Product vs. Solution Selling for Startups

Introduction

While it’s tempting for a startup to share all the benefits of the products and services it sells to customers, focusing solely on product selling can mean a missed connection when reaching out to potential customers.

But when startups center their efforts on solution selling, they can build strong relationships with clientele by offering a more personalized solution to selling.

Solution selling involves talking with a customer, defining their problems, and selling them products or services that will help solve the problems. 

But this process requires more than just assuming a problem and offering one solution. Instead, startups can make the most of solution selling by digging deeper to define not just a problem, but the root cause of the problem, then offering personalized solutions from their range of available products and services.

This can be one process that startups use to gain new and returning customers, growing not just their customer base but also their revenue.

Learn the main differences between product vs. solution selling, and why solution selling can be the secret weapon startups need to make a mark in their specific market.

What are the different sales methodologies startups can use?

Before a startup just dives straight into solution selling, it’s important to keep an open mind and use the company’s data to better inform what methodologies to use—and when.

Unlike a more established business that can pretty accurately forecast its future revenues and expenses, startups are in a unique position where there is a lot of change happening any given day. Startups may still be figuring out where to manufacture products, what tools to use to increase sales productivity, and even exactly who their target audience is. But startups still need to start making sales to have a chance at succeeding, even if business operations aren’t yet set in stone.

That’s where data can come in. Before deciding how to tap product vs. solution selling or when to incorporate artificial intelligence (AI), startups should let data lead the way. Some metrics that startups should consider when deciding on sales methodologies include customer acquisition and retention, runway, customer acquisition cost (CAC), customer lifetime value (LTV), adoption rate, and user retention.

These metrics will give you a better idea of what sales methodology to use. For instance, whether your startup will benefit from reducing CAC by incorporating AI to sell to customers, or if your acquisition and retention rates suggest sales teams should be spending more time with the clients.

Here are some common sales methodologies for startups to consider: 

Product selling

When you think of a salesperson trying to make a sale, the first thing you might imagine is that person sharing all the benefits of a product to every potential customer. For example, a customer walks into a technology store looking for a new phone, and the employee immediately shows off the newest smartphone model.

This method can be beneficial in that it doesn’t require a ton of time spent researching potential customers or personalizing your sales suggestions. This can reach a broader audience, but it isn’t as focused on building customer relationships as some other sales methodologies, like solution selling or consultative selling.

Solution selling

When comparing product vs. solution selling, the latter puts the customer relationship first. Because sales reps will need to thoroughly know every product and service the startup offers, solution selling may involve a lot of training to prepare the sales team to handle a variety of potential customer problems.

It may also mean sales reps spend more time with each lead as they try to identify the customer’s problems and offer solutions to ultimately make a sale.

While it does involve a lot of time, solution selling can boost conversion rates by accurately addressing client needs and leading them directly to a product or service that can solve their problems. It also helps sales reps build a stronger relationship with customers, which can improve customer retention and satisfaction and foster customer loyalty.

Consultative selling

Consultative selling and solution selling are similar methodologies that both address providing solutions to customer’s needs. However, with solution selling, the customer’s problem is usually shared or identified early on; the customer may even come directly to the startup to explicitly share their issues and look for a solution the startup could provide. 

Consultative selling involves a sales rep spending plenty of time in engaging, open-ended conversations with a client to uncover potential pain points that the sales rep can then consult on, even if the solution doesn’t involve a sale. This process can build high levels of trust with customers, but it’s less focused on making a sale.

AI-powered selling

Artificial intelligence is quickly gaining traction in sales, especially for startups. AI tools can improve productivity, handling repetitive tasks and using machine learning to predict users’ needs. AI can help startups follow up with leads, send personalized emails to customers, respond to sales inquiries, and more. 

AI-powered selling can work hand-in-hand with other methodologies, too. For example, utilizing AI to schedule calls with leads or send follow-up emails to new customers can give sales reps more time on solution selling to customers who need more attention for their concerns.

How startups build and test sales processes

The data is helpful in determining which sales methodology to pursue, but sometimes, startups will need to go through trial-and-error to find which sales processes are the best fit for their audience.

Startups will need to build and test sales processes, using data to find what works and what doesn’t. This all starts with niching down to a target audience, then moves to prospecting, generating leads, building relationships, and eventually closing deals.

