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Generate 100k revenue to validate a startup idea

Imagine you just graduated from Y Combinator startup school and want to validate your business idea. You have zero sales experience and are wondering where to find your first users. Even worse, you don’t know how to engage with users. What will you do? The marketplace is replete with apps offering “qualified leads”. However, in most cases, 30%+ are reported to bounce. Even after using other, more credible platforms, offering ludicrous subscriptions to automate unremarkable email engagements, there are no leads to survey.

So, How Does one Validate a Start-up Idea and Generate $100K in Revenue from Ideation? 

To accomplish this feat, it is important to understand the following 3 key ideas:

  1. Validating your startup idea requires sales skills
  2. Finding users requires prospecting skills
  3. Generating revenue requires negotiation skills

In the next 2 minutes, I’ll share quick and easy tips on how ClosedWon validated assumptions by combining market validation, user research, and sales techniques and PandaDoc. 

What is ClosedWon?

ClosedWon auto-pilots lead generation, email outreach & social engagements in under 60 seconds. 

What is PandaDoc? 

PandaDoc is a sales document workflow software with built-in electronic signatures, workflow management, a document builder, and CPQ functionality.

If ClosedWon brings in the sales meetings, PandaDoc closes the deals. Hopefully, you too could apply & practice our assertive ClosedWon framework. Often preached yet never taught.

Pre-Qualification: Validate a Startup Idea

Identify a problem you are personally experiencing. If you are not experiencing the issue first hand, there is no reason for trying to build the idea. Odds are already against you. Also, notice the singularity of the problem. The more focused a pain point is, the easier it is to collect data when it comes to market research.

Now that you have identified your pain point, ask yourself this question, “Are there a million others out there experiencing my pain?” If your answer is “Yes,” then you have a total addressable market (TAM) of a million users who are experiencing the same pain point.

How we Validated our Start-up Idea and Generated $100K!

Generated 100k revenue to validate a sartup idea

Step 1: Sign up to PandaDoc.com

First, I signed up to PandaDoc.com as a tool to streamline the agreement as well as collect payment.  

Then, I created a new template with the following sections:

  1. The overview consists of the pain point and the solution
  2. The process – most integration companies will call this Proof of Concept (POC)
  3. The timeline has expectations and execution of platform delivery
  4. The pricing – Paradigms & Positions

That’s actionable.

Step 2: Survey 100 potential users

Second, I reached out to 100 potential users with a professional background similar to mine: an entrepreneur, a technologist with a sales background.

I asked users who fall within this buying persona the following questions:

  1. What is the hardest part about your [x] process?
  2. Tell me about the last time you encountered this/these problem(s)? How often do you experience such [problem]?
  3. Why was it so hard – dig deeper?
  4. What, if anything, have you done to solve these problems?
  5. What do you hate about [x]?

Below are the questions we used to survey potential users, along with the top 3 answers collected. I still use them today.

 

  • What is the hardest part about your sales process?
    • Not sure where to find leads
    • Don’t know how to book sales meetings
    • Too much research and admin task; too manual
  • Tell me about the last time you encountered this/these problem(s)? How often do you experience them?
    • Earlier today
    • About 5-6 times daily
    • Daily
  • Why was it so hard – dig deeper?
    • Don’t have sales experience
    • Never took sales classes or sales training
    • Feel unmotivated and not productive
  • What, if anything, have you done to solve these problems?
    • Reddit or Google to find answers
    • Use Excel sheets and random Chrome extensions to manage the users
    • Joined Y Combinator school to learn from other sales folks
  • What do you hate about [x]?
    • Don’t know what to ask or what to say
    • Don’t want to sound pushy or annoying
    • Wasting time and connecting with the wrong people

 

 

Step 3: Use answers to write content

Third, we used those answers to create our content for the PandaDoc proposal. See if you can spot the mirroring technique.

*Did you know that users at Twitter started the concept of #hashtags?”

The overview: 

If you don’t know where to find leads, no need to worry! We will find verified leads for you. We apply quality assurance and will manually do the work for you. 

If you don’t know what to say or don’t know what to ask, we will help you with that too.

Never waste your time again because what matters the most are sales calls that get you to hit your quota.

If you don’t have sales experience, we have got you covered there as well. We will show you how to record and manage potential users, give you answers to the most pressing sales enablement questions, and even connect you to our network of top tech sales professionals.

Start connecting with the right leads today.

Step 4: Idea = P.O.C.

Four, include your idea in The process section of the document. For most development shops, they call this the Proof of Concept (POC). This is an excellent opportunity to add your great idea on how to solve the problem you seek to verify. Reposition the potential solution as a proof of concept. After all, when entrepreneurs request dev shops to build their idea – isn’t it the same thing?



