In the latest LaunchPad Insights Seminar, Jeannette Tran, Member Services Manager at EduGrowth and David Linke, Managing Director at EduGrowth, discuss sales and revenue generation for EdTech startups with Aashna Gavin, Project Manager for Higher Ed at Wiley Publishing and Oliver Krasny, CEO of the InStudent Group.
In the latest LaunchPad Insights Seminar, Jeannette Tran and David Linke of EduGrowth sit down with two of Australia’s leading EdTech thought leaders to discuss sales and revenue generation for EdTech startups. Their guests today are:
- Aashna Gavin, Project Manager for Education at Wiley Publishing
- Oliver Krasny, CEO of the InStudent Group
Topics include the relationship between sales and marketing, as well as strategies for both, establishing and maintaining relationships with customers, pricing, and the split between B2B and B2C.
Highlights of their conversation and the full transcript follow below:
Differentiating marketing and sales
Aashna begins the discussion on sales and marketing, noting that they both lie on the same spectrum, and only as a business grows do the individual roles begin to separate.
- For a startup, sales and marketing may be the same department or even the same person.
- Marketing develops the plan, the process, and the customer image. Sales pursues the direction that marketing sets.
Oliver adds that sales and marketing strategy will differ in a B2B space compared to a B2C space.
- B2C customers include students and parents, and may number in the thousands and even millions.
- B2B customers include individual schools and universities, numbering in the dozens or hundreds.
- Products can be tailored more easily in B2B marketing and sales, but the large number of potential B2C customers makes targeted marketing much more difficult.
“You use marketing as a tool to get your brand out there, to get interest out there, to reach as many people as possible. […] The sales process is the tail end of it. The sales bit is that part where you’re trying to close the deal.”
Oliver Krasny, The InStudent Group
The features of a strong sales process
A strong sales process starts with research. Access to the internet allows EdTech businesses to pinpoint their customer’s specific needs and use the exact verbiage and approach that resonates with the customer’s identity and goal. Aashna offers some advice and insight:
- Examples of customer identity and goals in the higher ed space include: improving community, improving peer relationships, and improving student experience. Any university will value these and other goals to different degrees.
- Repetition is key. An EdTech’s message repeated several times will cause it to register in the minds of the audience. Even if they are not buyers, they take away the message.
- Word of mouth is still your best marketing tool.
- Most networking calls will not get a response. Try again. Try a different contact or a different pitch. But do not quit after the first call.
- Oftentimes the first person you target in an institution will not be the one you end up working with, pitching to, or selling to. But making that first contact is vital.
- Past the startup stage, marketing is done at a higher level and farther away from the customer. Sales is “down-and-dirty” and face-to-face with the customer.
- Marketing has the deep dive research, but sales has the face-to-face experience. Both are tempted to believe they know the customer better. In a thriving business, both sales and marketing will listen to and incorporate the knowledge that the other has to offer.
“The majority of the time you won’t hear back, especially not the first time. [Academics] are very busy people. That doesn’t mean they’re impervious to your message. It just means that you didn’t hit them at the exact right time and perhaps with the exact right message.”
Aashna Gavin, Wiley Publishing
Sales and marketing strategies
Aashna and Oliver explain that B2B sales are few but profitable since customers include entire institutions. B2C sales, targeted at individual students, parents, tutors, and teachers are much more numerous but carry a lower individual profit margin.
Oliver offers some strategies to consider when marketing and selling to potential customers:
- Consider sending lead magnets to potential customers.
- A lead magnet is an offer distributed widely to earn information or access potential customers. Emails with a free ebook or a trial membership are common lead magnets.
Aashna adds a few more points:
- Be willing to modify your product based on input coming from the first few interested clients.
- Email reigns. Some customers use LinkedIn, some use phone, some use text. But all customers will use email.
- Utilize every contact option available to you. You never know which one will work best.
- In the 21st century, phone calls are often underutilized. People may be afraid of being rejected over the phone.
“Even if you don’t reach [a customer] on the phone because they’re in class teaching or they’re in a staff meeting, or a team meeting, just the fact that you called in 2021 where email is the de facto mode of communication is much appreciated.”
Oliver Krasny, The InStudent Group
Establishing customer number one
Every EdTech begins at customer number one. Without a reputation to fall back on, businesses need a strategy for earning a customer’s trust and buy-in. Aashna gives some advice:
- At a first meeting, take a targeted approach. Research on the client should be finished and your pitch deck should be tailored to their needs and internal language.
- Unless your product very specifically fills a dire need for the customer, such as facilitating exam proctoring during the time of COVID, expect to begin with a free pilot program.
David disagrees with Aashna, suggesting that in a first meeting nothing needs to be tailored and it is an opportunity to learn about each other.
Oliver add his input:
- For customer number one, access your existing network. Take a friend to coffee, leverage connections, send emails, texts, and make phone calls.
- When searching for a customer to pilot your product, look for an open-minded institution before a wealthy one.