Prospecting

Prospecting can make or break a startup. If a startup misidentifies its target markets, it will be trying to sell products or services to people who don’t want or need them. First, startups need to settle on a niche for their target audience. Then, they can break that target audience into segments of potential customers who may be interested in different products or services that the startup offers.

Generating and qualifying leads

Customers may engage with the startup at various points in the buyer’s journey, from simply reading more about the company background during the awareness stage, to reaching out about making a purchase at the decision stage. Startups not only need to generate leads through things like social media marketing, email marketing, and even old-school cold calling, but they need to know how to prioritize leads.

For startups, it can be exciting to see the first leads coming into the funnel, but not every lead will convert. Startup leaders should use CRM to identify the most promising leads and pursue those with more time and resources.

Nurturing relationships

Many customers won’t be immediately ready to make a purchase when they start inquiring about a company’s products or services. For startups, customers may be hesitant to go with a younger company over older, more established corporations. Sales reps should be attentive, ready to answer any questions and provide thorough explanations and information on the startup and its services. As the sales team nurtures relationships with leads, they will move farther down the funnel. This process can educate potential customers and give them the confidence to make a purchase.

See how me&U uses HubSpot to successfully track leads and manage the customer journey

Closing deals

When it’s time to close deals, sales reps will need to consider and address any final concerns from the client. Reiterate the value of the product or service and how it fits the customer’s needs, and make sure the customer is satisfied with the contract before finalizing the deal. 

Upselling and cross-Selling

Once the deal is done, the work isn’t over. For startups especially, growing a loyal customer base and getting repeat business from existing customers can save money on customer acquisition costs. Continue building the customer relationships with follow-up emails or calls and satisfaction surveys, and make sure to upsell extra features for the product or service they purchased or utilize cross-selling to sell other products and services that could solve other problems the customer is facing.

Why should startups sell solutions, not products?

Solution selling is nothing new; in fact, this method has been around since the term was coined in the 1970s and taught and implemented in the 1980s. 

With clients that come in already having done their research on companies, reading reviews, and exploring products online, it may seem that solution selling is a thing of the past. Is it still relevant today? 

Solution selling is as relevant today as ever. Customers don’t want to waste time being sold products they don’t need, and they’re looking for customized solutions to their needs. About 60% of customers say they’ll make repeat purchases at a business that provides a personalized buying experience. Even better? According to McKinsey, companies that do personalization will see a 40% revenue increase.

The same McKinsey study asked customers what kind of personalization tactics they are looking for, and 67% of those surveyed said they wanted service recommendations personalized to meet their needs.

It may seem easy for a giant corporation to hire enough sales reps to handle those longer client exchanges, so how can a startup incorporate solution selling with limited resources? 

This is where technology like AI chatbots can come into play. Some users just need quick answers to their questions, while others need to connect with a human to discuss their needs and purchase options. AI chatbots can trigger quick, accurate responses to users who don’t necessarily need to consult with a sales rep yet, so agents can spend more time nurturing relationships and finding solutions for clients who are further in the funnel.

Solution selling examples from startups

Maybe you’re interested in solution selling, but you’re not quite sure what that would look like in action. Theoretical examples can help, but there are plenty of startups showing how to successfully implement solution selling in the real world. 

Check out the following startups to see how they use solution selling to better serve their clients:

Canva

Canva is a graphic design startup that has empowered individuals and companies to get creative and design their own content, from resumes to social media graphics. Rather than pushing a specific plan or design template, Canva helps users find the exact services they need. Canva has landing pages with personalized solutions for sales teams, real estate agents, publishing companies, and more, or they offer an easy-to-navigate contact page and form, so their sales agents can offer personalized solutions to suit your specific needs.

SoundHound

SoundHound is an AI tool that offers voice solutions for businesses. For instance, this AI platform can answer calls or take orders at restaurants. Right from the website’s homepage, solution selling is clearly the company’s focus. It offers solutions based on specific needs or by industry. If customers aren’t sure what products are the right fit, SoundHound also makes it easy to connect with a sales rep for an even more personalized approach.

