#thoughtleadershipzen

[chamberchamberchamber]

Limitations of Perceptron and Multi-Layer Neural Networks

In the previous discussion, we explored the structure and functionality of the Perceptron. While the Perceptron performs well in predicting weather, it also has clear limitations. In this chapter, we will examine these limitations and how to overcome them.

Perceptron as a Linear Classifier

The Perceptron is a linear classifier, meaning it works well for data that can be separated by a straight line (or a plane in higher dimensions). This is useful when the input data can be linearly separated into two classes.

Earlier we learned about the Perceptron that linearly classifies sunny and rainy weather based on cloud amount and wind strength plotted on a 2D plane.

With sufficient training data, we found that, and approach values around 0.5. When plotted on a plane as a linear function, it serves as a linear classifier that separates the two spaces. Thus, if the dataset on a 2D plane can be divided by a single line, the Perceptron can learn to adjust the weights to classify any dataset effectively.

Moreover, the Perceptron is theoretically applicable to higher-dimensional data. Each input value corresponds to one dimension of data. For instance, a Perceptron with two inputs handles 2D data as a linear classifier. If it has three inputs, it becomes a linear classifier for a 3D space, and with inputs, it classifies -dimensional hyperplanes.

Even as the Perceptron dimensions increase, the method for deriving results remains the same. It sums the weighted inputs and produces an output.

The Rise of Multi-layer Neural Networks

Despite these features, the Perceptron has clear limitations. It cannot solve problems where the data is not linearly separable, like the XOR problem. The XOR problem is a classic example where the output is 1 if the inputs are different and 0 if they are the same, which a single-layer Perceptron cannot solve.

The Perceptron’s limitations do not stop there. It can only work with linearly separable data, but many real-world problems involve nonlinear data patterns. Therefore, the Perceptron alone is insufficient for solving complex problems.

In 1969, psychologists Marvin Minsky and Seymour Papert proved mathematically in their book "Perceptrons" that while a Perceptron can solve AND, OR, and NOR gates, it cannot solve the XOR gate. This led to a decline in neural network research during the 1970s as interest waned.

However, some researchers believed in the potential of neural networks and continued their work. Notable figures include David Rumelhart, Geoffrey Hinton, and Ronald Williams. Their research led to the development of Multi-layer Neural Networks, which marked a turning point in neural network research.

Structure of Multi-layer Neural Networks

A Multi-layer Neural Network consists of an input layer, one or more hidden layers, and an output layer. The more hidden layers there are, the more complex data the network can process. Multi-layer networks can solve problems that cannot be linearly separated, which is the fundamental concept of deep learning. More layers make the network deeper, hence the term "deep learning."

Intuitively, while a single line cannot classify some datasets, multiple lines can. By connecting multiple Perceptrons and adding more layers, a Multi-layer Neural Network can handle non-linear problems. Each layer extracts different features from the input data, and these features combine to form the final output.

So, the core idea of multi-layer neural networks is to use multiple layers to gradually transform the input data and introduce non-linearity through hidden layers, allowing the network to learn complex patterns. Each hidden layer extracts specific features from the input data, and these features combine to produce the final output.

For instance, in recognizing handwritten digits, the first hidden layer might extract basic lines and curves, the second layer might combine these to form shapes, and the final layer recognizes the digit. Multi-layer Neural Networks learn through backpropagation, which adjusts the weights to minimize the error between the predicted and actual outputs.

Summary

The Perceptron is useful as a linear classifier but has limitations with non-linear problems like the XOR problem. To overcome these limitations, Multi-layer Neural Networks were developed, consisting of input, hidden, and output layers. These networks transform input data through multiple layers, introducing non-linearity to learn complex patterns. For example, in handwritten digit recognition, different layers extract various levels of features, leading to accurate digit recognition. Learning in Multi-layer Neural Networks is achieved through backpropagation, adjusting weights to minimize prediction errors, allowing them to solve complex problems.

Learn more at Strategic Leap

[lmerli2953]

Marketing plan on one page

Throughout my practice, I’ve seen many different approaches to developing marketing plans. A clear and actionable marketing plan helps you to stay focused on the main activities that bring you closer to your main marketing goal, which is to create profit. Big companies prepare their annual, quarterly, and monthly marketing plans covering all their business activities in general and each of their activities or product groups separately and in great detail. These marketing plans can consist of 30 or even 100 pages. But the bigger the volume of any plan, the harder it is to implement it and the more effort that is needed. Therefore, the classical approach to creating a marketing plan might not be the most effective way for startups. In addition, during my global research on startups, I found that most startups have the wrong ideas about how to create their marketing plans.

So, we have a dilemma: every startup needs a marketing plan to stay focused on the main activities that help to create a profitable and scalable business, but startups are not big companies and therefore, the classical approach to marketing plan might be a little bit frustrating for them. This chapter shows a simple method for creating your marketing plan literary on a single page. It’s not done in a conventional way and it doesn’t include as many details as a traditional plan. But, a marketing plan in this form will give you a clear view of your main marketing goal, what intermediate objectives you are seeking, and what tasks you should do to achieve the goal. For most investors and entrepreneurs, it’s just enough. What I like most about it is that the marketing plan is very actionable.

Define the main goal of your marketing

What is your main marketing goal? Goals such as more paying customers, increased sales, and higher profit are too generic to be included as your main marketing goals. The most common case is to prepare an annual marketing plan and set a goal to increase net profit, sales revenue, or any other metrics during the period. Therefore, your main marketing goal should be oriented towards the same period (in most cases one year). Use the SMART methodology to define your main marketing goal:

S (specific)— The goal is clear to anyone that has a basic knowledge of the project.

M (measurable)—It’s easy to find out when you have achieved the goal.

A (action-oriented)—Sounds not like a dream, but as task or job to be done.

R (realistic)—Is possible to achieve given the availability of resources, knowledge, and time

T (time-based)—There is a defined time when the goal should be achieved.

Let’s talk about an example. To tell you the truth, not many startups agreed to share their full marketing plans with me and I understand their reasons. I’m very thankful for all startups that took part in the research and took the time to have an in-depth interview with me and provide additional answers by email. So, in this case, let’s take my personal example. While writing this book and having so many personal interviews with startups, I was suggested to create online video courses for startups. These courses would help startups founders to build their profitable and scalable business faster by effectively aligning marketing activities.

