5 Sales Lessons From ABC's Shark Tank
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5 Sales Lessons From ABC's Shark Tank

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After 4 years in the tank, the sharks invested over 20 million dollars in 109 companies, with the average deal valuation totaling $465,850. There are a lot of lessons to be learned about ...

After 4 years in the tank, the sharks invested over 20 million dollars in 109 companies, with the average deal valuation totaling $465,850. There are a lot of lessons to be learned about entrepreneurship, investing and selling from the show. In this ebook, we'll explore 5 of these sales lessons.

In this 20-page ebook we'll discuss the following ideas:

Prospects buy into you just as much as your product or service
Negotiation tips and tricks
Setting the appropriate deal expectations
The rise of the sales consultant
Why passion always wins

We’ll revisit some of the most memorable episodes of Shark Tank, and what sales lessons you can apply to your own business.

More info: http://www.getbase.com

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5 Sales Lessons From ABC's Shark Tank 5 Sales Lessons From ABC's Shark Tank Document Transcript

  • Presented by Base Before we “dive” in While the average Shark Tank viewer may watch for entertainment value, the hit ABC show also provides an education on how to successfully sell your product to high-profile prospects. In this ebook, we’ll explore 5 important sales lessons we learned from Shark Tank. Before we “dive” in, let’s learn a little more about the sharks. Image source: Rise Interactive
  • Presented by Base 1 Prospects buy into you as much as your idea or product Real passion and loyalty for a product is a salesperson’s number one asset. When you’re trying to convince someone that what you have is worth their money, they can’t just believe in the product, they have to believe in you. Image Credit: Shark Tank Blog When Shane Talbott and Steve Nakisher, the founders of Talbott Teas, pitched their designer beverage company on Shark Tank, they already had an amazing product. The company had increased from $100,000 to over $500,000 in sales over three years, with 50% profit margins. The Shark Tank investors loved the idea and the numbers, but were still reluctant to invest, citing business conflicts or lack of personal interest in the product. Those who didn’t bow out immediately kept asking questions, and the real tipping point came when the Talbott and Nakisher revealed that they had invested 2
  • Presented by Base $300,000 of their own money in the company. Even Mark Cuban’s eyes widened when they said that, and what he said next was the most telling analysis in the whole episode: “So you guys…, you believe!” The fact that Talbott and Nakisher had personally invested so much in their company made it clear that they were in it for the long haul. They knew they could take the company all the way themselves, and they were able to prove that to their potential investors. In the end, Kevin O’Leary offered to invest the $250,000 the Talbott Teas founders were looking for, but only for a whopping 40% stake in the company; twice what the founders had offered. O’Leary is known for rarely changing his offers after they’re on the table, but in this case he ended up reducing his equity requirement by 5%. His reason? “‘cause I really like you guys.” The Talbott Teas founders took the deal, and eventually sold their company to Jamba Juice for an undisclosed amount, in a deal that never could have happened if Talbott and Nakisher hadn’t been able to go beyond business metrics and prove that they were 100% personally invested in the product, and had deep enough domain expertise to see it through. If you need more evidence that investors will buy into a person just as much as an idea, look no further than Shark Tank episode 302 and Steve Gadlin’s hilarious business, I Want To Draw A Cat For You. Gadlin set himself apart from the crowd instantly with a literal song and dance. Though his musical business pitch was whimsical, Gadlin clearly knew how to sell himself. When potential investor Robert Herjavec asked how the business could go from $9,000 to $100,000 in sales, Gadlin answered, “By working with me on this, you’re partnering with one of the most creative minds, period. I strike gold in very unpredictable ways.” Repeatedly during his pitch to the Sharks, Steve acknowledged that while his cat-drawing business is the hook, the real investment is in Steve himself, and his ability to generate creative ideas that make money. Gadlin’s commitment to selling not just a business, but a partnership, paid off big time. Mark Cuban couldn’t resist, and offered $25,000 for a 33% stake. Steve walked away with 3
