people.

The startup ambition

Startup equals growth. Y Combinator founder Paul Graham coined this phrase.

He went on to say that ‘for a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people. Most businesses are constrained by one of those two items. If your business is not constrained by (a) or (b) then you’re in startup territory.’

There is are two important nuances that live within Paul’s philosophy, both of which relate to making something that lots of people want.

Making something that lots of people want is a process that takes time and experimentation. A switch doesn’t get flicked to reveal the thing that lots of people want. It takes the compounding effect of being in market for ten years, a high calibre dedicated team and luck to make something that lots of people want.

However, there are clues to short circuit the journey. Y Combinator, for example, has developed a reputation for backing founders who have built products that have a disproportionately large number of fanatical lovers of their product soon after the company is founded. I wrote about how to focus on those people recently.

The second nuance is more deceptive to founders. And it has to do with the difference between fixing a problem and solving a need.

Most founders become founders because they see an opportunity hiding in plain sight. Those opportunities are usually rooted in problematic experiences and here’s the punchline:

Fixing a problem is not the same as meeting a need.

Fixing a problem usually helps a specific group of people to resolve a frustration.

Meeting a need results in the creation of a magnetic attraction between user and product and an aspiration for others to engage.

And this issue usually doesn’t reveal itself in the early days of a venture. This is because the founder isn’t far enough into the journey to have evidence of meeting a need and the magnetic attraction that follows. The other reason is that their excitement for the idea is so great that they won’t let themselves see the difference.

In any case, the early days of a venture see founders trying to find evidence from desk research to support their thesis that the market potential for their idea is massive.

Notwithstanding the bias that can come from researching and finding data that fits the original thesis, the size of the opportunity is only half of what you need to know. The other half is the rate at which the opportunity should be captured to create or secure a large portion of the market.

Calculating that rate takes founders from vague top-down opportunity analysis to part (b) of Paul Graham’s philosophy, how to reach and serve all those people.

While this can also be solved with time and growth-focused experimentation, asking whether a venture will scale is actually asking how many team members will it take to reach and serve all those people. In other words, how many users and paying customers can one person serve?

Case in point: Slack

Consider Slack, maker of the popular messaging service. Slack has 1122 staff and as of September 2017 has over six million daily active users, with approximately two million of those users being paid.

This means that every Slack staff member is each serving over 1,780 paying customers. This isn’t a traditional metric but it makes the point that companies that scale make something a lot of people want and can reach and serve them.

Technology played a significant role in Slack’s ability to scale which begs the question, can non-technology companies scale? I think the answer is yes but they are in a small minority.

One last thing…

Be ok with a thriving, cashflow-driven small business. It can create an extraordinary lifestyle for you and your family. But there is enough evidence when you start to know you are starting a small business. Move to optimise quickly knowing that growth is tied (and limited to) the number of people you employ.

If you fit ‘startup’ run as fast as possible to understand your product’s fanatical lovers. They will teach you more, quicker, than anyone else.


SALES

GROWTH THROUGH AFTER SALES SERVICE

When it comes to sales entrepreneurs and salespeople often have the wrong end game in mind.

Their focus is on closing deals. And if in a startup, their end game is to close those deals as quickly as possible to develop enough momentum to convince investors to back them at the next financing round.

This is the right thing to do for the time. Well, sort of.

When a startup cracks to sales code for their target market, sales processes can scale and that means much-needed revenue can be generated.

The only issue is that most sales operations that have this endgame in mind (scaled or not), leave value on the table.

The punchline is that they miss out, forget about or de-prioritise the final step of selling: Turning each new customer into an advocate.

Word-of-mouth marketing is born at this step.

I think about it like this: Close a deal means you get paid. Closing a deal and turning a new customer into an advocate instantly increases the likelihood of another sale.

How to create customer advocates

I use two principles to create customer advocates. They are grounded in genuine concern for the success of my customer because I know my success and that of my company is inextricably linked to my customer’s success.

The first principle is to go all-in on after sales service. The objective is to make customers so overwhelmed with prompt and convenience-rich service that they can’t help but talk about you and your product. In practice this means:

  • Laying out a rapid path to show that the product I’m selling lives up to the promise
  • Widening the group of people working to implement the product (beyond the person who did the deal on the customer side) to create relationships and communication channels that will help me, help them be successful
  • Being available 24/7 via phone to answer questions and provide support

The second principle is more an accidental habit. I enjoy learning about the people with whom I do business. And I know that work is one part of life and for most of us, there is family and also a hobby, interest or side-hustle.

I invest time asking questions to learn about these things. Because while the product we’re discussing is interesting and will no-doubt create value, there is always more to life.

Many salespeople won’t reach out to wish a customer happy birthday, send them a YouTube video about their hobby that will make them smile or offer to connect them with another relationship that might add a new dimension of value to their life.

I do because I enjoy it. And because it’s essential to building trust and sustaining relationships.    

Case in point - WorkInc

A great example of these principles in action is WorkInc, the company that operates inkl’s Sydney office.

The Saturday before I officially joined inkl I needed to find an office. At 7:30 am on the following Monday I called the three co-working spaces I had researched on the weekend. Only one had a mobile phone number on their website.