Supposedly you would add a sketch drawing, an explainer video, a flow chart, a prototype, a Canva design showcasing your potential startup. We didn’t do any of these. Instead, we used an excel sheet as a POC. to explain our ultimate vision.

Step 5: Timeline = Urgency

Five, The timeline is a tool that works impeccably well when determining the team and the execution of the product you are going to build. Urgency is your friend when speaking to potential users.  Include expiration dates to help create the illusion of gravity. 

A timeline will also motivate you and your co-founders to move faster on shipping something. 

Generate $100k to validate a startup idea

Step 6: Put a price tag on your idea

Six, test 1 price assumption at a time and collect payment. You are probably thinking, “I can’t do that! Charge for an idea without a completed product?” If you want to validate your idea, a paying user is the best validation. The best entrepreneurs figure this out from the get-go.

Here’s how we determined our pricing model.

  1. Who will use the product? 
    1. Sales Development Representatives (SDRs)
    2. Account executives (AEs)
    3. Business Development Representatives (BDRs)
  2. Why will users use the product?
    1. An SDR’s role is to prospect, qualify, and book meetings for AEs.
    2. An AE’s role is to qualify booked meetings and to close deals.
    3. A BDR’s role is to do all of the above and build partnerships to convert to upsells and referrals.
  3. How we position, our pricing model depends on each narrative. Since the problem I’m solving is personal. I changed my paradigm by pretending to be the client. I asked myself, “to solve a, b, and c, what is the most I’d pay?”

Now let’s put this into context: To solve prospecting, qualifying, and booking meetings, what was the most I’d pay? It was $3300. I was willing to hire an SDR to do all three things for me.

Then, I tested my assumption.

In PandaDoc’s pricing table, I created ‘monthly subscription’ as an option. Too many choices confuse when it’s time to make the decision.  Our intention was to get to a firm “yes” or “no” and not dilly dally. This eliminates the case of ‘choice overload’ and prompts us to think logically in order to begin negotiations.

Generated $100k revenue to validate a startup idea

Finally, we integrated PandaDoc with stripe to collect payment. Here is a short video on how to use PandaDoc’s Stripe payment integration. 

Streamlining this process will allow you to say, “Great, once the contract is signed and the payment is processed, we will send the welcome packet to get you started.” The goal now is to get the buyer to think about getting started instead of placing their credit card within Stripe.

Notice the progress in paradigm with each stage of the sales process?

  1. Survey the market (who will purchase your idea?)
  2. Use Survey’s language in Proposal’s content
  3. Add Pricing block with $X to test the value of your idea
  4. Add Stripe integration to streamline from negotiation to a ClosedWon
  5. Learn from KPI Dashboard 

Nothing keeps us more humbled and grounded than learning from the numbers. We use PandaDoc’s KPI board as an indicator to increase or slow down our client onboarding pace.

There are operational limitations to growing when servicing clients at an idea stage. The number 1 metrics we track is revenue.  We know that we have to grow at 20% month over month in revenue before thinking about scaling or fundraising. The 2nd metric we need to track after launch is product retention.

Our assumption in 2018 was “We believe B2B companies will pay $3195/mo for 1000 qualified leads delivered in a 30-day timeline if it was converted to a sales meeting by sending a drip campaign that integrated email, voice, text, and Linkedin.”

Testing our assumption meant we had to send out proposals to learn whether companies will pay for a platform like ClosedWon. 

We realized the lack of a platform that generates leads and schedules meetings. We understood that agencies would provide these services, however, we couldn’t find software to solve the problem effectively.  We learned that finding qualified leads and converting them into qualified sales meeting is a 2019 priority for enterprise executives, B2B entrepreneurs, and early-stage founders and will continue to be at the top of the priority going forward.

If we built an MVP without experimentation, weeks, even months would fly prototyping, designing and debating on a core product that has zero data to back it. 

It would have taken 2x longer for us to learn what we uncovered:

  1. Prospecting blockers are experienced every hour by SDRs. 
  2. Scheduling qualified sales meetings are experienced daily by AEs.  
  3. 100% of sales reps (AEs + SDRs) use more than four platforms to conduct sales activities.

We improved and iterated on the ClosedWon framework for 12 months to generate over $100K in revenue with zero funding. Today, we are fortunate to have reinvested 100% of the revenue to productize and launch ClosedWon 2.0. And for that, we are deeply grateful to our alpha users.

By exercising 6 actionable sales techniques, we were able to drill down in learning what clients are willing to pay for. If you want to drastically increase your odds of success, let’s connect here

While building a product has been challenging, we’re finally launching www.closedwon.ai on Product Hunt.

Please join us while we host a debate around the evolving role of Sales Development Representatives. We believe that SDRs will evolve into Smarketers (Smart Marketers).

Join the discussion!

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