It is specific, measurable, action and time-based, and because it indicates the action “to sell,” explains what should be sold, how many, at what price, and when this goal should be achieved. Is it realistic? It depends on the resources I currently have or can acquire. When I shared this goal with one of my friends, he said, “Great goal, but a tough one.” I agree it’s not easy, but maybe it’s possible because by then, I’ll be a published author and will have readers all around the world. We should proceed to next step to assess if the goal is realistic.

What objectives must be completed to achieve the goal?

Once you have a clear and measurable goal, try to figure out what generally needs to be done to achieve the goal. Make a list of three to six intermediate objectives which if achieved, would also help you achieve your goal. Remember that you are creating a marketing plan on one page, so don’t get too deep into the details. Some marketing specialists would rather call it an outline or a roadmap rather than a plan, but don’t worry about the name at the moment. You need to create clear and actionable instructions for yourself on how to boost your startup business.

Let’s continue with the example. If I want to sell my online courses, there are five intermediate objectives to achieving the main goal. It’s obvious that first of all, I have to create the online course, which will involve market research and other tasks, but we’ll talk about them in the next step. As you see, I’ve set a qualification criterion for my courses: they must be really worth at least $500. This is double compared to the price I plan to sell at. Why have I made such a criterion? Before investing time and money in larger scale marketing I want to get market verification that target customers find this product at least two times more valuable than the price at which I plan to sell it at large scale. Imagine how much easier it will be to sell if people see, feel, and understand that it is much more valuable than the price it is sold at.

Courses will be sold online, so driving targeted traffic will be one of my main objectives. But how much traffic should I plan to reach, if I want to make 1000 sales? I came to these measurable objectives by thinking backward from my goal. I want to make at least 1000 sales and expected average conversion rate is about 7%. This is a hypothesis based on industry average conversion of similar tools and tactics I plan to use, so my final objective is to at least meet the industry average of 7% conversion rate on the course sales page. This page will be shown not to random visitors, but to engage potential customers. If I succeed in achieving such conversion, it means I’ll need roughly 15,000 activated, engaged target customers (for example, they should see my free online seminar series before they visit the course sales page). I think (this is another hypothesis that must be tested) that email marketing automation would be the most effective channel to reach potential customers and activate them for lean customer development. But I need to collect email addresses first to implement email marketing automation later. In order to acquire email addresses for potential customers, the landing page will offer one to three lead magnets (something valuable for startups absolutely for free and with no obligation, just in exchange for the email address). So here comes another measurable objective: acquire 50,000 email addresses. Why 50,000? Because for the next objective (activation) we’ve set a 30% conversion rate, based again on the industry average. Finally, we can calculate how much traffic we need to drive to our landing page if we want to collect 50,000 email addresses and the landing page conversion rate is expected to be 25%. The right answer is 200,000 targeted visitors.

Remember that we also have to check if those intermediate objectives inevitably lead us to the main goal. If we drive 200,000 visitors to an initial landing page which has 25% conversion rate, we’ll collect 50,000 email addresses. If email marketing automation campaign achieves a 30% conversion rate, we’ll get 15,000 engaged potential customers. And finally, if we have a sales page with an average 7% conversion rate and we offer a really valuable product, we’ll have 1,050 sales. The goal would be reached!

Tasks to be done, to complete each objective

The next task is to break out each of the objectives into smaller more detailed tasks. Yes, it’s easy to say “drive at least 200,000 targeted visitors,” “achieve at least 25% conversion,” but when it comes to the implementation of these objectives, you might get stuck. In order to avoid getting stuck, ask yourself one simple question: “what needs to be done to achieve this objective?” Apply the same principle as in the previous tasks when you were breaking out the main goal. Also, always double check if the objective will be achieved if you successfully complete those tasks.

The serious project manager would say that each of those tasks should be made according to the SMART methodology. But, actually, it’s up to you to decide if you want those tasks to be highly specific or more like major guidelines. The more specific you make the tasks, the easier it will be for you to implement the plan, because you’ll already know precisely what has to be done and that it is more or less realistic. But in some cases, startups always face a lot of uncertainty and it’s really difficult to set highly specific, lower level tasks because so many things can change very quickly. As far as I’ve found out during the startup case studies, the best practice for most startups is to set general tasks to be done to achieve the particular objective and to figure out along the way how to test it.

It doesn’t require much explanation. If you are preparing a marketing plan not only for yourself but for a team, it might be wise to at least explain each task in a couple of sentences.

Tie tasks to dates in a simple Gantt diagram or Excel

Now, it‘s about time to make your marketing plan more actionable and trackable. Having a marketing plan is good and helps a lot, but if you want to achieve even greater results you must plan your marketing actions based on time and money. Basically, you must decide when each of your tasks will be done and how much money it will cost. There is no one-size-fits-all solution

You can put your tasks in your personal calendar (online or offline), time planning app or software, or your company CRM if it has objective and task functionality. There are many specialized free and fee-based software solutions for drawing Gantt diagrams for your projects, including your marketing plan. Using a Gantt diagram for planning and managing tasks allows opportunities to join, combine, or even do some tasks simultaneously (even from different stages) which might save you time.

The example shows the main principles of putting your marketing plan in Excel spreadsheet. Most startups find this solution for marketing planning easy applicable and very helpful because it allows them to:

Create tasks for objectives, subtasks for tasks, and so on and put comments on each of them. So you can go as deep into details as you want and everything will be on track. If you want to see the general, strategic view including pricing strategies in marketing, you can hide grouped rows with sub-tasks and tasks.

The top row of the table shows the timeline (usually months or weeks). Marking certain cells with your chosen color allows you to easy to see the tasks you should be focusing your time on.

The bottom row of the table shows the sum of money required for all marketing tasks each month. All you need to is to add the amount of money required for each task in already colored cells.

[quiznakheadcanons]

Perfecting Your Pitch

This post is an excerpt, that is influenced from this post: https://thoughtleadershipzen.blogspot.com/2017/01/penetration-pricing-strategy.html

When it comes to fundraising, the devil truly is in the details in this case, the investor meeting and your pitch.

Your early sales are not just going to involve selling your product. When you’re trying to convince investors to give you money, you’ve got to know how to sell your big vision in a way that’s clear, concise, and consistent.

A panel of three Y Combinator partners shared advice based on their own startup experiences about how to pitch your company and have a successful investor meeting.

Know Your Pitch

Michael Seibel is a Y Combinator partner who previously co-founded and served as CEO of Justin.tv and Socialcam.

In his time at these startups, he learned a lot about pitching, and the most important thing to remember is to always keep it short. He said that you really only need a 30-second pitch and a 2-minute pitch.

