Y Combinator alumni sales school
Here's the recording of a startup sales bootcamp we did for Y Combinator alumni on August 14, 2014. This was my 45 minute startup sales crashcourse intro, followed by a Q&A (which we didn't record because founders shared some confidential numbers).
Here are the slides:
Prefer to listen? Here's the audio:
All right. So let me give you, let me do this the legal microphone thing. Oh, and the founder, let's shame him. He's late. No, I'm just joking. All right. So let's get started.
Let me give you a little bit of background, just a tiny, tiny bit why sales is important to me, why do I care, how I have learned the things that I know, partially at least. So we started a company called "ElasticSales". Originally, it was a totally different business called "Swipegood". That's how we sneaked into YC and then we turned the charitable micro giving project into a sales machine. So kind of like behind the, you know, the back through the chest into the nose.
So ElasticSales, what we did with that company is the idea was to do like AWS for sales. So we wanted to offer a sales team on demand for startups and technology companies. We ended up working with over 200 venture backed startups in Silicon Valley alone basically doing two things:
- working with startups in the sales exploration phase, right, you have some customers, you have a product, some things work, but you don't quite yet have a predictable repeatable sales model;
- and then the companies that were in the sales execution face so companies like Eventbrite, for instance, that is clearly on the path to IPO and they're like, "We have these seven verticals we'll never get around to get to. Here's the leads, here's the script, here's the process, you guys just throw people at this problem, manage it for us."
So we did both these things.
And from day one, we actually developed a piece of software called "Close" that was kind of an internal secret sauce. We never intended to actually launch that software. But we were recruiting people with it. We were making our own lives better. It's an inside sales tool. And eventually, it got so popular that we decided to release it last year in January.
And you know, as a founder, you almost always wrong, but once in a while, you're actually glad you're wrong. This is one of these cases. This was not me being a visionary founder and saying, "We should release Close immediately." I love the software, and I knew that eventually this would be a bit business. But I also was trying to handling this other business, ElasticSales. I was like, "I don't want to get distracted. This is going to be complicated." So I was resisting this.
But we were getting more and more signals from the outside world - come on in - that people would actually really, people really wanted the software, not just the services.
The other thing that happened is that a little group led by the guy in the orange polo, Phil Freo, he led the resistance internally at Elastic, lobbying it every opportunity, hustling me like, "We need to release the software. We need to release the software. The software must be free." It's just like pushing and pushing and pushing until because of a variety of factors, we decided, "All right, whatever. Let's launch the software." And Close has been a lot more successful than we thought. Today, that's all we do, is Close.
So we have done sales for other companies, for over 200 companies ourselves. And now we have software that's being used by thousands and thousands of inside sales, you know, people around the world. So we've seen kind of all different perspectives on this.
All right, let's talk sales basics. All right, so first of all, let me give you my formula for the hustle. And when you think about hiring sales people for a startup, you're not looking for traditional sales people. You're not going to go to your car dealership or your insurance company and try to hire those people to come and work for you because it's a completely different beast when you actually do sales for a startup, right?
It needs a lot more hustle and not just somebody that's like, "Give me a script, give me a commission structure and give me people to talk to."
You have to figure out a lot more things. There are a lot more moving parts. Today you're this business. Tomorrow you're a completely new business. It needs, it requires a completely different level of flexibility and hustle and somebody that's comfortable with the messiness of a startup. And it's not like, "Well, where's my sales material? Why isn't the commission structure already perfect? You know, why isn't this already a proven model that I can just follow instructions and I'm going to make 200k here?"
All right, you need hustlers. Here's the simple formula when you're looking for hustlers. You look for people that know how to do three things really well and it's in their DNA, in their nature. They know how to show up, they know how to follow up and they know how to close. Right?
Showing up is all about opening doors, going to events, calling people, like sending an email. All that is showing up even getting an opportunity to get attention, even getting an opportunity to build a relationship or even to sell anything, right? Once you showed up, that's already, like you're already at the top of the pyramid in terms of like competing in the market because most people don't want to show up. Most people want the customers to show up at their doorstep, you know, ready to buy. So when you actually have to show up everyday, go out there and hustle, it needs, it requires a certain type of personality that likes that, that wants that, wants to show up, wants to go and send that email, make that call and has that in them.
The next thing, once you showed up, that's just like 20% of winning and 20% of like the sales hustle. The other 80% are actually happening in the follow up. So follow up, and I'm going to talk about that, follow up is where winning really actually happens. It's when everybody else stops racing and you're the only person running in the race. It doesn't matter how slow you run, you are going to win because everybody else stopped running, right?
So I'm going to talk about my follow-up philosophy, but the core idea here is that when you make a connection with a human being, when you show up somewhere and there's a connection, somebody liked something, somebody got know you, you got to know somebody, make sure that you never stop following up until you actually get to a result. And it doesn't matter what the result is, yes or no. Both work. We're going to talk a little bit more about that later on.