- The first product will not be good, and you need a partner that is willing to go through the iterative process of development with you.
“Try to connect with someone open-minded, someone who’s willing to give you a go, someone who has a little bit of power and control over the institution to some extent.”
Oliver Krasny, The InStudent Group
After a client has signed-on with your product, the relationship is not finished. The customer-business relationship requires attention and effort for as long as the product is in use. Aashna and David heartily agree that:
- Sales does not end at the point of sale. It continues during the entire relationship with that customer to ensure their needs are being met and the program is adapting properly to assist them.
- Education is a small world. Burn a bridge with one customer and you’ve likely burnt it with all of them.
- Customers want to see that the product is working. Track and share evidence of efficacy throughout the entire trial, not just at the end.
“The reality is in this space that you burn a bridge once and you’ve burnt it with everyone. Your name is tarnished, so you must honor your contractual obligations. Really take pride in your product and make sure that it’s achieving the outcomes that you’ve promised it will.”
Aashna Gavin, Wiley Publishing
Sales and pricing
Once the initial marketing and contact stages have passed, EdTechs and institutions will want to discuss pricing and eventually agree on a partnership. Strategy in approaching the cost of the product and the time of the sales pitch is key.
- K-12 schools approve a budget in term 3. Sometimes funds are leftover in term 4. These are the key times to complete the sales process.
- Terms 1 and 2 are often used as trial periods for a new product that was approved in the previous school year.
- Sales cycle length for K-12 is nine to twelve months. University sales cycles may be 12-18 months.
Oliver adds some key insights:
- Since they are tailored so closely to individual customers’ needs, pricing for B2B products can only be determined on a case-by-case basis.
- Government grants can aid schools and universities in purchasing an EdTech product. Include that in your marketing research and your sales strategy.
- For B2C, a per student or per head pricing model is often best.
Before closing, Aashna and Oliver share their three key takeaways:
- Expect a long sales cycle (9-12 months).
- Capture evidence of efficacy and share it with your customer to build their confidence. Word of mouth is still your best marketing tool.
- Know your audience – do your research!
- Sales and product development are often closely related. Sales meetings are an opportunity to iterate your product based on feedback. Listen more than you pitch.
- When selling to schools or universities, it can often take 12-18 months. It’s also imperative to understand the sales timing cycle.
- When you are selling educational products or services, you must always act with integrity. Reputation is everything.
Firstly I want to open this discussion with, Aash and Oliver, and maybe we’ll start with Aash. “What is the difference between sales and marketing when we think about the EdTech sector?”
The key consideration in the EdTech sector when it comes to sales and marketing and their respective functions is the fact that they really sit on a continuum, and very often when you’re talking about a startup, the roles are played by the exact same person. You might feel as though you’re doing it all. I certainly did. Having said that, if I were to describe what marketing is and what sales is, I would say that marketing is the strategy and the understanding of the real process and planning that goes into the details of who your target customers are, what your key messages are, and what direction the sales team should be going in. The sales team, if you have one, should be pursuing the direction that marketing sets. That’s how I view sales and marketing. But as I said, when you’re in a startup you’re very much one and the same person.
I absolutely agree with everything you said, Aash. I think also it’s not just in EdTech, but it’s in tech in general that sales is definitely converging. Back when I was a Business Development Manager at an IT firm ten years ago, sales was the act of picking up the phone, calling, knocking on doors, and then marketing was the flyers, and the letterbox drops, and all that. Now it’s like you can sell products through e-commerce, through a website, so it’s quite different now.
Do you want to expand a little bit more on that aspect, Oliver, because you really work very much in the B2C space, but you’ve also got experience in B2B as well. Do you want to talk a little bit about the differences between the approaches that you take when you think about the relationship between sales and marketing? When you think of B2B compared to B2C?
You have to look at the scale of potential clientele in a B2C environment versus a B2B environment. In our business, we sell B2C directly to students and parents and there’s just hundreds of thousands in Australia, of potential students and parents that you could offer services to. But in the B2B space we sell to schools. I know Aash sells to universities. There’s just a few thousand schools in Australia and there’s 60 or 70 universities across Australia. So the scale dynamics become important, and so that really affects how much you can actually actively do selling to a B2C audience. You have to employ a bit more of an inbound lead approach and so that’s one of the main things.
Let’s talk about this inbound lead approach and the difference between that and going out and finding people in fossicking for potential customers. How do we build up a strong sales process and a strong structure to take, whether it’s to find and take those leads that are coming in and converting them through, and then after that Aash will talk a little bit about the other approach, which is going out and grabbing those customers and bringing them to you.
It’s quite idiosyncratic. Each sales process is quite idiosyncratic to each product. Whether it’s a software product or whether it’s a publication product. It’s something that you need to decide on your particular product, but broadly speaking in terms of the inbound strategy we employ, you use marketing as a tool to get your brand out there, to get interest out there, to reach as many people as possible. Then you try and get leads in as much as you can through your marketing activity. For me, the sales process is the tail end of it. If it’s a big funnel, that’s all the marketing. Then the sales bit is that part where you’re trying to close the deal, so to speak.
