In order to get commitments from your first paying customers you will inevitably have to do a pilot or what is commonly known as a “proof of concept,” or POC.
Don’t fight it — POCs come with the territory in startup sales. This is especially true if you’re a groundbreaking solution with no other competitors. Enterprises need evidence that your solution can do what you claim it can do before committing to a six figure and up deal.
Be proactive and offer up a POC to start the relationship until you have enough reference-able customers to help build your case.
Why be proactive?
- Lower the barrier to entry (for cost and commitment)
- Relationship building (this will help build trust)
- Gain proof in the form of results (KPIs) that validate your offering
- Because the customer is going to ask for it anyway
Framework of a successful POC:
- Define and agree on the goals of the POC – why are you doing the POC?
- Define and agree on the KPIs – what does success look like?
- POC terms – what is duration of the POC and compensation?
- Outcome of POC – if successful what do you want?
Keep the POC simple to help lower the barrier for entry. Make it a no brainer. With that said don’t give it away for free if you don’t have to. Free has no value and provides no skin in the game for the customer. Instead reduce the fee off rate card to a point where it looks very attractive.
Try to make the term length of the POC as short as possible. The key is to provide just enough time to prove out success but not let it run on to long.
Don’t forget to get some marketing support for doing the POC. Its common to ask for a case study, reference, PR or use of logo in exchange for a successful POC. Write it into the agreement should you move forward with a long term deal.
Last big take away; when possible write the agreement to include a continuation based on success. If the POC is successful the term continues at the pre-negotiated rate and duration.
Happy Hunting! On a related topic see my post on Getting Customer References.
Vince, I’m interested on your thoughts of paying sales commissions for paid POC’s or just after they convert?
That is a great question. I could go either way on this. However, I would most likely pay commission on the booking of the POC minus any professional service or implementation fees.