And then the last but not the least is closing. And closing starts with actually asking for the close. This is something most people don't want to do. The simplest secret in sales is - here's how you all are going to become sales ninjas: Just ask the question a lot and ask it early. "Hey, do you want to buy? Hey, are you ready to buy? What do we need to do to get you to become a customer?" Ask the question at a time when you're sure they're going to say no. How about that? Ask when you are completely certain they're going to say no. Embrace the no.
What about being comfortable with him saying no and saying, "Of course, you're not ready yet, but I was just curious? I was just testing, you know. Don't blame me. I was just playing. So you're not ready yet and it's cool. What do we need to do to get you ready? What are all the steps? Can you guide me through this?"
Asking for the close. I see this all the time. Founders present something and then they go silent and since the customer doesn't close themselves, they go, "Well, this was a really productive meeting and I really liked it and it seems that this was really good. So hopefully, yeah, just let us know." What's this all about? Just ask, "Do you want to be a customer?" It's an uncomfortable question because rejection is a pretty high likelihood, and you get comfortable with the uncomfortable if you want to actually succeed in sales. You need to look for people you're hiring that are comfortable with that. And that goes into the next thing.
What you are looking for is for people with a high tolerance level for pain and rejection because in sales, if you're not getting rejected, it means you're not trying hard enough. You're not going for big enough deals. You're not doing things that are valuable enough for the business. You're only going for the safe area that you've already mastered. You've created a safe comfort zone in which you operate successfully. These are the types of customers we're closing easily. And now, you know, you got comfortable in it that's all you do all day long. That means that you're missing opportunity, opportunities outside your comfort zone not inside.
You look for people, you need to look for people and in yourself you need to cultivate the ability to deal with rejection and to embrace it to say, "If we want to make sales a priority, if I don't hear no multiple times a day, we're not doing our job." Okay?
So and here's the next thing why sales is actually really fucking hard. So some people like Phil, I'm going to call you out. Phil is actually an engineer. He's an awesome product person. But Phil is also somebody who has a naturally high sales IQ or high IQ in general. So like working with us, he picked up all the sales strategies, all the negotiation hacks, and he is actually fucking dangerous when it comes to customers. When you hear Phil talking to somebody on the support call, all of a sudden he closed them on a one-year contract or something, you're like, "Wow."
And he's really great at critiquing sales people, critiquing somebody like, "Why did we give this amount of discount? Why did we manage this? Why not that?" And he has really great insight.
So actually learning the basics of sales is simple. If you're smart, if you're a hustler like Phil, you'll learn everything you need to know about like how sales works. And you will get people come and interview for you that seem to be really good at sales, really charismatic, talk a lot, like whatever, in a nice suit, present themselves in a way that makes you go, "Salesperson, right?"
What makes great salespeople great is not that they're good a talking or even good at like being charismatic. What makes great people great is consistency.
Sales is very much like a, you know, high-performance sport. So if you're Michael Jordan at your prime and there's a game and you get on the field, the scoreboard doesn't read 20 points for Michael Jordan being awesome. It's zero, dude. You have to perform. It doesn't matter, Michael Jordan, Kobe Bryant. You have to perform in this game today. It doesn't matter what you did last week or the last five years.
Sales is very much the same thing. That's why sales is really fucking hard because no matter how amazing you are in sales, if today's a new day, you have to do calls, you have to do emails, you have to negotiate, you have to close. It can't be like, "Oh, but today I don't feel like it. Oh, but today, you know, I wasn't in a great mood." No, what makes great salespeople great is consistency.
So when you're looking to hire people, for instance, you cannot judge salespeople on a single event or even two or three interviews. You'll have to actually work with them for a month and then a month or two and actually then see, "Does this person, is this person immensely consistent? Do they show up every day and bring it?"
If they do even if they're a little bit less charismatic or less impactful than somebody else, hire these people and not the people that are amazing one day, not that great the other day. Right? You need consistency.
All right, the other quick myth about sales or a basic truth about sales that you need to know is that sales is not about talking. Sales is not about you being like amazing and speaking for 60 minutes and talking people into decisions.
Sales is all about asking questions. It really is. She who asks leads the conversation, right, leads the focus of the conversation.
Sales is all about what I call - horrible salespeople do this, they throw darts in the dark. A dart is a value proposition or feature, and they go, "Well, you know, great to meet you. You know, let me tell you about our software. Our software is so amazing. Our software is going to increase your revenue and your sales. It's going to decrease your cost. It's really easy to use so your entire team's actually going to use it. Our support is amazing. We've been around for a long time so you can trust us."
They're going to be like throwing value propositions in the dark thinking something will surely stick. It's the worst thing you can do. The more value propositions, just like the website with 100 calls to action, the less your conversion. People tune out.
What you need to do instead is ask a bunch of questions and really understand somebody, not just on the surface level but really deeply. "Hey, why are you checking us out? Why are you interested in this software? What's important in your business right now? What do you struggle with?"