InfraSpeak

Facilities management is a broad term that can apply to businesses of all industries and sizes. InfraSpeak is a startup that streamlines facilities management, whether for a rental property manager needing to keep up with maintenance for condo units and shared spaces, or for a retail brand overseeing multiple brick-and-mortar locations. Because InfraSpeak offers so many different products that can fit a variety of needs, it makes solution selling a priority to service a wide range of customers. Each solution outlined on its website makes a clear case of how it connects to specific customer needs, even offering demos so users can find the solutions to best fit their unique and complex business needs.

How to implement solution selling

Product selling can work well for B2C startups that can benefit from generating excitement about a unique product; but startups that service niche needs may want to consider solution selling over focusing on products. SaaS, fintech, and B2B startups, in particular, may have a better chance of standing out from competitors by pursuing a more personalized selling approach that will directly address each customer’s needs.

To start incorporating solution selling, a startup will need to do the following:

Understand the startup’s products and services

In order for solution selling to work, sales reps at a startup need to fully understand what the startup offers and how each product or service works. Sales reps may benefit from thorough and ongoing training sessions plus a sales playbook that reveals some of the best use cases for each product or service. 

At this point, startup leaders should also make it clear the value props of each product or service, so sales reps know how these goods will add value to the customer.

Along with knowing the products and services inside and out, sales reps should have access to buyer personas that outline some top problems within your target audience. This can help draw a line to some common problems and the valuable solutions your startup can provide.

To start properly directing leads to solutions, startups can work with product or marketing teams to set up solutions pages on the website. This can help direct certain customers of varying buyer personas toward the solutions they need.

Research and qualify leads

Plenty of potential customers can start visiting your website and making inquiries, but they won’t all be at the same stage of the buyer’s journey. Some may just be looking for prices or what products or services are available, others may have a specific problem in mind looking for solutions, and others may be ready to make a purchase.

Before going down the list of leads and hopping on call after call, start by qualifying the leads, so you know which leads need your attention first. Some leads are best handled by AI off the bat, while others may be ready to speak with a sales agent about making a purchase. Others may need a consultation call, where an agent can start pinpointing problems and considering solutions.

At this point, it’s helpful to have a CRM that collects insights on leads, so sales agents have a good understanding of the potential customer and what they may be looking for before even picking up the phone.

Discover the Problem(s)

Now that you know which leads to prioritize, it’s time to start making sales calls. During the call, it’s important to ask questions that will help you uncover the client’s problem or problems.

Sales reps should ask about known issues, but they can also ask about the customer’s goals, other tools or solutions they’ve tried, and why those tested solutions didn’t work out or how they are lacking. This can help inform the sales rep what products or services they can suggest.

Offer a variety of solutions

The sales rep should offer at least a few different solutions that can help the customer, making it clear how each solution will address the problem and how the offerings differ from one another to empower the customer to make the best decision.

One helpful tool that startups can provide their sales teams is sales enablement documents. These can be part of the playbook assembled in the initial stage of implementing solution selling. The sales enablement documents will outline how solutions can serve specific audience segments or how they fit into defined use cases.

Provide value

When a sales rep recommends products or services as a solution to the client’s problem, they should make it clear the value the product or service will provide. Be sure that sales reps are educated on the value props of the startup’s offerings, so they can pass that information on when the customer is in the consideration stage, trying to decide which solution is the best fit. Value props can guide them in the right direction.

Make the sale

After doing your research, listening to the client, and offering potential, valuable solutions, you’re just about ready to close the deal. But keep in mind that this may be the time that clients raise any final concerns, so be prepared to respond quickly and accurately to concerns, again outlining the value of the solutions you’ve offered. When the customer is satisfied and confident, they’ll be ready to make a purchase. 

Gather the data; provide the solution

When deciding between product vs. solution selling for startups, it’s important to weigh the benefits of each and the time commitment. Solution selling isn’t always the right fit, but the data will reveal when your startup is ready to approach sales with solutions in mind. 

If you’re tracking metrics in decentralized software and spreadsheets that make it hard to keep your finger on the pulse of your business, it’s time to switch to a tool that manages everything for you.

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HubSpot for Startups offers everything a startup needs in one convenient place. The CRM streamlines the process of collecting and analyzing data, making sales, and building strong customer relationships to help your startup succeed.