The 30-Second Pitch

This how you talk about your company to people who are interested, even if not financially. You’re not asking anything of them, but instead you’re just explaining what it is your company does in three simple sentences.

1. What does your company do?

Seibel said, “You have to be able to [say this] in a way that is simple and straightforward … You have to assume [the other person] knows nothing. Literally nothing about anything.”

A good way to do this if you’re a tech company is to pretend like you’re talking to your mom or grandpa. If they can’t understand in one sentence what your company does, you need to simplify more.

Seibel gave the example of Airbnb, saying that their sentence couldn’t be “We’re Airbnb and we’re a marketplace for space.” That means nothing. But, this does: “We’re Airbnb and we allow you to rent out the extra room in your house.”

2. How big is your market?

Find out what general industry you’re in and how much it’s worth. It’s no mystery that people understand opportunity in terms of money, especially investors.

3. How much traction do you have?

This is where you talk about your growth rate and give some stats. Seibel said an example of this might be, “We launched in January and we’re growing 30 percent month over month. We have this number of sales. This amount of revenue. This number of users.”

Even if you’re just getting started, it’s important to emphasize how fast you’re going. Whether you’ve been working for a few months or a year, this sentence needs to convince potential investors of your momentum.

The 2-Minute Pitch

You’ve probably heard of the 10-minute pitch, but Seibel said that’s a waste of time and that you can get it all done in two minutes, even when talking to investors.

“One thing I like to tell founders is the more you talk, the more you have an opportunity to say something that people don’t like. Talk less and it will probably be better.” So for your 2-minute pitch, start with the 30-second pitch, and then expand into these additional points, allowing a sentence for each.

1. What is your unique insight?

What are you bringing to the table that your competition isn’t? What is your “secret sauce”?

Whatever you call it, this is the part where you want to tell the investor something you know that they don’t know about your industry and your business. Their ideal expression should be kind of an ah-ha face.

This one can be two sentences, if necessary.

2. How do you make money?

Seibel said that founders can be weird about this point, especially if the answer is advertising. But it’s best not to beat around the bush or sugarcoat because then it just seems like you have no idea how you’re going to make money.

He said not to run away from this sentence. Speak simply and directly about how you plan to make money and then move on.

3. Who’s on your team?

To investors, your co-founders’ best achievements are going to be the ones that made other investors money, seeing as they want to make money too. Even if you don’t have any of that on your founding team’s résumé, do not resort to listing PhDs.

The investor wants to know how many founders you have — Seibel said preferably between two and four. They also want to know how many are technical and how many are business-oriented.

Finally, be sure to mention how long you’ve known each other and how you met.

4. The Big Ask

Up until now, you’ve gone easy on the jargon, keeping things super simple and clear. But this is the part where that jargon comes in handy because it’s important to talk about money in a way that’s clear you understand it.

Seibel said that some of the things you should know are if you’re raising on a safe or a convertible note, how much money you’re raising, and what is the minimum check size.

And if you don’t understand these terms, make Google your new best friend.

When to Fundraise

Timing is key when talking to investors. Seibel said that you want to do it at a time when you’re strong.

How do you know for sure that you’re strong? He said, “If investors are asking to give you money, you’re strong.” If they aren’t, you should be working more to get the word out about your brand.

Another way to show your strength is to build in a way that you don’t need their money to grow. The more self-sustaining your model is, the more you can show self-reliance and initiative, making investors even more certain that you’ll handle their money efficiently.

Seibel said to give them the impression that this thing is moving with or without them. He also said that, if you do need money really early on, plan on needing less money and show traction and speed where you lack in age (of your company).

The Investor Meeting

So you’ve gotten an investor interested and they want to know more. From setting up the meeting to saying all the right things, the more flawless each step is the more likely they’ll want to invest.

Get Introduced

As with talking to the press, it’s always best if you get introduced to potential investors through shared contacts. This helps your inquiry get to the top of the stack as it’s already endorsed by someone they trust.

Keep in mind, though, that the credibility of the middle man (or woman) is super important. For example, if that person is an investor who’s already passed on your company, Seibel said it’s best not to use them as a connection.

Make a Date

When it comes to scheduling the meetings, it’s no time to drag things along. “It’s a sprint. Not a marathon,” Seibel said.

If possible, you want to schedule all of your investor meetings in the same week. If this sounds overwhelming, don’t worry; Seibel has a nifty strategy.

To get all of your meetings on the same week, he likes to use a script like this: “Hey, we would love to set up a meeting but we’re building like crazy for the next two weeks. So can we set it in that third week?”

This is far enough in the future that they have room in their schedule and you’re able to get everyone in on the same week with enough time to prepare before then. It also gives the impression that you’re not completely desperate for their money.

“It’s signaling all of the right things,” explained Seibel.

It’s also best to have one person handling all of the investor scheduling as it can be really time consuming.

Dos and Don’ts

Qasar Younis and Dalton Caldwell, both Y Combinator partners, finished off the lecture by sitting for a mock investor meeting and going over some final dos and don’ts of pitching your company and asking for money.

Do

Let the person know exactly what you do. (See 30-second pitch above.)

Teach the investor something, giving them some unique insight about your industry and your business.

Move the conversation forward with confidence and clarity, which comes from knowing your facts.

Ask for money. After all, that’s what you’re there for.

Don’t

Make the meeting feel like a one-sided interview or an interrogation. It should feel more like a collaboration/conversation.

Meet with bad investors. Do research on who you’re meeting with and find out if they’re a good fit for your company.

Let the conversation end when the meeting is over. Make sure you send follow-up correspondence.

Fund until you’re blue in the face. Fundraising is not the goal or a measure of success. It’s what you do with the money that’s important. So stop when you have what you need.

[mayerfever]

How to Raise Money?

Raising money isn’t the most important part of starting a startup. But unless you’re independently wealthy or can begin generating revenue right away it’s pretty hard to get much done without it.

These insights will turn you into a fundraising pro.

As a founder, raising venture capital is going to be one of the easiest things you do for your company. But, it’s still no picnic.

Y Combinator president Sam Altman moderated a panel at Stanford University featuring three big names in startup fundraising to talk about everything from the big picture down to the nitty gritty details of asking people for money to support your next venture.

Fundraising Stages

When startups talk about fundraising, they’re not talking about selling Girl Scout cookies.

Whether you’re knocking on the door of Silicon Valley venture capital firms or amping up for Demo Day at a startup accelerator, raising money in the startup game comes in stages.