How often these days do you pick up the phone and close the deal when you’re working in this e-commerce space or is it primarily that most of your customers check themselves out?
We sell a lot of books. There’s no need for anyone to talk to me about books. Unless we’re at an expo, and we have a stall, and they want to meet the author or talk about our product, and get a scan through. Online especially with the COVID environment, like in Melbourne, in a lockdown, there are no such events. They can read a sample chapter. They can see reviews online. And they can check themselves out. We also have online tutoring services. That’s something where a parent or a student wants to have a conversation with someone, and connect, and build that level of trust, and it’s obviously a more expensive purchase. So that is something where you need a little bit more of that personal sales experience.
We’ll come back to that piece which is building trust in a little bit, because I think that’s really really key. Aash, do you want to give some tips on what you think is really important when you’re building a robust sales process?
The key things that come to mind are understanding your audience. When you’re in the EdTech environment in Australia, as Oliver said before, we’ve only got 40 universities so the scale is very different here. We’re talking about outbound. We’re talking about hyper-personalized efforts to strike on key messages that your audience wants to hear. That might sound a bit academic, but really what we’re talking about is knowing your audience so intimately that you’re able to pick up the phone, which you will do again and again and again and again, and you will email a billion times the same people, and various stakeholders that may be tangential to those people, until you find the person who’s willing to speak back to you. Point one around building a robust sales process is research. It’s really digging deep and understanding who your audience is, and there’s so much research you can do by desktop. If you have the privilege of being partnered with organizations or institutional bodies that can help introduce you to particular stakeholders, excellent! But if you don’t, then Google is an excellent starting point. Just to double-click on that, if your goal is to create institutional partnerships or B2B sales, then understanding the university’s strategic direction or goal is your step one because that will underlie everything else, every operation they are under. For example, I was working with Vygo as Jeannette said earlier. Vygo is a BeB peer mentoring platform, B2B in that we sell institutionally. We set up the platform and then students are able to engage via that platform in peer mentoring or peer tutoring relationships.
Step one was to say, “Okay well what aspects of that platform would resonate with your audience?” For many looking through a university strategic plan, you determine really quickly whether improving the community, or improving peer relationships, or improving student experience was high on their agenda. That would really inform your sales process because you’re not going to go in with marketing messages that don’t hit on those specific characteristics or those specific value propositions that your audience wants to hear. So understanding who your audience is, researching as hard as you can, and then trying as hard as you can, as well to get in touch with them, and not being disheartened in your attempt to reach the right person.
I think that’s a really important point. The idea of being disheartened is really difficult, especially when it’s the first time going out there and really putting yourself out there. Especially if you’re a founder, for all the people out there who’ve built a product with their own hands, getting feedback from people can be pretty brutal when you get started. But that’s really important to shape the message. If you’re hearing things from your customers, how do you need to craft the message so that the next time you go out there you’re building upon that?
I think we’re talking a lot about marketing and that creates the top of the funnel for the sales process. Do you want to talk a little bit about some of the steps that you need to put in place to take those top of the funnel things? And how to strategically push them all the way through? Aash, especially for B2B at this point we’ll talk about that.
The key thing is that repetition is key. I think the latest stats are that you need to repeat the same message seven times in order to have it actually register in the mind of your audience. So oftentimes it’s just about that repetitive interaction and doing it with both integrity, yes, but also with gumption or a bit of bravery. So say, for example, your first marketing effort was to send out an email in advance of a major event where you’re about to meet a prospective target. If it was to make it super specific, say I’ve emailed the Head of Student Retention at Griffith University and said, “I understand that you’re going to be at this upcoming event and I’d love to meet you, this is what I’d love to talk to you about, I understand that it’s important to you because blah blah blah, I’ve seen it in your strategy, I can see it on your profile. Griffith University has an excellent reputation for x, so let’s have a chat.” Say that’s your first marketing effort. Maybe you’ve also got some collateral as Oliver mentioned before. Maybe you’ve got some assets or something pretty, some sort of flyer to go along with it. Here’s the easy one pager. You can take a look. Or a video or something to complement and visualize that message that’s done.