The first one didn’t answer (and did not have a voicemail service)

The second one didn’t answer (but I left a message)

The third one had a mobile number on their website. I SMS’d the number and outlined my needs.

Four minutes later I had a reply and by 8:45 am on the same day I was in an office. By 9:00 am I could access Wi-Fi, 24/7 fingerprint access was sorted and I was joining the daily standup.

During that week Tom, the General Manager, took me for coffee to learn more about inkl. He also learned about my side hustle and offered to find me a place to record my podcast.

I became a huge advocate for WorkInc and have introduced a number of new customers to Tom as a result.

Starting at the beginning with new salespeople

As I was writing this post and thinking about customer advocates I was asked why people are afraid of working in sales.

Starting in sales is an obvious precursor to growing in sales and creating customer advocates.

So why are people afraid of working in sales?

I think there are four reasons.

First, they have never been shown how to create value for another person or experienced the exhilaration when that person appreciates that value.

Second, they are scared of being told no.

Third, they haven’t found something they would love to sell.

Fourth, they equate being in sales as being a used car, snake oils salesman.

Let’s do some myth busting.

On creating value

Look back on the last time you did something for a friend, colleague or family member that genuinely helped them.

Their reaction was genuine, one of surprise and gratitude.

You might have saved them time, moved them further away from fear or closer to happiness.

They may or may not have expected it but it was you who did it.

You met a need.

This is the heart of great sales.

On being told ‘No’

You will always hear more No than Yes in sales.

No of it is personal and there will be factors you can see and those you can’t which influence a ‘thanks, but no thanks’.

Sales can be a grind and it’s made more difficult when your expectations are unrealistic. I expect on my run rate business to be told ‘No’ 200 times for every ‘Yes’. I expect to hear No 50 times for every yes on strategic deals.

Does it play out that way?

No.

But the mindset is important to help push through the grind.

On loving what you sell

If you’re not 110% bought into the product you’re selling, stop selling it and move on.

It’s that simple.

And don’t mistake fatigue for not loving the product. We all get tired. The grind takes its toll.

BUT if you stand up a little taller and talk a little faster when you’re pitching the product, no matter how tired you are, you still love the product.

Turn off your devices.

Get some sleep.

Exercise.

Eat good food.

And show up the next day.

On how you perceive sales

I wrote about how I felt when a manager first told me I thought I was a sales guy. It’s not an exaggeration to say I freaked out.

Many people hold onto the persona of a used car, snake oils salesman as what salespeople are like.

The best salespeople are focused on their customer's long-term success and doing whatever is necessary to turn them into their advocates.

Because their success depends on it.

You will find these 8 characteristics in the best salespeople:

  1. Use data to form compelling pitches
  2. Understand the value of time (and don’t waste any of the customer’s time and they optimise their own)
  3. Deliver value three or four times before a sale is made
  4. Do the unscalable (like keeping an eye out for insight and resources that will make their prospective customers’ life easier or travelling 20 hours to make an important meeting)
  5. Respond quickly to questions and issues
  6. Teach their techniques and communicate lessons learned to their teams and organisations to a) bring the voice of the customer closer to product development, and b) increase the number of minds that can help get a prospective customer over the line
  7. Excel at after sales service by personally being involved in implementation, investing time to talk with junior people using the product at customer organisations (to answer questions and address issues) and being available to answer questions. On this last one, everyone at my customer organisations has my cell number and they can call it anytime, no matter where I am in the world.
  8. Look nothing like a used car salesman

Two last things…

The best online course I’ve ever done to brush up on sales tactics was created by Scott Britton. You can find it on Udemy here.

If you’re looking for sales coaching from one of the best in the business, reach out to Sidney Minassian at Sales Native.

I highly recommend both resources and I hope they help.


sales

HOW TO INCREASE SPEED TO 'YES' OR 'NO' IN SALES

There is only one thing I like more about sales than closing deals. It’s getting a quick ‘thanks, but no thanks’.

And when I say closing deals, I’m not just talking about revenue and partnerships, I’m talking about achieving buy-in from colleagues for decisions on internal projects.

Over the last five years, I have honed a technique to help get to a quick YES or NO from potential customers, investors and colleagues. A colleague overheard me using it this week and twigged to the fact I was using it regularly to good effect so I thought I would share it.

It is not rocket science but it has taken practice. On reflection, I started using this tactic because I found myself in countless meetings with people who didn’t know how to ask the right questions to close deals.

As I dug deeper into why this was happening, it seemed that the people I was meeting had lukewarm interest in engaging in a sale or had received no real training in how to have sales conversations. Either way, they were leaving it to me to drive the meeting.

I wanted to learn why people were saying ‘No’ so I could evolve the pitch and product. And as I’ve written about before time is my most precious resource and I wanted it back.

I had more people to pitch and while developing relationships is essential, wasting time to talk about unrelated topics before getting to business in the last 10 minutes of a one-hour meeting was (and is!) a waste of time.

Increasing the speed to YES or NO in sales

Here are the four steps to the tactic I use.

Step 1

Constrain meetings to signal more will be achieved in less time. If your default meeting duration is one hour, make it 45 minutes. If the default ‘short’ meeting is 30 minutes, make it 15.   