Seed Stage

This is your initial capital used to conduct research, get patents, and generally get all the ducks in a row that you probably wouldn’t have been able to without cash flow. This will help you build a strong foundation for the next stage.

Series A (aka Venture)

With your product more streamlined and most of the company ownership still under your belt, this next phase will help you expand and hire a larger team.

Series B and C (aka Second and Third Stage)

This is a continuation of your startup financing and quest for external funds. With each round, you should be continuing to improve your product, and your pitch will follow.

After these stages, your road may take you to the bank, IPO, or acquisition, but that comes into play later. Right now, it’s time to talk Series A.

Have a Good Product

Your product and your penetrating pricing should be so good and self-sustaining that you don’t even need to raise money.

After pitching to VC firms all up and down Silicon Valley, Conrad was given the advice to “be like the Twitter guys.” That is to say, have a product so good that you don’t even need a killer pitch. Your idea can initially sustain itself without all of the cash.

In fact, that’s a trait that first attracted Conrad to the idea of Zenefits. And it turns out, that’s an attractive trait to investors as well.

If you know your market so well that your product is lean, smart, and self-sufficient, then you’ve created something with momentum that’s not dependent on cash. That’s the kind of product confidence and direction that investors look for.

As Andreessen put it, “You’re always better off making your business better than you are making your pitch better.”

The entire panel agreed that they look for the outliers — the ones whose ideas seem nuts at first (i.e. Airbnb), but they stand out as something “so crazy it just might work.”Crazy, but not without a plan, of course.

Understand Your Risks

Andreessen learned the “onion theory risk” from Andy Rachleff (co-founder and executive chairman of Wealthfront).

The idea is basically that, as a startup (especially before Seed funding), you are just layer upon layer of risk. Even after you get your first round of funding, it’s not the money that makes those risks go away, it’s what you do with it.

As you make smart decisions with your capital like finding a co-founder who’s as good or better than you, conducting research, and gathering more data, you’re achieving milestones in your business. And with each milestone, you’re peeling away a layer of risk.

Because you’re starting out with so much risk, early investors (Seed and Series A) are going to be more focused on attaining a percentage of ownership rather than something monetary. With that in mind, it’s important to manage the amount of equity you’re giving away, so that you don’t end up with only a sliver of ownership for yourself.

Andreessen sees this as a big deterrent for investors in later stages because, for a founder with little stake in the company, the drive and ambition can quickly fizzle.

Cover Your Bases

Conway broke down some technical aspects of working with investors that are obvious, yet can be easily overlooked especially by first-time entrepreneurs.

Master the One-Sentence Pitch

You should be able to sum up your product in one sentence. This is not only good for refining your own vision, it’s also a way to quickly and efficiently paint a picture of the product for an angel investor … or whoever is listening.

Don’t Procrastinate

Things move fast in the startup world. In fact, every week Conway and the team at SV Angel look at about 30 companies and only invest in one on average.

Procrastinating (especially going into fundraising) can be a huge detriment when your cash competitors are going at full speed and staying nimble.

Get It in Writing

After any important decision is made, you should send an email to the investor right away outlining what was discussed to make sure that both parties are on the same page. Conway said this small, simple step can eliminate a lot of potential controversy down the road.

[tsmsblog]

Getting Press the Right Way

Attracting media attention can be tricky. Here’s some advice that will increase your likelihood of success.

From Kiko and Justin.tv to Twitch, Justin Kan’s ventures have received press coverage on tech sites and beyond with the right pricing strategy, and his advice has definitely been learned first-hand through trial and error.

From his own experience, he knows that, before you start reaching out to news sources at all, you have to ask yourself some basic questions. Once you have answers for these questions, you’ll be better able to respond to queries from the press when they come a knockin’.

Here are the questions you should ask yourself:

What Is Your Goal?

What do you want people to come away from the story knowing about your startup?

Make sure you keep these business goals in mind before talking about your company so you can speak about it clearly and concisely. “Um”s and “you know”s don’t read well in an interview.

Who Do You Want to Reach?

Consider your audience before reaching out to news outlets. Writers want material that will interest their readers, so make sure that you’re pitching in places where your story is likely to have an audience.

Kan gave an example of how he went about finding an audience for Twitch PR:

“Twitch TV … is like ESPN for gamers, kind of like a live stream community for gamers. Our goal was to reach the gaming industry … whether they were developers or advertisers. [We wanted them] to think about us as an important place where influencers were, so we really targeted industry trades and game dev blogs — stuff that the industry was reading.”

Kan suggests that it’s best to handle PR yourself rather than hiring an agency, at least early on. “It’s generally not a good use of money, especially in the early days [to hire a firm].”

He said that most firms can only help you with contacts and logistics. They can’t create your story.

What Type of Story Are You Pitching?

After you have an idea for your story and the audience(s) you want to tap into, it’s time to figure out what type of story you’re bringing to the table.

Once you know which of these you fulfill, you’ll be better able to pitch your story in a convincing way.

Product Launches: The beginning is always a good place to start.

Fundraising: People love a good financial success story.

Milestones/Metrics: Did you make a lot of revenue in one week? Numbers talk, so that could be news.

Business Overviews: Startup stories are always great reads. But more often than not, this coverage only comes when you’re a bit beyond the early stages.

Stunts: Think guerrilla advertising.

Hiring Announcements: Like when former Etsy designer Cap Watkins became BuzzFeed’s first VP of Design, that’s big news.

Guest Posts: Contribute your own voice to the outlets your audiences are reading by writing a guest post.

Step-by-Step Pitch Process

Even after you’ve nailed down your goals, found an audience, and picked which type of story you want to present, you’re still going to have to actually pitch your story to someone who will hopefully write about it.

Kan shared some step-by-step advice on how to do that:

1. Think of a Story

Before you pitch your story, Kan said, “What you really need to think about objectively is, ‘If I wasn’t the founder of this company, would I want to read a story about what I’m pitching?’”

2. Get Introduced

It’s best to get introduced to a reporter through someone else. Think about someone who has already covered a friend or fellow entrepreneur who you know and ask your contact to make the introduction.

3. Set a Date

Give the reporter at least four to seven days to write and publish your story — more if you can.

4. Reach Out

A lot can get lost in translation over email. Get a commitment from the reporter to meet face-to face or at least talk on the phone, if you can.

