5 steps to get your first customer [webinar]
Our very own ace of sales, Kevin, recently did a webinar for early-stage startup founders. If you want to know how to get your first customer, then this is for you.
Hey guys. So if you’re just joining us, this is a little webinar that we put together for – to teach you guys about how to hustle your way to your first customers. It’s possible that some of you guys already have those first customers but – and some of you guys might not. I don’t really know. I don’t know all the details about all you guys but I’m going to teach you what I know about how to hustle your way to get your first few customers.
To start that off, let me talk a little bit about my background so you know where I’m coming from, what have my experiences been, and how I perceive these things.
So to start off, I used to be in engineering. I was a mechanical engineer. I used to work at NASA. I worked on the Mars Rover mission that landed on Mars in 2012. The mission was called MSL and that’s the – well, the goal of the mission was to find life on Mars. Hasn’t found life yet but definitely made some amazing discoveries.
After doing that for a little while, I really, really was drawn to entrepreneurship and the software industry and I really wanted to start my first company.
So I teamed up with a friend of mine and we started a couple of companies where because I didn’t code, I did the business development or rather the sales aspect of things and my co-founder did the coding. Needless to say, we had spectacular failures and we learned a lot and in doing so, I learned a few important lessons.
The very last startup we started before I was part of the Close team was called FitSquid and in this startup, my co-founder and I were selling a fitness product, essentially a way to automatically capture every single piece of cardio data from a machine, from a cardio machine at the gym and automatically uploaded to the cloud and to your smartphone. So you could check into a machine like you check in Foursquare or on Facebook. You check into a location. You check into a cardio machine at the gym and you get all your metrics around your workouts. You get all your numbers. All of them are saved and you can also compete with people around you and around the world just with your smartphone.
That was the technology that we have created and in doing so, we had to go out and get our first few customers. So at first, we started targeting gyms as our customers. We pretty quickly realized that that wasn’t going to work. So we decided to go after large companies that had a good – that invested a lot in the employee help.
One of the companies that we targeted among many, many, many companies was Google and we were able to close Google as our first paying customer and that – a lot of how we did that inspires this discussion today. So I’m going to tell you that story.
So when we first started cold calling businesses, we decided we were going to – we’re just going to try to reach as many businesses as possible and try to go after the fitness directors at these companies.
So we were calling tech companies anywhere from Apple, Google, to Amazon, Microsoft, but all sorts of small companies as well.
Pausing here for just a second to make sure everybody can still hear me if there are any messages. OK, great. We’re all good here.
So going back to the story, we were cold calling businesses, pitching them, pitching the directors. For the most part, we didn’t get a whole lot of interest. Well, one day I decided, “All right. I’m going to call somebody at Google,” and I was able to find a research – who the fitness director was at Google via LinkedIn. However, I only got his first name because LinkedIn keeps the name private.
So what I did is I called Google. I called their corporate line and I said – and for the sake of this discussion, I’m not going to use his real name. So I asked for John and Google said, “Well, John who?” I said, “Well, he’s the fitness director,” and their response was, “Well, we need their last name to transfer you. So we can’t transfer you.”
So I said, “OK, no problem.” I hung up. I said, “All right.” Normally you would give up and you move on. But I was determined. I knew Google was a good company to sell this technology to. So I turned around and I went and researched on Facebook and I was able to make a guess as to who two or three possible last names of people would be that are also working at Google that were also in the fitness technology.
I was able to find the name of the person and then I called Google, the mainline again. This time, I used the full name. I said, “Hey, can I speak to John Robinson?” Again, not his real name and they were able to say, “Yes, sure. We will transfer you. But is he expecting your call?” My answer to this question was, “Yes, we have a meeting scheduled.” I lied. But it didn’t matter, because they transferred me and when John answered the phone, he was totally not expecting to hear from me. I immediately got into pitching them on my product, so much so that John was impressed with what we had to do and they called us in for a demo.