Step 2

Open each and every meeting with ‘This meeting will be successful if…’ and list the desired outcomes. I learned this from Jeff Weiner (CEO at LinkedIn).

Step 3

Say this:

‘Thank you for taking the time to meet today.

I know your time is valuable and I’m sure you would like to respect mine as well.

The reason we are meeting today is the discuss [insert topic].

We would love to work and partner with you.

If you feel the same I would like to understand the steps we need to take to start creating value for both of our businesses.

If you don’t think we can work together, let’s talk about why that is.’

Step 4

If business is to be done, specify and agree on the date to finalise the next immediate step in the process. Diarise it and nail it.

There will undoubtedly be other steps but get the people in the meeting focused on the next step and the rest will follow.

If business won’t be done, thank them for their time and then do the unexpected.

In two weeks time from that meeting, send them some value. It might be a study, an article or a video you found that they will benefit from.

Why do this?

Because 'No' only means no, today and by extending value, your stock just went up a couple of points in their mind.

Two last things …

First, in reading these steps you might think that this tactic is too abrupt. I can assure you that investors and seasoned sales and business development people respect this approach because they also understand the value of time.

Second, when people talk about increasing sales they usually mean increasing the momentum of sales. This means widening the universe of people and companies that are prospective customers, partners and influencers.

Momentum comes from rapidly understanding why people will or won’t buy, invest or partner.

Increase that momentum by giving that universe of prospective customers and partners permission to be candid and start generating value or move onto the next thing. Either way, this will accelerate how quickly you can sell and evolve your pitch and product.

And at the end of the day, people get time back in their day, something we all want more of.


beginner

THE BEGINNER MINDSET

READ AND LISTEN

The beginner mindset is an essential belief system for entrepreneurs.

It’s equal parts naivety, courage and vision.

Add a ‘do what it takes’ attitude and this mix is often responsible for why entrepreneurs attack problems in industries they have no experience in.

The punchline is that deep domain expertise is not a prerequisite for building a great company. Entrepreneurs know this and first-time founders should know it too.

History is littered with examples where the founder didn’t have the domain or technical expertise in the beginning that you would expect them to have given the business they built. Just look at Apple.

When I think back to my first business, I had the knowledge of a scientist and that of a soldier. I had no domain expertise. And in every business since the only real layer of knowledge that has been added to science and soldiering is how to build businesses.

While being naive, having a big vision and being courageous (to start a new business after one that failed) is essential, the capacity for learning is usually what makes or breaks entrepreneurs.

The learning superpower

The lead indicator I look at in determining the future success of an entrepreneur is their rate of learning. The higher their rate of learning, the higher the quality of their decision making.

When a founder enters a new domain the beginner mindset puts their rate of learning to the test.

This happens in two dimensions.

The first is that they need to acquire as much knowledge as possible to understand market dynamics, navigate incumbents and capture the opportunity.

The second dimension involves tracking the knowledge of the team you build to supplement your deficiencies in domain expertise. The point here isn’t that you need to know exactly what your team know. You need to know enough to maintain high-quality decision making (and this usually means you need to know a fair bit of what they know).

6 tactics to accelerate learning when you’re a beginner

1. Maintain a ‘grow the pie’ mindset

I’ve often found that the term ‘disruption’ inspires binary behaviours. Entrepreneurs are often doing the disrupting and if they are not creating an entirely new product category they perceived to be people determined to dismantle or reorganise an industry.

If, on the other hand, you are part of an industry being disrupted, there’s a good chance you’ll be part of an effort to defend value that’s been created.

There are few winners in this scenario.

The alternative is maintaining a ‘grow the pie’ mindset. This might not remain the prevailing mindset as the business grows but if you don’t start this way, you will miss insight that will be important to the future success of your business model.

2. Find the talkers

I have learned a significant amount as a beginner by listening to people who just wanted to talk.

And there are few people who love to talk more about their work than veterans whose livelihood is a byproduct of their standing in their industry.

They have such conviction in their industries future that they will speak from a place of authority that at times can be borderline condescending.

I’ve found these people to quite happily lay out playbooks and existing processes in meticulous detail. For the most part, they are happy to do this because they do not view you as any kind of threat.

3. Identify canaries in the mine

The analogue of a canary in a mine are people who become allies and advisors to your business.

They are also industry veterans. They may have moved on or they may still be trying to champion change internally. In any case, they are prepared to be honest about the innovation their industry could enjoy and benefit from.

They also know what needs to change and will provide early warning if you’re headed towards it. I can think of eight people who played these roles for Opher and me at AirShr. They were invaluable then and we're good friends today.

4. Beware of the surface layer

Every business in every industry, old or new, presents an element of spin. In other words, what you see on the surface through websites, PR and initial meetings might appear elegant and well-organised but it’s important not to accept what you see on the surface.

Every business also has an engine room. It’s where design and manufacturing take place or where paperwork is processed. It’s where manual work is done. And it’s where entrepreneurs’ solutions become more complicated than originally expected.

Always look for the engine room from the beginning. It will save you an enormous amount of future lost time.

5. Look for transition incentives

These aren’t the incentives for the future. They are catalysts that will help people gain the conviction needed to move from today’s environment to the tomorrow’s paradigm.