5. Pitch Them

When pitching your story, write out bullet points of what you want covered. This is what Olivia Pope calls “controlling the narrative.” Yes, that was a reference to the T.V. show Scandal.

6. Follow Up

Leave things on a good note before the launch and thank the reporter for his/her time. Also, tie up any possible loose ends by confirming potential lingering details: names of founders, date of launch, etc.

7. Launch Your News

The final step is to share your big announcement. And ideally the reporters are publishing the articles you pitched at the same time.

Don’t Confuse Press with Success

In your pursuit of press, Kan said it’s important to keep in mind that a lot of media coverage does not a good product make:

“Getting press is like a vanity metric. It feels like you’re being successful because many successful companies like Facebook are covered in the press all the time, but it doesn’t actually mean you’re successful. It doesn’t actually mean you’re making money, getting users, or making those users happy.”

[kateatahealthyrate-blog1]

Marketing automation strategies & tools

Marketing automation platforms enable you to create and manage customer interactions with greater speed and customization, send different messages to different customer segments, automatically launch email campaigns to individual prospects based on their action, or other triggers that you choose. Marketing automation enables customer-segmented communication tracks to provide content and messaging based on the potential customers’ behavior, interest levels, and demographics. Automation can range from setting up single email campaigns to designing entire sets of emails and multi-channel content to enrich and expand customer interactions while building trust and strengthening the relationship. Manual processes could never scale to meet the demands of these sophisticated and targeted lead nurturing methods.

Find out what could be automated in your situation

Marketing automation is more than an email workflow engine. Your marketing automation workflow steps can include updating of contact attributes, importing of data into your CRM, management of subscriptions, and more. Customer contact attributes can even be used in the personalization of your website content, enabling you to design a visitor experience according to their specific interests. This tactic provides an additional communication channel with your customers.

Review your sales funnel and customer journey map and ask yourself, “What would I like to automate in order to save my time and grow my business faster?” At this point, don’t limit yourself by wondering if there is a technical solution to do the automation. Just list your ideas about what should be automated to scale your business. This might include:

Sending email campaigns

Quickly building micro websites and landing pages

Tracking website activity analytics

Creating and distributing forms and surveys

Client membership management

Updating lead records in CRM (lead segmentation and scoring)

Providing hot lead data to your sales team

Getting reminders sent to yourself and team members

Sharing your content online/offline

Automating activities in social networks

Monitoring efficiency of online advertising

Sending SMS

Others

Outline your marketing automation strategy and workflows

To get started, draft your strategy and plan your automation workflow for each sales funnel stage on paper. Why it is this so important? The technology itself doesn’t engage and convert prospects. It’s having the marketing plan in place that makes it all happen. Have you heard of the 40/40/20 rule of direct response marketing? Even though some people think it is old school, you should review it anyway before investing in marketing automation. The rule says that the success of a campaign (in this case, marketing automation campaign) is based:

40 % on targeting the right audience (identifying your marginal users and successfully using your lead magnets to attract them)

40 % on the offer you make (your lead magnet offers, main irresistible offer, cross-sell, up-sell, down-sell offers)

20 % on your creative execution (copywriting, design, right timing)

A marketing automation workflow is a series of automated actions that are initiated based on advanced pre-defined triggers related to a person’s behaviors or contact information. It means that you have a possibility to outline the typical behavior scenarios of your potential customers and bring your main offer in front of them when they are most likely to buy. But, to do that, you need to know who you are contacting, what you are communicating and delivering to them, and how to communicate with them in the most appealing manner. The most basic marketing automation workflow could be:

To build an email list of potential customers (leads) to whom your product might be highly valuable and get them into your sales funnel

To develop a relationship and build trust with those leads by delivering them value without asking them to buy anything (the more that the largest part of your sales funnel is automated, the more chances you have of scaling your business fast)

To convert those leads into paying customers at some point

To keep your customers happy about their choice and initiate word-of-mouth advertising (remember the viral loop when your current customers refer your business to their friends and bring new leads into your sales funnel).

Once you are clear about your marketing automation strategy, it’s time to plan actual workflows based on triggers. Here are the top ten most frequently used marketing automation campaign triggers, but you can always add new ones that are more relevant to your business situation.

Content download trigger is used for topic-oriented lead nurturing. Usually, it is directly related to lead magnets; once the potential customer downloads a lead magnet, a particular marketing workflow starts.

Achieving certain lead scores and activity triggers usually launch campaigns targeted to highly engaged persons who are interested in a product or topic, but are not yet ready to buy. For example, an invitation to a webinar, opportunity to join a special group on social networks, while learning What is Social Media Marketing or a quiz might be good tools to grow their interest in your product and their trust in you.

Achieving high lead score trigger is used to increase sales readiness. If you set up a lead scoring system on your website or CRM (if it is integrated with your marketing automation platform), once a potential customer reaches a certain score, automatically offer them the activity you identified as being key (for example, sending them your irresistible offer).

Shopping cart abandonment trigger is used to identify potential customers that were ready to buy but didn’t finish their purchase. You can automatically contact those website visitors and

remind them of their purchase they might have forgotten.

Offer a special discount or bonus to loyal and long-term buyers

Ask for feedback on why they didn’t finish the purchase (even if you won’t sell this time, you might get valuable insights how to improve your whole sales funnel)

Past purchases and sales cycle triggers are used for up-selling, cross-selling, and cycle-based selling campaigns.

Sales cycle stage trigger usually initiates after sale support automation. Start automatically building a positive relationship with your customers once they have bought your product. Provide great after-sales support, like sharing useful training material and videos, informing them about product updates, sending personalized holiday greetings (you can automatically put your customer’s name in the pre-build template and everyone will get a personal and warm greeting from you).

Inactivity of leads can be set as a trigger to wake inactive leads or remove them from your CRM. If somebody was interested in your product a while ago but didn’t buy it, send them an exclusive offer to re-engage them. You’ll get one of two benefits: you’ll wake up the potential client and close the sale or will remove this lead from your list and thus save your marketing automation resources.

High or low Net Promoter Score (NPS) trigger is used to automatically launch word-of-mouth fostering campaigns (motivate your happy customers to spread the news about you) or problem-solving campaigns (figure out what is wrong with your product, service, or overall customer experience if this person gave you a low NPS value).

Event registration trigger initiates automated communication to event participants, for example, reminders, special content sharing, sending invoices, event updates, etc.

Company manual download or video watch trigger can be used for employee training campaigns. This kind of trigger is mostly used by large companies that have many employees, but during my global research on startups, I found many startups who are already in the market use this trigger for training their affiliate partners and value-added resellers or sales agents.

