One of the most exciting things than a starting CEO in a business market can listen to a potential customer: “We are excited. When can and show us a prototype?”
This may be the beginning of a profitable customer relationship or a disappointing sink of lost time, money, resources and a demoralized engineering team.
Everything deepens a question that each starting CEO must do.
He was drinking coffee and cakes with Justin, a former student, listening to him to complain about the time he was wasted with a potential client. I was building a complex robotic system for factories. “We spend weekly integrating the data of the sample they gave us to build a functional prototype, and then, after our just we.
After listening to how he entered that situation, I realized that it sounded exactly as the mistake made by the business software.
Enthusiasm versus validation
Finding product/market adjustment is the Holy Grail for new companies. For me, it was a real career when potential users in a large company loved our slideware and our minimum viable product (MVP). They were ecstatic at the time the product could save them and began to attract others to our demonstrations. Some critical internal recommenders and technical evaluators gave our concept the thumb up. Now we were in conversations with the potential buyers who had the corporate checkbook, and were ready to have a “next step” conversation.
This buyer wanted us to transform our slideware and MVP into a useful demonstration with their real data. This was going to require that our small engineering team committed to the MVP turned the MVP into a useful prototype.
When I listened to a potential client that we were surrounding their own internal client data, I was already imagining Popping Champagne Corks once we show them our prototype. (For the context, our products were sold for hundreds of thousands of dollars, and the life value for each client was enhanced in millions). I returned to our engineering team to work during the next months to prepare the demonstration of the prototype. As much as we could, we integrate customer users and technical evaluators in our prototype development process. Then came the meeting with the potential client. And it becomes great. The users were in the room, the buyer asked many questions, they all asked some suggestions and then we all went home. And the monitoring of the potential customer? Crickets …
Even our users’ defenders arrested the emails.
What did I do wrong?
In my unbridled and very naive enthusiasm for impressing a potential client, I made a rookie error – I never asked the user champion or the potential buyer what were the steps to turn the demonstration into a purchase order.. He had done a lot of assumptions, all bad. And the most important thing is that I wasted the most precious things that a startup has: engineering resources, time and money.
In retrospect, I have no idea if my potential client was asking other companies to demonstrate their product. I had no idea if the buyer had a budget or even a purchase authority. If they did, I had no idea of their schedule for a decision. I had no idea who the other decision makers were in the company to integrate, deploy and climb the product. I did not know how the success criteria were seen to obtain an order. I did not verify the warning signals of an agreement that would not go anywhere: if the person requests that the demonstration be in a business unit or in a technological evaluation/innovation group, if they would pay a functional prototype, etc. To pay the demonstration and/or my costs.
(My only excuse was that this was my first foray into business sales).
Be ruthless about the opportunity costs to pursue offers
After that demoralizing experience, I realized that each demonstration of low probability led us farther from success instead of the fence. While a large company could pursue lots or offers, I just had a small set of engineering resources. I became ruthless on the opportunity costs to pursue agreements whose result could not predict.
Then we build rigor in our sales process.
We build a sales map to find first FIT product/market with users and recommenders. However, we realized that there was a Second product/market adjustment With the organization (s) that controlled the budget and the path to implementation and scale.
For this second group of Guardians, we came up with a cheap trick to validate that a demonstration was only an exercise of tire kick on its part. First, we asked them basic questions about the process: the successful criteria, the decision -time line, there was a budget, which had the purchase authority, what were the roles and approach processes of the andosos of another organization (IT, compliance and second, etc.). Company. (All rookie questions that should have done the first time).
That was just the starting point to decide if we wanted to invest our resources. We follow our questions for Send a fully cancelable purchase order. We listed all the characteristics that we had shown that they had Gods that users excited and threw the characteristics that the technical evaluators had suggested. And we list our price. In large cards, the purchase order said: “totally cancer.” And then we send it to the chief of the group that the prototype asked us.
As you can imagine, most of the time was the answer: WTF?
Find out who is a serious perspective
It was then that true learning began. It was more than well for me if they said they keep him ready to sign. Or they told me that there were other groups that needed to be invaded. Now I was learning things I would never have if I appeared with a prototype. By asking the customer to sign a fully cancelable purchase order, we exclude “less likely to close perspectives”; Those who were not ready to make a purchase decision, or those who already had a selected supplier but who needed to go through the “demo theater” to make the selection seem fair. But the most important thing is that a conversation began with serious perspectives that informed us above all the end -to -end approval process to obtain an order in additional people who needed to say that in the entire corporation and what were their decision processes.
Our conversions of demonstrations in the orders went through the ceiling.
Finally, I was learning some of the basic concepts of complex sales.
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Justin looked at his cake do not be for a while and then looked at me and said smiling: “I never knew that you could do that. That gives me some ideas what we could do.” And so he left.
Lessons learned
- In complex sales there are multiple Product/Mercado Fits – Users, buyers, etc. – Each with different criteria
- Do not invest time and resources in the construction of prototypes on demand if you do not know the path to a purchase order
- Use Cortés Forcing Functions, CANCELABLE purchase orders, to discover who more needs to say “yes”
Filed in: Client Development, E.Piphany |