This is probably one of the most difficult problems for entrepreneurs to solve. That's because from the outset it’s hard to understand the relationships between all the incentives in play.

I talked about this on Sidney Minassian’s Sales Native podcast this week.

I’ve found that determining the financial and cultural incentives of people in organisations to be relatively straightforward. It’s the systems-level incentives which are often complex. In media, for example, there are relationships between content creators, agencies, distributors and advertisers that are opaque and ever-changing. The same is true for other mature industries.

The point is that continuously mapping and probing for transition incentives is an essential part of shifting a paradigm.

6. Have mentors

This is essential and I talk about it a lot (like here, here and here). The punchline: Don't go it alone.

One last thing…

The beginner mindset is as important to entrepreneurs starting a new venture as it is to people undertaking wholesale professional or lifestyle reinvention.

You might be naive, courageous and full of vision but the key is how quickly you can learn.

I’ve come to rely on these six tactics to accelerate learning and I hope they help you too.


SELLING IF YOU’RE A RELUCTANT SALES PERSON

SELLING WHEN YOU’RE A RELUCTANT SALESPERSON

Selling is my job and I really enjoy it.

But the idea of ‘selling’ is confronting to most people.

I remember being told that I was ‘a natural sales guy’ in an annual review meeting. Sitting across from me was my manager. John was a capable, intelligent and sincere man with whom I enjoyed working.

When he delivered this feedback, I couldn’t believe what I was hearing.

A ‘sales guy’?

The annoying, used-car, snake-oil salesman stereotype rushed into my mind.

I felt sick to my stomach, ashamed that somehow I had the potential to be a deceitful, all-hustle but no substance guy who could (and would) sell anything to anyone.

I have met men and women who fit this mold perfectly. They sell widgets with little concern for the relationship once the deal is done. Their primary incentive is financial and you can spot their insincerity a mile away.

At the other end of the spectrum are people who are deeply invested in developing business and making their customers more successful than ever.

They combine empathy, compassion and humour with data and logic to present compelling propositions. These people know that the energy required to close a deal is only half of what’s needed to make a partnership successful.

They are ready for the long haul and know that their strategic success is inextricably linked to that of their customers.

These people also appear resilient, determined and measured but just below the surface, like anyone who takes pride in their mission, they manage the burden of setbacks and fatigue through mentors and tactics that help them grow.

Their primary incentive is changing your world. And I was shown how good this can be by people at the top of their game at General Electric and Google and by entrepreneurs like Andrew Lowe, Jo Burston and Greg Nance.

This is how I think about selling.

Getting in the right headspace

There are 12 truths to selling. They apply to consumer and business sales and are particularly relevant in complex selling (where two or more decision makers are involved) and where partnerships are the most efficient pathway to growth.

But above anything, these truths help people to get into and stay in the right headspace to enter the endurance sport that is selling.

It starts here.

Segmenting customers, crafting messages, pitching new business and placing ads on social media comes later.

The 12 Truths

1. Love what you sell. If you don’t, stop wasting your time (and that of the people you’re selling to)

It’s easy to tell when someone loves what they are trying to convince you to buy. They ooze authentic conviction because they know, through careful research, that their product or service will make a genuine and positive difference to the life of the buyer. This comes naturally to most founders.

But remember, if you don’t love what you sell, the buyer will see it from a mile away and there’s a good chance that your behaviours will reflect your incentive (no matter how well you try to hide it). If you’re in this boat and given the value of time, you need to ask yourself if it’s worthwhile.      

2. You either move people closer to happiness or away from fear

These are the reasons people buy things. Your product or service has to do one of these two things really, really well. If it doesn’t for one person, then they’re not in your target market. If it doesn’t for a large group of people, you may not have a business. Don’t underestimate how binary or how true this rule is.

3. There’s always a run-rate business and a strategic business

Selling a product or service repeatedly to individual customers is how most businesses get runs on the board and gain early traction. This momentum helps create opportunities to pursue larger distribution through strategic partners. With the right timing and luck, a virtuous cycle will be created where large partners drive higher sales to individual customers.

This never ever happens quickly and that’s why companies of all sizes need to operate a run-rate business (selling to individual customers) and a strategic business in parallel. This is a tricky juggling act but a necessary one in order to achieve scale.

4. Sales involve the whole team

The buck might stop with one person for sales results but every single person in a company has a role to play in selling. This is as true for the CTO and engineers, who enable features that help to close deals, to those charged with customer service who shape and influence buyer’s perceptions at the front line.

Every team member should be able to answer ‘how do you support sales?’ in the same way each team member should know how they contribute to product development.

Every team member should feel a genuine sense of contribution when a deal closes. The absence of this is a lead indicator of a disconnected culture.

5. Successful selling is backed by three types of marketing messages

This point isn’t about the mix of marketing channels you use to wrestle for a decision maker’s attention. It’s about how the messages you create co-exist and perform over time to reinforce your brand in the mind of the decision maker.  The first two types of marketing message are scalable, the last one is far from it but just as important.

The first type of message is subliminal and involves the subtle appearance of messages designed to draw curiosity. You might not receive a direct sale from them but they will reinforce your brand. Text ads on LinkedIn or branded weather reports on screens in elevators are good examples of subliminal messaging.

