Start Up Blog

Counter intuition, deal cutting and commissions

Posted in entrepreneurship by Steve Sammartino on April 22, 2014

I really like sharing my ideas with groups of people – so much so that I often get up on stage in front of large groups of people to to do this. After doing it for the best part of 10 years (usually in local startup events & for friend who work at large corporates) I started to get offered money to speak at events. Which is quite exciting. It’s a classic example of the wood chips generating a significant revenue stream on their own.  I’ve recently starting working with an agency to help me manage my speaking engagements. Again, these guys came to me through others who recommended me as a potential source of revenue to them – apparently I give good voice.

When we talked about how the agency thing works for their speakers the issue of commission came up. Surprisingly I was advised that I could pick my preferred commission to give to them. I could chose to give the agency a lower percentage commission if I wanted. I could give a commission of 10, 20 or 30 percent. I chose 30 percent. My dad once told me the easiest way to make money is to help other people do the same. To create a deal where there is enough in it for the other guy that they go to work for you. So I took his advice.

The principal of the agency then told me it was a good decision and that most people take more and but end up with less.

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How to lose a customer

Posted in entrepreneurship by Steve Sammartino on January 20, 2014

I’ve been using a certain weather app on my phone for some time. It is called Pocket Weather AU – Lite. It is the free version. A few times when I have clicked in to check the weather, it has given me this pop up screen below:

Pocket Weather

This time in good faith, I thought I’d click through and see what the offer was. To my disappointment, it was a simple ‘buy our paid version‘ of the app. No benefit, no exclusivity, nothing had been unlocked, no reason, no thanks for using. Just their way of asking me to upgrade. Now if you ask me there cannot be a more insulting way to incentivise a customer to upgrade. Tell them they are a cheapskate, pretend to offer something better, and then give them nothing for using the service for a few years.

Here’s what I did. I deleted their app – got another equally good free weather app, and wrote this blog entry about what I think might not be the best way to engage an audience your doing business with. Some things these guys might want to consider:

  1. If you don’t want your app to be free, then make it a paid version.
  2. Insulting people is not a very effective way to get them to upgrade financially to a software or web service.
  3. Making promises of exclusivity and non existent benefits is generally not a good idea.
  4. Understand the economics of excess supply. There are a zillion other free weather apps and my cost of moving to another service is close to zero.
  5. But mostly respect people, and maybe make them some kind of offer or reward for loyalty if employing a fermium business model.

I prefer to be positive in life, and have not even enjoyed writing this entry. Maybe that’s the over riding lesson. Don’t lie, treat people with respect and  positivity and they just might give you more money.

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Simple sales hack

Posted in entrepreneurship by Steve Sammartino on December 9, 2013

When selling anything we need to know where to focus our energy. Often there are two different realms we need to sell against.

  1. Convincing or demonstrating to the person that the product or service is good or better than the alternative.
  2. Convincing the person to exchange the thing in question for their money.

Most good sales people know how to do both of these tasks, but sometimes it’s tricky to know which one is the focus question of the moment. A simple way of finding out is to go ahead and ask. It’s worth remembering that selling isn’t a guessing game it’s a service game.

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Can I help you? Why retail customers always say no

Posted in entrepreneurship by Steve Sammartino on May 21, 2013

These are the four worst words anyone can utter to a customer in retail. We all know they answer it gets 99% of the time – because we all give it.

“No thanks – just looking”

These 4 words are revenue stoppers, barrier creators, and empathy evaporators. It just says to the potential customer – I’m too bored and uninterested to even use a sentence that isn’t expected, practiced or considerate of the fact that you are the person who pays my wage. But rather than simply pointing out that it doesn’t work, let’s discuss a couple of simple and effective alternatives. And I’ll do this by giving you an example and a retail sales person who gets it.

I was recently shopping for some new jeans in a Myer store in Melbourne. When the sales guy approached me he asked me a simple question:

“Are you after pants or tops today?”

A very smart move. Either answer starts a conversation we he can ‘be help’ instead of simply asking if I need it. If I answer ‘pants’ – we can start narrowing down the selection. Same if I answer ‘tops’. Or he might even get lucky and I say ‘both’. If I say ‘neither’ I just look like a fool, and we can both wonder why the hell I walked into the store in the first place. Needless to say, I told him and he helped me find a nice pair of jeans.

blue jeans

The trick is simple:

First – never ask an open ended question. They don’t solve problems or lead to results.

Second – ask two pronged choice questions for which both answers are good for the sales person.

Third – don’t feel guilty or pushy doing it. People wouldn’t (especially men) enter a store just for the sake of it, they want help.

So next time you go into a store with sales assistants, pay attention to the language they use and you’ll start to notice those who get it and those who don’t. This example might also serve as a good question or test when recruiting business development staff for your startup.