And when people give you answers, you can't just go, "Oh, we're struggling with revenue. We need more revenue." - "Oh, cool. Our software does revenue - " No, no, no, no. You don't know anything yet! They just said a word.
Calm down. Ask follow up questions like these to deepen your understanding.
- What does that mean, revenue?
- How much revenue?
- How much are you making today?
- How much do you want to make next quarter?
- Why are you struggling with it?
- What have you tried before?
- What are all your options in trying to increase revenue?
- Why would you go with the option of choosing our software instead of some of the other options?
- What is the - who is involved in revenue in the team?
- Is it the entire company?
- How do you guys decide if you are on the right path?
You really want to dig deep and understand the person. Once you truly understand them you throw in one dart and it hits.
If they're a good fit, once you truly understand what they're situation is, you're like, "Okay, here's why our software is going to increase your revenue by 5%. I have four case studies to show you they did the same thing in the exact same market. And they also had to choose between this and that, just in the same situation as you and here's how they went about it."
Now you can close them easily. You just give them a solution to what they describe to you they need.
I'm going to go through this really quickly. Don't sell features. Don't sell features. Don't talk about features.
Nobody gives a fuck. People might ask you about features and yes, you can tell them. "Yes, we have, you know, whatever, we have bulk email. Yes, we have the analytics dashboard that does X, Y, Z." But that's not the sale.
"Why does that matter? Why do you need this feature? What's the value you try to create? What is the exact work flow you're trying to use it in?"
People go, "Oh, we need an email software that allows us to send emails to a lot of people at once."
"Cool, we have that software, blah, blah, blah. This is it." Wait a second, is it a newsletter? Is it drip email? There's a million cases where you do one-to-many email. You need to go really deep and really understand them. And then you sell them on the value that your features are creating, not on the list of functionalities and features that you have.
This is as tiny as I could make it so guys would have to lean forward. No, this is the size of the graphic.
So somebody asked me recently, "Hey, if I'm doing startup sales, what is the kind of aggressiveness I need? Do I need to be like Wolf of Wall Street, like pushing people into decisions, be like hard hitting like baller? Or, do I need to be like a lamb, more like a teacher that offers information, it's like responds passively to whatever people want and make sure that I'm not offending anyone or doing anything wrong?"
Here's the model that I want you guys to think about when it comes to the salesperson that you'll hire and the way that you do sales. The way that you need to do sales is what I call in "friendly strength," right?
So hostile strength is when you're in it for yourself and you think everybody's preying. And you kill everyone. You're a wolf. You're out there to kill people to benefit yourself, right? That doesn't work for us.
But, you know, friendly weakness is when you're like, "I don't know anything. You know, the world's a complex place. I don't want to offend anyone. You know, the most important thing is -" and these people also get killed out in the market, right? And customers actually treat these people horrible.
You would think like these people will be loved. No. When somebody's actually friendly and weak, it makes you a little bit aggressive. It makes you a little bit unreasonable. The dynamic between the two people is not healthy.
The thing you want to go for is actual friendly strength.
The best was to describe it - because I'm a dad now and I describe almost anything in family terms - is great parent. A great parent is somebody that if they're interacting with their child, interacting from a place of friendly strength. What do I mean by that?
I know better than my child in most cases except when it comes to having fun. I know better than my child certain times what decision to make, when to go to bed, when to eat, when to not stick a knife in his head, things like that. So when I give my child information and my child acts all crazy because he's like tired. You know, it's been too late. It's 8 pm, he goes all nuts, I'm not affected by that.
He screams, he does this, he says I should leave the room. I'm not like, "Oh, my God! My son hates me. You know, why do you? I've done everything for you."
I'm not getting involved emotionally. I'm not fighting with my son. I'm not taking him that seriously either because recognize, "All right, this is a special state. You know, he's tired. What he's saying, what he's doing is not really what he means."
But I still have to be firm.
So I go in there. When he goes nuts, I'm going to go, "All right, my man, I understand that you're upset, but this the way that this is going to go down. I'm going to put you in your pajamas, we're going to get this book, we're going to read it together, you're going to enjoy it, and then we're going to hit the bed. And that's how it's going to go down."
You know what? He's like rebelling a little bit, but this is not optional. I pick him up, change the clothes. And by the time we hit the book, he forgot about everything. It's like, "Oh, he seems pretty certain that dude knows what he's doing so I'm going to just submit to that."
That's the way you need to sell you customers. That's the way your salespeople need to sell your customers.
You usually should know better about your product and market than most customers do.
If you actually only want to sell to people that qualify for your product and where your product is the best fit, then it's your responsibility to close them.
And when they say, "No, I'm not interested, blah, blah, blah, you guys are ridiculous," you're not going to get involved.
You're going to be like, "All right. That's fine. I'm going to put you in our pajamas, we're going to, you know, read a book together, and then you're going to buy." You're going to say, "You know what? This is exactly the same thing that the last 10 customers said that I closed. Those people are my best customers. I totally get where you're coming from. Let me tell you how it's going to go down. What we're going to do next is we're going to through this, this."
