Hello 👋

Martin here. Welcome to another edition of Founders’ Hustle!

I write newsletters containing actionable insights and insider knowledge across the full spectrum of company building from inception to exit.

Today, I’m sharing the third instalment in a multi-part series of how I closed the initial 10 B2B customers for my first startup!

In case you missed it, here’s:

Part 1: Defining target customers 👥

Part 2: Approaching target customers 🗣

Now for Part 3…

Converting targets into customers 🤝

So, you’ve identified some juicy prospects, fired off a round of kick-ass cold emails and got some promising responses back. Now what?

Remember the ‘Ladder of Attainable Events’ I previously mentioned?

You’ve ascended the first rung, now it’s time to ascend to the top through ongoing dialogue.

The nature of your outreach email and the recipient's response will dictate the copy you reply with, so this is difficult to provide a template for.

But, sticking to a few core fundamentals in all of your communication going forward will take you a long way. They are:

• Keep providing value.

• Clear and concise explanations.

• Low friction next steps.

Once you have received a reply, usually it contains questions about you and your product. This is super exciting. But, I urge restraint.

An excess of enthusiasm in this moment can easily lead to a brain dump response and an overload of information for the recipient. I found keeping responses short, to the point, and digestible to be the most productive format.

Always lean the conversation towards what value you can provide to your prospective customer.

Focus less on the specifics of how your product works or what features it has and more on the core problem it solves. Prospects need to connect with the ‘What’ before they care about the ‘How’. If appropriate, frame this within a wider market or industry context, tieing in key themes or trends.

At the end of every touchpoint there needs to be a clear, actionable and low-friction next step to move the relationship forwards. It can be as simple as asking a question. Make it as easy as possible.

Think of it as optimizing user experience. What is the clearest and simplest possible action your prospect can take to advance to the step? Does it even need to happen?

We took this to a whole other level at my first startup. It’s commonplace for companies to sign a contract before they work together. This can be a significant friction point, with back and forth of redlines for days, weeks, or months.

Due to the nature of the businesses we were targeting for our launch, we suspected they would be happy to try our product without a contract in place. So, we never suggested it and removed that friction point altogether.

I wouldn’t necessarily advocate that approach now, but, you get the idea.

Even as something as simple as arranging a call can be made a lot easier for your prospect by suggesting times in their timezone, not yours, and sending the calendar invite yourself.

Lower the recipient's cognitive load requirements to the absolute minimum throughout the entire pitching process. Often this can be done by breaking down complex narratives or processes into bitesize touchpoints. 

Think of it in terms of ‘progressive discovery’ —starting off very simply and drip-feeding more detail incrementally.

Guage the pace your prospect is moving at cognitively and match it. Remember, there is gigantic asymmetry in knowledge between your understanding of your product and their understanding of your product.

You should consciously consider where you are with your prospective client in the Ladder of Attainable Events at all times. It’s easy to move too quickly through the pitching process.

If you skip ahead you’ll be out of sync.

Sometimes the prospect will pretend to keep up to save face, but they don’t really follow. You’ll walk away feeling confident that you delivered all of the relevant information, and they’ve come away baffled.

Startups are intrinsically chaotic, but, throughout the pitching process, you need to project control, focus, and intent. Indecisiveness and unsuredness are turn-offs.

For example, presenting 1 way a prospect can work with you achieves better results holistically than presenting 100. It’s intuitive to think flexibility will open more channels of compatibility, but all it really does is stall proceedings. The prospect gets overwhelmed with choice. Or, they sense weakness.

You probably have a thousand uncertainties spinning around in your head as to how this could go wrong one way or another, but that’s normal. Even highly-skilled salespeople at major corporations have this anxiety, it’s just of a different nature.

A common question that surfaces from founders at the early stages is:

My default position on this is yes.

As a founder, it’s easy to underestimate your leverage. You see all the bugs, the unfinished functionality, the grand product roadmap vision that isn’t anywhere near realized yet.

You’re just starting out, so it can feel natural to make your product free in return for your first customer ‘taking a bet’ on you.

All of these thoughts are working against your negotiating position. You’re essentially negotiating against yourself.

If the product you are providing drives meaningful value for your customer they will pay for it. If not, it raises questions as to the commercial viability of your product roadmap.

It’s also a great filter to establish conviction. Prospects that are willing to pay want the solution you’re providing the most. They’re more likely to become heavy, longterm customers, and provide amazing feedback.

By offering your product for free you’ll close prospects that later don’t have the conviction to use it materially, let alone pay for it.

Plus there’s also a psychological and value expectation component from the purchase deicion-maker. Once you’ve made your product free, you’ve set a precedent as a free-to-use tool. This can be tricky to reverse or later price at a premium level.

Established companies that maintain a free tier to onboard B2B customers generally have a sophisticated value perception and evaluation processes to later upsell customers through paid tiers.

This is hard to replicate at the genesis of a startup. Plus, it’s debatable as to whether this is even an optimal model period.

The main question is the price. How much do you charge?

To gauge that, you should be able to quantify the value your product generates in some form, which can — to a reasonable degree — be converted into a monetary figure that you use to formulate an economically attractive price.

Climbing the Ladder of Attainable Events is a very different experience depending upon if you’re selling a low-cost or high-cost product.

Typically, it’s easier to convey the value a low-cost product generates, is simple to adopt internally, and the decision-making framework around making a purchase is light and more likely to be actionable by a single person.

High-cost products are the opposite of this.

With a low-cost product, you’re going to ascend through the Ladder of Attainable Events which each prospect much faster. Less emailing, less calls (potentially none). Touchpoints will be fewer and less intense in scope.