We were able to demo John on what our product was all about. Eventually we closed John as our first paying customer, Google as our first paying customer, and we actually took money from them. We were able to use this to actually get into 500 startups and raise money from them as part of fundraising for our business.
So that’s kind of my background and my story of where I came from. I came from the technology industry, went into software and by doing mostly sales and business development. Eventually, after FitSquid, I joined up with the founders of this company which is Close today and was able to build out the sales team here and do all the sales that we do for Close.
Elastic Sales: Sales as a Service
So that’s kind of my background. I want to talk a little bit about the company itself. The company story is also really, really unique. Now when I left FitSquid and I joined up with the Close team, we were not Close back then. We were something else. We were Elastic Sales and Elastic Sales hadn’t been established. It was an idea in the founder’s head.
So Steli who’s the CEO asked me to join up with the team and said, “OK. We’re going to do this. We’re going to pitch sales as a service to all of these startups because we think we could do sales better than a lot of technical founders can. So we’re going to actually sell them a sales team on demand.” But guess what. We did not have a sales team on demand. The sales team on demand was Steli and myself. That’s it. The rest of the team were all engineers.
So we said, “All right. It doesn’t matter. We’re going to pitch it anyway.” So what we did is we pulled a list of companies from CrunchBase with their phone numbers and we began calling. Every day we keep a goal for each one of us to make at least 100 calls to try to reach as many people as possible, to try to qualify as many people as possible and try to close our first deal.
We would call people. We would say, “Hey, we are offering a sales team on demand. Our customers are startups and technology companies. We have a lot of experience selling technology.” Much of these things were not really completely true. We had some experience with technology but we’ve had no sales team on demand. There were only two people. But we sold it anyway.
After three weeks of cold calling businesses, we were able to close our first paying customer and the rest is history, which actually incidentally the history of Elastic Sales didn’t last very long. But it played a major role in building Close which is one of the premier inside sales tools on the market today.
So when we finally closed our first customer, we started ourselves selling for that customer. So when I closed my customer, I actually became his on-demand sales team and I was the only one selling. But we didn’t really fully disclose this to the customers, but we were able to deliver high level of performance, so they never asked any questions. Eventually we started hiring and growing the team and we started building out or internally a technology to actually improve our own sales. So we could close more deals and make more commissions. This is how Close was born.
Close - The inside sales tool made by sales people for sales people
If you guys have looked into Close at all, this is our website, Close. It’s an inside sales tool that actually makes calls, automatically logs calls and automatically logs emails in the platform, so that you can actually spend more time doing sales and less time doing data entry, which is the case with other CRMs.
So we actually built Close for our own team internally, so that we can sell better and we’re actually able to do it. At one time, one of our – by a certain point, one of our salespeople was able to do 300, 400 calls a day and we’re able to really increase our contact rate or reach rates of businesses and close much higher volume of deals.
We took the learnings of sales that we had and actually applied it to the technology and our engineers were building the things that the salespeople thought were more important. So the feedback loop between sales and engineering was so much tighter, the product team and the customer – who was the internal sales team was so much tighter, that our engineer is able to build a significantly more superior product.
Eventually some of our customers started asking a question. Well, how does your sales team close way more deals than our sales team? Because they had internal salespeople as well. How does one of your sales guys do three times as many calls and three times as many deals as our guys? So we showed them the secret sauce of ours, the software that we had built and suddenly we realized, “Wait a second. We have a product on our hands. People actually want to buy this thing,” because our customers are demanding that they want to pay for this.
So we decided to – we made a bet. We launched Close as a product and it completely took off. Eventually we realized that Close’s growth was so strong that we had to pare down Elastic Sales and completely focus on Close, which we did and more than a year ago, we made a full switch to Close and ever since then, we’ve been growing like crazy.
So that’s kind of a very brief history of the company, how we started. I will get into some other more specifics as I cover some of the – I wanted to give you the back story now, but I want to give you some of the specifics as I cover some of the points.