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What to sell first

Posted in entrepreneurship by Steve Sammartino on May 16, 2013

Before anything is sold to a customer, first a story gets bought.

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Which door to knock on

Posted in entrepreneurship by Steve Sammartino on April 22, 2013

Deal making is very different to most other activities, sports and business pursuits. In life, it generally pays to incrementally work our way up. To earn the right to play a ‘bigger game’. But when it comes to making a deal – selling something big, raising capital for our startup or doing something that requires a commitment from someone else the opposite is often true. In fact, I think it is easier to go big than small. Easier to make that big deal. Easier to raise a large amount of capital. While this sounds counter intuitive, when we consider the ‘why’ the reasons become clear:

  • It takes the same amount of time to meet the prospects
  • It takes the same amount of time to prepare the offer
  • People in charge of small amounts of money, tend to watch it more closely
  • People in charge of large amounts of money are mostly the decision makers as well
  • People in charge of small amounts of money often need approval to spend
  • Small investments get caught up in detail and administration
  • Big investments are made by those who need ‘big outcomes’ and are less risk averse
  • Big investments are usually made with OPM – other peoples money

Granted, getting the big meeting takes more work, but the simple truth is that raising 10 or 100 times the money, rarely takes 10 or 100 times the effort. In fact, it takes no more effort, and usually less. So when you’re next out deciding who to go for, remember the above and go straight to the top. While all rejections are created equal, all deals are not.

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Passion is not enough

Posted in entrepreneurship by Steve Sammartino on April 9, 2013

We are often told we need to be passionate about our work, our startup or the product we are selling. And while it is true, it is also a little bit ephemeral. Today I heard a better way to describe what we need to do to sell our ideas from Brian Tracy – whose an old school business coach, though his approach is still highly relevant today. Brain says we need to be able to do this:

Transfer our enthusiasm.

I love it, and I’m going to use it as a way to judge myself after I present an idea or project to people in the future.

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What best sellers have in common

Posted in entrepreneurship by Steve Sammartino on November 26, 2012

If you’re an author it’s often an objective to get on the New York Times best sellers list. If you’re in any form of pop culture there’s usually a best selling list that is worth getting on. While getting on it is an indicator of how well you have done, it also perpetuates  further success through attention and validation. The interesting thing about these ‘lists’ including the NY Times Best Seller list is the name itself. It isn’t the NY Times best ‘writing’ list. There’s a big clue in that. It isn’t the best work that wins. In fact, some of the most amazing work may remain hidden from the market forever because the person behind it couldn’t sell their ideas, or find some one to help them do that.

The lesson is simple and clear – If we want to be the best at anything, we need to pretty good at selling too.

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Advocacy

Posted in entrepreneurship by Steve Sammartino on August 7, 2012

We don’t create advocates, we are advocates and then others join in and follow. Our social mission should define what we sell. If we attach a social cause to what we already sell, then we have got it back to front.

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Hitting 3 out of 10

Posted in entrepreneurship by Steve Sammartino on July 18, 2012

In baseball a hitters average matters a lot. If you are hitting 100, it means that you score a run 1 out of 10 times you step up to the plate. If you are hitting 300, it means you are getting 3 runs per 10 steps up to the plate. In modern times, a season batting average higher than 300 means two things. The first is that you will be in high demand in major league baseball. The second is that you will be earning millions of dollars for that skill. Anything higher than .400 is regarded as an almost unachievable goal. The last player to do so, with enough plate appearances to qualify for the batting championship, was Ted Williams of the Boston Red Sox, who hit .406 in 1941, though the best modern players either threaten to or actually do achieve it occasionally, if only for brief periods of time.

It turns out that sales and baseball are very similar.

An average person will probably close a deal 1 out of 10 times. Someone who can get the job done 2 our of 10 times will make a very good living as a sales professional and earn an income well above the norm. If however, a person can get over 300 in selling, then they too will end up earning millions of dollars – just like the guys in the major leagues. All they need to do is find an industry that understands and appreciates the value of people who sell their wares. A big clue here is that it wont be a product that sells from a shelf. Another clue is that sales can be learned, it’s invariably a human skill that we all have, but very few people actually embrace their potential to do it.

When it comes to startups, we’ve all got to sell. We’ve got to sell our ideas, our passion, our product and our vision. We’ll even need to sell to our supply chain before we even get a chance to sell to customers. Success and selling are inextricably linked. No matter how advanced technology becomes someone has to sell it at some point, or revenue wont happen.

The thing to to remember though, is that we really only need a hit rate of 2 out of 10 to beat Joe Normal. Doing any better than that and we are on our way to stardom.

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