And that kind of energy creates real trust. People are comfortable, want to buy from people that have strength that come from a friendly place.
All right, and then I said a little bit about follow up, but I don't want to preach about this too much. I've written about it a lot. You sir, Nathan. You've commented. I've posted a talk that I gave on the Facebook group of Y Combinator and then you sir said something about the kind of results that you got through follow up. And we didn't talk about this beforehand so I'm sorry. So you want to share some of that.
The basic philosophy that I have is you never stop following up ever until you get a yes or no. The result doesn't even matter. A no is good. A no is fine. It's a result. What you're looking for is creating results, outcomes.
Yes and no are both great. Maybe or I don't know are killing your business. Killing your business. Occupying mind space, occupying time, not doing anything. Yes or no are both great.
When you have a connection with somebody, you have a meeting or a call or something and they say they are slightly interested, you think it's a good fit, what you have to do, what you absolutely have to do is you have to follow up indefinitely until they actually tell you to fuck off or say, which happened to us... I followed up with one of my investors in the early days of YC. We got an intro from an investor to a guy. All of your are using his product. And the guy responded and said, "Yes, I want to meet." And then I sent an email and said, "Hey, next Tuesday or Thursday," didn't reply. Followed up again, didn't reply. Followed up again, didn't reply. 48 follow ups later he replies and he says, "Fuck. Thank you so much, Steli. I was traveling. We had this big crisis. Can you show up tomorrow at 1 pm." Ended up investing.
You want to share your use case real quick?
Nathan:[0:18:10 - 0:18:48]
Steli: Awesome. Yeah, because you don't want to inconvenience people, you don't want rejection, you don't want to be that insecure person that's been like a nuisance and like annoying.
But this is business. Like grow up. Like this is business. When we talk and you're interested and I send you an email saying, "When should we talk again," and you don't reply. I'm not going to make up stories. "Oh, he doesn't like me. He didn't like my shirt. He thinks I'm ugly." No! Dude, I'm not going to make any assumption. I'm going to just assume you're busy.
At any time you can send me a reply and say, "Fuck off, dude. No, I'm not interested." It's not that hard. As long as you don't reply, I'm not going to make up stories why.
Keep it clean, keep it professional. Don't refer back, "I've already sent you 10 emails. Why haven't you replied? It's really rude of you." Like don't do that kind of stuff. Just clean cut, "Hey, another beautiful day in paradise. Here's the three things that we've done last week. Can we talk this Thursday?"
Next email, "Hey, look, we're in this press. We got this product launch. What about this Monday?" Just keep it clean cut, professional and see what happens.
Speaker 3:[0:19:48 - 0:20:02]
Steli: All right, awesome. So he has a little task, a little takeaway right away. I want all of you to think about three people, three people, investors, press, employees, potential co-founders, customers, whoever you've wanted to continue the relationship or move forward in the conversation you haven't heard from them in a while, write down three names and follow up today.
And don't stop until you hear from them either yes or no. And then we'll compare results. I can create a little email group with everybody that was here today, and we can share like, "This shit didn't work. We got sued because of too many emails. Steli, you suck."
Or like some people can share more stories of like, "Fuck, we closed this deal. Fuck, we hired this person." And we can all encourage each other to be a little like better in our follow up hustle and with that more successful with our company.
So just take a moment. Think of three people, three people, whoever three people that you should be following up. See some people are like, "I don't want to follow up with anybody." Just everybody, write down three people. I can't control it anyway so if you don't follow up with them I can't do anything about it.
Speaker 4:[0:21:06 - 0:21:08]
No. So it depends, right? It's a philosophy thing, but I think if you adopt the philosophy, "I'm going to follow up indefinitely if it's valuable to me until somebody says no," you're already at the, you know, top, top, top of your game.
Now there's people that are more aggressive than that and say, "A no today doesn't mean a no in a year." So if it's just valuable enough I'll just keep that relationship open. And some of these people have had amazing successes with that.
But I want the baby steps. One step at a time. One simple rule. When people tell you, "I don't want to hear from you anymore," just leave them alone, right? But they don't talk to you, when they don't reply to your email, never stop following up if it's worth it. It's a $10 a month deal, obviously, you can afford it. But if it's a big investment, big, something that's crucial, never ever stop following up.
Most of the things that are happening in our business today are results of things that started six months ago.
Outbound sales pros and cons
So outbound sales. Let's talk about that real quick. Lead generation, you know, so that's the first part. So let me go really quickly through all the ways that you can do lead gen when you're going up or even, you know, let me backtrack real quick.
Let me actually just highlight a little bit the difference between outbound and inbound sales and what is good about outbound and what isn't before I even go into lead generation. So here's what's awesome about outbound sales, all right?
The thing that's awesome about outbound sales is that it empowers your business to be proactive. You can decide who the hell you want to talk to, who would be your most amazing customer, and then you don't have to wait around for them to click on your ad somewhere.