  • Presented by Base an investment that was more than double his company’s total profits. More importantly, he walked away with a billionaire business partner, which is exactly what he wanted. Selling Yourself The founders of Talbott Teas and I Want To Draw A Cat For You both knew that making the sale required more than a stellar business idea. To get the money they came for, they had to make the Sharks feel good about working with them. That can be tough to do, but it worked, and their businesses have become two of the most incredible success stories in Shark Tank’s history. Plenty of salespeople can make friends with a buyer, but maintaining the relationship is what can really boost sales, and there are a few tried and true ways of doing it. 1. Keep in touch A recent Forbes article suggests that selling to your existing customer base is the best way to increase sales overall. Once you have built a trusting relationship with a buyer, their willingness to buy more in the future skyrockets. 2. Follow up promptly The first time you get in touch with a potential buyer, make sure to tell them exactly when you will follow up with them. Make a promise, and keep it quickly. This is one of your best opportunities for earning trust. As Craig Rosenberg elegantly wrote in a blog post on sales development teams, “your buyer wants you to follow up.” Research done by Velocify also indicates that following up on a lead quickly can massively increase your conversion rate. Tell them you’ll call, and do it! It all boils down to trust. 4
  • Presented by Base 3. Treat your customers like friends Don’t spend all your time trying to sell to the customer. Steven Van Belleghem illustrates this point beautifully by citing the example of Tupperware Parties hosted at customers’ homes. These parties were wildly successful at selling kitchen supplies largely because they created space for friendship and camaraderie between the seller and the buyer. Buying is often more of an emotional decision than a reasoned one, and buying from a friend feels good. All the goodwill and relationship-building in the world won’t help if you can’t meet your buyer’s needs. Shark Tank has some excellent examples of how negotiating with the buyer’s needs in mind can help you make the sale. 5
  • Presented by Base 2 Learn how to negotiate If you know what is important to your buyer, you are in a great position to negotiate. Figuring out exactly what your buyer values most in a deal allows you to focus on their needs while still providing you tons of leverage to negotiate the terms you want. Image Credit: Local Living When Aaron Krause pitched his innovative, texture-changing sponge company, Scrub Daddy, on Shark Tank, three of the Sharks made offers, and immediately started trying to outbid each other. The bidding war that broke out among the Sharks gave Krause an amazing level of insight into just how 6
  • Presented by Base desirable his company was, and a good negotiator can always turn that kind of insight into leverage. The Sharks’ bidding war wasn’t the only negotiation tool in Krause’s belt. He had previously had great success selling Scrub Daddy sponges on the home shopping network QVC, and one of the Sharks, Lori Greiner, has a major reputation for investing in QVC products. Greiner’s status as the “Queen of QVC,” along with her aggressive bidding for Scrub Daddy, made it clear that she placed more value on the product than any of the other Sharks. Before it became obvious that Greiner was the best Shark for this deal, Krause exercised several well-known negotiation tactics that helped him secure more advantageous terms. 1. Never accept the first offer Krause flatly refused Kevin O’Leary’s offer of $100,000 for 50% equity in Scrub Daddy. This was a powerful tactic because it showed that Krause wasn’t desperate to make a deal. Power negotiation expert Roger Dawson outlines the reasons for always rejecting first offers on his blog, but what it boils down to is that if you take the first offer, you aren’t negotiating. And if you aren’t negotiating, you should be. 2. Focus on the other side of the deal Krause knew that Lori Greiner was “the queen of QVC,” and it came up before any offers were on the table. If he hadn’t known about Greiner’s special interest in his product, Krause might have been tempted to accept one of the many lucrative offers from other Sharks. Because Krause understood what Greiner was after, he was able to bide his time and allow the other Sharks to sweeten the pot repeatedly, eventually pushing Greiner to give Krause much better terms than she initially offered. Negotiation expert Ed Brodow offers Ten Tips for Negotiation in 2014, and half of them are about focusing on the other person, listening to them, and knowing what they want. 7
  • Presented by Base “Do your homework…,” Brodow suggests, “The more information you have about the people with whom you are negotiating, the stronger you will be.” 3. Don’t be afraid to ask for what you want Krause really proved his negotiation chops in the final moments of his spot on Shark Tank after rejecting deal after deal and watching the offers skyrocket. Lori Greiner laid down an ultimatum: $200,000 for 25%, if Krause accepted immediately. If not, Greiner would bow out. Even under intense pressure, Krause made the important negotiation decision to ask for what he wanted. He asked Greiner to lower her equity requirement to 20%, and she took the deal. Hockey legend Wayne Gretzky famously said “You miss 100% of the shots you don’t take.” You will never get what you want without asking, so if you want to negotiate, you have to ask for what you want. No excuses. Negotiation tactics can help you in almost any sales or business context. Knowing how to meet the other party’s needs while securing terms you are happy with is vital. That doesn’t mean you should use your knowledge to push your buyer or investor into a deal they aren’t comfortable with. Getting what you came for without being greedy fosters goodwill and will earn you not only the business, but the respect, of anyone you work with. 8