So that’s the top of the funnel. Now you’ve got the date of the event. You want to make sure that you’re super prepared for that event. That’s your first time interacting with that person, whether or not they’ve responded to you. So I’m putting them in the funnel regardless of their response because the reality is, and then this comes back to that disheartenment comment before, the majority of the time you won’t hear back, especially not the first time. They’re very busy people. They’ve got way more things on their plate than we could ever imagine. That doesn’t mean they’re impervious to your message. It just means that you didn’t hit them at the exact right time and perhaps with the exact right message, or maybe they just ignored your email all together. So the event is today, you’ve met this person, or you’ve been introduced, or you’re stalking their LinkedIn profile, so you know what they look like. And you’ve walked right up to them. This comes back to that bravery comment I mentioned before, that gumption. It sounds terrifying but this is where you’re wearing both your sales and your marketing hat because, especially if you’re a small organization, you’re the only one to do it. So you’ve walked up to this person and you’ve tried to hit those key messages again. “I understand you care about blah. This is what I have to offer you. Blah.” That’s pushing them further down the funnel. Then you might find out that actually, “Hey! Look, I’m not the right person to talk to, but my colleague over there is. I’m gonna introduce you.” That might happen, or alternatively they’ll say, “Look, now’s not the right time.” or a whole array of maybes eventuate from this one conversation. So depending on what that outcome is, you follow that funnel.
So the funnel isn’t like this necessarily all the time. It’s like this and I don’t know if you can see that on the video, but it’s back and forward and meandering. No matter what, you just need to be super agile and eventually you’ll talk to the right person all because you made those initial attempts, even if the final result is not with the initial person that you targeted.
Can you define B2C and B2B, Oliver? This is your part of the world. You spend your life in B2C and B2B. Tell me what the difference is, and let’s talk about how schools think about it differently.
B2C just means business to consumer and B2B means business to business. What that actually means is business to consumer sells to individual consumers, non-enterprises. Business to business sells to businesses. I wouldn’t say necessarily schools and universities are businesses, but that’s sort of the nomenclature that we employ to talk about institutions or enterprises of any sort.
Do you think we need to take a slightly different sales approach when we’re thinking about B2B versus B2C, Oliver?
Absolutely. I was listening to Aash explaining about the research process in terms of finding out everything about your customer, and you just can’t do that. It’s, as I mentioned before, a scale thing. You just can’t do that on every single individual student because the economics aren’t there. You’re just going to have to have thousands and thousands of sales people finding out about every single student, and then that’s plenty of man-hours. Ultimately you’re selling a fifty dollar study guide or whatever it might be, or 50 subscriptions. It just doesn’t work. So typically the sort of value amounts of the B2B sale are significantly higher than a B2C. That factors into your approach, and the economics, and the fundamentals of the actual revenue drivers.
Aash, you’ve got experience on both sides being in the sales at the top of the funnel with the marketing messaging, and now actually trying to close as well. Maybe you can give us a bit of an idea about the interplay between the marketing and the sales teams. Traditionally we don’t like each other on either side. I’ve been on both sides as well, so do you want to give us a little bit of conversation about that interplay?
I think it’s really important for both sides to try their best to respect each other’s knowledge. I think that can happen if they work in them, particularly. If marketing is done at a higher level, so to speak, it typically involves surveys sent out to target customers or virtual desktops, etc. It gives insight into the macro environment. Then sales is down-and-dirty, one-to-one with your target audience. I’m talking about B2B to see here, but that means that your sales person is directly in front of your customer. They’re going to feel like they know your marketing team, having done all that backwards research, and feel like they know best. So ultimately bringing together these two problems and making sure that the communication is clear and shared, that will benefit everybody. There’s no way that that won’t be the best case scenario. It’s just about if you can’t evidence to your own sales team from a marketing perspective that what you’ve got to say is accurate, then how on earth can you convince your final target. That’s the key thing I would say about sales and marketing if they’re different people. If they’re the same person, then be hyper vigilant at taking every single conversation that you have in the B2B environment.
That’s business to business. You’re talking to the person that you want to sell to, and they’re going to make sure that their university is brought on board, that their feedback and their responses to your key messages, everything, should be noted down. That brings me back to something I should have said when asked about the sales process, which is around your CRM, your customer relationship management system, for those who don’t know what that is. A CRM is basically your data warehouse for everything sales and marketing. But ultimately it should contain details of every single person that you have targeted, that you want to target, that you failed with targeting, and all the details surrounding each of those interactions. Oliver can speak to CRM at scale. The profile within your CRM that you engage with and then within that you’d have multiple stakeholders. So maybe you’re Head of Student Retention, and then their deputy, and then the Head of Student Affairs or whatever it is. Each of those people that you’ve interacted with, you keep your notes there and you say, “This was the last conversation we had. This is what we talked about. This is what they loved. This is what they hated.” And you make sure that those reactions are built back into your marketing world, your key messaging and your collateral.
Let’s move on for a little bit from the marketing. Let’s start talking about three phases. I want to talk about lead generation. I want to talk about that first interaction. Let’s talk about that first zone. So these are the fundamentals that you need to do. Let’s talk a little bit about the lead generation process, and Oliver you’ve got lots of experience in that space. Let’s talk a little bit about lead generation. I’m going to ask you to count the balance B2C and then we’ll talk about B2B in a second.