So I will pause right here. If there are any questions about the company, please post them in chat and I will come back and actually answer them.
5 Steps to closing your first customer
All right. So five steps to closing your first customer. My assumption is that when you’re going to do this, you have some semblance of a product. You know your target market and you’re ready to hustle. I mean these are prerequisites to anything.
This is not about how to determine if there’s a product that has a product market. This is not about that. This is about you think you have something, you think you can sell it. How do you acquire those first two customers? Which can be a real, real challenge.
Step 1: Work backwards
So that’s the assumptions I’m making as I start with that. So step one, work backwards. What do I mean by that? Well, a lot of times, people think – they’re only too focused on their goal. So their goal is we have to get five or ten customers. OK. How do we get our five to ten customers? We just need to start talking to people we know, maybe sell a few people, and that’s it. It never takes on any better shape than that.
Here’s how we did it for Elastic Sales and here’s how I did it for FitSquid. We said, “All right. We need to close two customers, one for Steli, one for me, so that we could start selling.” The goal was to prove that we can actually do this successfully and people will pay us and we can actually make money from it.
So what we did is we said, “All right. In order to close two customers, how many people do we need to qualify? What does qualify mean? Well, how many people are going to actually be interested or express interest to us?”
Well, we assume if we close a bare minimum of – if we have a bare minimum of a 20 percent close rate, we would have to have 10 qualified leads in order to have two closed deals. In other words, we have 10 customers or prospects who say, “Yes, we’re interested and want to move forward,” and out of this, we close two of them.
In sales, there’s always a conversion. There’s always a drop-off. So we look at the fundamentals. All right. If the goal is two, that means we need to create 10 qualified leads. All right. So in order to create 10 qualified leads, how many people do we need to reach? How many people do we need to pitch, reach or pitch? Meaning people we get to actually pitch the software or the idea or the product or the service to.
So in order to do that, we decided that to pitch – to qualify 10 prospects, we needed to reach or pitch at least 10 times as many. So the number we came up with was 100. So we assumed that there would be a 10 percent conversion rate from reached to qualified or pitched to qualified.
So in order to reach 100 people, we decided we needed to have – assuming again a very low reach rate, we need to have – make 1000 attempts. So again, we 10X that amount. So you notice how we’re working on this. Instead of working – instead of saying, OK, we need to – it’s all just a numbers game. It’s all about conversion. So to close deals, to get two closed deals, we need five times the amount of qualified leads. So that’s from two to ten, so ten qualified leads and to get 10 qualified leads, we need to reach 100 people. We need to have 100 conversations. To reach 100 people, because you call or you pitch them, it takes – the conversion tends to be really, really low. We contacted 1000 people.
So we set about to make 1000 calls. In reality, we ended up cold calling over 2000 or 3000 companies in order to get those 10 qualified leads. That was actually an error on our part. We assumed the conversion was going to be much higher. Well, we made an assumption and that’s how you should plan – you should work backwards from your goals. Assume always a really low conversion and get to a number that’s a really high action number.
So the contacted number was the action number, meaning we’re going to make 1000 cold calls in order to get two paid customers.
Step 2: Focus on quantity
So that’s how – I mean now you might say, “Well, that doesn’t scale because we’re a startup. We have to do all of these things. We’re founders. We have to run other parts of our business.” I hear this all the time and this is a mistake people make.
Think about it. If today you had 10, 15 or even – like even a handful of more customers than you had right now, is that now worth investing in way more than the other things that you do? Other things are also important but it’s a startup. You have limited resources. You have a million things to do. You have to prioritize and if you prioritize selling first, that’s a much bigger impact on your business than the other things you might prioritize.
So as founders, I actually really urge you to actually do the things that don’t scale. Long term, you’re not going to be making 1000 cold calls a month or a week. Long term, you’re going to be trying to – you’re going to be building the other parts of your business. You’re going to be diversifying the actions that you do. But in the very beginning, it’s really important. It’s really critical that you do the thing that doesn’t scale. But it makes the biggest impact on your world today, which is getting your first few customers.
