Editor’s Note: Joe Procopio is the Product Manager of Get Spiffy and the founder of teachingstartup.com. Joe has a long business history in the Triangle that includes Automated Insights, ExitEvent and Intrepid Media. His columns are a regular part of WRAL TechWire’s Startup Monday package.
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RESEARCH TRIANGLE PARK – There’s never been a better time to start a business. Today, almost anyone can quickly set up an infrastructure that can automate most or all business functions related to the marketing, production, and even delivery of a product.
There’s only one area that hasn’t caught up yet. Even with all the technological advances that have spawned automated marketing solutions, code-free software development platforms, and point-and-click fulfillment options, there is no magic bullet that will sell your product.
So while it’s never been easier to start a business, it’s still just as hard, if not harder, to sustain that business.
Yes, you can still sell individual products to individual customers, and you can build a base of those individual customers over time. If you’re lucky, your product will have a price and margin that will still allow your company to make a profit with such a manual and time-consuming one-to-one sales approach.
But almost all companies stop and stagnate at a certain level of manual sales productivity. Also, sales methods that were once thought of as automation magic bullets (search engine optimization, pay-per-click advertising, social media marketing, and the like), those methods aren’t as magical as they once were.
Even the latest and most advanced approaches, such as two-sided markets, are not sustainable until they reach critical mass: a market share large enough to make the transaction process both time and cost efficient for to the customer
Joe Procopio (Photo courtesy of Joe Procopio)
Back to the basics of sales, with a technical twist
Fortunately, you don’t need magic software to increase your sales. There are a number of old-school approaches to volume selling that any business can take advantage of, and more advanced businesses can even enhance these approaches with technology and automation.
All approaches revolve around a single concept: getting other people to sell you your product. This is not in a shady way, not in a multi-level marketing or bug-your-friends-and-neighbors way. These are corporate tactics, used for decades and still today.
Just as modern technology has incorporated major resources to build, market, and deliver a product that were previously only available to large corporations with deep pockets, this same technology is beginning to make it possible for any company to sell more units with fewer resources. . .
Here are four of those methods that I’ve used time and time again and would recommend to any business, regardless of the size of the business or the nature of the product.
Method 1: Business Sales
Many companies offer an enterprise version of their product by putting a listing on their website with a call to action to contact their sales team and stop there. This is a missed opportunity.
How it works: Think of tiered offerings: let’s call them hobbyist, professional, and business. We usually associate tiers with software, but it doesn’t matter if the product is an application license, protective equipment, or artisan snacks.
The hobbyist level is for someone who wants the product, but hasn’t decided they can’t live without it. It is the equivalent of a test or a sample. The sole purpose of this tier is to convert the customer to the pro tier, which is the “real” version of the product. The business version is just a bulk purchase of the pro tier.
Why it’s always worked: The assumption is that the person who would get the most value from a pro-level purchase of the product may also be the same person who can authorize the purchase of multiple units of that product for the entire company. This assumption is correct more often than not.
Modern touch: By simply playing with this assumption, you should turn every professional user of your product into a business champion. This person should be able to understand and unlock the additional value they can present to whoever has the authority to make the purchase of the business, even if it’s not them.
If you offer a digital product, there are many ways to do this within the product itself. But even if you don’t, you should make marketing materials, a cost calculator, and an easy-to-understand overview of a business deal available for that champion to use to sell your product to their own business .
Trust me, they will be a much better salesperson than you, especially early in the sales process. At least they can get the meeting.
Method 2: Customer referrals
The best way to find new customers is undoubtedly through your existing customers.
Peers are often the first place potential customers go when they have an interest in your product category. And this peer review is make or break. You are always working to maintain a healthy relationship with your existing customers just for this type of word of mouth marketing.
A referral program means making the word-of-mouth process itself proactive rather than reactive.
How it works: Incentivize your best and happiest customers, the ones who find the most value in your product, to actively seek out others like them.
Why it’s always worked: These people will give you leads that are much easier to convert than random leads. When you pay them to bring you these valuable insights, they’ll bring you more.
Modern touch: These days, it’s very simple to start a referral program without making it a complex and complicated process. Digital methods to track referrals and digital coupons to reward them can completely automate the program. For example, you can give a free month to every customer who brings in a new customer.
A note of caution here. Don’t make a referral program your primary source of customer acquisition, and don’t turn it into a multi-level marketing scheme. This will create more mess than results, in terms of potential for fraud and abuse. Your customers should never get the idea that a) they work for your company or b) they can get rich selling your product.
Method 3: Revenue sharing
Think of a revenue sharing model as a grown-up, professional version of a referral program. The main difference is that you should have a dedicated contract.
How it works: You are building a team of authorized resellers. Simply put, if my company has a 20 percent margin on our product, I can offer another entity, maybe half, to do the heavy lifting of finding customers that are already lined up to find. So it’s like a 10 percent commission for what is essentially an outside sales force.
Why it’s always worked: It works when the partners you target with a revenue share model are predisposed to complement and not compete with you. In other words, if you sell peanut butter, your partner should sell jelly. You pay them more than you would for a referral because of this predisposition to a larger number of potential customers.
Modern touch: Revenue share models can be almost 100% automated, not only in terms of organizing the partnership, but also in the actual selling. With a little work, you can set up a system where your partner can sell your product through their own sales channels, even their own website, only contacting you to fulfill the order.
The more automation you build into the relationship, the closer you get to the final method.
Method 4: White label platform
This is the holy grail of getting other people to sell your product, and sometimes this method can replace your company’s entire sales process.
How it works: Take the modern twist on the revenue sharing model and completely convert everything related to selling your product to be branded, marketed, transacted and maybe even paid for by the partner.
Amazon does this with their Amazon Basics line, where they partner with companies to offer Amazon-branded products through Amazon’s marketing, sales and fulfillment machine. Companies that make generic products for grocery stores use essentially the same approach, but a less modern take on the method.
Why it’s always worked: It allows both you and your partner to focus on what you do well. For example, your partner makes very good golf clubs, you make very good golf towels. The process for doing these two things couldn’t be more different. The golf club company, instead of investing a ton of time and money into making a completely different product, can just sell your towels branded with their logo.
Modern touch: In software terms, this happens in what is known as a “powered by” approach, where Company A offers its customers a feature or an entire feature suite that is “powered by” Company B, but makes no mention of Company B (unless, and I would recommend this, negotiate a “powered by” label type somewhere in the feature set).
Even with physical products, the same infrastructure you use to market, build and deliver your own product can be rebranded by the other company, sometimes as simply as changing a logo.
One last piece of advice: start simple. These four selling methods can quickly shoot off in several different directions and become as unique as you want them to be. But the simpler you start them and the simpler you keep them, the easier they are to maintain, which makes selling your product to ever-larger markets that much easier.
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