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Startup Strategies: Overcome Customers’ Objections

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As a tech startup grows, it needs to develop more process and management in order to scale. I call this “arming and aiming” your salesforce. My post yesterday dealt with “aiming” your sales teams, or making sure they are focused on the right opportunities.

This post starts with “arming,” or giving your sales team the right materials to increase their win rates.

Many sales don’t spend nearly enough time training their staff on “objection handling.” When I talk to people about sales, I often describe the process as a series of hurdles that a customer puts up to avoid making a purchase. The sales rep’s responsibility is to work through these common objections with the customer.

In the evangelical phase, where you are still having to persuade customers that there is a need for the type of product you offer, you work through these objections with customers on the fly. Some concerns are real and end up becoming changes to your product, service plan, pricing or bundling. Other objections are just excuses not to buy that can be overcome with enough time, effort and evidence.

When you’ve been dealing with these kinds of objections for a couple of years, you can easily handle them without much thought. It is tacit knowledge. But to effectively scale a sales team, you need to codify it, train your sales teams, monitor results, refine your messages and then refine the training and rollout to your teams.

To start with, here are some common objections and how sales reps can handle them:

1. Our prices are too high. Inexperienced sales reps will try to convince you they need to lower price to win deals. More experienced sales leaders seldom compete on price. They’ll discount, sure. But they want to establish a baseline in the customer’s mind of the value they will get by using your product. The only way to do that is to help the customer calculate the return on investment of using your product. As a company you need to invest in ROI calculators that make it easy for sales reps to enter basic customer metrics and receive an expected benefit. It is even better when the spreadsheets are established with your early customers so that the baseline for the calculations are real. If you can use the customer as a reference, you’ve got the holy grail of sales.

2. We’re more expensive than competitors. The standard response should be: “Of course we are. We’re a premium product. Let me walk you through a comparison set of our product versus our competitors’.” Then, the sales rep needs to talk the customer through the advantages. For example, if your company has raised twice the funding of your nearest competitor, then talk about the investment dollars you’re putting into your product versus the competition. For example: “It’s not about buying the product only where it’s at today — even though we’re advanced there — it’s about where the product is going. We’ve investing in R&D at a faster rate than the competition, which is why we raised $10 million to fund extra development.”

3. The customer would rather buy the “all-in-one” solution. The sales rep’s response? “Let me show you our APIs and how we integrate. That way, you can have the best of both worlds. All-in-one solutions may initially seem appealing but you end up getting inferior innovation. Our big, integrated competitor is investing across 12 different product sets. Since we only do two, those two are much deeper/offer better functionality/are more focused.”

Or whatever. These made-up examples are typical of the kind of knowledge that, over time, you gain and use to win an increased percentage of competitive deals. You need to codify all of this knowledge, put it into writing, disseminate it to sales reps and run training exercises where you drill people on the most commonly raised objections.

Just as important, you also need to get feedback from your sales reps who are on the front line every day about what is working and what isn’t. Don’t think that you have all the answers in the ivory tower. Adjust your sales materials according to this new information, and make sure your staff has the most up-to-date information.

If you don’t arm your sales team, each rep will be competing on his own, without the collective wisdom of your company’s years of experience. The next post will talk about more of the munitions your sales reps need to be even more effectively armed.

Mark Suster has started and sold two companies and is now a general partner at venture capital firm GRP Partners. He blogs about issues related to tech entrepreneurs and other startups at Both Sides of the Table.

Image courtesy of Flickr user SD Dirk.

9 Responses to “Startup Strategies: Overcome Customers’ Objections”

  1. Thanks for taking the time to do these types of posts. It’s very practical information that I can act on today and will improve my startup tomorrow.

    If you ever need a part-time break from that side of the table and want to dabble in some sales to keep your skills sharp : P

  2. It’s really, really good that someone with experience writes these lines. In big companies where they trade millions, especially with a few number of customers, sales people get all the training they need. Often, they have to learn what to say word by word, just not to make mistakes. They get trained in psychology and in objection handling. Furthermore, they are trained in objection prevention. Like Steve Jobs who makes the audience cheer when he announces a new computer that is nearly twice as expensive as from a competitor (this spares you the “It’s too expensive” objection. And there are many, many more things you can be careful of to reduce objection handling, or in best case, get completely rid of it.

    I think that often entrepreneurs in tech start-ups underestimate the importance of this. If you are techies and have no fun in dealing with customers, hire someone who likes that (it can be a very rewarding job) and give him or her all the tools they need to do their job properly.

    And when you have your customer to sign, holding a pen in his hand, shut up and let the tension do the work for you.

  3. Hi,

    Very interesting reading thank you…

    I’ve a view that objection handling without a problem or a desire to solve a problem can come across a just ‘Smart Answers’

    I’ve seen that when you know the problem your solution/service is solving overcoming objections becomes easier, my acid test questions are:

    1. What’s the problem am I solving?
    2. Has the my customer agreed they have that have this problem and they want to solve it?
    3. What’s the benefit/value to them in solving it?
    Note: And if you need to build some weight here go beyond the immediate ROI and look for
    a. Strategic benefit; how will it differentiate my customer, make them stronger, more agile and better to work for etc…
    b. Political benefit; how will it make my buyer look good, help them win support and deliver to SLA’s etc
    4. Finally what are the areas of risk and what is my strategy to build on my strengths

    The last point is the most important, creating an need that can be met by many is doing all the hard work for the competition!



  4. Hi Mark – great post – thank you – and totally agree. From an objection handling standpoint, we’re finding that you have to have gotten enough objections to be able to sort through what they mean. Maybe that means we’re starting to get past the “evangelic sales” phase – maybe not. But until you have data, it’s either totally reactive or a shot in the dark.

    Now that we’re seeing consistent objections, we’re working with our potential customers to sort out what those objections “really mean.” Which, is very hard to do.

    One thing I’d love to see you comment on is when objections (and this relates to what we’re doing) seem to signal that the product (package, price, support, etc) are right, but that it’s not the right time.

  5. davewbaldwin

    Thanks Mark, your posts are helpful and therapeutic.

    Regarding your statement in last post on the high % of made up statitistics, is that always intended(?), or is it a matter of fuzzy parameters dealing with something that is to launch in the future?

    Or, out of that high %, is it a matter of half of it is just bs and the other half a reasonable best guess?

  6. dave w baldwin

    Your posts are very helpful and, in a sense, therapeutic.

    On the Rev Projection side, you mention the problem regarding made up stats. Is that from the side of basing something one year into the future, many things can happen(?), or guys just throw at you crazy figures?

    My handle is if you’re setting up a realistic plan, you should set realistic parameters since my job is to produce revenue reasonably in line with projection…taking into account parameters that can start as fuzzy becoming more focused as you move thru the timeline.