When you receive a direct marketing message, the second type, it comes to you through an environment that you’re very familiar with and it grabs your attention for at least 3-5 seconds. You find these messages in places like the television screens, in subways or in your Facebook, Instagram or LinkedIn feed as sponsored content, to name a few. They’re not specific to you but for some reason, they are presented at the right time and make you stop and take notice.

Intimate marketing usually involves an event where the seller grants exclusive access to a product or the people behind the product. These high-touch, invitation-only occasions are reserved for a small group of decision-makers on the buy-side who want first-hand experience with key people who can discuss an issue they need solved or an opportunity they wish to pursue.

Intimate marketing can also involve repeatedly visiting and supporting prospective clients to demonstrate commitment and empathy. Never underestimate the value of a personal touch in a commercial relationship.

The combination of subliminal, direct and intimate marketing messages is potent.

6. 90% of deals are lost due to poor follow-up

Anyone can send out an introductory email or make the first sales call. It takes discipline and a well thought-through sales process to stay focused, nurture prospective customers and close deals. Invest in technology that will keep you on track. I really like ProsperWorks for customer relationship management (particularly if you use Gmail for company email).

7. Promoters and detractors live at every level of your customer. Work with both.

This is a business to business (B2B) sales truth. As you forge new partnerships with large organisations it becomes clear that there are people who are willing to advocate on your behalf (i.e. promoters) and those who are active in creating roadblocks.

The best salespeople fight to establish the motives of all the actors in a customer’s organisation who will influence their companies success. This is a continuous exercise is sensing and responding and it requires working and understanding the perspectives and incentives of promoters and detractors. And that’s why I look forward to one person in a prospective customer organisation saying ‘No thanks’.

As I wrote in The Pyramids Aren’t As Tall As You Think, ‘no’ only means no today and as far as I’m concerned this is just the beginning of a strategic conversation.

8. Funnels, numbers and lead indicators are your lifeblood

Revenue makes a lot of problems go away in business. And although sales results often speak for themselves, I’m always surprised at how many people talk about the steps that lead to a sale (their funnel) and the indicators they use to determine how sales efforts are trending. In most cases, they talk a good game but their funnel, sales numbers and indicators are all in their head or buried in their email.

That isn’t sales, that’s chaos.

Sales funnels are made up of the practical steps required to take someone from being unaware to being an advocate for your brand. And each of these steps is accompanied by a percentage likelihood that a deal will be done given the stage.

For example, the chance of a deal getting done when someone first expresses interest in your product might be 10%. They’ve still got a ways to go as they consider the pros and cons of doing business with you. By contrast, there might be an 80% chance of a deal being done when contracts are exchanged.

Take the expected first-year revenue of a customer and multiply it by the stage at which the customer is in the funnel and you’ll have the potential value that prospective customer will add to your business.

And there’s a sweet spot for how many steps there are in sales funnels. It varies by business. My general rule is that a practical funnel is a productive one.

When it comes to knowing my numbers, I focus on five measures as part of managing sales funnel health.

#1 Amount of leads generated

This is obvious. The real question connected to this measure is ‘where are your leads coming from?’

#2 Quality of leads generated

It’s always been about quality over quantity. I look at the overlap in characteristics between customers and those of prospective customers who are moving through the sales funnel quicker than other leads. The insights from this analysis usually result in a change to how we generate leads and how we nurture existing leads.

#3 Leads to close ratio

This ratio is telling you how many actual sales come from leads. Here's the calculation: (Amount of Sales Leads over a certain period of time / Amount of Closed Sales over the same time) x 100.

#4 Average sales cycle length

This measure is telling you how long it’s taking to win new business. I’ve seen the largest improvements in sales come from examining and optimising the factors that contribute to sales cycle length. Here's the calculation: (Number of days from first contact + Customer conversion for all deals) / Number of deals.

#5 Customer referral growth

This is the number of referrals that come from existing customers. The first four measures focus on ‘getting customers’. This one is about ‘growing customers’. In particular, it’s about how you’re adding value once the deal is done and how that translates to word-of-mouth referrals. Think carefully about how you can incentivise customers to do your bidding. Believe it or not, it begins with asking customers what it would take to earn their referral.

Although these metrics are important, I don’t consider them lead indicators.

The lead indicator I focus on, the one that will give me the most insight into whether sales strategies are working, is the number (and outcomes) of sales calls, emails and meetings. You can learn a ton by focusing on this because not only does it give an indication of your organisation’s sales momentum, it goes a long way to answering one important question; are people willing to buy what you’re selling.

9. Selling ‘vapourware’ is OK (but be ready to get called out)

I’m a big believer in selling an idea with a prototype before committing to build out an entire product ecosystem. I’ve benefited from investing a small amount of time and money to find there isn’t a product/market fit. I’ve also had the ‘holy shit’ moment when I’ve been called out by a prospective customer who wanted my yet-to-be-built product that day.

Any way you cut it, it’s better to sell first and build second.

10. Like product development, selling is all about experimentation

There is no ‘set and forget’ when it comes to developing a product. It’s about countless experiments. The same is true for sales. The truth of the matter is that you start losing the moment you create a campaign and sit back and wait for results without quickly moving onto the next experiment.   

