Why startups sell better than corporates?

Published in Mar 4, 2021

The good thing about a startup is, that you are most likely working on a solution for a real-life problem, that you have personally encountered in your daily life. Solving this problem gives you a good feeling about actually having a positive impact on the world and making it a better place. But when you are thinking about scaling your business, going out on the market and trying to sell it to potential customers, this positive feeling might soon vanish as you realize, that there are other, bigger or more aggressive companies out there addressing your problem, maybe with a way more mediocre product than yours. Especially if you are in direct competition with corporates, you might feel like in a battle between David and an almighty Goliath. By how come, that startups are able to enter a market and establish themselves as a relevant player? To get behind these questions, DMS Accelerator has talked with different corporates and startups about their experiences in B2B sales.

In the past two years since establishing the DMS Accelerator in 2019, 100 startups have received coaching and mentoring from industry experts to scale their business on the European data-market. With this many startups and time, we have gathered feedback in hundreds of hours in mentoring and coaching to get a clearer understanding of what works and what doesn’t in doing B2B sales in Europe with highly specialised solutions. When breaking our qualitative feedback down, the two most important factors are flexibility and feedback.

Be the speedboat

Let’s dive into the first aspect: Flexibility. Startups usually have got a small team. When being in a meeting with a potential client, decisions can be made on the spot, because of the lack of a hierarchy or complex internal selling processes. They are flexible in most situations in terms of timing and pricing. Especially the pricing is a flexible element, as startups are often trying to find the right pricing model. Of course, you should also get paid for the manpower you invest into a client, but when it comes to licensing your solution for a steady cash flow from your client, you also need to find a right price for the value you provide. Startups can make assumptions on this based on online material or feedback from investors but need to falsify or verify it in the field. Here the fast decision-making process also comes into play. The above-mentioned flexibility in regard to less complex internal processes gives the startup the opportunity to work at the client’s pace. Bigger clients are more likely to be slower than speedboat-like startups. Between different stages in the sales funnel coming closer to the closing of the deal, startups can make changes to their product roadmap in the time the client needs to respond to prior questions. You are able to deliver faster than they are used to and might be able to ship a feature you have committed to early that might not have been developed yet. The difference in speed is a great advantage for the startup to directly address the customer’s need. Most likely, the product is less complex than already existing solutions by bigger competitors, so individual changes can be implemented way faster. Also, the focussed and limited portfolio is a blessing to the potential client for a simple reason: The startup doesn’t try to annoy thew customer to upsell to another product or higher tier of their solution, simply because there is nothing to sell except more man-days. In addition, a lower complexity of the product with a focussed value proposition also avoids a technology lock-in. This is a good thing for the customer as they don’t need to fear a gigantic integration project on the one hand and get rid of your solution rather easily on the other. For you, it is a positive thing because you can avoid a long and resource-intensive integration process and use it as an argument against corporates who compete for the same project. Especially big software corporations often force the client to make changes to their existing processes to implement their solution to have the benefit that they provide with the “correct application” of their solution. Whereas startups focus to fit in into the current infrastructure. Of course, all these arguments can also be used by corporates against you, as corporate arguments can be used against them. Be aware of objections addressing this unfair game to strengthen your stand. Get feedback from the client and your colleagues to build a play to easily address objections in the future.

Sales is people business

Now, with these things in mind, let’s look at this important second factor: feedback. You need feedback from your customer in order to improve not only your product roadmap but also your communication. This information is super useful to build a company that scales. Besides this internal benefit, feedback from the customer brings your closer to the customer’s need. You can provide a solution that fits precisely their needs and build a positive relationship that lasts. Sales is people business, so show empathy to build a relationship of trust. It will make your work easier and the client happy. Implement a weekly appointment to talk about the application of your solution after the deal is closed as part of your account/customer success management. The information provided by the customer helps you for the next iteration of the product and the next communication material for your marketing and sales department.

Things to consider along the way

As always, there are some pitfalls that need to be considered along the way. The factor we want to stress the most is to be careful of the interaction between flexibility and feedback as companies try to take advantage of you and press down the price. Flexibility can be seen as a lack of focus and you might come over as a turncoat to them. Getting feedback on every aspect and reacting on it, might seem as having no clear focus and therefore being seen as a consultant and not a solution provider. Make clear, that your service cost value and set expectations on your own boundaries. Use the feedback of the customer to change your communication and not your whole product development process. The feedback can change the priorities for the product development process in your roadmap, but should not change the product itself. With this information and the back of your head, the sales process and client communication should become a bit easier for you.

If you want to get more insights and feedback on your sales, book a mentoring session with Dennis Birkhölzer during the DMS Accelerator program. The call is now open for the 2021 cohort.

 

Picture by Christina Wocintechchat on Unsplash

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