Ironically I’ve actually been just doing quite a lot of it today for B2B, but happy to talk about B2C. In terms of lead generation, B2C, you really can’t go past digital advertising nowadays because that’s obviously extremely scalable and cost efficient. You can look at things such as, particularly in a digital environment, what’s called lead magnets, which basically is something you offer your potential prospective clients something for free and they sign up. An e-book is the traditional example. So an ebook on how to study from home effectively, and it’s a free ebook. All I need from you is your name, email address, etc. Any sort of key information that’s going to help you in understanding your client base, understanding that client to then further convert them into a client. So you get a bunch of leads that way and you can promote that through Facebook, Instagram advertising, Google advertising. I’m not going to go into the mechanics of that because that obviously is quite complicated. But you offer them a lead magnet. You get a bunch of leads. Then you can email them. So you can set up an email sequence that’s automatically sent. The first email might include that ebook that you mentioned that they’re after, and then the second email might be actually promoting your paid product that you’re trying to sell them, whatever that product is, a subscription of some sort, or whatever. Whatever it is that you’re selling. A piece of hardware.
So can I ask a practical question? We’ve done some programming. We’ve got some leads. Your first interaction, at the moment within the B2C world, is going to be some sort of automation process before we try and score that lead, before we hand over to a sales person to make a call, is that right?
What I would say is, I know this is obviously a very early stage startup audience, at the start it’s as Aash was saying, it all blends into one. Even that first lead, or that first those first two leads, in time you’ll be talking about thousands of leads. But those first two leads, you just, and this is one point I did want to make, is your sales is really very similar to your product development cycle and your product iteration, because as long as there’s some sort of germ of or essence of what you want to help students achieve, you can modify your product hugely based on those first few clients. Certainly we’ve employed that process for pretty much all our products, and it’s worked well because there’s no better product developer than the client themselves. I’m not sure if I actually answered your question there, David. I think I went on a bit of a tangent.
It gave us some insight, which is great. Aash, there’s a question for you which I wanted to ask around the university in higher education. I think you’ve also worked in the TAFE space as well. What channel in lead generation worked most productively for you? And the specific question from someone in the audience was around LinkedIn, and how influential and useful that channel was for you.
We’re talking again about B2B sales and marketing. We’re talking about trying to get through to the right person in the university executive space. So maybe a manager or a head of department. Look, LinkedIn I think is growing in popularity. I think a lot of academics don’t have LinkedIn. I know that from the Wiley side. But from the Vygo side I would say that they have LinkedIn. But look, it wasn’t an effective tool for us, and ultimately email reigns. So email is the short answer. But my encouragement to anyone working in B2B EdTech is to exploit every channel that you can. There’s not many. There’s email, and there’s LinkedIn, and there’s a phone, and I think the phone is the most underutilized channel because I don’t know why in higher ed. I’ve noticed that people are very resistant to picking up the phone. It’s a fear factor. They don’t want to be rejected over the phone. But I think calling the heads of department and even just hitting their receptionist was one of the most effective methods that we used to get to the person that we tried to reach.
Ultimately I think also, just to pick up the phone, even if you don’t get through, we call many heads of departments at schools because we sell to schools. Even if you don’t reach them on the phone because they’re in class teaching or they’re in a staff meeting, a team meeting, just the fact that you called in 2021 where email is the de facto mode of communication is much appreciated.
That’s a really important point there as well. So we’ve got some leads. I think you were saying before Oliver that you’re trying to automate the first couple of steps to reduce cost. So the next step is, we’ve got someone on the line, what level of proposal am I generating before I get to a meeting? Or am I going to a meeting to understand, and then generate a proposal? What’s your process?
Okay, got the lead on the phone. Cool. I think in the B2C space, where you’re selling a product that’s maybe worth 100 or 200 bucks a year, you’re not doing a custom proposal. You’re not even really talking to them on the phone. If you’re talking about an annual value or a sale in the low thousands in B2C, then you could do a formal proposal. But typically it’s more about a consultative sales approach, trying to find out where they want to go, how you can help them, and then it is, ultimately in B2C, it’s less that you’re not tailoring the product so much to each customer. It’s more just a standard product that you deliver and slightly edit for each potential customer. But in the B2B space you do work very closely. It is more like a partnership-type thing. You could develop the product or the way it’s offered completely around the way that the school or the university needs you to deliver it.
I’ll ask you the same question, Aash, which is that you’ve got your first appointment and we’ve had a conversation. What are you bringing to that appointment?
This really depends on the format of the appointment. Assuming you’ve been lucky enough to actually sit in front of your customers and maybe a group of their colleagues, you will be bringing a pitch deck at the very least with broad messages. Again, I cannot insist upon this enough. With higher ed, with the university sector there is so much information available online. There is no excuse to come unprepared to these meetings. You don’t need the Head of Academia for Griffith to tell you exactly what he cares about. That information is available online. So you’ve come and you’ve already adapted your pitch deck. We adapted our pitch deck for every single client meeting that we had. So we’ve already adapted it so that we’re using the exact same language that they’re using in their strategy or on their department home page or in their latest press releases, whatever it is that you’re sourcing your insights from. So the pitch deck is already tailored. Yes, you are there to gain more insights and have conversations where you learn, but it would be very poor work if you’ve come unprepared and don’t look like you already know the answers that they’re.