With a high-cost product, each rung of the Ladder of Attainable Events will be very hands-on and detailed. Prospects need to establish a high-degree of conviction and comfort before moving up to the next rung.

Plan for lots of calls with various members of your team and theirs. In advance, prepare media that can help communicate your proposition — documents and videos.

This will help your primary contact assess your product better. It’s also a useful tool for them to envangalize your company to internal stakeholders that may not in direct contact with you.

Therefore, such media should be holistically informative so that if it’s someones first interaction with your company they should be able to get a basic, but good, understanding of your proposition.

It’s practically guaranteed that your prospect will want at least one demo or walkthrough presentation from you for a high-cost product— likely multiple.

You may understand your product inside out, but, communicating and distilling your knowledge down to an easy to follow narrative that clearly articulates the value and compatibility of your product with your prospect’s agenda requires planning and practice.

Try it later.

Call up a friend or family member on Zoom and give a 10 minute demo presentation. It’s tough to pull off succinctly without pre-mediated structure and practice.

Zero preparation often leads to an illogical order of subject matter that’s hard to follow, repetition, periods of silence, extensive focus on minutiae detail, and dialogue about upcoming features and functionality (implies what you have isn’t ready).

You should generally prepare a distinct presentation for each stakeholder role that you expect to have a significant influence over the purchasing decision.

For example, at my last B2B startup, there were three roles at prospect companies that had a major influence over adopting our product: Business Development, Editor, and CTO. We constructed distinct sales narratives for all three.

And, when I say “presentation”, I don’t mean linear and one-sided like a Shakespearean monologue. I’ve found the best presentations are dynamic — they adapt and flow to prospect inputs (questions, statements of needs and requirements, etc).

This is hard to do well at first, but, as you conduct your first presentation, then second, then third, etc, you’ll naturally develop dialogue templates for distinct talking points that you can seamlessly switch in and out of in response to prospect stimuli.

Let’s walk through the rest of the rungs in the ladder in sequential order that you’ll tackle them with each prospect:

Discovery ⛵

This phase is all about learning — from both sides.

You should ask questions about your prospect’s business. Build familiarity with the challenges they face and deepen your understanding of how they operate. This will help structure your sales process and provide guidance on how you steer the conversation and overall pitch.

By the end of this phase your potential customer should know the value proposition of your product, adoption costs, and the team behind it (you).

They’ll start to form opinions on whether or not it’s worth continuing the discussion further quickly.

Particularly in the beginning, keep the conversation fairly high-level. Bitesize chunks of information. Dive deeper when your prospect prompts via more detailed questioning.

I found having an easily accessible demo version of our product live that I could direct interested parties to increased conversion rates.

To do that, we hosted a demo version of our product on a website that we had previously made. Prospects could simply clickthrough from my email to see it.

Sharing any market research or data from tests you’ve conducted can help increase conviction.

If your prospect asks about costs or fees in the earliest stages of engagement I’ve generally found this is a sign they’ve grasped your product and have interest to take the next step.

Assessment 🤔

Once a prospect has grasped your product’s value proposition they will enter a phase of assessment. For low-cost products this can be lightning fast. For high-cost products it will likely be quite extensive.

In either scenario, the prospect wants to make a determination as to the degree of positive impact your product will have on their business. Your product needs to hit a certain threshold in order to make it worth their while.

Essentially, you’re competing against every other B2B company pitching your prospect — for their time and internal bandwidth to adopt new products. Your prospect will prioritize based upon which delivers the greatest return on investment.

If your product increases revenue, saves time, or increases productivity in some other way, try to help them quantify this in numbers.

At my first B2B startup, we gave prospects an estimation of the increase in traffic they would receive monthly. Prospects utilized this figure to model revenue uplift using their internal visitor behaviour and ad monetization KPIs. It’s a subtle psychological shift, the money becomes real.

Feasibility 🛠️

By this point, your prospect is hot for your product. Nicely done! Before you cross the finish line, your prospect will need to verify using your product is feasible.

They may review such things as the technical integration, contract conduciveness with other vendors, resource bandwidth, due diligence on your team, or a whole bunch of other things.

The best thing you can do to smooth this process along is to be as helpful as possible. Be proactive with information sharing and try to give them as much visibility as possible.

For my last B2B startup, technical integration was a common blocker at the feasibility phase. We focussed on this hard to continually make it simpler and easier. First, with clear documentation that could easily be shared with CTOs to the degree no further discussion was needed. Later, by constantly upgrading the product to make it easier and faster to install.

Agreement 🤝

By the time this phase begins your prospect has tentatively agreed to use your product in principal. Now, it’s time to put it in writing.

Contract signing generally goes one of two ways: fast or slow. As the vendor, you supply the contract, so you have some influence on the outcome of your client’s behaviour.

Some clients will sign with no or minimal ammendment suggestions (redline), others will pretty mich rewrite the whole thing. The shorter and simpler your contract, the faster it will get signed.

As you progress up the Ladder of Attainable Events the prospect drop off rate will get lower.

Whilst you’re doing all of this, it’s important to measure lead quality and track progress in order to get a realistic snapshot of your sales pipeline.

Many first-time founders fall into the trap of overestimating this, mistaking tentative interest as an indication of a future sale.

A simple but pretty effective way to do this is to use a scoring system. The details of this are beyond the scope of this post, so here’s a guide.

Once you’ve closed your first ten customers, you’ll start to build a repeatable sales playbook that you can use with other prospects. You’ll also naturally develop a dialogue tree and be able to segment prospects into conversational pathways that are best suited for their first interactions with your company.

You will become more efficient by closing more customers in less time and conversion rates will increase.

Check out Part 4: Keeping customers engaged & driving action at launch. 👊

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