The story of one clueless founder
I’ll be the first to admit that I’m a lousy CEO. My heart is always in making the thing, not getting it to customers.
Long before starting Ethical Digital, I wrote musicals and licensed them to high schools through my first startup, Go Musicals. Every year I would present a new show, and every year the response would be less than I hoped. And every year I reacted the same way: I would drop my last show and start working on the next one.
The problem with this strategy was that I was always making new stuff and never learning how to sell the stuff I already had. I wanted instant validation, and when I didn’t get it I would return to my workshop to escape the crushing responsibility of actually making sales.
Later I would start an online traffic school that had immediate success simply because of the nature of that market at the time. I didn’t need to sell anything; it was like I flipped a switch and money came out.
That experience rescued me from my failed musicals startup, but it also allowed me to avoid the lesson I needed most: how to develop a sales process to grow a business.
Now here’s the embarrassing part. This post was originally published two years ago, and I’m still in basically the same position today. For sure we have come a long way, and we did try hiring a salesman. But instead of getting clients, I still find myself retreating to the workshop to focus on the next feature, the next upgrade, the next thing I keep hoping will get Ethical Digital instant validation.
So if you’re reading this and you feel like a loser because you’ve created something amazing but you can’t bring yourself to make sales, you are not alone. Salespeople are born that way. Some of us are born founders.
Why startups need salespeople
They say the richest people and the poorest people are in sales. If I had to make sales for a living, I know which group I’d be in.
The moment I go into pitch mode, my mouth forgets how to form words. I think three sentences ahead and get lost on the way. In a word, I choke.
In theory, anyone can sell. You typically don’t need a special license or certification. You don’t need a college degree. You don’t even need permission to hit the bricks.
Yet if anyone can sell, why do most of us find every reason to avoid making that call, paying that visit, knocking on that door? Why do we find every possible excuse to procrastinate, to tinker with the product, to avoid making the pitch?
I started Ethical Digital with some of the most talented, hard-working people I know, but we had no experience in outbound sales. In the past few months we’ve learned the hard way that no matter how amazing your product is, without sales you have no business.
Four months in, we keep making stuff – tools, documents, collateral, everything but sales. It’s like planning the ultimate party but neglecting to send out the invitations.
Now we must either learn how to sell, or learn how to recruit people who can.
To be totally honest, I feel way out of my depth. My comfort zone is the figurative garage where I can make cool stuff like the software that powers Ethical Digital. Sales is the global antipode of my comfort zone, somewhere off the coast of Madagascar in the Indian Ocean.
But we share our fears and failures to help each other grow, and so that we feel less alone. I’m sure we are not the only startup that launched without thinking about sales, and if you read this and think “Oh my God, that’s me,” then it is worth sharing the embarrassing details.
Or maybe you’ll just laugh at our ignorance. Either way, what follows is our journey thus far as we grope and fumble our way toward a sales plan for Ethical Digital.
When you’re lost, ask for directions
I can work from anywhere, so I try to work from everywhere. From Dingle to Belgrade, from Osaka to Ubud, I’ve posted up with my laptop in bars and cafes all around the world.
After a few years of almost constant travel, you might think that by now I would have developed certain instincts, like a sense of direction and the ability to navigate a train station. Nope, I am constantly lost.
The one thing I have developed is a shamelessness about asking for directions. I find that most people are eager to help if you just ask for it. And if that is true of strangers in the street, it is even more true of people you know, even if they are only acquaintances.
So as it became apparent that we needed serious help jumpstarting our sales efforts, we sent out a distress call to our friends, family, and former colleagues, asking for guidance. Here’s a representative sample of the valuable feedback we received:
Dad’s advice – find salespeople in their natural habitat
My dad knows me pretty well. When I told him I needed to learn how to sell, he gave me a long look. Then he leveled with me.
Kevin, he said, you will have more success recruiting talented salespeople than trying to become one yourself. Salespeople are a different breed, and some things just can’t be learned. But if you give them the chance to make money, they will gladly work for you. Salespeople love to congregate and network, so go to where they are: meetup groups, professional clubs, and conferences. Take business cards, and if you can’t recruit them, at least get their feedback.
Moms believe you can do anything, but you can always count on Dad to give it to you straight.
A friend’s advice – Empathy > Eloquence
We have a buddy who trains and manages sales staff for a large corporation. He told us a salesperson’s most powerful quality is the ability to build relationships. We have the stereotype of salespeople as manipulative hucksters, but in the B2B world, the gift of gab will only get you so far. A silver tongue may help you break the ice, but empathy and loyalty are what build trust. This friend is one of the most empathetic and loyal people I know, and it has served him well in business.
The lesson I took from that meeting was that our first criterion for any Ethical Digital employee must be that they are a good person. We’re not selling snake oil, so we don’t want snake oil salesmen.
A former colleague’s advice – Incentives, Leads, and Collateral, in that order.
