The Top 3 Most Scalable Sales Methods for Startups

August 6, 2009 – 4:09 pm | by Matt Ackerson

How are you going to sell your web-based product or service? It’s a question that all internet entrepreneurs must ask if they are serious about turning their idea into a growing, robust business.

My current start-up, Bluesky Local, which offers a web-based, automated small business marketing service for restaurants and stores, is in the midst of making this important decision.

There are numerous sales methods that could possibly be employed. However in making this decision, it is important to consider how scalable each option is. For the purposes of this blog post, there are two definitions of scalability: labor efficient scalability and cost efficient scalability. First the former, then the latter. Labor efficient scalability requires the least amount of additional physical labor capital for every additional sales lead generated.

Here is a listing of possible sales methods for generating leads among the local business owner community in order of how scalable they are based on labor efficiency (1 is the most scalable).

  1. Google Adwords (SEM) – typically one person can do this, regardless of the size of the campaign, and can target anyone searching for anything anywhere in the world.
  2. Email Marketing – Reach as many prospects as you wish with a single email marketing message.
  3. Search Engine Optimization – This is more time and labor intensive, but usually a single person can do it effectively on an on-going basis.
  4. Press – Reach thousands or millions all at once, but continuously getting press can be difficult if you have nothing new and interesting to report. Plus it is difficult to measure results or to target your audience.
  5. Twitter – Reach out individually to potential customers by following them and conversing with them.
  6. Telemarketing – Call any potential prospect, anywhere in the world, however this can take time and numerous additional employees calling in order to reach a progressively larger number of prospects.
  7. Door-to-door sales – Door-to-door sales is the most laborious of all the possible sales methods since it requires physical movement and is constrained by the speed of that movement across a given geographic area.

However, what if you are bootstrapping your start-up and have severe capital constraints? You will need to understand these options in terms of cost efficient scalability. Cost efficient scalability requires that the minimal upfront monetary cost be incurred to the business for each additional lead generated with the most direct and immediate link to a sale. For this we will make assumptions about how labor for each method would be compensated.

  1. Telemarketing (Commission-based)
  2. Door-to-Door (Commission-based)
  3. Email Marketing (Compensate per 1,000 email addresses aggregated)
  4. Google Adwords (Pay-per-click; 1 person managing it would be compensated weekly)
  5. SEO (Compensate based on # of incoming links, Page Rank improvement, etc.)
  6. Twitter (Pay weekly, bonus for sales leads)
  7. Press (Pay per published article, based on size / distribution of publication — variable results are likely, may be hard to measure.)

In all honesty, it is difficult to rank the above options because of assumptions that have to be made. Theoretically you could pay for everything on a commission basis, which would be extremely cost efficient though not realistic.

The important point is that the methods that cost more up front and are hard to difficult to link back to sales are at the bottom of the list, while those that are commission-based (compensated only when a sale is made) are at the top of the list. While some at the bottom may produce better results, even in the short term, if lead-time is a factor (the time it takes for a prospect to actually make a purchase), the sales methods at the top can have a cost savings advantage for a cash-strapped enterprise.

Both types of scalable sales definitions considered, what are the Top 3 sales methods for local lead / sales generation?

  1. SEO
  2. Tele-sales
  3. Email Marketing

SEO is like a very slow, more laborious version of Adwords simply because you can get to the top of Google or other search engines for certain keywords, however you have to continue your link building activities once there. It is difficult to test other keyword terms instantly (like you can with Adwords).  I would actually suggest that you do some testing in Adwords first as well as use SEObook’s  Toolbar for FireFox to research in advance the best keywords to optimize for. One other positive aspect to consider though is the fact that customers will see your business listing in organic search results, making them feel less like they are being advertised to, and therefore more likely to buy. By the way, I would include blogging under SEO.

Tele-sales can be almost as effective as generating new conversions as in-person sales, although the major downside is that it requires a lot of following up, hence an extra labor cost. However, if you are able to prove to potential hires that conversion rate they are likely to achieve while working on a commission-basis as well as have a thoughtful sales script and procedure that you can hand off to them, you can be very successful with this method.

Email marketing is a way to reach a large number of customers any where in the world with near zero cost to send the email to each additional recipient. In addition the cost of training team members in collecting email addresses in a systematic way is low.

Our web-based service is unique in that we face the challenge of targeting “offline customers” (local businesses) in a scalable fashion with limited capital at our disposal. The major benefits to employing these methods to generate sales for startups is both cost as well as labor efficient scalability.

Whether your business is similar or different from Bluesky Local it is important that you consider all options in a systematic fashion such as the one listed above.

Please tell me if you think this is dead-on or completely off in the comments below. Thanks for reading!

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  1. 5 Responses to “The Top 3 Most Scalable Sales Methods for Startups”

  2. By Lawrence Watkins on Aug 9, 2009 | Reply

    Matt, Great post man. This helped me think more through some of the sales models that we use with my company. It can be hard finding that balance between scalable models and cost-efficient models. I think that the most important part though is to have a consistent delivery of the message.

  3. By Angeline on Aug 14, 2009 | Reply

    Matt,

    In regards to selecting a scalable method that works, my top three would be, 1. SEO, 2. Email Marketing, and 3. Press. Although press can be a hit or a miss, I think as Lawrence stated if you have a consistent message, it can prove to be low cost high return. Of course the high return is depended on several factors a few being, proper targeting and execution.

  4. By Matt A.* on Aug 15, 2009 | Reply

    @Angeline – That’s very true, and press would be number four on my list, but it didn’t make it into my top three because it doesn’t expand or scale as you increase your investment into it with the end goal being to produce sales. After a short period of time, if you do not have anything new to report about your business the ROI will flat-line. Also as you alluded to, there can be difficulty with targeting the message and content.

    However it does would be listed as number four on my list simply because, say you’re published on Techcrunch.com or NYTimes.com–you’re reaching those of people instantly. Some of them can refer your product/ service or who are potential buyers themselves.

  5. By Megan Thompson on Jul 4, 2010 | Reply

    Telesales is actually good for promoting your affiliate products both online and offline situations.~~*

  6. By Matt Ackerson on Jul 4, 2010 | Reply

    True, I agree. Thanks for the comment Megan.

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