11. Relationships matter but time matters more.

I have two cardinal rules when it comes to sales and business development; 1) Always arrive with value in hand and 2) Never waste a prospective or current customer’s time.

How many times have you rolled your eyes when you see a call coming through from a salesperson.

Take pride in not being that person.

As far as rule one is concerned, set up a quarterly event in your diary to reach out to them but make absolutely certain you have value to bring to them.

And by the way, this doesn’t mean asking them for a coffee. It means adding real value, the type of value that makes their professional or personal life better. It can be as simple as reaching out to wish them Happy Birthday to sharing a piece of important research that you know they will value to offering to make an introduction based on a conversation you’ve had.

Hopefully, the second rule is self-explanatory.

12. The buyers' decision-making process matters 100X more than your sales process

I’ve left the best to last. Do not be fooled into thinking that just because you control the speed and creative aspects of your companies sales and marketing that your job is done and it’s only a matter of time until the sales pour in.

That’s not how it works.

The more difficult (and largely uncontrollable) aspect of sales and business development is understanding the decision-making process of prospective customers.

If you wake up each day with a desire to find ways to map closer to their approaches to consideration and buying, you’re halfway there to being successful in sales.

Closing thought

Sales and business development is an endurance sport. It requires focus, resilience, integrity and a sense of humour. I have days when I shake my head at how difficult it feels to gain momentum with customers. The good news is that I’ve always found the answer in one of these 12 truths.

And like building a company as a founder, sales is a learning game. Using mentors and tools like this to help you evolve is essential.

If you learned something new, let me know by leaving a comment below. Thanks!


Strategic Partnership Incentives

HOW TO INCENTIVISE A STRATEGIC PARTNER

LISTEN OR READ

Every startup faces a strategic partner conundrum.

It begins with the realisation that growth usually always requires partnering with existing brands.

The idea of collaborating with a brand to turbocharge the distribution of a product or service is very exciting. In fact, you may have already identified the brands, who to contact and at a very high level, what's in it for them. This thinking might have also found its way into your pitch deck.

The real question is, once you've impressed them with your hustle and value proposition, will they help you achieve your distribution dreams?

There is one reason why the answer is NO for many startups.

It comes down to incentive alignment.

The conundrum, therefore, isn't whether you should partner, it's how.

Look beyond the brand

It's easy to forget how much goes on behind the scenes to make big brands work. There is competitive pressure, internal priorities and politics and a long line of other companies wanting to partner with them. Unsuspecting founders look at big brands' reach and strength and quickly forget that these companies are complex and often moving in pursuit of a strategy that cannot be well understood from the outside.

Approach any strategic partner with these 6 facts in mind

1. They have all the power

Don't kid yourself that at this early stage you have more control than you actually have.

It's important to remember, however, that this is the most vulnerable your venture will ever be and the momentum you are creating by forging these partnerships will increase your influence and leverage over time.

This requires patience, a counter-intuitive behaviour for most founders. In the context of valuing time as your most valuable asset, position your value-adding product or service confidently but avoid posturing. It will cost you time and potentially a partnership.

2. Their objectives matter more than yours

You should be clear on what your venture needs from the partnership but remember that if your partner's success increases because of you, your venture's value increases and the future will be brighter.

Fight hard to understand the motivations the sit behind each of your future partner's objectives and then determine how to align your objectives. There's usually a trade-off where not all of your needs will be met but that might be better than not having a strategic partner at all.

3. Partnerships don't start with binding contracts

Partnerships are built on mutual intent. It takes understanding through multiple conversations to establish intent and the desire to work together.

Avoid starting with a contract. Instead, work up a plain-English statement of intent which can be iterated as the relationship evolves. Expect this to turn into a legal document at some point but for now, feel free to use this template.

4. Once a deal is done, expect to work much harder than you expected

An agreement doesn't automatically pave the way for smooth partnership sailing. The people asked to support partnership efforts still have day jobs, priorities and politics to negotiate. Be ready to play a significant leadership role in driving clear communication and decision making across a new team who lack the context afforded to the people who signed off on the deal.

The bottom line is that it will be up to your venture to get things done.

5. There are allies within your strategic partner

Find them, as quickly as possible and develop relationships based on you delivering on the 51% rule. These people enable progress and are your backchannel. They are essential to your success.

6. Partnerships nearly always take longer than expected to bear fruit.

Unexpected issues and opportunities appear in partnerships all the time. This usually affects the time it takes for both parties to create the value they initially expected to enjoy.

As a rough guide, I usually expect to work on a partnership for 2-3x longer than I originally expected.

Navigating to strategic partnership

Armed with the 6 realities of forging a strategic partnership, you can now start moving towards the critical milestone of closing the deal.

After shortlisting brands which are likely to be able to support your distribution objectives, the next step is to determine what's in it for them.Incentives fall broadly into three main categories. Your job is to determine which of these incentives will make people inside your partner's business happier and more successful. The next step is to organise how your product or service fits with the incentive.

1. Financial Incentives

These incentives involve payment in return for access to your partner's assets. These payments may be at a discount (due to the partnership) and can range from revenue share to commission-based arrangements.