So do it the backwards method. Work backwards and it just – that’s step two. It’s quantity. It’s about quantity. Don’t worry about the two customers. Once you’ve worked out that all right, to get two customers, we’re going to make an assumption that here are all the numbers we need to hit, the top most number of the funnel, which is 1000 calls in my example, then that is your answer. Then it just becomes a numbers game. Then your goal every day is to hit that number.
So we started off with having a goal of every day we had to do 100 cold calls each. Before that point, the most cold calls ever done was 30 or 40 and I was scared. I was like, “How am I going to do 100 cold calls?” But when you set a goal, when you put your mind to it, Steli and I were both able to hit 100, 120 within our first week. Then we doubled our goals. We made the goals into 2X and we said, “Now, we’re going to make 200 cold calls, because we really wanted to hit our numbers and get our first customers.”
Then that’s a really old school method. A lot of times in today’s startups, a lot of founders feel like, “Well, maybe we should send a lot of emails out or we should network or look at people that we know.” Great! You could always find people you know who will pay you. But that’s not about this. You want to build a business that can actually scale. Not the people who you know. Your friends and family paying for this is not actually predicting the success of your business. But if you can get strangers, complete strangers to pay for your business and enough of them, that means you have a business. You have something they can actually sell. So to do that, focus on the numbers. Do the old school, un-scalable things. Just do the volume. Cold calling is one of the most powerful tools and most underutilized tools by founders.
People think that they don’t have enough time or they think that it’s too – it’s uncomfortable. Don’t worry about that. Just worry about hitting your numbers. Can I make 100 cold calls today? Don’t care if every person on the phone said no. It doesn’t matter. Make 100 checkboxes and check every box off after every call. That’s how I did it. I had 100 checkboxes and if I checked my boxes at the end of the day, I had a good result. I could feel good about myself.
Even if 100 times people said no, it doesn’t matter. If I assume I’m going to reach 20 percent or 10 percent of the people, I just want 10 nos. Then that’s my goal. My goal is to get 10 nos. If I get 10 nos, I might get one yes. That’s why you focus on the numbers rather than the results. The results are irrelevant especially when you’ve already worked up the proper conversion rates.
You really need to thrive on the rejection. The rejection means that you’re making progress towards your goal. So pick up the phone. In other words, the whole point of all this is in other words, pick up the phone and call your customers. Pitch as many people as possible. You can close deals. When you close deals, you’re going to improve out your business. You’re going to build – you’re going to get your first few customers.
So old school methods, don’t ignore them. At least in the beginning, they can actually be of value. We don’t do any more cold calling anymore. It’s no longer part of our business. For Close, we’re all inbound and so we’re always having warm conversations. But if I were launching Close today, I would do the same exact thing. I would be cold calling out there because people don’t know who you are. Content marketing, outbound, inbound sales, all that stuff can happen later, but the thing that can actually help you get a foothold is outbound. So don’t hesitate to do that. So focus on quantity. That’s the main lesson here.
Step 3: Create a process
Number three, create a process. So creating a process for outbound is really, really powerful. So one part of it is, all right, you’ve decided you’re going to make 100 cold calls or 200 cold calls a day or you’re going to send out 5000 emails and try to get 10 percent response rate. Out of the 10 percent response rate, you’re going to call five percent of the people and out of that, you’re going to convert two customers. Whatever the number is, however you’ve decided to do it, create a process.
If you’re doing cold calls, create a script. I can’t tell you how many times people are just not taking the time to write it down. Honestly write it down because you can write down the perfect script and write the perfect sales pitch and if you repeat it over and over again, you don’t have to think. Even if the person on the other line is an asshole, it doesn’t matter because if you do your pitch perfectly and you’ve had it – got it written down in front of you, you can repeat it consistently and actually do well.
