Craig Wortmann, Professor of Entrepreneurship at the University of Chicago’s Booth School of Business, explains the importance of sales in entrepreneurial education.
I recently sat down with Craig Wortmann, CEO of The Sales Engine, author of What’s Your Story? and Professor of Entrepreneurship at the University of Chicago’s Booth School of Business, to talk about his philosophy on sale. Craig is no stranger to sales. After cutting his teeth selling for IBM in his early years, he now teaches a top business courses at Booth called “Entrepreneurial Selling,” hailed by Inc. Magazine as one of the top ten entrepreneurial courses in the country. Being a career entrepreneur and salesman, I knew he would have an answer for a question I spend a lot of time thinking about: Why isn’t sales currently taught in 90% of MBA curriculums?
Below is my interview with Craig:
You teach one of the top entrepreneur classes in the country called ‘Entrepreneurial Selling’ at Booth. How do you define entrepreneurial selling?
Entrepreneurial selling is centered around the founder — getting your first five clients if you’re B2B or your first five thousand customers if you’re B2C — and requires that the founder do everything. They need to know what the value proposition is, how to talk about competition, how to determine customer needs, and how to communicate what’s unique about their product. And they need to figure all this out in the context of an emerging idea that’s taking shape when the market is unknown. The sales process for entrepreneurs is much blurrier and nonlinear. I like to think of entrepreneurial selling as helping entrepreneurs put a definition around all of those blurry processes.
When you look at other MBA programs, including Stanford and Harvard, most of them don’t include selling or direct sales — at best you see a class on sales management. Why do you think that is?
Well, the good news is, Booth, Harvard, Kellogg and other schools in the top tier are starting to understand the need for sales. But interestingly, some of the lesser known MBA programs got the memo sooner. Bigger institutions seem to have a blind spot about sales, that sales is something beneath them. There are two approaches to this: the optimistic view is, “Sales is important, but it’s a trade school skill. We can leave that to someone like IBM to train our people.” The negative view is, “we don’t do that here. We are PhD’s and theorists, we care deeply about the research. You can’t get a PhD in sales.” I think they’re coming around to the need to teach their MBA’s this skill, but institutional progress can be slow.
How does the lack of training programs influence small businesses?
Without training programs, small businesses are left to beg, borrow, and steal sales training wherever they can find it, usually online. I’m not convinced that this is a bad thing, though. Entrepreneurs are resourceful, and will find what they need online. But I really wish we could take sales more seriously, and put in robust programming that reaches beyond what companies do for their employees. In short, institutions are doing it in fits and starts, but there isn’t a systematic program for smaller companies, and it’s much harder for them to succeed without that knowledge. We are all in the business of selling. Selling shouldn’t be a foreign concept, even for those in undergrad programs.
Most existing sales training programs focus on larger companies or executive programs. It’s not for new product launch sales for entrepreneurs.
Exactly. And I could point to some existing companies that, when something new is launched, they do have a sales conversation. They get the founders in a room, and teach them how to talk about the product. The rift occurs because a lot of that conversation devolves into talking about product features. It doesn’t talk about getting prospects on the phone or teaching entrepreneurs how to sell.
In your course syllabus, you talk about an ‘Entrepreneur as a Salesperson.’ What do you mean by this?
I put a lot on the entrepreneur’s shoulders. I say, here’s all this stuff — raising money, doing product development, hiring first employees, figuring out where the bathrooms are — and I’m adding to that list by saying you have to be your company’s first salesperson.
I’m not saying you have to be the most killer salesperson the world has ever seen. But you do have to be the first to articulate the value proposition, the first to talk about your unique market position or advantage, and about how to go after the identifiable customers. Here’s why: first time entrepreneurs make the mistake of thinking, “I’m starting to figure out the product and the company, now I’m going to hire salespeople.” But the best salesperson in the world can’t help you sell something that you haven’t defined. If you can’t communicate your value proposition to them, then how do you expect them to communicate it to customers?