Like how would you say, "We want to close the VP of marketing of Coca Cola." All right, cool. Now do inbound marketing and get that guy, right? There's no way to do that.
So outbound sales is great because you can define that. Say, "I want to close that dude or that gal," and then you pick up the phone or you send an email. You proactively go forward. That's the awesome part of outbound sales. You can decide who should buy your product, and then you go after them proactively.
The other thing that's awesome about outbound sales is if you can make it work, it can scale pretty dramatically.
And the third thing that's awesome about it is that if you compete with other technology companies, other startups, most of them will want to shy away from it. So if you can embrace it and make it work, you're going to crush them independently from who has the better solution.
If one startup does only online, you know, ad spend marketing or SEM/SEO and you do some of that too but you have an outbound machine that works, you're going to kill them. We all know these products that are shittier than their competition that are killing it. You know, outbound sales can make a huge difference.
Now what sucks about outbound sales is that you're interrupting people with a message they didn't ask you for, right? So you're now in my inbox. I didn't ask you to be there. I don't want you to be there. I have too many things in there. And now you need attention from me. You need computational power from my brain. You have an ask. I need to do something for you.
All of a sudden, you created to-dos for me. It's very inconvenient. I don't like it.
Same thing with a call. I don't want to pick up my phone. There's a random phone number that's popped up. I don't want to pick up. When I pick up, I'm like, "Oh, shit. I don't know this guy. He wants to hire, you know, people, give me recruiting services or sell me some software." We hate it, right? We all don't want to be sold to especially when we don't ask for it. That's the bad thing about outbound sales.
Just embrace the suckiness of it because what's not going to work no matter how amazing your outbound sales machine is, what's not going to happen is everybody loving you, everybody being appreciative of every email and call you make. That's not how it's going to go down, right?
All right, let me actually, this camera remembers me that somebody has to document that people are actually here. We did this. All right.
So this is the bad thing. Outbound sales is going to be painful. It's going to be painful. It's like saying, "I want to lose like 200 pounds or whatever." Awesome, go to the gym and eat healthy.
This is not going to be a pleasant exercise until you actually made it a habit and a part of your life. It's not. It's not going to be easy. It's not going to be painless. It's going to suck for a while. You can't deal with that level of pain, you're never going to succeed with outbound sales. Period. Right?
So let's talk about all the ways you can do lead generation. And the cool thing is it's very limited. There aren't that many things you can do to do lead generation.
You can either buy a list. You go to Data.com, you go to Hoovers. It's like 10 places on the web that you can go and depending on who you want to sell to, you may or may not be able to download a massive list of names.
Good thing about it is that every idiot can do it. Bad thing about it is every idiot can do it.
The quality of those contacts usually are usually really bad so you have 30 or 40% typically of these contacts they're not going to be accurate anymore. These people have left Coca Cola and now working at Pepsi. That email, that title, the phone number, nothing of that works. So a lot of these names will not be accurate so you have to account for that.
And these people, these lists, the people that have lists they optimize to sell them as many times as possible. So awesome, right? You're not the only person who's calling them. These people are going to get tons of calls, right? So but sometimes it works, right, if you sell to doctors or to lawyers, any kind of profession, this might work really well.
The next thing is to scrape list. So this is where you say I cannot buy or don't want to buy a list, but I'm selling to restaurants so let's just go to Yelp and scrape it, right? Or let's go and find a way to write a script, to do the same thing essentially, just go to different websites and take the content information out of them.
This can work really well and it can be a huge producer of bullshit, right? More often than not, these like high quantity things are low quality things. Right?
And you need to account for that.
I'm not saying you shouldn't try it, but you need to account for it.
I have people that tell me, "Oh, well, we've just bought 10,000 contacts of leads. So if we contact all of them in the next two months, we think that we can get a 30%."
Whoa, whoa, whoa, what 30% conversion of what? Well, 10,000? You're not going to. Out of those 10,000, there's 6,000 that are actually accurate. Of these 6,000, if you send them an email or if you call them, they're actually just going to reach like 2,000 of them. Right? So and now apply your conversion rate to those 2,000 and not to 10, right, just to manage your expectations.
So buying lists, scraping lists.
The third option is researching, doing the manual work of basically saying, you know, buying it or scraping it en masse doesn't have the human judgment of deciding what's good or not.
So what you do is go into LinkedIn or go into Twitter or go into wherever your audience is, wherever your core customers are hanging out, wherever that is and having actual human beings, either yourself or people that work for your company, look at things manually one by one and choosing who's good, who's bad, who's good, who's bad, building a list. Right?
Then last but not the least, you take that job and you just work with a company that has mastered that and has a bunch of people doing that and you outsource it.
These are all your options. When you do lead gen for outbound, you either buy lists, scrape them, you do the work yourself manually or you outsource it. That's it. It's not rocket science. Right?