I’m going to be controversial and say I don’t agree, but that’s fine. I think you should go to the first meeting as a discovery. But you’re right, you have to be prepared. I think that one of the challenges in sales is that you need to have the balance between understanding the customer’s needs and how your solution fits. So I agree, all the preparation, but I genuinely like to ask what the objectives are. I like your approach too. I’m just giving people an alternative. Let’s try and get really specific here. We’ve got some people here who are looking for customer number one. They’re looking for customer number one, Oliver. Come on. Give us the Oliver crazy three-step process that I need to get my very first customer who’s going to trial my product, pile up my product, buy my product. What am I doing?
For customer number one, just look at your network. I would honestly be organizing a coffee with Mr. David Linke over here because he has probably the biggest network that you directly have access to, unless you have particular connections. And I’d be asking him for a school introduction. Sorry to throw you under the bus, David, but realistically that’s what I would do. I think, alright now we’re in the same market. We’re in the same bowl. That’s right. I think I’ve done as much, in fact I’ve utilized you in that way before. It really is a network because a warm introduction for the first client when you don’t really have that much of a reputation. You’ve just got yourself and your passion. You just need that first foot in the door. It’s like the cliche thing of getting that first job as well. Just get a foot in the door. Don’t be afraid to leverage connections. That is really how the world of business and sales often work. You will know someone. Particularly nowadays we are all connected, and there’s LinkedIn, and when we network there’s got to be someone that you know. Don’t be afraid to call them. Pick up the phone or send them an SMS is my actual advice for client number one.
I’m going to ask you a question, Aash. The same thing we’re looking for: client number one. Aash, am I asking them for money? Am I asking them to pilot my product? Am I asking them to trial it? What am I trying to achieve in customer number one?
This is very contingent upon the product and whether your MVP is ready. If you’re looking for customer number one and you’ve got a B2B solution, I think asking for anything more than a free pilot at that point would be very gutsy. Sure, if there’s been all sorts of solutions in the last 12 months since COVID that have been purchased off the bat. I remember there was. When code first hit and every university was asking the same question, “How on earth are we going to assess our students?” and a company came out with an online exam proctoring product – invigilation. They were basically able to watch you while you were being assessed by the internet, which is very controversial and very uncomfortable. But at the same time it was the only way they could ensure the integrity of the assessment. So universities were shelling out abominable amounts of cash because they needed this product so badly. So yes, pilot for free is definitely what you’re looking to achieve, and I would say this word partnership is what you’re after. You want to make sure that the outcome of your pilot is one based on mutual benefits that both you and your partner can then go on to demonstrate and use again and again and again. We instituted this pilot. We achieved these outcomes. Everybody else, you want what we’ve got.
And Oliver, do you want to just comment around this idea of what partnership actually means in this context? So if we’re going along, we’re going to pilot our product for free, what does the partnership model look like that you’d like to achieve with that customer?
It is a case by case basis, but what I would typically seek in a client or a partner is someone who’s not afraid to have an open mind because you have to realize that version of your product is not going to be good. There’s a famous quote by Reid Hoffman who started LinkedIn, and it’s, I’m paraphrasing, “If you’re not embarrassed by version one of your first product, you’ve shipped it too late.” and I think that’s absolutely true. There’s a lot of schools, and I’m sure universities, that aren’t open-minded. There are people who just want it to work, and expect it to work, and they aren’t open to the iterative process. So the first thing I want in a partner is someone who’s open-minded, someone that I can work with, so it’s almost like you’re hiring someone for that collaborative job, someone you want to brainstorm with, someone who is looking to improve things in education in a positive way. They see you as a way they can leverage you and your product to achieve some of their objectives. So again, because it is case by case, I can’t get too specific. But basically someone open-minded, someone who’s willing to give you a go, someone who has a little bit of power and control over the institution to some extent. Having said that, even a lower level staff member can pilot something within their little classroom or whatever it is. I think those qualities are more important than a school with a lot of money. Someone who’s open-minded at a small regional school is far more exciting to me than the former.
I guess to sum it up, it’s a discrete partner with discrete objectives, so you both know exactly what you want to get out of this pilot. Someone with a perhaps a discrete sample of students, so whether it’s a class, or a department, or whatever it is, you know they are the ones that are being tested and you test them from start date to finish date. You can agree more all along that innovation or open-minded co-building mindset because without that it’s just an upward hill battle.
I think your free pilot and partnership has to be with the actual same type target customer. You want them to be focused on target customers, so you don’t just do a pilot outside of your ideal customer base. It’s still going to be very much connected to who you want to see as your customer long term. That’s really important. I want to ask you to comment on this, Oliver, if you don’t mind, around free pilot and this level of co-investment, what that might look like. Because potentially customers in schools, very much in this round, don’t really value free.
