A longtime friend of mine and B2B expert Matt Heinz of Heinz Marketing brought up some amazing ideas as we were discussing the other day, that have an amazing impact on how startups should prepare for investors but also how investors should look into startups.
Although most of the work Matt does is directly with B2B companies and their leaders, more frequently these days they're being engaged by venture capital firms, angel investors and board members of companies who are seeking to increase the efficiency and production of their sales & marketing efforts.
We've found that the following seven questions not only uncover gaps in a founding team's strategy, but also focus and align everyone on what's most likely going to drive repeatable, scalable, and predictable sales growth moving forward.
1. Show me your model
Request to see a copy of the spreadsheet that outlines how the founders expect to drive sales. This should include basic components such as expected sales each month/quarter, how that breaks down by # of deals and average deal size, plus size of pipeline required to hit that number, volume of leads required to develop that qualified pipeline, and expected sales cycle length. You can make the sales model far more complicated than that, of course, but without these basic elements, it's difficult to have confidence that the sales numbers can be achieved.
2. What problem are you solving and for whom?
This isn't about the product. It's about the outcome. Your founders' articulation of the problem and how its solved is very close to the sales pitch. What are you enabling for your customers? How well can they speak the customer's language in describing the problem? If they can't articulate this without talking about the product directly, they have work to do.
3. Who is your target customer and why?
Your founders should be able to enumerate their early adopters. What type of companies will buy - size, age, make-up, industry. Who are the specific decision makers internally who need to be engaged. Why do these companies need it now? How does this become a need-to-have vs. a nice-to-have? At my company Outro, we wasted valuable time going after the wrong target until we honed in on exactly the right type of buyers and it made a world of difference.
4. What is your sales process, and how does it align with how your buyers buy?
Few companies know the answer to the second part of this question, but it's critical. If you can't align how your customers buy with how you are going to sell, you will be introducing artificial and undue friction into the process. Your founders' sales process should be a manifestation and response to how the buyers buy.
5. Who is selling for you, and how are you managing/measuring them?
Channel vs direct, field vs inside, a combination of these. A specific scorecard to measure what's going on, what the leading indicators of success are in each area, how activities lead to conversations that lead to pipeline and closed deals.
6. How are you going to generate leads?
Cold calling isn't the best answer, but at least it's an answer. At my previous company, we actually do all of the cold calling and appointment setting for clients. Sometimes outsourcing that task can help generate new leads, but don't forget to do some of it yourself so you can grasp the essential learnings from it. At the top of that model referenced above needs to be an explicit plan for where all of those leads come from. If your founders expect it'll all magically and quickly appear through inbound marketing, you have a problem.
7. How are you going to decrease acquisition costs over time?
This speaks to making the transition from expensive, short-term pipeline building to long-term relationship management with existing and potential customers & prospects. The better you invest in content and relationships and nurture programs up front, the more cost effective, scalable and cost-effective future sales can become.
This isn't exhaustive, but the crispness of answers you get from these questions (or not) should give you a level of confidence (or not) as to what your founding team might be able to accomplish in the coming months and quarters.