Although these incentives look straightforward on paper, your venture's capacity to generate enough meaningful revenue to share in the early days will be low so don't expect a partner to think this will be sufficient.

Other important financial incentives include tailored pricing to manage perceived cannibalisation risks (if you plan to distribute a partner's assets in one of their existing markets) and equity in your venture if certain extraordinary milestones are achieved.

2. Relevance Incentives

Never underestimate how hard brands need to work to maintain relevance in their chosen markets. A relevance incentive helps an existing brand to deliver a fresh message to market while simultaneously promoting your product or service.

3. Exclusivity Incentives

Exclusivity is a powerful incentive. It helps a partner in one of three ways. First, it helps to extend the first-mover advantage of the partner once the exclusivity period is over. Second, exclusivity can be extended in the event the partner wants to maintain monopoly access to a startup. And third, exclusivity helps protect the partner's interests in the early stages where intellectual property is being created between the companies involved.

Be as practical as possible

These short-term incentives can co-exist in a deal with a strategic partner. Using one or a mix of incentives allows both parties to road-test the relationship and determine how much value exists. If this audition works out, the future may include a more lucrative partnership or result in the partner taking an equity stake in the startup.

I've used a host of tactics over the years to negotiate strategic partnerships and it's important to remember that each incentive is (usually) accompanied by a tradeoff.

So if you're mulling your first strategic partnerships, start with the 'run before you walk' approach, be wary of strategic partnership dynamics and work as quickly as possible to generate value.

And one final thing, always listen to your gut.

Notwithstanding what we've covered, if your spider senses tingle as you move through the steps to form a partnership, listen to them. A counter-productive partnership can a time and momentum sinkhole.

Time is everything.

If you learned something new, let me know by leaving a comment below. Thanks!


4 REASONS WHY YOU SHOULD ALWAYS RESPECT YOUR COMPETITION

I love the energy that competition generates.

To some, this energy is pure angst after they (finally) realise they are not alone in their chosen market.

And to others, it’s a sign of validation that a market actually exists.

Ultimately competition always results in better products and services being created over time.

There’s just one problem.

And it’s a human one that dates back to many of our childhoods when we were pitted off again other children in a sporting race.

This is often our earliest exposure to the term ‘competition’. It’s at these events where, as much as parents try to keep their emotions under control, they start yelling and screaming in support of their son or daughter.

In response, and in a blink of an eye, children recognise that all effort in that moment needs to be concentrated and expended on trying to win. This is the beginning of a feedback loop. And from here attitudes to competition evolve and oscillate along a spectrum as we get older.

A healthy respect and good humour for those who offer us a challenge lives at one end of the spectrum. Ego is tempered by the good humour and the admiration for the spirit of competition reminds us that people exert effort in pursuit of improving something bigger than themselves.

At the other end of the spectrum is a philosophy of winner-takes-all-at-any-cost. Not be mistaken as ‘mission-focused’, those who consistently operate here either ignore their competition. They believe they are superior or focus on eliminating their competition to become the dominant market player.

Ego is more difficult to temper in this environment and it can lead to a loss of market awareness and this is a cultural slippery slope.

There are 4 reasons why you should always respect your competition.

1. Their founders have dedicated their lives to solving problems

They are obsessed with solving the same problem(s) you are. That means they’re always thinking, always experimenting and always learning. You know what is sacrificed to walk this path. Respect it. They might just outsmart you.

2. You don’t know what they’re building

The reality is that there is no way for you to know, and it might be better than what you’re building. Don’t get me wrong, I’m not suggesting you obsess about what your competition is up to. I am saying that completely discounting what a competitor is capable of creating is a mistake. They may surprise you and if (and when) they do, you may not be organised to respond and that can be fatal.

3. You might end up being forced to work together

Businesses are often required to work for the same customer as a way for large companies to mitigate supplier risk.

If your business is forced to collaborate with a competitor and either of the businesses have developed a culture devoid of respect for competition, it’s going to be a rocky ride. The obvious worst case scenario is that the customer fires both businesses due to lack of performance and everyone loses.

4. They might want to buy you or vice versa

Contrary to popular belief it’s not uncommon for founders of competing businesses to meet periodically. These conversations usually focus on strategic industry-related issues and opportunities but they can also lead to merger discussions.

The only time mergers create value is when the teams of two businesses are genuinely excited by what can be achieved by joining forces. Value is rapidly destroyed when one of the businesses considers the other the enemy. And it’s also no surprise that adversarial cultures are born from spending too much time at the winner-takes-all-at-any-cost end of the competition spectrum.


Disruptors live across the competition spectrum. I like to believe people live somewhere in the middle, venturing from one side of the spectrum to the other as they need to. But remember, left unchecked ego and competition are a dangerous mix. Don’t trash your competition. It’s not worth it.

Just be aware of their presence and keep moving towards your vision.


pyramids

THE PYRAMIDS AREN'T AS TALL AS YOU THINK

The moral of this story is that you can reach just about anyone online.

This is an important idea when you're developing a business. It doesn't guarantee access, nor does it mean that everyone you want to speak with will want to speak with you. It means that you can accurately identify and start plotting paths towards people who you can add value to whatever you're creating.