Here's a thought that in in outbound sales the way this works is that you have some level of numbers and then it drops quite dramatically in the next two, three steps. A lot of them will not be accurate. And most of them you're not going to be able to reach. And then take the ones that you can reach and now we'll see if we can work with that.
All right, so let's dive - oh, one last thing that I want you to think about, in general about this.
Here's a good way to think of lead generation. You should take - who has a business that has customers right now that are paying? Shit, a ton of you guys.
All right, so take your top five customers today, the customers that pay you the most money, the customers that get the most value out of it, that are the most vocal, that love you the most, your five, 10 best customers. Create a DNA, like create a spreadsheet where you try to figure out and create as many data points about them as possible.
- How many employees?
- What's the industry they're in?
- What other software tools do they use?
- Are they on social?
- Where on social are they?
- What other titles of all the employees, the title of the employee that bought?
- Anything, everything you can find out about them.
And then see once you've done that for five or 10 of your best customers, see of you can find the common denominators like the things that all of them have in common and create a customer DNA. And then use that to do your lead gen. Use that to find their competitors next to pitch to if you want to do outbound. Use that to find companies that are as closely related to your best customers as possible and reach out to them first.
This is the best - here's another thing that sucks about outbound sales, if you go really broad, which most people do, you're going to get very inconsistent, unpredictable results.
So I have people that tell me, "Well, we sell, let's say, to restaurants or lawyers." Let's say restaurants, whatever, right? "We sell to restaurants. So we made a list of 100,000 restaurants in the US and we're sending, you know, 5,000 emails every single month and we make X amount of calls."
The first thing that I would ask is how predictable and consistent are your results? Because I know they aren't.
Yeah, you know, it sucks because one, we do the same activity one month and get this result and the next month we get a totally different result.
And that's the worst situation you can be in. You guys know that. If something clearly doesn't work, that's cool. You learn something. Move on. If something clearly works, sweet. Those are the best situations. Do more of that.
But when things are kind of you don't know, how are you going to make decisions? Should you continue or not? Do the employees suck, your process suck, the market suck, your product suck? You have no clue. How are you going to make decisions to continue or not? That's the thing that really suck.
So the problem with when you go really broad in your lead gen and in your sales approaches is that all restaurants aren't created equal, right? There's such a variety of restaurants.
Who are you best customers? Are those restaurant chains with like five or 10 locations? Are those like Mom and Pop shops? Is it the specific restaurant like Asian food, Mexican food that's better? Do they have to delivery? Do they have to have a Yelp account?
Like try to figure out something that's more narrow because if you go really, really narrow, you can like scale immediately.
But once you can actually reproduce the same results again and again and again, now you have something that clearly, that works or doesn't. So you can either continue or not. And that's what you're going for when you're doing outbound. So better go narrow than go really broad at the beginning.
Sales calls: Reach people
All right, let's go into the meat of sales calls, outbound sales calls, right? It's not rocket science people. No offense to you. It's really not rocket science. The very first thing you need to do is you actually need to reach people, right?
And this is, again, the most obvious thing but the thing people don't think about this. We all, we don't think about this.
We think I've 1,000 leads, I call 1,000 people and 20% of them are interested then I'm talking to 200 people. No! You're not reaching 1,000 people just because you have 1,000 people.
You're going to reach voice mails. You're going to reach dial tones. You're going to reach assistants. You're going to reach whoever. You're not just going to reach every decision maker every single time. You have to have... that's where your outbound model will either work or not. It starts with your reach rate.
Some simple benchmarks. If you're doing cold calling and you're reaching less than 15% of the people that you call, chances are more likely than not that you're already dead in the water when it comes to outbound sales. There's exception to the rules, but more often than not you're fucked. So look at that number and see if you actually improve it. The higher it is the better obviously, right?
If you can have like 20. Like best of market are usually in companies that are around 30%, 20 or 30. Sometimes there's anomalies, 40%. But if you're in like 5% or 10%, it's going to be really, really, really hard to make it work. Right?
Reach rate is really crucial. That's where the top of the funnel is. If you're like really, really low there, it's going to be hard to make this work. If you only reach five out of 100 people and you call 100 a day, and out of the five you have a conversion rate of 10%, right, 0.5 people, like half a person a day. It's going to be really hard to make this work. So pay attention to your reach rates.
Sales calls: Sound good
Next thing, once you actually reach somebody, you need to sound good. Your salespeople need to sound good. You need to sound good.
Here's the other thing like this is really hard to swallow for technical founders or for entrepreneurs in general, we think it's all about the product, it's all about the technology, it's about the logic, the content of what we're saying. Nothing could be further from the truth.
In human communication - this is not like a big surprise or like a super, you know, secret insight - in human communication, the content of what you're saying is making up a very, very, very small part of the way that communication is perceived. In person, your body language makes up the majority, whatever the percentage is, 60, 70%. Your tonality makes up another big chunk of it. And the slimmest like 10% of the entire way that you actually impact people is what you're actually saying.