So write your pitch down. Write your script down. You know what else you should write? Objections. What are the objections you can imagine people having? It’s best to prepare these upfront because you – what we used to do is we had a sales script and instead of qualifying questions, questions that we would ask to understand the customer better and try to figure out how we can move the sales forward. The last part is we had an objection management document, where we had all the possible objections that we could hear and answers, good answers to those objections, sales answers.
For example, a really good objection question is like, “Oh, that sounds interesting. Yeah, send me an email. I will think about it,” and what that usually is, is the person blowing you off. How you’re going to handle that makes all the difference in the world. Most people – if you’re cold calling someone and he says, “Yeah, send me more information via email,” you’re going to send them an email. You’re going to hang up and then you’re never going to hear from them again.
But a good salesperson, when he gets an objection, he says, “Sure. I will send you an email. What’s your email address?” He takes it down. The other person lets his guard down because they think you’re going to hang up and then you say, “Cool. Just so I send you something more relevant and not waste your time, how exactly are you guys doing A, B and C? Are you guys having any challenges with that? What is it that are your main challenges?”
You’re just getting to asking questions. You just don’t worry about it and that’s how you manage objections. Objections are – so write them down. Get a document together and make sure your goal is to try to talk to as many people, have as many conversations as possible, and get those objections out of the way.
Write them. You’re going to do way, way better. Iterate on these processes. The email templates, A-B test them. I mean these are obvious things. You guys can figure it out. But A-B test them. Do the objection management. The phone script, this is really, really important.
Now we have a lot of materials on our blog. If you go to blog.close.io, a lot of materials on how to create amazing sales scripts, how to create amazing email templates, how to do objection management. So you’re going to learn about that. We actually can learn – we actually even have a sales book. I actually forgot to mention that in this presentation but I will open up the webpage later and I have a discount coupon. If you guys want to ever buy one of our sales books, just let me know and I’m happy to take care of that for you guys.
Step 4: Sound bigger than you are
All right. So step four, sound bigger than you are. So oftentimes, when you’re pitching, people – and the early days, their biggest concern is that you’re just some joker out of nowhere that is not some – that’s going to get them in trouble with their boss or the product isn’t going to deliver what they expect to deliver.
So it sometimes helps to just sound bigger than you are. We were a two-person team, sales team, offering sales as a service model with dozens of salespeople on demand. What we were selling, the dream, to people was if you want it tomorrow, you could scale it up to 100 people. We can get that and that really inspired people to want to work with us. We couldn’t deliver it but we didn’t need to deliver it. But we needed to be able to sound that way for people to – I mean you could say, “Hey, this is lying. I don’t want to do that.” It’s up to you. Different people have different comfort zones here. A little bit leaning on the truth, a little bit of exaggeration can actually help.
A great story comes to mind. You guys all know Palantir, right? So maybe this story is true. Maybe the story is false. But from what I’ve heard from the insider people, this may really be true.
But Palantir is this really fast-moving startup. They have now millions of dollars of revenue. They make government spy software basically and when they were first starting out, they actually built their first version of the software and they were pitching to the CIA and the FBI on it.
Again, not every part of my story is going to be 100 percent accurate because this is second hand information. But this part of the story I believe is true. One of the days, they were pitching this to the FBI and the CIA. They got a call saying, “Hey, the director of so and so branch is going to come to Palo Alto to meet you guys tomorrow morning at 7:00 AM. So be ready.”
The founder of Palantir looked around and they were working out of an apartment. They had pizza boxes and beer bottles everywhere. It was a complete mess and there was no way they were going to be able to let – you have someone from the FBI or CIA come to their office. So what they did is they made – they had some connections. They were able to get an empty warehouse close by. They went to IKEA, bought a ton of furniture, bought a bunch of new iMacs and they spent all night long assembling new furniture, putting up whiteboards, setting up the empty warehouse space as if it’s an office space, wrote a bunch of random things on the whiteboard. In the morning, the founders met with the director of the CIA or FBI, whatever it was at the office.
