Deciding which sales channels your startup should test requires weighing their various advantages and disadvantages. Here are some of the most common sales channels for startups and their pros and cons. We will look at more sales channels in later parts of this series.
Ads
What: Ads allow startups to place their message, for a price, in prominent places during a potential customer’s usual web browsing. For example, text appearing above search results or app download suggestions in a social media feed.
Pros
Instant Access — There is a low bar to start driving potential customers to your offering. All you need is some text for the ad, a landing page, and some money to pay for it, even a few hundred USD is enough to see some results.
Clear Targeting — The major ad networks, Google & Facebook, offer a huge array of options for targeting specific customer profiles; improving your chances of selling to the right people.
Cons
Cost — Every click from your audience costs you money, even if you don’t make a sale from it. Many startups overspend on ads, shortening their runway.
Management — Given the high cost and risk of incorrectly targeting, you will need to spend time and resources to manage your ads’ performance and budgeting.
Network
What: Your pool of existing relationships, for example friends or former colleagues, where you can find and be introduced to potential customers.
Pros
Customer Attention — The presence of an existing relationship usually means you’re able to get a meeting sooner and the customer may trust you more, getting you closer to a sale.
Feedback — Customers you know well may be willing to provide more detailed feedback than you might receive from others, improving your sales pitch.
Cons
Irrelevant Networks — Your network may not be relevant to your startup’s market. Or too small to support growth.
Relationship Risk — If you fail to provide a good service, you might damage your relationship.
Conferences
What: Industry events where you can meet potential customers related to your desired profile. For example, informal gatherings, panels, speaking, or renting a booth.
Pros
Lead Concentration — Conferences can have numerous potential leads all in one place, if you pick one targeted at your customer profile.
Market Knowledge — Conferences give you other benefits beyond leads such as competition information, data on industry trends, customer feedback, and business development.
Cons
Cost — Attendee tickets are rarely cheap,and Booths are usually too costly for pre-seed companies unless you’re a speaker. Plus travel and accommodation can be expensive (if needed).
Shelter-in-Place — In the Covid-19 era, in-person conferences have largely stopped. This option may not be available until 2021 and we don’t yet have good data on whether virtual conferences are effective.
These first 3 sales channels are some of the most common but each has their own strengths and weaknesses. Ensuring you’re equipped to deal with both, will help you succeed when testing your first sales channels.
This is the first part of a series on startup sales channels. In later posts, we will look at cold outreach, content marketing, referrals and others — please let me know, in the comments, if you have a sales channel you’d like me to review.
Sterling Road invests in pre-seed B2B startups based in North America. Full process here: sterlingroad.com/process.
You can reach me here: ash@sterlingroad.com
Thanks to Kaego Rust for their help on this article.
Photo by Denys Nevozhai