I say this time and time again, but it really is case by case. We’ve done initial client partnerships where I’ve been extremely consistent that they have to pay something, even a nominal amount, because I think psychologically that can be quite important. In schools typically nowadays they do a free trial. Now that doesn’t necessarily mean it’s a full trial. That doesn’t necessarily mean it’s a trial for an extended period of time. But it’s a discrete two-week trial where we’re dedicated to this, we’re investing. The reality is, David, that the school or the or the partner is investing their time, which is ultimately money.
That’s a really important point, but co-investment doesn’t have to be money. The co-investment could be, and I would encourage everyone who does this if you set up a pilot with someone then you should take it as formally as a sales contract, so you should write up a memorandum of understanding and you should list the activities that you’re committing to do, that they’re committing to do, and if you can do it, I cannot tell you enough that you will save yourself time, if they won’t commit to metrics of success, do not progress with the pilot. You must have a pilot. It’s not a delay in the sales cycle. It is a beginning and it’s an integral part of the sales cycle. So if that potential customer that you’re working with, either the person you’re talking with or the institution that they work for, whether a school or university or TAFE, are unwilling to sign a memorandum of understanding that says we are giving you this. And you get rid of the term “free”. You put a price in it and you discount it down a hundred percent. You give them an invoice for zero dollars. Don’t accept the pilot that says, “Hey, we’ll just try in a classroom.”
I would also argue that your pilot should have a very strong structure. I would suggest that it needs to be long enough to show evidence of traction and also it needs to show that they’re committed to the process as well. So we’ve made a sale. We’ve got to a customer, whether it’s a free trial or whether it’s an actual paid customer would be fantastic. That would be awesome. Does the sales cycle finish, Aash? Does the sales cycle finish once the customers got an invoice and paid?
No, absolutely not. It’s your nurture campaign, and you’re making sure that your customers are happy forever. It is, if anything, just a very beginning in the B2B landscape.
I’m very excited you use the word I use, and I feel really it’s the very beginning of the sales cycle when the customer said yes and paid. Let’s spend the next three hours talking about the beginning of the sales cycle because that’s in my view where it starts. I don’t think I’ve had to even pay you for that. You just came out naturally. I’m really excited now. So yes, the beginning of the sales cycle.
Once you’ve got that paying customer who’s put down their commitment to typically a one-year contract, it is your responsibility then to continue to secure the longevity of that contract, to make sure that the product that you have provided is doing what you promised it will do because either, (a) they won’t sign and (b) that you’re lacking integrity if you’re just promising things and not delivering. So it’ll reflect very badly on you, and Jeanette said this the other day, but the reality is in this space that you burn a bridge once and you’ve burnt it with everyone. Your name is tarnished, so you must honor your contractual obligations. But really take pride in your product and make sure that it’s achieving the outcomes that you’ve promised it will.
So, given a free pilot for B2B in the university SAAS platform, what’s the most effective way to collect feedback in order to display the evidence? I’m going to change it to evidence at the end of the pilot. Do you have some insight to that, Aash, that you can think about?
The most effective way of communicating efficacy and evidence of the pilot… Look, you should never wait till the very end of a process to have evidence. You should be tracking your evidence all the way along, and everyone who is part of that contract should be on board with where you are at week one, week three, week six, etc. So it’s not a, “Hey! We’ve started.” and “Oh, now we’re looking at the end.” Otherwise they’re not actively involved, which to your point, David, on that final point that Oliver and I hadn’t mentioned yet was making sure that that investment on their side, whether it’s time, money, or just taking the gamble on you because you know academics or people who work in the university sector are very busy people. They’re not going to run an experiment for fun. They’re going to do it because they actually want to see an outcome and use that outcome to justify further behaviors or activities. So if they’re not invested, then having evidence at the very end of the process isn’t going to convince anyone. To that questionnaire, I would argue that you probably know the metrics that show success for your product. So you should try and build those in. I think those metrics will be established from the very beginning.
You should know and agree with the customer on what they need to see and what you need to deliver in order to hit those sweet spots for them to continue.
I forgot one incredibly important thing, which is a question around how long is this sales cycle? We’ll start with you, Oliver, seeing that you’re in our spotlight right now. How long do you expect this typical sales cycle to last for a school?
This is one of my key takeaway three points. You have to learn and understand the seasonality of the sales cycle, particularly with the B2B process. Schools typically will pilot and try a product potentially at any time, although they’ll often say, “I’m busy this term. I have exams. Let’s try term three.” We’ll start the pilot so you have to understand what they’re going through and the terms and the holidays. There are basically 40 weeks in the year that you can really actively be selling to schools, and then you have to understand the dynamics of when school starts, and the dynamics of the back-to-school period and exam revision period. To answer your question, the seasonality aspect is really important, and that dictates the sales time frame. It really depends at what stage of the year you start selling to when you’re going to see that purchase again. It is idiosyncratic on your product versus the B2C space. You can have an instant sale. It can be immediate.