  • Presented by Base 3 Don’t be greedy If you’re in business, it is safe to assume you’re there to make money, and nobody is going to hold that against you. However, it is important to go into any deal knowing your own expectations, and what kind of terms you’re willing to walk away with. Managing expectations is a key factor if you want to consistently close sales with no regrets. Image Credit: Caroline Tran When Hanna and Mark Lim pitched their Made-in-America straw cup for toddlers on Shark Tank, they got a fairly positive response, with several of the Sharks making tantalizing offers. When the bidding got aggressive, though, they hesitated too long. It quickly became obvious that they weren’t going to get their initial request of $100,000 for a 15% stake in the company. Several of the Sharks made similar offers for 40% offers, and Daymond sweetened the 9
  • Presented by Base pot by offering the same amount of money for 30%, but he backed out when the Lims hesitated for too long. Because they were unable to decide quickly enough to accept the best offer, the Lims ended up taking $100,000 for 40% of their company, with the investment split between two of the Sharks. While the Lims didn’t take the best offer from a monetary standpoint, they ended up with two investors that they had strongly desired to work with. By accepting that they weren’t going the get the numbers they were after, they were able to secure an acceptable investment, and two extremely smart and experienced advisers. Managing your own expectations in any business deal is vital, but it is also important to anticipate the expectations of your buyer. Kevin O’Leary threw the Lims a curveball when he said he’d invest in their company if they would offshore their manufacturing, compromising their Made-in-USA ethic. Because the Lims didn’t have a strong argument for why manufacturing Lollacups in the USA was important, they were put on the defensive, and had to deal with changing expectations on the fly. Forbes offers five tips for managing client expectations, one of which is to anticipate client needs before they even know their own needs! The Lims failed to anticipate the general hostility of the Sharks toward their Made-inUSA requirement, and they lost ground because of it. However, their willingness to compromise on equity and valuation helped them get a solid deal in the end. When managing expectations, either your own or your client’s, it can be tough to avoid getting caught up and trying to predict every possible outcome. Flexibility and an understanding of your own needs should always come first. As Yaro Starak, author of the Blog Profits Blueprint, writes, “There is always room for improvement, so know what is ‘enough’ for your own needs.” 10
  • Presented by Base 4 Solve their problem, don’t sell the solution The role of the sales person is evolving, and instead of having a fixed product to sell to everyone across the entire swath of humanity, savvy business people need to focus on the actual needs of their buyers, and develop products from that starting point. That’s exactly what Travis Perry did with his Chord Buddy product. The invention didn’t start as a business or a moneymaker. It started as a way for Perry to teach his daughter to play songs on the guitar. Image Credit: The-Shark-Tank Perry’s personal experience with attempting to teach people to play guitar provided massive benefits when he decided to create the Chord Buddy device and the learning system to go with it. He had struggled with his music students quitting out of frustration, and he knew that the inability to play a recognizable song quickly was one of the problems that discouraged new guitar players the most. That knowledge allowed him to build a product and a set of tutorials that struck right at the heart of the problem. By making it easy 11
  • Presented by Base for new guitar players to learn actual tunes quickly, Perry helped give them the motivation to keep going until they had developed actual skill. There’s a vital sales lesson here: know your customer. Know them better than they know themselves, and give them exactly what they want. Many entrepreneurs talk about the importance of “doing what you love,” but the Chord Buddy story illustrates an even more important practice: do what your customers love. Modern businesses operate in a transforming landscape with highly informed and connected consumers who demand real relationships and trust with the companies they buy from. Travis Perry intuitively understood and capitalized on some of the biggest trends influencing salespeople. A blog post by the Millennial CEO notes that “value is rooted in information and creativity.” Translation: companies can’t peddle the same old stuff any more. As Daniel Newman writes, “businesses need to think about how they can prove that they are delivering the value they promised during the sale. This is the key to building positive rapport and retaining customers into the future.” Perry’s Chord Buddy promises an extremely specific timeline for delivering a well-defined, desirable outcome. No wonder people love it. The same Millennial CEO post notes that “trust tops the list when it comes to building successful, sustainable customer relationships…” Perry’s Chord Buddy grew out of his own experience, and buyers are much more likely to trust someone who created a product from scratch because it made their own life better. The startup sage and Y Combinator founder Paul Graham once wrote that a good way to get business ideas is to “look at something people are trying to do, and figure out how to do it in a way that doesn't suck.” That’s what Travis Perry did with Chord Buddy, and every business will have to apply some version of this formula to succeed in the future. 12
