This HBR article on the significance of sales is aimed at mid to large sized enterprises; here’s why startup sales strategy is important for you and your company’s success.

First of all. Let me ask you this. Do you like paint-ball?

I love it.

When I first play after some time, I end up running out of paint halfway through the first round, because I fire the paint aimlessly. Well, I’m sort of aiming in the general direction, but wasting so much paint in the process. However, when I buy a top-up round, I’m careful and more strategic in my approach, and I end up being way more efficient and effective.

Paintball reminds me of startups and entrepreneurs approach to sales. They don’t have a strategy, resulting in adopting a splatter gun approach, the way I do in my first round of paintball.

Why a sales strategy is important

We both know, there are four ways you make more profit:

1. Invest in activities (products or services) that return more than it costs
2. Increase profits from existing activities (upsell/ cross sell)
3. Reduce how much you’re spending on activities that deliver lower % returns
4. Reduce how much you’re spending

Returns more than it costs

Who you call that day makes an impact on your bottom line. Most sales incentives are geared towards volume. And what message is that telling sales people? Go far and wide! It then becomes a splatter gun approach, and as a result, your customers are all ad hoc, too. What eventually happens is, your customer dictate your strategy – which should be the case, because it’s where you create value in the market place. So being mindful of who you target will impact strategic issues in your business.

For example, I worked in a startup where the product offered unparalleled brand recall. But we also outperformed the market for direct response – industry average was 0.1% and our results were a staggering 3% to 5%. And most big brands will have one team for branding and another for direct response, and separate agency teams. So we had parallel conversations, with the branding team and the direct response team.

Who you have conversations with, the feedback they give, and the subsequent actions you take to serve their needs, impacts how your product and service is positioned in the market.

We didn’t want to risk being positioned as a direct response vehicle because the market potential for branding is far greater.

Up sell and cross sell

How sales interacts with internal staff to deliver the products and services impacts the time. So the sales and purchase cycle starting from customer touch points right through to delivery needs to be considered in order to understand where to maximize value: lower cost and increase revenue.

Reduce investments in lower % returns

Understanding sales performance, sales hiring, training and field behaviour must all be understood and assessed and hacked in order to smartly reduce costs and efficiently allocate resources.

Reduce capital expenditure

Reducing how much you’re spending isn’t as simple as leverage, risk and debt-to-equity ratio. The maths is simple. Your financing needs are driven by how much cash you have and the working capital you’ve already invested. And how much you sell is probably the single biggest factor determining your cash flow. Accounts receivables is largely determined by what is sold. Period.

Your startup sales strategy is critical for success because how your startup interacts with customers impacts all areas of your business, and your sales strategy equals sum of those interactions.