Aash, did you want to talk about what you think is the sort of typical sales cycle length for the university or higher education and TAFE space?
I think it’s also one of my three key takeaways. Definitely nine to twelve months is what you should expect for a B2B. Nine to twelve months. I think going in there with an expectation of less is ambitious, of course, and maybe you’ll get lucky. But you have to be prepared for that because you need to budget accordingly.
I’ll just make a comment around K-12 schools where I’ve spent a long time making sales around the seasonal component of selling to schools. He’s right, schools have four terms. Everyone knows that process. In many schools the buying decisions are made in term three in the school year because they are doing budgets for the next school year in that period of time. But don’t exclude or don’t forget how incredibly useful the last two months of the school year are for making sales. It’s really really common for schools to have leftover budget or what they call “underspend”. They’ve budgeted one-hundred thousand dollars for the library. In fact they’ve only spent eighty-thousand, which means they’ve got twenty-thousand dollars left, and they’re going to go and pool all that money and go make a purchase.
So a really common thing that you’ll see big education companies provide if you’ve got the cash flow to be able to manage it, is to be able to do what’s called “buy now, pay later” so that they can begin implementation at the end of this school year for the next school year. It’s just a great way of pulling through those sales, and what you’ll typically find is they’ve got leftover budget and they may make those purchase decisions. So the sales cycle I think is that the decision is made in term three. And term one, and term two, and term four of the year are the introductory phases. Keep those in mind and you’ll also get a big spike in the beginning of the school year as well.
Why don’t we rapidly run through three or four of these questions so that we can get people with answers to the things that they’re wanting to know? Here’s our first question: “When making your first sale in B2B with universities, how do you determine a fair value price for the product?” Aash, that feels like it’s a question for you. Good luck. Off you go.
Pricing. It’s the impossible question. (a) It has to make sense for you, (b) don’t discount the concept of government grants. If there’s a grant available, bring that concept back of a partnership with your prospective client and see if there’s a grant that can help them out and then charge more and receive some from the government and some from the client. But the pricing is something that has to work for your business and if they’re the pilot customer then we’re talking about very basic figures and round figures. Don’t complicate it too much. That’s what I would argue, but there’s no golden way of knowing the answer on pricing, sorry.
Well that’s another three days of science to talk about pricing. Did you want to make a comment about that? I’m interested in your experience, Oliver. What do you think is a price point that the B2C market are comfortable with, without an incredible hoopla around buying it?
I know I’ve said this so many times. It is really case by case. There are students with extremely wealthy parents, and there are students with parents that are lower SCS, and so you really have to know who you’re talking to. That’s the first point. This is the second point. What I’ve found in education in the B2C space is, particularly knowing the demographic that you’re selling to, parents will find a way to purchase educational resources for their children. I’ve seen examples where it’s the number one priority for some families over and above nutrition. So you have to be very cognizant of how important the thing you’re selling is, and don’t be exploitative.
Why don’t we use this as an opportunity to make our three key points? Aash, why don’t you give us the three things that you want this audience to take away from selling into the hiring space.
I prepared these earlier and now I’ve forgotten what they are. On the price thing, using a per student or a per head price is probably your best bet. Anyway the three key takeaways, (1) expect a long sales cycle. Both Oliver and I have mentioned it. It must be true. I say for B2B, no less than 9 to 12 months. (2) Capture evidence of efficacy. That’s my second point. Word of mouth is still your best marketing tool. If you have evidence of efficacy early on and can share that with the wider audience then you’re laughing. You’re just so much better prepared and you can integrate it into every piece of marketing, collateral audience, and do your research. When I say know your audience I mean the key stakeholders, and often within a university setting you’ve got the buyer, you’ve got the decision makers, you’ve got the influencers, and you’ve got other stakeholders that come together into this decision-making team. So know your audience, and don’t give up if one of them says no. That doesn’t mean that everyone’s going to say no, so just keep going.
Fantastic. Oliver, what are your key three takeaways?
I think we’ll start with number two because I think Aash and I share that in common. When selling to schools and universities, it can often take 12 to 18 months. It’s also imperative to understand the sales timing cycle and seasonality in your sales cycle. Number one, sales and product development are often closely related. I made this point already. Sales meetings in the early stage, your first few meetings, your first few sales meetings, they’re an opportunity to iterate your product based on real client feedback. Listen way more than you pitch. Number three, when you’re selling educational products or services, you must always act with integrity. Your reputation is everything, and that’s not like a hokey sort of thing to be like a good moral person. That is really important, and it’s a small community, and in education, and so you have to act with integrity. It’s absolutely paramount.
Fantastic. Thank you both so very much for giving us some fantastic insights into the selling process in the B2C, B2B school and education market.