Ten steps to diagnosing the causes of inadequate sales traction in start-ups.
Start-ups need to show how they will achieve sales traction to be able to secure funding. Traction has become a vital measure of future success because the lack of traction is one of the leading reasons for start-up failure.
Achieving and sustaining customer demand is key to generating ongoing revenue for your business. Assessing the robustness of your customer acquisition strategy by evaluating the answers to these 10 questions will allow you to find areas for improvement and manage risk.
1. Who are your target customers? The ability to very clearly articulate who your customers are, where they can be found and what they want is key to any effective sales and marketing strategy.
2. What stage of the product lifecycle is your product in e.g. innovators, early adopters, early majority etc.?The types of marketing activities required to drive demand are different at each stage of the business lifecycle. A fundamental shift from technology advantage to unmet customer need is required as the business matures and attempts to cross the chasm from early adopters to early majority.
3. Can you articulate the value proposition? Everyone in the organization needs to be able to tell the story of how your product solves the customer’s biggest unmet need better than any other available alternatives in a consistent and compelling way. Clarity of message draws customers in, making marketing more effective.
4. What is your revenue target translated into unit sales? Unit sales are the one metric that really matters – businesses sell units of something (which can be counted), not revenues which depend on price. Align the whole organization behind this number and ensure that every employee understands what needs to be done to deliver it.
5. How many contacts do you need to reach to be able to achieve your unit sales target? If you understand the stages of the customer purchase journey and the attrition rates at each stage you will be able to estimate how many prospective customers you will need to engage with. Then you can plan your marketing to achieve this reach. Marketing without an understanding of the audience size needed to meet your targets is like shooting in the dark.
6. What form of lead nurturing do you do e.g. none, manual or automated (using systems like Hubspot, Marketo, Pardot)? Lead nurturing is critical once you have established contact with prospective customers as not all of them will be ready or able to buy immediately but are a valuable source of potential income in the future.
7. Where in your marketing campaigns are you placing the most emphasis e.g. identifying contacts, engaging potential customers, developing opportunities or converting leads to sales? A common mistake is to spend the majority of money and effort creating awareness while underinvesting in the other critical stages of the customer purchase journey. The result is a low sales conversion rate.
8. What is the length of the sales cycle from initial contact to close of sale? Sales cycle length will significantly impact the amount of lead generation and ongoing nurturing activities required to meet your annual sales targets.
9. What is the quality of your sales and marketing collateral? Collateral that is clearly aligned with the value proposition, that has clear and consistent messaging and branding and is appropriate to each stage of the customer journey will have the greatest impact.
10. How skilled are your sales people? Lead to sales conversion is key. Start-ups need sales people who are hunters rather than gatherers or farmers. They need to be able to work with very little organizational support and be comfortable building a contact list often from scratch.
A strong sales funnel needs to be supported by effective marketing which is aligned with the changing needs of customers as the business moves from early market to mass market. While securing funding might not be entirely within a business’s control, gaining traction is. Do you have the right demand generation programmes in place to deliver to your business plan?