  • Presented by Base A salesperson’s job isn’t just to sell any old product anymore. Every salesperson is selling a better life to their buyer. The product is just a tool that helps them get there. 13
  • Presented by Base 5 Demonstrate your passion You have to be passionate to build and sell a product. Period. The advice to “follow your passion” to career success has become a cliche, but it is true that unless you have the personal, emotional investment to stick with your idea through tough times, you’ll crash and burn. The same rule applies to sales. If you don’t truly believe in what you’re selling, and prove it to your buyer, they’ll walk away every time. Image Credit: The Shark Tank Blog When Raven Thomas pitched her confectionary company, The Painted Pretzel, to the Sharks, her personal investment and passion for the product quickly became her number one selling point. Kevin O’Leary was quick to point out that the market for chocolate covered pretzels is saturated, and that he could easily find someone else to manufacture Thomas’ exact product for less money. Mark Cuban disagreed, arguing that The Painted Pretzel is differentiated by Thomas’ passion and commitment to the business. Cuban was impressed that Thomas had singlehandedly grown The Painted Pretzel 14
  • Presented by Base into a company with hundreds of thousand of dollars in sales over a period of four years. She had also walked away from a two million dollar deal because she didn’t have the funds to fulfill the order. It was clear that Thomas was in business for the long haul, and would keep going with or without a Shark’s investment. “You put your heart and your soul and your love into it, and you care about the business,” Cuban argued in Thomas’ favor. “It’s called sweat equity…” Moments later, Cuban put his money where his mouth was. He offered Thomas $100,000, the exact amount she was seeking, for a 25% stake in The Painted Pretzel. Cuban’s words, and his pile of cash, proved that even when you’re pitching to billionaires, passion sells. Of course, not everyone is trying to sell equity in a company. It is just as important to be passionate when you’re selling a product or service. Every purchasing decision is based partly or completely on the buyer’s emotions, and a passionate seller will be much more likely to appeal to a buyer on an emotional level. Sales expert Nancy Bleeke suggests combining emotion and logic when addressing a potential buyer’s concerns: “After hearing an objection, paraphrase what you heard them say and then ask for clarity which will help you, and them, identify the emotions involved. Is it fear, frustration, concern, excitement, or other emotions driving the objection?” A salesperson who has passion for what they sell will be able to empathize with the buyer’s emotions about the product, and empathy is a powerful tool for completing sales and building business relationships. Susan Payton’s list of sales lessons that she has learned by owning her own business also emphasizes the importance of passion. She writes: 15
  • Presented by Base “My passion is what helps me sell projects. Clients see that I love what I do, and they’re eager for me to apply that enthusiasm to their own marketing needs.” Raven Thomas’ experience on Shark Tank showed that not only do you need to have passion, you need to prove it! Potential investors, buyers, or clients need to be able to feel your passion and excitement in their bones and understand that you’ll use that passion to help them get whatever they need from the deal. 16
  • Presented by Base Conclusion After 4 years in the tank, the sharks invested over 20 million dollars in 109 companies, with the average deal valuation totaling $465,850. There are a lot of lessons to be learned about entrepreneurship, investing and selling for the show. In this ebook, we explored just 5 of these sales lessons Hopefully, you can take them back and apply them to your own sales teams or companies. This ebook is brought to you by Base, the next-generation CRM and sales productivity tool specifically designed to boost productivity and keep you on track - whether you’re at your desk on on the road. Base CRM is an intuitive, easy to use tool that takes just minutes to set up. You’ll get powerful features like: ‣ Customizable pipeline ‣ Unlimited contacts ‣ Automated tasks ‣ Sales goal setting ‣ Social media Contact Clipper ‣ Dynamic reports ‣ FREE native mobile apps for Android, iOS and Windows devices ‣ Integrations with other tools you use, like Outlook or Gmail Inspired? Sell like a shark and sign up for a free trial.
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