If I call and I'm like, "Hey, um, I'm Steli from Close. I'm really excited to talk to you." Does it fucking matter what I'm saying? No.
You're like, you're already like, "Oh, my God. How can I get off this call?" You don't paying attention. You don't care what I'm saying, right, because I sound horrible.
And on the phone if you're doing inside sales, if don't go knock on doors, like you're tonality is going to make a massive impact on how you affect people.
And this is not rocket science. We don't all have to become - bless you - like Anthony Robbins and whatever motivational speakers and like amazing tonality. Just be a little excited. How about that?
Be a bit excited. If you're not excited to talk to me about your business, why should I give a fuck about your business?
If you sound like you are like suffering right now, how is this going to be a good call for me?
There's no winning if the person's trying to pitch me is like in a horrible condition and hates his life. Now way that I'm going to listen because the information is so interesting. No, I'm not listening to you, right, because your voice is going to actually create images, and those images are going to influence me.
So you need to create images of somebody that's excited, somebody that's energetic, or of somebody that's authentic that I can believe. But your tonality is really important.
The simplest thing to do is make sure that when you call people, you're happy. Listen to a cool song, Eye of the Tiger, if you need motivation, whatever it is, whatever works for you.
Make sure that when you talk to people in meetings, you have some level of joy and excitement. It's going to make a bigger impact than with your sales pitch is.
Sales calls: Asking questions
The next thing is asking questions. We talked about the magic of sales being all about actually asking questions versus talking, right? This is not about you talking for 30, 40 minutes.
This is about you asking questions, finding more out about them to actually be able to qualify them and decide should they buy your product? And if so, why? And once you really, truly know that, you can close them. It's going to be easy.
Sales calls: Manage objections
You need to be able to manage objections. Don't be surprised by that. I'm always surprised that people are surprised by that. "Every single time people tell us the same thing. They don't have the budget."
"Okay, what do you tell them?"
"I don't know. I mean every call is totally different, super inconsistent," because you've never taken the time to actually sit down and think through what are the top 10 or 15 objections people have? What are the top 10 objections people have that you hear again and again?
You know what? How about writing down an answer to those?
Keep it at two sentences max. You know what?
It doesn't matter what the answers are. They don't have to be perfect.
Obviously, when you write them down you have to actually have some thoughtfulness behind it. Other people can see it and critique it, so it has a lot of benefits to it, but at the end of the day, the more important part is to actually be able to answer something with precision and some level of clarity in one or two sentences.
That alone will make the other person feel like this guy knows what he's doing or this gal knows what they're doing versus when you compute the answer on the fly, you're always going to tend to talk too much. All right, "Uh, well, uh." You're just going to go on and on and on and you don't know when to stop because you've never thought about, you know, what you actually want to say. All right?
Sales calls: Ask for the close
And then last but not the least - we talked about this - you need to close. Ask for it. Ask early. Ask often. Just because somebody says no at the beginning doesn't mean that they're going to keep saying no.
But actually, like in the hierarchy of things, you need to be aware of being in the trap where people tell you they like what you do.
Listen, especially when you call enterprise clients, restaurants, people that are not in the startup innovation technology world, these people, you're the most interesting person they've talked to in a while, right? And most of these people are actually like they're getting paid. Like if you're like a large corporation and you have a meeting with me for 60 minutes, I don't give a fuck what's going to happen to those 60 minutes. I'm being paid right now. And now I hear about this new technology and how is it to be a Y Combinator startup like I can, "Oh, my God. I love what you guys are doing."
And then you guys are all like we're all confused like, "Oh, my God. They love what we did." Well, loving what you did and buying is a very different thing, right?
- So at the bottom is like, "I really like you."
- One level above is them actually saying, "Yes, I'm going to buy this." Or, "I really want to buy it."
- And at the top is them actually giving you a credit card, singing the check, actually purchasing something.
You always want to go for the top.
The original Elastic script
All right, so I don't think we're going to get through this. I'm just going to do the beginning to give you one quick example. So this was the exact script we developed the first day we had the idea for ElasticSales.
We were cold calling startups that had raised a series A and B2B that we didn't know. We used fake names, I was, Steve, Steve Eli, we were doing a different startup. We didn't want the world to know. We were just like getting press on how amazing everything is we're doing, and we knew we failed with that business and want to do a different one, right?
So no websites, no powerpoint, no logo, no nothing. We started, we wrote this up in a day. We started cold calling the next day. Here's what I was saying, and the beginning is really important. That's what I want to go into a little bit in detail.
So I would call startups and would say, "Hey, my name is Steve. I'm calling startups in the area to figure out if they're a good fit for a better program that we're running."
Why is this important?
The first thing people do when they pick up the phone is like, "I don't recognize this person. Who the fuck is this person? Can I hang up? Should I hang up? How can I hang up?" Like that's, we've all been there. Like you're trying to see, "Who's this?" And once you figure it out, "This is somebody I don't know. How can I get off this call," right, "as quickly as humanly possible?"