We spoke with several former colleagues, one of whom is a top saleswoman at her company. While we weren’t able to recruit her, she was willing to give her feedback on our sales efforts. She covered a lot of ground, which can be roughly divided into three parts:
1. Offer the right sales incentives
Given that we are not providing benefits, office space, or any other perks of working in an office, are we making sure a salesperson can make enough money to justify leaving the comfort and security of a full time job?
2. Provide qualified marketing leads
We want our salespeople on the phones, visiting offices, sending emails, making connections – not scraping through business listings. What are we doing to provide them with qualified leads?
3. Develop effective sales collateral
Our sales staff should be armed with slide decks, sales scripts, product white papers, case studies, videos, business cards, and anything else that will help them communicate value and show Ethical Digital means business.
We subsequently asked a few other salespeople to rank the importance of incentives, leads, and sales collateral, and they all agreed with that order.
Salespeople are money-motivated
Given the feedback we were receiving on incentives, we had to do some soul searching on our compensation plan. Were we asking people to incur too much risk? Were we overlooking the importance of non-pecuniary benefits, like a fun office environment?
We are all motivated by different things to different degrees: money, fame, fun, status, social interaction, interest, stress, leisure, location, love, and the satisfaction of helping others. We also all have different levels of risk tolerance.
These preferences change over time. For instance, young people often have few responsibilities, a very high tolerance for risk, a lust for fame, naïve ideas about how to help others, passionate interests, and relatively high status in a society that privileges youth. With that cocktail of motivations, it’s no wonder young people often make career decisions that later seem crazy
Most people engage in some self-delusion about their own motivations. Being a starving artist is cool in your early twenties. Running a non-profit gets you into a lot of black-tie galas.
By and large, salespeople suffer from no such delusion. They want to make money. Maybe they want to make money so they can buy a solid gold jet-ski, or maybe they want to make money so they can feed the hungry in Africa. It need not matter to us why they want to make money, only that there is a relatively straightforward way to motivate salespeople.
The importance of incentive alignment
But incentives are not enough. If incentives are misaligned, then sales, fulfillment, and the client will pull in different directions until the deal is torn apart.
One obvious misalignment that plagues many agencies is front-loading the sales commission. When salespeople get the majority of their commission up-front, they have a big incentive to over-promise. This sets the fulfillment team up for failure when they inevitably under-deliver.
Our solution is to make sure sales, account management, and fulfillment all participate at a level rate throughout the duration of the client relationship. This keeps everyone aligned with each other and with the long-term interest of the client. Salespeople will set realistic expectations that the fulfillment team can exceed, knowing that they will benefit from upsells and renewals later when the client is pleased.
A digital Field of Dreams
I admit I had an “if we build it, they will come” attitude with Ethical Digital that hasn’t yet proven true. With a product that sells itself and a 20% cut of the total lifetime value of the client, people should be beating down our door with the opportunity to get rich selling our services to businesses that desperately need it.
So far that hasn’t happened. Have we mis-calibrated our compensation plan? Should we pay a base salary and a lower commission? Should we charge more for the product, even though that makes it harder to sell and harder to keep the client happy? Should we give a larger cut to sales and a smaller cut to fulfillment, even though that affects our ability to hire the best talent?
There is no avoiding tradeoffs, and neither can we avoid the possibility that we have gotten the tradeoffs wrong. We are thinking seriously about this, but I’m still not ready to raise our prices or reduce our incentives to fulfillment. Our earnings simulator shows how a salesperson can do extremely well with our current commission structure. I don’t think the problem is money.
You can lead a horse to water
So what is the problem?
I think it just takes an enormous amount of initiative to jump at an opportunity, especially one that is scary and uncertain and hard. As entrepreneurs we should know this better than anyone, as entrepreneurship is all about seizing the opportunities that others overlook.
Right now we are asking people to source their own leads, figure out a sales strategy, and go close deals. That’s not leading the horse to water; that is pointing at the clear stream at the bottom of the rocky gorge and saying “head on down.”
I could be wrong, but before we go messing with our compensation structure, I think we need to try building out the tools and support that will make it easy for people to close deals. So easy that anyone can sell.
To that end, we are working on a sales library full of training materials, sales collateral, and lead generation tools. We are upping our own inbound efforts to build a list of qualified leads, and we are having conversations with people we know can close deals when we’ve given them the resources they need.
Ultimately we won’t need to lead every horse to water, but we do need to pave the way.
I need to stop making excuses
As I write this I am painfully aware that working on a sales library and writing a blog about sales are just ways to avoid making sales calls. Despite my dad’s advice, I should be making sales calls. I may lack innate sales ability, but I am passionate about this company and I believe in what we have to offer.
Moreover as a small business owner myself, I have a lot of empathy for other business owners who need digital marketing but have tight budgets and don’t know who to trust.
I could easily make ten calls a day. Even five. Even one would be a start.
But it’s scary, and uncertain, and hard.
Maybe I’ll get started right after I edit this blog post.