Communicating transparently with customers, vendors, your bank, investors and with your team is the basis for building trust. An important aspect of transparency is the precision that you apply when discussing the state of your business.
It’s easy to be loose with terms when you’re fielding questions about your business i.e. differentiating between a pilot, a customer, an LOI or a ‘great meeting.’ All of these words and phrases are potential indicators of traction, but when you are speaking with a potential investor, it can be critically important that you speak with a degree of precision in order to avoid communicating a confusing message. Any confusion when discussing your business can cause mistrust, even if you’re explaining the good, the bad and the ugly, transparently.
A glossary for constructing your sales funnel and sales cycle
One way to describe the traction that your business is exhibiting is to think progressively about the active customer interactions that you are pursuing. Sales cycle attributes vary from company-to-company, but using a generic progression will make the point.
A great meeting – have you ever worked with or managed a salesperson who moved from great meeting to meeting, with nothing substantive ever truly occurring? Great meetings can be the beginning of true customer relationship, but it’s easy to end up in a loop of great meetings that never yield any progress. Is the person you’re speaking with capable of getting something done, either directly or in an advocacy role? Or do they simply enjoy talking about cool features, and the like? The only goal of a great meeting is to determine if the lead is qualified (Traction isn’t measured in number-of-meeting units).
Demo or beta test – the rubber is approaching the road. If the outcome of the pilot is defined and explicitly leads to the ‘next step’, then this account is a live one.
LOI, MOU or negotiate – Once the customer’s finance or buying group becomes involved, you are progressing. There may be constraints you have to meet in order to proceed. If you can meet the performance characteristics, delivery schedule, price etc., your confidence should be high.
After you’ve shipped or deployed your product or service, do you have the chance to resell/upsell your customer? Do customers continue to use your software, after the initial turn up?
Applying the glossary
With a degree of precision in your vocabulary, you can communicate your traction in a quantifiable manner:
“We have 27 potential customers in our current sales funnel. 15 have been initially qualified and we are scheduling demos. We are in price and delivery negotiations with 8, and we are awaiting signed contracts from 4, totaling $x… Our current churn rate is y%, and we’re [doing something] to improve our retention.”
Now, when you describing ‘traction’ with a potential investor, they’ll have a clear sense of your traction, your sales cycle and how much confidence they can ascribe to your revenue forecast.
At Black Ice Strategies we will work with you to build and market your business, to achieve the goals that your enterprise aspires to accomplish. We’d like to learn more about your business, and how we can help.
Drop us a line at firstname.lastname@example.org