When the directors asked, “Wait a second. Where are all the engineers? Why aren’t they here?” their answer was, “Well, this is the startup industry. This is Palo Alto. People don’t show up here until 11 o’clock.” And the reality was that wasn’t even their office. But they actually pretended to be way bigger. They relied on that in order to actually get their business. They didn’t have any negative or false intentions but it was about creating the – establishing trust and establishing that you are a safe bet.
So it’s always important. Sometimes you can’t do that. You can’t avoid that. So it’s good to minimize the risk by understanding what it is that they need and actually diving into it. I’m happy to talk about this a little bit more in detail at a later time or at the end of the session.
Step 5: Sell it before you have it
So the last part is sell it before you have it. So here’s the great thing about getting your first customers. You don’t have to have a finished product to actually get them to pay. People often worry about that, that they can’t get somebody to pay because they’re too embarrassed with their products being terrible.
When we were doing FitSquid, Google – when we pitched Google, Google asked us to come and do a demo and we came and we had a prototype version of the product and we just came in and we showed them a demo. But our product was a wired product. We had to plug in a bunch of wires and run a bunch of cables in order to make it work.
So when Google eventually tested it out, it worked well. They were pretty happy. They said, “OK, this is great. But we’re going to need a wireless version of this product. So you guys have that, right?” And my co-founder and I both looked at each other and then we nodded, “Yeah, absolutely. We have that.”
They said, “OK, great. Can you show us a demonstration of that?” We said, “Yeah. We don’t have it with us right now. But how about in a few days?” So we put a date on the calendar a week later and we went home and we invented it. We did not have a wireless version. We did not have a way to do it before. We never even thought of it before. But this is what Google needed and this is what we needed to close the deal. So we just said yes and we went in and did it – built it.
We came in with another prototype that was wireless and we actually were able to successfully demonstrate it even though it was more or less completely broken and Google then paid us our first payment of $5000 to make an installation on their entire fitness complex. We were able to close our first deal before even having a properly finished product.
So the answer is simple. Sometimes it’s OK to sell the promise, as long as you intend to deliver honestly and we did. In the end, we delivered exactly what we promised. We worked really, really hard to do it but we did it and it’s OK to charge money upfront and it’s OK to ask for money for your product, because you – because there’s real value in it, even if you’re embarrassed about it.
So that’s it folks. That’s the session. I’m happy to answer any questions. Just let me know if this made any sense, if this was helpful, useful or any other feedback that you have for me. It’s still – you guys are still muted. So please post your questions in chat.
Thanks Adam. Oh, just so you know, I will show you the startup sales guide. This is our book, sales book, if you guys want to learn more about sales. You can also go to our blog. Sign up for that. We have a free sales startup course. Our mission is to teach people about sales, help them get really, really amazing at it. So here’s The Ultimate Guide to Startup Sales. We have an outbound guide. We also now are about to launch the inbound guide and then a joined guide. But if you want to buy this book, you could buy it. The discount code to get it in half price is “awesomesauce” all one word. So feel free to use that code to get half price in this book. That’s our CEO Steli who wrote it. There are a lot of great nuggets in there including how to do your outbound sales.
So you – good question. I’m assuming everyone can see his question. But when we made calls to qualify our leads, we were doing everything on the phone and honestly, don’t be hesitant to close deals over the phone. You can actually do it. I’ve closed anywhere from $100 a month deals to hundreds of thousands of dollars in deals, in annual deals over the phone. It just takes a few more steps but you could totally do it.
So we were doing everything for phone sales and we were able to do that. By the way, if you want to also learn about the more expanded version of the Elastic Sales story, you go to ElasticSales.com. That was the sales as a service business. This is the background story about us. So feel free to take a look at that if you would like to learn more.
