Sell, Sell, Sell! (Physical Channel)

We are now on the 11th installment of our Lean Innovation series and it is time to get out of the building for the 3rd time in the process to answer another set of questions that will test the validity of our product and market.

The steps for the Physical and Digital channels are significantly different, so we will cover them in separate blogs. If you are pursuing an innovation or new product or service in the digital channel, you can skip this post and we will cover the digital channel next week.

(In case you are not an Eddie Murphy fan, the scene above is from Trading Places where the Dukes are trying desperately to Sell, Sell, Sell!)

This phase of Customer Validation is a “test” sales process. Real sales will be made, but full scale revenue does not happen until the Customer Creation phase. The principal aim of this phase of Customer Validation is to answer a long list of questions that include:

  • Are customer’s enthusiastic about the product’s value proposition?
  • Does the company understand its customer segments and their needs?
  • Do customers truly value the product’s features? Are any key features missing?
  • Is the product pricing right?
  • Can the product be sold at a reasonable cost?

Testing in this phase consists of simple pass/fail tests based on the hypotheses in your business model. This are yes/no questions only. Either you pass or fail. There is no middle ground. Question examples include:

  • Did you close two sales for every 10 sales calls?
  • Did 2/3 of the prospects you pitch refer you to three friends each?
  • Did the $5,000 investment in the trade show generate 25 leads?

There are 4 steps to this phase of the process. We’ll provide a brief overview of each step.

  1. Find Earlyvangelists & Get Appointments – Earlyvangelists have budgets and the power to write checks. Never confuse them with “visionaries” who don’t have budgets or check writing authority. Assume one of 20 prospects will take your appointment and one of three or less will sign a purchase order. That is less than a 2% success rate. Be ready for the rejection. Your newly hired sales closer will handle setting all of the appointments, but founders should always strive to attend the sales calls.
  2. Test Sell – Anyone can give away or deeply discount a product to get an order. Earlyvangelists should be jumping over the table to get your product. Evidence of this level of enthusiasm is their willingness to pay full price.

Have a detailed sales process and record all of your findings. Why you were rejected is more important than why someone said yes, but record both in a detailed spreadsheet with plenty of room for details. Take your notes as soon as you leave the appointment to document all the details.

  1. Refine the Sales Road Map – You’ve already developed a Sales Road Map and now you have lots of new information that you will use to modify and update the road map. Your goal is to have a well-defined diagram of the sales process that leads to repeatable orders. This plan details every step, every presentation, every sales piece and every price point. Your hiring test for your Sales VP will be whether they discard the road map and go back to their rolodex or use it and refine it.
  2. Test Sell Channel Partners – If you do not sell directly to your customers, now is the time to validate the channel strategy you developed in Phase I of Customer Validation. This step comes after validating end users because any good channel partner will require evidence of enthusiastic end users before they make a decision to work with you. Do not confuse channel partners with customers. A great conversation with a channel partner begins with “we have customers for you.”

Questions to get answered: Will the channel partner buy the product at proposed pricing and terms? What percentage of the retail price will the channel require? How will they promote the product? How can you influence the channel to sell more? Can the partner help you project sales volume?

Next week we’ll cover the steps for the digital channel and then move on to phase 3 of Customer Validation to develop your Company Positioning.

As always, I’ve done my best to summarize the main principles in this blog but pick up a copy of “The Startup Owner’s Manual” by Steve Blank and Bob Dorf to dive deeper.

Thank you for being a part of our values driven community!

Image courtesy of http://www.businessinsider.com/trading-places-frozen-concentrated-orange-juice-trade-explained-2013-7

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