Evaluate marketing automation tools and choose the one that best fits your needs

Chose the marketing automation platform that best fits your needs. Don’t hurry to buy or subscribe yet, unless it is a free account like the one offered by MailChimp. There are five key tasks to do before you make a decision to implement a marketing automation platform:

Estimate your technical needs but don’t over-complicate it. What would be the best and what is the minimum you could start with. How well does the platform scale as you increase the size of your database or the number of transactions? How does the platform scale to support new channels/mediums? As you grow, your sales funnel and marketing plan might become more advanced and include new technical solutions. Will your chosen marketing automation platform support them?

Evaluate integration possibilities with your other tools and systems. If you know what integrations you are looking for, great! If not, you might want to look at integrations with other systems you use within your company. There is a lot of value in integrating all the systems that touch the customer’s journey. The visibility you get into the customer and the potential for reducing the number of manual touch points make it well worth it.

Determine your budget and create a shortlist of platforms. Is there an onboarding cost? Many vendors charge an onboarding cost. How does your cost change as you scale up? Your initial cost might be low, but what will it jump to when you renew?

Read reviews and customer feedbacks, especially outside of the platforms itself. Reading testimonials on vendors website will give you some clue as to what to expect from the platform. But if you search for reviews in forums and third party websites, you might find out additional pros and cons that are not necessarily shared by the vendors.

Watch videos and demos, conduct a free trial (if one is available) and check customer support. Evaluate the tool by using it for at least one campaign so that you know firsthand how it delivers on its promises, and how well it matches your needs.

After comparing at least few marketing automation platforms, you should be able to answer the main question: will this help to build and scale your business? Before making your final decision, think about if it will help you to close more business, do it faster, and save your money.

Create, measure and update your marketing automation workflows

While creating your workflow content and messages, remember that it must be high quality, useful, and valuable for your customers. Otherwise, your messaging and content will quickly be treated as spam. Most prospects convert into leads based on interest in a particular product or area of concern. Marketing automation content should relate closely to those interests until the prospect indicates a desire to move on to other products or topics.

Though you shouldn’t start your active sales pitch too early, it is important that your marketing automation processes and objectives are aligned with the sales process, especially if your main sales are not done online. I’ve seen many startups make this mistake while funding for small business. Their marketing communication is well automated and planned for ahead of time, but there is no connection with the sales team (in the best case, the sales team gets hot leads in the CRM). If you have employed marketing automation, try to align it and update it according to the sales process.

The build-measure-learn rule also works well here. Use A/B tests everywhere you can in your marketing automation (for example, email subject line, email copy, etc.) to increase conversion of your workflow and keep it up to date. Remember that the relevance of your automated content might have a short lifespan. Don’t forget to check your automated content and triggers, and periodically review them to ensure that messaging and content are appropriate and aligned with your target customer segments.

There is no magical growth hack that would stick and stay constant forever. At least none of the thousand startups I analyzed boasted about found a magical growth hack. Growth hacking is a never-ending process. But when you know how to measure your growth and pay attention to what really matters, it’s much easier to focus your efforts on the right things that help in scaling your business. Unfortunately, sporadic actions won’t yield sustainable results in the long run. You need to work on business growth consistently and methodically. Review this chapter and do these exercises from time to time and you’ll notice that you are getting closer to your goal of building a profitable and scalable business.

[gamingvulture]

Key leverage points and partnerships

In today’s economy, it’s more difficult than ever for anyone, especially a small business, to go it alone. It costs more to pay for all your own advertising, find all your own customers, and do everything else using only your own resources. There’s an alternative: cooperating with and forming strategic alliances with other businesses. This enables you to pool resources, share customers, spread the cost of marketing, and do it in a way in which all parties win. A partnership with another company can be simple and limited or very involved and complex.

Partnerships in marketing can be employed by virtually any business when it can find partners interested in mutually beneficial cooperation. Fundamentally, it involves pooling resources—whether those resources are knowledge, expertise, distribution infrastructure, brand recognition, reputation, or simply money—to achieve a result that would be more costly to obtain independently. Startups are eligible for business partnerships from the very beginning. Actually, a lot of successful startups made a major leap in progress not just by boldly attracting investments, but by creating strategic partnerships. So, it doesn‘t matter where your startup is in the development cycle, you can and should look for possible partnerships that will boost your business.

Identify key leverage points relevant for you

Usually, there are at least a few possible leverage points in any business and yours is not an exception. Leverage point means a place where even small amounts of effort can generate significant results. Most starting entrepreneurs can’t see leverage points at the beginning, but once they notice and create at least one of them, it becomes nearly a habit to exploit them. If you manage to identify and use leverage points in your startup, you’ll quickly notice a meaningful increase in your key metrics of growth and profits. Here are a few areas where you could start looking for possible leverage points:

Marketing leverage is the ability to control and generate large profit increases from low-cost or no-cost marketing methods. Marketing automation and sales funnel optimization are the most popular domains of startup marketing. We’ve already talked about many things that could at least slightly increase conversion in your sales funnel. These also might be leverage where the implementation doesn’t require too many resources. For example, one-time offers and point of purchase incentives might be a leverage point for nearly any startup. It takes no extra expense to generate a second or third purchase if you implement an up-sell or cross-sell strategy. Increasing the frequency of customer purchases is another example of leverage because if you have customer contacts, know his interests, or at least purchase history, you can make him a customized offer without even spending anything on advertising.

Customer service and FAQ automation might be another pool of possible leverage points. Remember what we’ve talked about in terms of customer touchpoints and think about how a minor change in each of the touchpoints could result in a major effect on your business. A number of startups use a FAQ (Frequently Asked Questions) section on their website to provide answers to the most common questions in order to save their time avoiding explaining the same issues to each client. Well, that is a good solution, but not a great one, at least not from a marketing perspective. Effective marketers see FAQs as a leverage point to overcome any objections potential customers might have. Raising the right questions and answering them shows potential customers that you have nothing to hide, that many other people had similar doubts and reservations about buying or using the product, but here are the clear and honest answers to these questions. Some startups from my research reported that just by applying this type of approach to FAQs has helped to increase conversion by 5 to 18%.

Big data leverage allows you to do analysis that identifies purchase patterns of your customers. It might lead you to identify much more accurate targeted segments (or even niches) and create customized offers for them. But you should consider this domain of leverages only when you have a huge amount of data. Otherwise, results aren’t accurate and valuable.

