Value Proposition Test - Sales Pitch
Conducting a sales pitch as a smoke test is when an entrepreneur pitches a value proposition to a potential user or customer for the purpose of gathering feedback on a problem. This versatile method can also help us gather insight on a solution we have built and decide whether or not a target market is willing to pay to use our solution. During a sales pitch, we are looking to discover pain points, learn their impact, and confirm that there is value to the customer in solving them, and then to pitch a solution. This is related to the Flyer Smoke Test.
Will a customer pay money for the product?
Does the customer see value in the product's value proposition?
What objection(s) do customers have?
B2B
B2C
Behavior
To paraphrase Thomas Watson, if you are building a for-profit business, nothing really starts happening until something is sold. While it's a test of founder gumption, the primary (learning) purpose of pitching a product is to force the target prospect to make a decision.
As a smoke test, initial sales are particularly valuable when testing in the early stages. The ad copy, product packaging, and value proposition are still up for grabs in a B2C context. In a B2B context, it's often possible to tailor the product or service to the company's needs. Actual sales prove that you have a combination that works in the prospect's eyes.
Tends to vary significantly based on cost of product and method of distribution.
At one extreme, you have a low-dollar-value product. Figuring out where to sell and place the product tends to take some time. Yet the actual purchase will tend to be an impulse buy.
At the other extreme, a large enterprise sale can take months, if not years, and many meetings with multiple decision-makers. For the main decision-maker, it's not just a financial decision, as the success of the purchase can impact their career trajectory.
Establish contact via a channel that is working for you. Traditional techniques include cold calling, door-to-door sales, or piggybacking on existing marketing and lead generation systems (if any).
Meet with the prospect in person.
Establish rapport and trust.
Show warm interest.
Don't be needy.
Do your homework and check out the prospect on social media before meeting them (LinkedIn, Facebook, etc.).
Ask well thought-out and observant questions. Match the customer's motivations with product attributes.
If/when appropriate, pitch the product.
After the pitch, expect objections and be ready to handle them.
This is where you will learn the most about how your prospect perceives your offer and your product.
Listen closely, and give the prospect a chance to explain what's bothering them.
If appropriate, repeat the concern back to the prospect to make sure that you understand what they're saying.
Explore the underlying reasons.
Close the sale.
"Does this sound like something you want?"
"So do you want to pay now or pay next Tuesday?"
"We’ve got a 20 percent discount for customers who sign up today.”
“So we have the Networked Toaster, the 10-year comprehensive guarantee, and our free delivery and installation service. When would be a good time to deliver?”
“In your opinion, does what I am offering solve your problem?”
“Is there any reason why we can't proceed with the shipment?"
“If we sign the contract today, we can start work on these concerns first thing tomorrow morning. Is that something you would be willing to commit to?”
If you are successful at selling the product or idea, particularly for the first time, you have proven that the product can be sold. This is independent of whether or not it delivers on the promises you made. From a business-model standpoint, you have proven a number of assumptions affecting your revenues box, should you decide to go further using this business model. From a pirate metrics standpoint, you have figured out what you needed to successfully acquire customers.
This smoke test does not suggest the optimal price point for the product, or whether you can deliver it profitably (after your costs).
Anchoring bias: One sale does not a business model make. A fully functioning sales system is what you ultimately need; however, a smoke test is still useful to prove that you have a sellable product.
Clustering illusion: It can be tempting to overgeneralize learnings from one sale. Try to make a few sales, particularly if the product is not very expensive.
Estimation fallacy: Underestimating the amount of time to get to that first sale.
Curse of knowledge: You know your product, service, or solution better than your prospects. You may overwhelm or confuse them, preventing them from buying, even though they actually need it. When fielding objections, try directly asking them whether or not they understand the proposition, or use comprehension testing to determine this.
When initiating a conversation with a prospect, make small talk by observing and commenting on them or the situation.
Use open-ended questions to discover more about the customer and what they're looking for.
Ask about your customer's goals and intentions first, to adapt your pitch to their circumstances.
An in-person sale is usually made by overcoming one or a few top objections, and each customer will have a different one.
When is a powerful question that helps establish the urgency of the problem for the customer.
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