This is particularly useful if you want to reach titans of your industry. Their track record speaks for itself and a moment of their time can change the trajectory of new companies.

From the outside, it’s difficult to tell how they tip the scales for previously unknown companies. It might be their experience, network, capital or a combination of all three.

And as they become known for helping these companies, it can seem as though your chances of connecting with them decrease. That’s true but that doesn’t mean it becomes impossible.

I’ll never forget one of my closest friends saying ‘the pyramids aren’t as tall as you think’ after we walked out of a series of meetings with people we considered titans. Some were entrepreneurs, some investors, while others were friends of friends of friends. The one characteristic they share is that they're at the top of their craft. They are at the top of the pyramid.

They tipped the scales for us, as they had done for many others. And as excited as we were with the outcome, we had to work hard to create the opportunity to have these conversations. We had been actively practicing the 51% rule for some time. They didn’t just come to us.

The 51% Rule

The number one rule in relationship management is the 51% rule.

The essence of this rule is simple. In every meeting value is created. It's your job, in every meeting, to be the one delivering 51% of that value. In other words, your objective is to always create more value for the other person/people in the room than you receive.

Why? Because developing a business is a strategic pursuit built on the value you bring to relationships. And consistently delivering 51% of the value has a cumulative effect where over time a large proportion of those people you invest in end up returning the favour, oftentimes in unexpected ways.

Here's how I live the 51% rule:

  • By helping. My opening gambit in every meeting is to ask 'How can I help?' and then do what I said within 24 hours.
  • By listening. I practice being the last to speak in meetings so I have the best chance of understanding context and then adding value.
  • By connecting. I'm quick reach out to someone new to cultivate a relationship when I'm certain I can offer them value. I'm also quick to connect people who I instinctively know will gain value from meeting one another. I'm even quicker to say 'thanks, but no thanks' so I don't waste someone else's time.
  • By sharing. I constantly think about who in my network would benefit from content I'm consuming (articles, posts, podcasts) and sent it to them.
  • By celebrating. I celebrate birthdays of people in my network because it's their day!

This rule also works in the opposite direction. Consistently being a net absorber of value means the likelihood of your network supporting you takes a nose dive. Don’t be that person.

The wrong way to climb pyramids takes little effort. And you don’t climb far.

It ignores the simple rule that humans engage and prosper through relationship.

These people cold-call and request value from others where a pre-existing relationship doesn’t exist. They do this in the hope a few will respond. If you've ever been on the receiving end of LinkedIn invitations which lack context or a reason for connecting, you know what I mean.

I don’t invest a moment thinking about the sender’s intent when they pressed the ‘invite’ button. I decline these invitations immediately and just in case you’re wondering what I’m thinking, it’s this: ‘My network is valuable. If you want access to those people, you can work for it’. That’s just the way it is.

The lesson here for people trying to climb the pyramid this way is that the internet and social media remove context and intent.

Online research might surface some insight about a person’s work history, relationships or hobbies but it will almost certainly be void of what’s happening in their life today, their context. And it’s for this reason that your intent, no matter how genuine, isn’t likely to mean much when you try and make contact.

5 rules of climbing pyramids the right way

Developing business isn’t rocket surgery but it does take patience and the built-in thirst to create value for customers and partners.

1. Until you meet in person, you’re a stranger.

Don't assume for a second that just because you can read about someone's experience online that they will want to engage with you. You're a stranger and in order to gain relevance among their priorities you need to dial up the 51% rule.

2. Piquing attention requires you to have something interesting to say

Time is everyone's most essential asset. If you have nothing to say, wait until you do. First impressions count and so does every one after that.

3. Relationships are the most important filter

Leverage LinkedIn to understand how your relationships can help you open conversations with people you don’t already know. A warm introduction is 10x more likely to result in a first meeting compared with a cold call.

4. No just means no today

Rejection is a big part of building a business as I wrote about recently (Expect To Be Told ‘No’ 500 Times Before You Make A Dollar). If you’re told ‘No’, understand why you got that answer and make a plan to re-engage in 8-12 weeks time. Rinse and repeat. This is resilience in the making.

5. Always be optimising the 51% rule.

Steal my tips for the 51% rule, create your own or blend them together. Which ever way you go, just make sure you are always the one creating more value. It pays dividends over the medium and long term. Ignore it at your peril.

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EXPECT TO BE TOLD 'NO' 500 TIMES BEFORE YOU MAKE A DOLLAR

I count how many times I get told 'no'.

'No' from investors.

'No' from potential customers in B2C campaigns.

'No' from potential customers in B2B campaigns.

'No' from potential partners.

And here's what I've learned after pitching investors over 700 times and running more marketing campaigns than I can remember.

For every new business model you should expect to be told 'no' 500 times before you make your first dollar of monthly recurring revenue (MRR). 

500 no's for $1 MRR.

This isn't about getting someone to pay you once.

That's easy.

This is about consistently delivering repeatable value regardless of whether you're running free-to-play, freemium, subscription or any other model.

If you nail the first dollar of MRR before you reach 500 no's, you're onto something. If not, keep testing and evolving. And don't bother whinging about being rejected (like I heard three times today).

Building something new is a state of mind. It's hard, worthwhile and opt-in.

Remember the 'opt-in' bit.

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