Photo credit: Luigi Caterino
Last month I met an entrepreneur with a good, albeit early stage business. He went through the product market fit and refined both products and target market. He had secured his first few customers. Whilst his product was targeted at organisations of different sizes, from mid to very large sizes, he wanted to focus on large corporates. His background was in marketing, he had a range of contacts and relationships with marketing agencies that, in turn, had a lot of large corporate clients. So he naturally thought the best way to reach his potential clients would be to use sales partner. In his case, agencies who would sell his innovative product and, consequently, be perceived as innovative and value adding.
Sounds like a perfect way, doesn’t it? No hassle chasing prospects, no issue identifying who the right person was in the organisation, none of this “cold calling” dirty business and a huge amount of possible clients to tap into.
Well, not quite… After a long conversation, this entrepreneur realised what he was hoping to do. He simply wanted to outsource his problem. And not a small problem: the problem to bring his business the much needed revenues. So he thought someone else would just be happy to own his problem…
This isn’t an unusual thought process. Entrepreneurs do not have experience selling, they are expert about what their business does. But they don’t have experience selling. They are more than often very enthusiastic about their product and focus on it rather than trying to understand the issue their prospect have. So, this concept of “sales partners” is often seen as the “get out of sales jail card”. But that’s clearly the wrong approach, especially for young ventures.
The main reason is that start-ups need to validate their product and service. And selling direct to customer is the unique way to validate. Once validated and variable such as pricing, buyer persona, etc… are determined, the direct sales effort keeps going on all the time. Businesses that have raised millions of $ are, of course, still selling direct so what applies for established, solid ventures certainly is valid for young ventures.
Clearly, once the product has been validated, a possible addition to the sales effort is indeed selling indirect (though this is not the so called “sales partner” and need to be managed closely too). This gives an organisation a greater reach. But it’s not taking place before validation. Finally, the last step, usually in the technology industry, is integrating to a platform. That allows to achieve the graal that many investors talk about: scale (but don’t build your revenues on another companie’s property, some people paid dearly for it).
6 reasons why not to rely on sales partner
Not convinced and still want to go indirect or, as it might be, you are nervous about selling and think a sales partner is the “get out of sales jail card”?. Here are 6 reasons why, in all likelihood, it is not going to help you to go indirect first:
- Market feedback and control: A young organisation (or even an established one) can only be aware of how the problem they address is perceived by their prospect by talking to them. They can better understand why the prospect might be buying or why they might not, what is the economic impact of their problem (and therefore appropriate pricing), what process they follow to make a decision, etc…. Sales partners are not going to relay all this crucial information. And giving away control is risky…
- Owning the timeline: For young companies, speed is crucial. Speed and execution. When a sales partner is used, the company, the partner company does not have the same urgency to bring revenue
- Risk: Young businesses are risky. Period. They might go bust. That’s often a hurdle in the process of new ventures. And sales partners who have invested time and effort into getting a range of clients are not necessarily willing to risk that goodwill by introducing a young business into their reliable income source.
- Full plate: Possible sales partners have already a full plate. Entrepeneurs who think that outsourcing sales is the solution as they have too much on their plate to also add the sales effort do not realise that partners also have a full plate. Usually full of stuff more important and less risky than theirs…
Of course, if someone is kind enough to introduce you to a possible prospect, that is another matter. And it helps generating these much needed conversations…