Also like if you guys have specific questions about sales, like how to – what’s a really good way to craft a sales pitch? Feel free to ask questions like that. I’m happy to help with that.
Did we generate our list of thousands of companies purely from CrunchBase or were there other sources? Good question. So we started out with the CrunchBase list because it has – it had information about – because we were actually – we decided very simply we’re going after startups and tech companies that are growing.
So we wanted companies that have raised some amount of money because they’re going to be able to pay us to do it, but also at the same time, we knew that they had the sales need and had a rough product market fit.
So we created a list from CrunchBase. Then we pulled lists from Data.com. Then we pulled the YC list. That was actually a big part of it. In fact our second customer was a YC company. We were also YC at the time, but we did not use our network to get that. We just pulled the list of YC companies, tried to find their phone numbers and email addresses and we mostly cold called them.
In fact, to close our first YC company took 42 calls and 38 emails back and forth to make this happen. So YC lists, 500 startup lists. We looked at Techstars’ list. At the time, there weren’t as many accelerators. This was in 2011. But they were starting to pop up, but those are the main ones at the time. So that’s when we – that’s where we started. We just went after these companies and a lot of times, people hung up on the phone, told us to F-off. It didn’t matter, because as long as I could hit my 100 calls a day, I knew that I was going to hit my goal, which I did, because you talk to enough people, you’re going to find somebody who’s in the right time.
Outbound is all about volume. It’s all – it’s a beautiful thing. It’s such a simple thing. It’s just math. It’s just how – it’s just a numbers game. If you knew you were going to convert 0.5 percent of everybody you would talk to into a customer, then you know you need to make 200 calls. You need to talk to 200 people and the fastest way you could do it, the more you’re going to get value out of it.
Any other questions? How long do you fake until you make it? Well Daniel, the answer is in that question. You fake it until you make it. Essentially, it’s just going to slowly get there. You pretend sometimes and again, this is – some people may feel like, “Oh, my morality doesn’t let me do that. I don’t think this is right.” It’s really up to you. It doesn’t matter. If your overall intentions are honest and you intend to deliver on your promises, then that’s what matters. You can lean on the truth sometimes.
But we started off with two people of delivering this outbound sales as a service team and we hired our third person two months later and then we started really, really hiring as we started getting more and more customers. At one point, we had gotten up to 100 customers and we still had a relatively small sales team. We had around I think 20 or 20-ish sales people. We’re able to handle tons of campaigns.
At that point, we knew we had made it because we were profitable and we knew that this was a real business. You just know. It’s not something that you have to – that’s not an answer that you have – you can like see clearly. You just go and you will start to see results and you just keep going. Eventually, you know you’re there.
With Close, it was very simple. We started off. We launched the product and the first month, we had a couple of thousand dollars in recurring revenue. It was like, oh, that’s kind of interesting. People actually want to pay for this product. Well, that’s good.
Then the next month, more people paid us and our MRR, monthly recurring revenue, started to increase and then again the next month, even more people and then we said, “Wait a second. This is a business. It’s actually growing.” As we started to hit the different revenue milestones and got bigger and bigger, then we passed profitability, then we knew we had arrived at least to a significant business and then after we doubled from that size, then we knew that this is a business that can really, really scale. So it’s a gradual process. It’s not a simple one.
Hugh asks, “How do you iterate objection messaging? Was it a case of writing down your most frequent objections and then crafting the optimal responses?” Exactly, exactly. So the way that worked is we took – because we had some experience in sales, we wrote down some typical objections. You spend some time thinking about this and then we can craft answers that essentially allowed us to take power in that – take charge of that conversation. So someone says, “You know what? I’m not interested right now.” So my response is – a typical salesperson or a person who’s not experienced, their response would be like, “Oh, OK. Sorry to bother you.” They get defensive or they start to shrink back. My response would be, “Cool. I get it. Why? Why do you think you’re not interested in this?” Well, because so and so and so. Oh, all right. How would you ideally like it to work? How would it work for you if it was the best possible case? Well, it would work like this.