So you need to address these questions. Who the fuck are you?
And I use a lot of lingo here, right?
I say, "We're calling startups in the area," suggesting you're probably a local too. I'm using lingo like,
"We're looking for a good fit for a better program," not closing you on our product but looking if there's a good fit for a better program. We're calling startups. They probably had a better program themselves.
So this all tells people, "I'm like you. I'm in your area. I understand you," right? "Maybe you should give me one more sentence."
Every sentence in a cold email or cold call selling people on listening to you for another sentence.
You can't be talking for 10 minutes then figure, well, the bottom they're going to figure out why this is interesting. They're never going to get there, right?
So once I said that, I said, "What we do in a sentence" - and this is so they can calm down and not think, "Oh, my God. This guy's going to pitch me for 100 hours" - "what we do in a sentence is we offer startups a sales team on demand.
Does that in general sound interesting to you?"
And here it didn't really fucking matter what they said.
They said, "No." And I said, "Oh, interesting. What's your sales process?"
They said, "Maybe." I said, "Oh, interesting. What's your sales process?"
They said, "Yes." I said, "Awesome. What's your sales process?"
I didn't take their answers serious here because they didn't know anything. I didn't know anything about them. They didn't know enough about us. So it was not the right time to make that decision, but I knew that they had a thought. They already made up their mind after I said what we do. "What we do in a sentence is sales team on demand."
Somebody says, "Oh, my God. I want this." I cannot continue with a pitch.
I have to address the elephant in the room and allow them to verbalize it, allow them just to say no so it's out of their mind out of their system. And now we can continue, and they can actually pay attention to what I'm saying. If they think no and I continue talking, they're not listening to me, right?
So once they did that, I would actually go into the qualifying stage and actually try to discover if this would be a fit.
"Hey, what's your sales process like? What is this? What is that?"
The power of questions is really, really amazing. We've all been taught as kids that you should answer when asked. It's impolite to not answer. So when somebody asks you a question, there's a very strong, unconscious urge to answer. You don't go, "Well, who are you?" And this group maybe more because you are really highly intelligent. But most human beings would just answer impulsively.
They're not like, I had an employee of mine 15 years ago who was a really junior guy. And every time he called me it was like, "Hey, where are you?"
And we're like, "Well, I'm at a client."
And then next time, he would call, "Hey, where are you?"
"Oh, well, I'm on my way to this meeting."
And one day when he's like, "Where are you?"
I'm like, "Wait a second. Why the fuck do I have to tell?" Like, "Where are you?"
And he's like, "I'm on my way to the office."
The urge to answer questions is really, really powerful.
All right, next one, cold email. Same structure. This is really simple, guys. First they have to open it. Then they have to read it. Then they have to respond, and you should have a plan in mind to follow up. It sounds simple, right?
You know how many founders send me emails to give them feedback in outbound email, and it doesn't have the subject line in it.
You know what my replies, "Where the fuck is the subject line?" It's the first thing I want to look at. I'm not going to read your email. I don't know what your subject line is.
Startups spend like 80% of their time with the text of the email body and like 10% of the time with the subject line because it's less texts so it's clearly less important.
No. If your email wasn't open, it didn't exist. So it doesn't matter what it says.
First thing you have to do is you have to make sure that people open your email, right?
Now if it's an outbound email, you want to strive again for like 20 or 30% open rates. If you're below that, if you're like at 15 to 20, may or may not work. If you're below 10, you're fucked. Again, you're fucked. You need to figure out a way to make them open your email. (Btw. our sales CRM with integrated emailing not only tracks individual and overall email opens, but also response rates).
One thing, even open it, you have to make them read it. And again, you have to actually have the philosophy in mind that every sentence in this email needs to be selling, sell the reader why he or she should read one more sentence. If your sentences don't do that, people will not get to your content. They're not going to read.
Then you need to have a call to action. One, not five. One thing. "Reply here. Let's find a time."
If you ask them for a time, give them options so they don't have to make decisions.
All the simple things that you would do with your website, do with your email as well.
And then when it's truly important, have a follow-up strategy in mind. I said follow up indefinitely when you had a good meeting. When you didn't, if this is a cold email, still follow up.
Follow up two or three times at least.
I have companies that have been following up with me for months now like probably 20 times.
I've never replied, but I'm getting really familiar with the guy, and I'm like, "Oh, yeah, this is John again in my inbox. And wow, that subject line is good."
You know, I didn't see it coming when I opened it. I was like, "Oh, that's John. I didn't realize that."
So I personally respected, but even if I didn't - and there might be just in a weak moment I'm going to reply to him - but even if I don't, it doesn't really matter.
I could at any time reply and say, "Stop." Or put him on a spam folder. I haven't.
But have some kind of a follow up game even if it's just three follow ups, but follow up.
Don't just send me one cold email and never again follow up. Then don't email me at all.
All right, let's do Q&A. What's the question?
- END OF TRANSCRIPT -
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