viaCycle
Selling smart bicycles (or any other product): A delicate dance
“How do I successfully sell my product?”
Every entrepreneur must ask themselves this question at some point during their development cycle. Often, the issue of sales appears simple on the surface. Of course people will buy my product… it solves a problem, and it does it better (at least in some way) than any other solution out there. What more needs to be said?
As we and many other startups have discovered (some more painfully than others), there’s much more to it than that. A couple of weeks ago, viaCycle attended a brownbag seminar at ATDC called “Closing the First Five Sales”. ATDC is Georgia’s local start-up accelerator, and provides fantastic resources for entrepreneurs. The workshop was led by Bill Kunz, an ATDC mentor and Executive in Residence. Bill started out selling computers for IBM, and later moved to Stratus and Cisco where he established a highly successful sales management career. At the seminar, he covered the basics of moving from an idea and a business plan to the point where money exchanges hands, and later, on to repeating that transaction. The seminar was great, so we thought we’d share some of the key points, as well as some insights into our own market.
Bill made very clear distinctions between sales 1-5, and emphasized how the process can be vastly different for each sale. Five doesn’t sound like a lot, but in each case, you are using that sale to learn something very specific about the validity of your business model and product. In this post, we’re going to discuss the first sale in detail, because that’s where viaCycle is at in our own development process. In Part 1, we’ll go over some general considerations of making a sale (many of which are from Bill’s excellent advice), and in Part 2, we’ll discuss viaCycle’s own experience and some unique aspects of the bicycle sharing market.
Without further ado, let’s break it down:
1st sale: Find the pain
The first sale for any new company is going to be difficult. You have no credibility, no track record, and sometimes, not even a working product to show while you’re trying to pitch. The trick is to find a problem or pain point that your customers are willing to pay money to solve. If that pain is large enough, your track record won’t matter; someone will step up to the plate in an effort to get rid of their problem. This has the added bonus of validating your market; if you successfully find the pain and make a sale based on it, you know that your product can be seen as a viable solution (at least occasionally).
The concept of finding a pain point is old hat to many entrepreneurs. Here at viaCycle, from the moment we decided to write a business plan, advisors repeatedly told us to identify the problem we were solving and describe it in detail. The story of that unmet need speaks front and center in every aspect of the startup: the business plan, the executive summary, and every company pitch. I sometimes wonder if the entrepreneurial community as a whole places too much emphasis on new companies marketing themselves as heroes and game-changers, but nobody can deny that people identify strongly with a good narrative.
There is a key difference between describing the pain in your business plan and using that pain to make your first sale: the latter decides whether your unmet need is real or not. Until the sale, it’s just a bunch of pretty words on a page. People may agree with those words, but before they pull out their wallet, such agreement should be considered lip service. For this reason, Bill emphasized that it’s critical to charge actual money for your product. Everyone is eager to get their idea up and running, but doing unpaid demos and pilots doesn’t accomplish the critical step of proving your pain point.
Oh crap, I just signed a contract. Now what?
Now that you’ve asked people to pay for your product, you’re faced with a critical juncture: in order for the first sale to succeed, your product must work. Even if it doesn’t come out perfectly or work quite as you intended, you have to make sure that your customer is validated for their leap of faith. The first customer forms the foundation for your reputation going forward, and negative feedback can set the company back further than if there had been no sale at all.
For this reason, it’s important to evaluate where you are in your product development cycle before jumping headfirst into sales. Has the product been tested enough to be ready for primetime? Do you have enough resources to provide proper support and maintenance? Are the terms of the sale reasonable so you can properly meet them? Sometimes these questions are forgotten in the rush to generate revenue, but they must be addressed. If not answered beforehand when you have time to carefully evaluate them, they’ll be answered by default later on, in ways that you may not expect and may not like.
If you’ve thought about these issues and are satisfied, then you might be ready. Well, probably not. But you’ve got a chance. From here, it’s important to follow through on the sale while still keeping sight of the larger company vision. In many cases, the first sale may change that vision to some degree. That’s ok, as long as it’s due to valid customer and market feedback, and not from trying too hard to appease the people who gave you your first dollars.
The seminar included more advice on the first sale that we’ve probably forgotten, and any omissions or mistakes are our own. It also discussed the critical followup stages, so for any company at a similar stage of development, ATDC is the place to go to find out more.
Didn’t you mention bikes?
We did. The principles above generally apply to selling bike sharing systems, but our market is unique for a number of reasons. Discussing them all here would make this post dissertation-length, so in Part 2, we’ll share some of our personal experiences as we get our own product ready to enter the market. Stay tuned!
<update> Selling Smart Bicycles, Part II has been posted. Check it out here! </update>