OK. If I said we could actually deliver something better than that, would you be open to having this discussion? Are you still convinced that this doesn’t work for you? Then that changes the dynamics. So yes, you write down some questions. You iterate. You keep improving them. You keep improving some answers.
In fact, if you guys ever want to send me, email me, Kevin@close.io is actually my contact information. Some of your objections and some answers that you think I will be able to give you suggestions on how to improve them, so feel free to do that.
Oh, beautiful question. Jeremy asked, “Can you tell us more about qualifying questions?” Qualifying questions are great. So here’s how you do it. When you construct a pitch, you want to start out with an initial pitch. The pitches should be designed to engage with questions. Questions are critical and those are the qualifying questions. What you’re trying to do is figure out A, “Is this person a good fit?” Not if this person is interested. Don’t ever go with that mentality because guess what, nobody is interested because nobody was expecting your call. If they were interested, they would be checking you out. But they’re not. So they’re not interested.
You are supposed to make them interested. But that comes later. First, you’re supposed to understand them. So you ask some – you have an initial pitch and you follow it up immediately with questions. The questions should be about understanding the process. Here’s our pitch for Elastic Sales.
“Hey, John. I’m calling some local startups in the area because we’re about to launch our beta program or to explore if there’s an interest in our beta program. I wanted to see if you would be interested in talking about that.”
So the initial pitch was designed to get them curious about what we’re asking. So they’re asking, “What is this beta program? What are you guys doing?” Well, what we do is we offer sales as a service for tech startups to help scale the sales team and increase their sales. I don’t remember 100 percent of the pitch really. It has been many years now.
But this is the rough gist of it and so I – and then I would not stop there. I would ask, “By the way, do you guys have a sales team? Oh, what is your sales process? How do you guys do sales? Do you make calls or do you send emails? How many calls per day do you make? Great! If we could actually – if a group of people could actually sell your product effectively and just send you deals, would you be interested in that? Is that something that actually sounds good to you?”
So first, understanding if they’re a right fit. That’s part of the qualifying question, so understanding are they even the right business. Are they actually something of a fit for what you do? Could you actually benefit them? By the way, you should never sell something to somebody who you cannot benefit. I mean I’m sure you know this but really, they’re just going to make a terrible customer. It’s going to come back to bite you.
So it’s not worth it. So just don’t do it. Just understand if they’re a right fit and then figure out if you could deliver what they really need and then show them who you deliver them and that’s it. The sale is done.
So there are a lot of options right now for outsourcing outbound effort. Would your still recommend doing it all yourself? I would think outsourcing outbound would reduce conversion. But do you think that increased volume could offset that?
Jonathan, if there’s one point here, it’s don’t outsource outbound. Just don’t. Not right now, not until you’re really, really big. Look, let me ask you this. Jonathan, are you generating $10 million, $15 million in revenue per year? If you are, obviously then you’re in the wrong room. But I’m assuming you’re not and if you’re not, you should not be doing – you should not be outsourcing outbound.
That’s because – and here’s something that we learned from practice. We were the ones who were doing this for other companies and for the smaller companies, we realized they’re nowhere near the point where they can actually build up a sustainable outbound process, let alone have room to be able to pay another organization. Yes, they could do it. But it’s still better if in the initial days, the founder does it and soon after, an internal sales team does it.
Outbound, outsourcing outbound until you’ve – outsource outbound when you have the following, when you have a repeatable sales process. A sales process that you can repeat by – you have a full – all the sets of processes, you have all the scripts, you have all the conversion numbers. You know exactly how you convert every leads, where the leads come from. Then you can outsource it because then you know how to control it and how to measure it. Don’t outsource the outbound sales campaign unless you know how to measure it. So do that internally. Grow your internal team and then do outbound. Does that make sense? My pleasure. Any other questions?