As Eric Ries points out in The Lean Startup [RIE11], only three exist to drive revenue to a company:
- Paid. You can spend money with marketing and sales efforts to “buy” customers.
- Sticky. You can enhance the customer experience so that current customers purchase more or return more often.
- Viral. Current customers can refer others to become customers.
This posting is about the first. My next two posts will about the subsequent two.
Many books and articles exist that teach readers how to improve their ability to sell using a specific sales strategy. The purpose of the current post is to emphasize that a start-up must decide how it will sell products to its market. Here are just a few possibilities:
- Inside direct salesforce. You hire employees who communicate with potential leads via phone or email and attempt to close a sale from their office. In the case of market-push, salespeople contact potential customers (leads are usually acquired by marketing personnel). In the case of market-pull, potential customers contact the company (as the result of marketing-created advertising, email broadcasts, or internet presence). The sales model for physical retail stores is generally an example of a market-pull inside direct sales. Telesales is an example of market-push inside direct sales.
- Outside direct salesforce. You hire employees who meet potential leads (usually acquired by marketing personnel) and attempt to close a sale in person.
- Sales channels. You retain services of another company (often one that knows the market well) which then distributes/sells your product to end customers. This other company becomes your customer, and, depending on industry, is called a distributor, reseller, channel partner, wholesaler, or integrator. Your arrangement with this company could be exclusive (for your product or for a particular target market) or non-exclusive.
- Internet sales. Many companies, both in business-to-business and business-to-consumer, rely on their websites to sell products and services in the same way that Sears relied on catalogs to sell its products in the early 20th century. In this model, customers find the company’s products via search engines or are drawn to the website via advertising, and execute the purchase over the web without salesperson involvement. Search Engine Optimization (SEO) techniques enable web visitors to easily find your website.
- Proposals. In some industries, customers make their needs known via issuance of a request for proposal (RFP), and the company responds with a formal proposal containing detailed specifications of products to be delivered along with a price quotation. This is the approach used by almost all government agencies at all levels.
The above extracted from my latest book, Will Your New Start Up Make Money? Buy your copy in Kindle or paperback formats at http://www.amazon.com/Will-Your-Start-Make-Money-ebook/dp/B00JOOZQNE.