Sales force leverage helps get more out of your sales team without expanding it or spending additional costs. The main principle is to identify the right sales process and improve the effectiveness. This is usually done through outlining a consistent sales process and then setting sales objectives around those activities or the ones related to specific sales goals. According to Shelley Cernel from SalesForce (2015), companies that follow a defined workflow are 33% more likely to be high performers. The next step is to properly train your sales team. Continuous training can yield up to 50% higher net sales per sales rep, especially if the sales team is equipped with such tools as sales playbooks, training materials, persona-based selling tips, etc. Startups never stop learning, therefore this cycle should be repeated continuously: identify which sales tactics are effective, build them in your sales processes, and teach your sales team to use these tactics.

Partnership leverage basically mean that you are using other peoples’ resources at low or no cost at all and you might be trying to get money, connections, specific skills or business operations, time, and any other resources.

Find with whom you would like to partner

There are dozens of ways to cooperate with other businesses.

One of most common practices (although in some countries, it‘s illegal) is to trade mailing lists with other businesses. It is forbidden by customer rights protection laws in some countries, but there is a civilized and polite solution. If you can‘t exchange mailing lists, you can rent them by sending official emails with your name from your mailbox and combining promotional information of your partner. Most often examples include:

The partnership of non-competitive businesses. This could include a tow service, auto-repair shop, and car-rental business teaming up to offer end-to-end service to the same customer.

Destination partnership. For example, hotels, restaurants, and tourist-oriented businesses pool resources to market their location to prospective travelers.

Technology partnership. These are often formed to promote a new device or concept. In many cases, innovative technology startups often face greater competition from companies that represent the existing and established alternative technology. A partnership allows these startups to create a greater market presence to displace the old technology and ensures that they get to establish the standards for the production of the new technology.

Partnership to expand into new markets. This is particularly useful since independent expansion requires a huge investment of resources and the development of new distribution channels. This is especially useful for tapping into overseas markets, whereby a company in one country can offer a product through another company already established in another country, thus tapping into the new market immediately. This principle also works for domestic expansion.

Research prospective partners, taking into account the likelihood of a return on investing in such a relationship:

What can these companies provide to you?

What could you provide to them?

Do they have a partnership with other companies, and how have they fared?

Are they stable and follow similar customer value proposition as yours?

Do they have a compatible management style?

If you run a web design business and want to find more potential leads, try partnering with a web hosting company or online marketing agencies. Any partnership which benefits both companies is a great idea and a great way to grab the attention of new potential clients. It’s also a great way to boost your targeted marketing. Just make a list of potential partners to serve the same customer segments but don’t compete with you.

Todo.ly is an online to-do list and task manager. The founders had a goal to reach millions of new users and make Todo.ly widely available as a web application. They succeeded in securing a partnership with Google Chrome and were able to leverage their 200 million user database to help them achieve their one-year growth goal in just three weeks:

1000% increase in average daily traffic

780% increase in user base

400,000 new tasks each month

The key was that the Chrome platform was brand new and the Todo.ly application was submitted three to four months prior its launch date. As the Todo.ly app was exactly what Google was looking for to add to the Chrome Webstore, they have contacted the founders and asked for an integrated two clicks login through Google OpenID. Todo.ly has implemented that and became featured from day one. There was a huge marketing campaign around the Chrome Webstore, TV spots, prints, and press conference.

Peter Varadi, the founder of Todo.ly, shared his advice based on his personal experience: “Look for new waves of technology, new platforms that are expected to be used by a massive number of people and try to be on that platform as one of first.” In Todo. ly case, it was clearly visible that Chrome had 200 million users already and when they launched their webstore, they would obviously put it front of all their users. Google needed web apps to fill their webstore for the launch and they opened the app submission process a few months earlier. That was a timely opportunity for Todo.ly to jump in.

What could be your new wave and chance?

Reach out to potential partners and be persistent

Most partnerships are mutually beneficial, so before scheduling a meeting, be sure you have a win-win proposal. Persistent actions are as important as reaching potential investors during fundraising (Learn more on How to get startup business funding). Look for possibilities to network at appropriate conferences and trade shows and meet partners face-to-face. Use personal referrals and active follow-up on your most valuable potential clients. If you have to reach out to potential partners by email, focus your introductory e-mail on what’s in it for them (this might include traffic, money, new customers, or gaining competitive advantages, depending on how the partnership works). Always explain your startup’s vision clearly and highlight why partnering with your new company is beneficial for them. Persistent actions mean a lot. You shouldn’t give up if most of you potential partners say “No”or simply ignore your offer. If it is a win-win proposal, you’ll eventually find significant partners if you just put forth enough effort.

I want to share my personal experience with partnerships. I was working as CMO (Chief Marketing Officer) in an international logistics company, but I wanted to start my own marketing consulting practice. I created a website and needed to attract targeted visitors. At that time SEO was quite a new thing, because not every business understood it’s importance, so I decided to take a chance on it. I wanted to find as many link-exchange partners as possible. These are companies that provide services to other businesses who would be willing to put my link on their website if I would put their link on my website. Basically, it means no costs to any of us, we are not competitors, and even if the website visitor doesn’t click on the link, Google will see it anyway and will rank our websites higher. When I approached potential partners with this proposal, roughly only 2 out of 10 agreed to exchange links, but when it came to implementation, I lost a third of these partners because to some of them thought it was too difficult or it took too much time and effort. But I didn’t stop until my website got into the top the three of Google search results by almost all of my main keywords. Even though I was just starting out as a marketing consultant, my website was listed first compared to well-established marketing experts who had 15 or 20 years of experience. I got more leads, worked on them attentively, and converted them into sales. After just a few month, national business magazines and portals started asking my opinion about various aspects of marketing, and I became a nationally known marketing expert. And all of it started from my persistent, targeted actions to create beneficial partnerships.

[digitaliskingfashionisqueen]

Marginal users & magnets to get them

Not every customer who visits your website or physical store is willing to buy immediately. In fact, it takes time to build trust and prove your value. In some industries, it takes less time to build trust, while in other cases building trust can require up to a few month or more before you are able to sell to the customer. The more your business is innovative and strange, the more skeptical most people will be towards you. So get used to the fact that you’ll have to spend some time building trust. Another fact to be noted is that a very high percentage of visitors never return to a website as per the web statistics analysis.

