Interview with Veera Johnson, CCO and Co-founder of Circulor, and Lars Vestergaard, Market Connect at Oracle for Startups
We recently sat down with two business development experts, Circulor Co-founder Veera Johnson, a veteran management consultant with a passion for economic and urban development, and Oracle for Startups Market Connect Lars Vestergaard, a recognized authority and strategy advisor in the investment banking, telco, and tech fields, to find out what early founders need to know to prepare for their first enterprise sale.
Q: What is your high level advice for early stage startups that are trying to sell to enterprise?
- Having been on both sides, the first thing is to remember that enterprises have strict governance protocols to qualify you as a supplier before they can get sign off. The sales process takes time. It’s important that you are able to articulate what is unique about your product.
- It’s a challenge for startups and founders to be tenacious sales people and understand the enterprise process. Sales is an art.
Q: How do you show credibility when you are a small startup?
- Think of it as you’re riding a bicycle that you’re still building. You’ll never get fired from buying something that solves a specific problem. Narrow down your value add, that need that you can solve better than anyone else This pitch may feel very different from VC pitches where you are selling the big vision.
- Being tenacious is key, as well as knowing your product inside and out so you can articulate it to your champion. Show them that you can help solve their problem. I often ask my customers, “What can I do to help you sleep better at night?”
Q: Do you have any tips for outbound sales — what are the most effective ways to build your top of funnel?
- Lockdown has been challenging for all of us. Messaging on email really matters. What is in your subject line? You have to think carefully about every detail.
- Networking is even more important these days. There are webinars where you can network. Use your LinkedIn network to reach someone at a company. It can help to find partners that can help you. Any chance you have, send a LinkedIn invite to someone. Think about who can be that voice for you — who can help you.
Q: When it comes to customer discovery, can you share more about the strategy of asking questions instead of pitching?
- Be blissfully honest. The industry is small — be honest and then overachieve. I once got hired into a job to sell a product that I knew wasn’t ready. I didn’t want to damage my professional reputation, so we built a pilot proof of concept. We asked our first customers to come on a journey with us. They ended up aligning on joint goals and co-pioneered the platform with us.
- Be brutally honest and show the journey your company is going on. You could even map out your product roadmap and share it with your first customers. Co-creation can really help.
Q: How do you start a conversation with a corporate to get that first meeting? Once you get it, what do you need to do at that first meeting to get the follow up?
- Sales reps have account planning documents that show who within the company is responsible for buying. The more you can learn about the company’s internal structure, the better. My top recommendation is to use a VC arm or accelerator — they can help you find out a company’s demands, and use that route to help you get to the buyer.
- Get out of your comfort zone. They’re used to it. Be aggressive. Ring the company switchboard. Ask who holds the budget, who is the main influencer, who is the decision maker. Start with the business owner and find out from them who they need to involve and who needs sign off. Use open ended questions to find out what hurdles you need to cross.
- Once you find someone who will champion for you, give them something extra, market insights and other things they wouldn’t get internally. But don’t show up with too many slides — focus on what will be memorable. You should be able to explain your business in 10 seconds.
Q: How does the sales process change if you’re B2B vs B2C?
- Each aspect of B2B and B2C sales is radically different — pricing, support, everything. With B2C, you need to think more about customer churn and focusing on the customer experience with marketing.
Q: What are the differences between selling to corporate enterprise vs government?
- The most distinct difference is that government sales have more stringent requirements and companies need to meet their qualification requirements to be registered as suitable suppliers.
- Then there’s the competitive tender process. It’s the same mechanics for selling to local vs central government. Government is harder to sell to, but once you’re in it’s sticky — it’s hard to remove you.
Q: Is the corporate venture arm a good entry point for startups?
- VCs may be more focused on investments than accelerators. My recommendation is to open dialogue with your contact and appeal to them to get the info you need. VC arms are getting increasingly popular. Allianz in Germany has €1B in their VC arm. BMW has €500M in theirs.
- My first choice would be to go with an accelerator over a VC arm. VC arms often have to go through a due diligence process.
Q: We are seeing many startups go to market with a bottoms up sales motion, for example using freemium products to get individual users within a company, and once there is enough usage, selling to an enterprise contract. What do you think of this approach?
- There is no silver bullet. It may make sense to start with medium sized organizations. Hone your messaging and have a concise value prop. The better questions you ask, the better credibility you’ll have. Enterprises run a risk in buying from you.
- Be prepared to go into an enterprise and run a series of focus groups or innovation co-creation workshops. Do them for free. But they’re your marketing. These co-creators help you refine your messaging and can become your internal champions.
Q: How do you mitigate risk for an enterprise?
- They’re always afraid of the risk of a startup being around in a year. This risk of your startup failing is the elephant in the room. Address it and tell them how you’ve built an organization for the long term. Show them how roll out has happened in the past, de-risk it for them.
- Where in the company does roll out happen? Which department? Is there a lower risk if the product fails? For example, a customer-facing product is higher risk than an internal-facing one.
- Speak their language — that helps them sell internally. Be very industry specific and use internally focused language based on their milestones and performance goals. Enterprises will often have their own agendas and coaching programs. Make sure they understand your vision so use their terms to help them tick off their boxes.
Q: How do you recommend structuring contracts so that it makes it easier for an enterprise to say yes?
- Corporates are often so risk averse. Structure a contract with a pilot period so they’ll have a period of time where to prove that it worked for them outside of their main business environment. After a certain number of transactions, it will convert to a multi-year contract. Then you can focus on holding their hand through the pilot to paying customers.
- Make the pricing so attractive to join, that by the time they get to full scale, they’ll get a discounted price for being one of the first couple of clients.
- Value you can bring is increased revenue or decreased cost. Prove your worth. Make a model with low risk at the beginning, but have a model that shows how you can grow.
- Often the last thing companies will look at is IP protection. Corporates will often use you to soundboard and then go build it themselves. Make sure that you have NDAs and contracts protecting yourself.
Q: What about founder-led sales? What recommendations do you have for hiring your first salesperson?
- In early days, enterprises often like to see founders in sales meetings. Founders should never let these customers go. Check in with them regularly and make them feel valued.
- Once you have your messaging and your deck, then you can bring in externals as sales people. Normally allow 3–4 months for them to get up to speed. Don’t hire your same image. Find people smarter than you are. Reward them well — they should be earning more than you so they’re incentivized to sell sell sell. Use step ladder incentives and compensate them to motivate them to reach explosive growth.
- There are people in your networks who could do the job. Reach out to them — they can be easier to onboard.