You are a startup that creates smartphone apps to empower sales associates at bricks-and-mortar retailers. IBM is a competitor. You show up early for your sales presentation to a major retailer, and watch as IBM shows the video above. How do you compete with that? IBM has been selling retail automation products since the 1880s (yes, 140 years). You have a credibility problem.
The IBM team leaves, and after a short break, all eyes turn to you. What do you say? Silently, you look at the screen. A familiar voice starts to speak (this is an excerpt from an actual discovery call):
The voice is Sally Smith. She’s a director at this company, not a character in an IBM testimonial video. She’s also here in the room, smiling now, as everybody agrees with her opinion on the screen. You just won the opening round against IBM.
Problem-Solution Magic for Startups
Why do we advocate the Problem-Solution style? Because startups with no history or customers have little credibility. You start at a disadvantage.
Problem-Solution eliminates this disadvantage, by leveraging your understanding of the problem into instant credibility:
- During a problem-solution presentation, your clear understanding of the customer’s problem becomes your credibility. In the example above, Sally opened the door for you to walk in with the solution they need.
- If the problem is real, you can use that shared understanding to bond with even the largest enterprise customer.
- If your solution is unique, you have instantly captured mindshare.
Established vendors like IBM, HP, Google and Apple have decades of credibility to stand on. They can tell stories about themselves and their products instead of starting with the problem. Startups have to begin the credibility-building process from nothing. Agreeing on the problem the best starting point.
The Best Problems are Customer Specific
Here are the three best problem statements that an unknown startup could use in their very first presentation to a large retailer, rated by how much credibility they convey to the customer:
- “Your Director of Retail Sally Smith told us your biggest challenge is…”
Nobody will argue that Sally is wrong.
- “When we spoke to your front-line employees, they said your biggest challenge is…”
Management doesn’t always agree with the front line, but they will listen, particularly if you play audio or video clips.
- “Retailers struggle with these challenges…”
While you can use industry data to describe the problem, this is the same message IBM used in their video above. If you tell the same generic story as an established competitor, they win. Why compete on equal footing with IBM when you can get Sally Smith to call IBM “clunky enterprise crap?”
What About Story?
By this point, you are probably asking, “Wait a minute! Everyone says we should tell a meaningful, poignant story at the beginning of our pitch!”
Yes. An origin story introduces you to the audience at a human level. Here’s how to do it right:
- Do NOT make text slides or data charts for your poignant story. Consider an actual photo of the person or event. Or no slide.
- Tell the story verbally, looking directly into your audience’s eyes.
- Keep it short, under a minute is usually best.
- Provide a clear segue, such as, “That’s the problem we set out to solve…” and flip to your problem slide.
- Be sincere.
Be careful letting other team members use this story: if the event was is not real and meaningful to them, they might be perceived as insincere. Rewrite the origin story for them as factual history: “Our founders set out to solve…”
In the next lesson, we’ll critique some Problem-Solution presentations.
The Challenger Sale: Too Ambitious for Early-Stage Startups?
A new sales book has gained a large following in the last couple of years: The Challenger Sale. The sales process and presentation style it advocates is particularly powerful for large enterprises selling to other large enterprises. This article examines the presentation style advocated in the book. Download the Zuora presentation PDF.
The Challenger Sale encourages you to demonstrate that the customer’s problem is big and getting worse. IBM could get a lot of mileage out of that approach. But your goal as an early-stage startup is to quickly get to revenue by solving an immediate problem. What if you convince the customer that the problem is too big to entrust to a startup?