Startup Sales Channels — Pros & Cons — Part 3

This is the 3rd part of a series on sales channels your startup can use. The previous Parts 1 and 2 dealt with ads, your network, conferences, channel sales, referrals and content marketing. In this final part we will review: cold emails, customer advisors, consulting, and communities.

Cold Emails

What: Sending direct emails (or social media messages) to a potential customer.

Pros:

  • Easy to start — All you need to get started is a rough idea of your customer profile and a basic email template.
  • Scaleable — Cold emailing systems can be easily automated, removing the requirement for human input until a lead has expressed interest.

Cons:

  • Spam — Many of your message recipients may not want to be contacted, marking it as spam. This can trigger your email to be blocked elsewhere and expose your company to potential legal issues.
  • Low response rate — This approach tends to remain at a 5% response rate (or less), which is a fraction of efficacy versus personalized emails. This means you can quickly burn through most of your potential leads.

Customer Advisors

What: Sending direct emails to a potential customer, asking them to be a “customer advisor” to your company.

Pros:

  • High response rate — Well written and personalized cold emails can achieve 30% response rates because you are showing the client they are important instead of asking to close a sale.
  • Generates lots of feedback — Your “customer advisors” are usually much more willing to provide product feedback or information because they value the relationship with your company.

Cons:

  • Lots of work — Writing high quality emails that are personalized takes significant time. Most founders who struggle with this approach are not willing to invest the time required.
  • Not every lead is actually interested — It can sometimes be difficult to change a lead’s mindset from “customer advisor” to “buyer”. This can be especially frustrating after spending so much time with them, but it’s ok to end a relationship that won’t result in a purchase after a few meetings.

Consulting

What: Selling a fully customized solution to customers, rather than a scalable product.

Pros:

  • No need to build to get started — This approach doesn’t require you to build anything before a customer agrees to the sale, as your work will be completely based on their specific requirements.
  • Easier to close a sale — Customers are more likely to say ‘yes’ to a product that is exactly tailored to their needs.

Cons:

  • Work for each customer — Each new customer usually requires days, if not weeks, of work for your team; before the customer can get started.
  • Hard to scale — As you’re selling your team’s time, it’s harder to rapidly scale; as is possible with software businesses.

Communities

What: Providing online community tools for your target customer, to gain access to those customers.

Pros:

  • Opportunities to sell — If your target customers are engaging regularly in your community, you can advertise your product often.
  • Existing trust — Potential customers are more likely to trust your product if they’re having a positive experience in your community.

Cons:

  • Another product to support — In addition to supporting your revenue generating product, you will now have to deal with supporting users in the community, with all the requirements of bug fixes, feature requests, complaints, etc.
  • Engagement is tough — Building a thriving community is incredibly difficult, there are many companies that dedicate themselves to this problem alone, and most fail. Don’t underestimate the challenge of generating daily engagement from your users.

There is no “right” sales channel for startups. In reality, you will have to test a few of the options discussed across this article, along with parts 1 and 2.

Make yourself aware of the pros and cons of each sales channel in advance to give yourself the best chance of success in each test. When you find a successful channel, don’t expect it to last forever or scale infinitely; you will be back to testing new channels soon enough.

Sterling Road invests in pre-seed B2B startups based in the US and Canada.
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
Caleb Jones

Pre-seed Investor. Email: ash@sterlingroad.com. B2B, US only. I work with founders for 3 months before investing. More info: http://SterlingRoad.com/process