Startup Strategies: Overcome Customers’ Objections

As a tech startup grows, it needs to develop more process and management in order to scale. I call this “arming and aiming” your salesforce. My post yesterday dealt with “aiming” your sales teams, or making sure they are focused on the right opportunities.

This post starts with “arming,” or giving your sales team the right materials to increase their win rates.

Many sales don’t spend nearly enough time training their staff on “objection handling.” When I talk to people about sales, I often describe the process as a series of hurdles that a customer puts up to avoid making a purchase. The sales rep’s responsibility is to work through these common objections with the customer.

In the evangelical phase, where you are still having to persuade customers that there is a need for the type of product you offer, you work through these objections with customers on the fly. Some concerns are real and end up becoming changes to your product, service plan, pricing or bundling. Other objections are just excuses not to buy that can be overcome with enough time, effort and evidence.

When you’ve been dealing with these kinds of objections for a couple of years, you can easily handle them without much thought. It is tacit knowledge. But to effectively scale a sales team, you need to codify it, train your sales teams, monitor results, refine your messages and then refine the training and rollout to your teams.

To start with, here are some common objections and how sales reps can handle them:

1. Our prices are too high. Inexperienced sales reps will try to convince you they need to lower price to win deals. More experienced sales leaders seldom compete on price. They’ll discount, sure. But they want to establish a baseline in the customer’s mind of the value they will get by using your product. The only way to do that is to help the customer calculate the return on investment of using your product. As a company you need to invest in ROI calculators that make it easy for sales reps to enter basic customer metrics and receive an expected benefit. It is even better when the spreadsheets are established with your early customers so that the baseline for the calculations are real. If you can use the customer as a reference, you’ve got the holy grail of sales.

2. We’re more expensive than competitors. The standard response should be: “Of course we are. We’re a premium product. Let me walk you through a comparison set of our product versus our competitors’.” Then, the sales rep needs to talk the customer through the advantages. For example, if your company has raised twice the funding of your nearest competitor, then talk about the investment dollars you’re putting into your product versus the competition. For example: “It’s not about buying the product only where it’s at today — even though we’re advanced there — it’s about where the product is going. We’ve investing in R&D at a faster rate than the competition, which is why we raised $10 million to fund extra development.”

3. The customer would rather buy the “all-in-one” solution. The sales rep’s response? “Let me show you our APIs and how we integrate. That way, you can have the best of both worlds. All-in-one solutions may initially seem appealing but you end up getting inferior innovation. Our big, integrated competitor is investing across 12 different product sets. Since we only do two, those two are much deeper/offer better functionality/are more focused.”

Or whatever. These made-up examples are typical of the kind of knowledge that, over time, you gain and use to win an increased percentage of competitive deals. You need to codify all of this knowledge, put it into writing, disseminate it to sales reps and run training exercises where you drill people on the most commonly raised objections.

Just as important, you also need to get feedback from your sales reps who are on the front line every day about what is working and what isn’t. Don’t think that you have all the answers in the ivory tower. Adjust your sales materials according to this new information, and make sure your staff has the most up-to-date information.

If you don’t arm your sales team, each rep will be competing on his own, without the collective wisdom of your company’s years of experience. The next post will talk about more of the munitions your sales reps need to be even more effectively armed.

Mark Suster has started and sold two companies and is now a general partner at venture capital firm GRP Partners. He blogs about issues related to tech entrepreneurs and other startups at Both Sides of the Table.

Image courtesy of Flickr user SD Dirk.