Venture Capitalist at Theory

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2 minute read / Aug 24, 2020 /

Why Startups Should Establish Qualifying Signals for Sales Teams Early On

Demand generation limits growth. To scale, a company must find customers in ever larger numbers.

The ideal scenario is one where purely external signals confer a prospect’s propensity to buy. A prospect experiences hypergrowth is perfect example. Massive headcount growth presages large software purchases and expansion. A company anoints a new department head catalyzing change.

The more external the signal of lead quality, the easier the demand generation task will be. External signals are powerful proxy metrics.

Most of the time, these external signals won’t suffice. Internal data points are critical additions: adoption of new infrastructure technology, dissatisfaction with an incumbent vendor, budget availability, or a new project or initiative.

Mnemonic frameworks like BANT (Budget, Need, Authority, Timing) and MEDDIC (Metrics, Economic Buyer, Decision Process, Decision Criteria, Identify Pain, Champion) remind sellers to solicit these internal signals during qualifying calls. This data collection is one reason salespeople are critical to many sales processes.

There’s another form of signal that’s very powerful: product qualification. The product qualified lead or PQL has been around a long time. Entice users to use a product, encourage usage and internal cross-pollination, then use data to prioritize leads for the sales team, which is none other than Kenny van Zant’s flywheel model.

Most bottoms up SaaS companies with smaller ACVs use product qualification to grow because outbound prospecting or other demand generation techniques aren’t economically viable. Plus, product-led growth is a powerful competitive moat.

Whatever technique(s) you decide to use, I’d encourage you to think early about finding those proxy metrics for good prospects. The earlier the business can determine them, the more focused and productive demand generation efforts will be.

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