You have to have early sales conversations to understand how to find and reach your customers. You have no idea about the answers to some of these questions about your product — your customers do, though. But it isn’t until you learn how to talk to them about your product that you can get those answers. I always say to people, “No matter how good you are, the answer is not in this room. It’s outside, and you have to figure out how to find it.”
How do you recommend an entrepreneur go about approaching their first sales conversation?
Ideally, you’d spend 50% of your early time talking to customers, and 50% talking to friends and family. The first thing I say to people is, picture a target. Right in the hot, red center is your friends and family. The concentric circles moving outward represent the rest of the world, every prospect for your product; you have no idea who they are, and they don’t know you. The real question is, Who do you go to first? Everyone says friends and family. I don’t necessarily disagree, but those are very different conversations than your first sales conversations.
Most people think you get the most objective feedback from friends and family, but these people are close to you, and they care about you. After a 45-minute conversation at Starbucks, they might walk right out the door and have no idea what you’re talking about. They’ll still be supportive and try to help, though, and that doesn’t tell you what you’re doing wrong. No one wants to have those “cold” sales conversations, because no one wants to be rejected. It’s just something you have to do.
What process do you use?
In terms of the actual approach, I tell people to have a very concise description of what they’re trying to do, and what the product’s value is as it relates to the person they’re talking to. Then just try it. See how it feels, and iterate on that. I actually take people into a room with just a whiteboard and a phone, and make call after call, iterating the pitch as we go. When we leave the room after 100 or so calls, it’s down to an art. You’ll have a script, you’ll be concise, and you’ll be dangerous.
Selling isn’t only something that happens monetarily. What role do you see sales playing in early stage (pre-seed, seed, and series A) organizations? When should founders start thinking about sales / selling?
I’m not a guy who says, you’re selling all the time. Sometimes you’re sleeping or running the numbers. But when I ask, ‘when are you selling?’ a lightbulb goes off. Students immediately think, ‘dating, interviews, customer discovery.’ But for founders, you are selling from the beginning. I have a list of questions you should be able to answer to know you’re ready to hire a salesperson, and carve out a role for sales in your organization:
- Who’s your target market?
- How have you filtered it down to an identifiable customer? What’s your buyer persona?
- What are the 8–10 objections you routinely get? What are the answers?
- What are your 5 best stories of success and failure?
- What are the 10 qualification questions you ask, in priority order, about your sales process? (i.e. do you have money, are you the decision maker, is our product compatible with your IT group, etc.)
- What are the processes you have setup to ensure you retain customers to acquire and drive word of mouth?
Professional salespeople need to tools to succeed. They cannot come in before you have answered these questions (and many more) about your business. I think that many entrepreneurs are so focused on product, and so allergic to the term ‘sales’ and the idea of picking up the phone, they don’t get to those answers quickly, or ever. They know everything about product, and have no idea about sales.
What approach should founders use instead?
I always say, when talking to customers or pitching, stay high, stay with the executive level conversation as long as you can. It puts you beside your customer, instead of facing them. Do not show a demo. You’re demonstrating features, buttons, interfaces, instead of telling people why they should buy what you’re selling. You don’t actually have to show the product if you’re good enough at selling it. Bring it, but don’t show it. I’ve rubbed some clients the wrong way by saying this, but I can tell a lot about a sales force by how they react to this philosophy. If they fight me on it, I can tell that most often they’re not actually good salespeople. They’re over-relying on the demo to do the selling for them.
I have an exercise I do with my students. I show them an income statement, and I ask, “what’s the most important line on here?” They always say profit, but the answer is revenue. Without revenue, all your problems will crush you. With revenue, you can afford to have many other problems, and be able to take the time to solve them correctly and intelligently. If you’re not making money, you don’t have a business, you have an expensive hobby. It’s fantastic that you’re getting some traction, but if you’re not making money, then you aren’t running a business. Get your product ready, answer those questions, and let’s go sell it.
Interested in learning more about selling at Seed and Series A companies, follow my blog or me on Twitter @thesalesmethod. Upcoming articles include redefining the concept of selling, the importance ‘founder selling’ and an interview Hiroshi Wald, partner at Austral Capital on successful partnerships and what to look for in a partner.