If you have already developed your sales funnel, it means you know what action you want potential customers to take when they visit your website, physical store, or have interaction with you in any other way. You may want them to buy a product, pay for a service, sign up to your pre-order list, become your beta user, come to your special event, etc. But what you do if they quit your website or physical store without completing your desired action? They basically quit your sales funnel even without entering it. Whatever your initial goal is, you have a chance to increase your conversion rate by focusing your attention on marginal users and setting up compelling lead magnets for them.

When it comes to driving growth, people who are already using your product are not the ones you have to worry about the most. Yes, they are important, but they already know and trust in you and your product. What you need to focus on is the marginal user, the potential customer or user that is close to making a purchase decision, but doesn’t make it without additional encouragement. Simply stated, you know there is a certain number of potential customers who are not yet using your product or who don’t know even about it, and there are paying customers. If you make a list of your paying customers, the marginal users would be those who you would write down somewhere outside the margin. They are not paying yet, but they are close enough and might convert at any time.

A lead magnet is a tempting offer that provides a very specific value to highly a targeted customer segment (marginal users, in this case). In other words, when you offer your lead magnet, you give an ethical bribe or gift (call it what you like it) in exchange for their contact information. The main goal of such lead capturing is to secure the marginal users’ contact information so that you can get them into your sales funnel and start building a relationship and trust. So instead of doing nothing and continuing to lose your website visitors who don’t buy and never return back, offer them a tempting lead magnet as soon as they visit your website and once again when they are trying to leave. Different studies report that well-developed lead magnets can result in up to 20 to 60 % conversion depending on the industry and some other variables. So, just imagine what a tremendous effect that could bring to your startup if your average sales conversion is just 2% or even less. According to Marketo, Forrester, and CSO Insights, companies that excel at lead nurturing generate 50% more sales at 33% lower cost per lead (Jean Marie Bonthous).

Identify your most important marginal users

In order to create effective lead magnets, you must first identify your marginal users, those potential customers who are the most likely to convert into paying customers. You should be able to identify where your marginal users are and get some insights about how you could reach them. Try to figure out what potential customers do and feel in each stage of your sales funnel, what do they want, need, or dream about? Decide on how your products or services can satisfy those needs.

Online marketing traditionally suggests developing different lead magnets for each stage of your sales funnel. Therefore, it’s quite common to identify your marginal users (hottest potential prospects) at the beginning of your sales funnel (for example, they might be first-time visitors to your website). You also need to think about who you should target at the end of your sales funnel, for example, when you’ve employed every marketing effort you can but these potential customers still didn’t buy. So, who are they and what do they really want? You should also consider any sales funnel stage in between. Identify at which stages of the sales funnel potential customers might be already close enough to make a purchase decision or, on the contrary, at what stage are you losing most potential prospects without having a chance to reach them again. Who are these people and what would encourage them to buy your product?

For any early stage startup business, I would pay attention to at least two main groups of marginal users. First, you should really be concerned about bringing as many potential customers to your sales funnel as possible. Therefore a lead magnet for marginal users who get in contact with you, your product, or brand for the very first time is a must. Once you have a well-tested lead magnet for this group of marginal users, it’s time to check those customers who already bought from you but who didn’t become loyal or repeat customers, and those who were your repeat customers, but who don’t make purchases anymore.

The main part of this task is to set criteria for how you can identify the different types of marginal users. Once you have that done, let’s get down to creating lead magnets to hook them.

Decide on lead magnet type

The best-performing lead magnets add great value to the potential customer by satisfying their specific need or solving their problem. These lead magnets appeal to the target audience because they provide a much-needed service, valuable information, guidelines on how to solve a problem, and so on. The best lead magnets do not seek to answer all of a customer’s questions, but very specific ones. Lead magnets can be of different forms, but all of them can be delivered or at least ordered through your website. Here are a few of the most common types of lead magnets that you might consider adopting for your startup:

Cheat sheets are well-designed short tips, lists, or worksheets that help customers solve a specific problem. But, be aware, even though it looks easy to prepare a cheat sheet (it is short and simple), this lead magnet used by itself is less effective. Therefore, think about how you could reinforce a cheat sheet. Combining it with any additional type of lead magnet (for example, a free video training or an eBook) could bring significant results.

Free training can include videos, workbooks, courses sent by email or done on specific platforms, or any combination of these. If your marginal users have problems that require multiple steps to get to a final solution, free training might be an ideal lead magnet. If you could show step-by-step training on how to solve at least a small piece of a general problem, it could be a very effective lead magnet to attract those potential customers who really want to solve the main problem. The lead magnet will give them real value (by solving a small piece of the problem) and will generate more trust towards your products and services.

Free templates might generate lots of targeted leads, you just have to be sure your templates support what you are selling and don’t replace it. Templates as a lead magnet can be used in many startup businesses because they can consist of nearly anything you can imagine, from spreadsheets to videos. I used templates as a lead magnet to promote this post, and I started collecting leads before I had written a single post. Without spending anything on advertising, I collected more than a thousand qualified leads. If people are downloading templates that are useful for developing a startup business, they might be also interested in reading my post about startup marketing. So when my post was ready to be published, I already had a solid list of marginal users. Maybe you were one of them and I sincerely thank you for that.

Swipe files contain good ideas and examples of things that your marginal user could use in practice.

Toolkits can be a little more complex to produce because they are filled with resources that usually include one or two e-books and a worksheet, a video, or a checklist.

If you are short of ideas what value you could share for free with your marginal users, take a look at these additional types of lead magnets:

Free product or service

Free tickets to live events

Product samples

Product giveaways

E-books

Audiobooks

Checklists

Worksheets

Workbooks

Test or quiz

Case study

Free consultation

Coupon for special deal

Free shipping

Audio CDs

Mini-courses

Video courses

Audio courses 19. Email courses

Webinar with live Q&A

Webinar replays

Cheat sheets

Guides

Mind maps

Process flow diagrams

Resource lists

Tip lists and sheets

FAQ sheets

Planners

Specific calendars

Action plans

Spreadsheets

PowerPoint download

Starter kits

Scripts

Industry reports

Predictions and forecasts

Infographics

Calculators

Generators

Recorded video events

Transcripts

Branded, promo materials

Acceptance to Facebook group or any other members area

Access to library

Mobile games and apps

Recipes and other kinds of regular advice

Original research data as per enterprise data management

Certification program

Lotteries and contests

Create magnets to hook your marginal users

The main point here is that you must give customers a reason to provide you with their contact information. Most people today are overloaded with emails, newsletters, and all kind of promotions. Therefore, if you want to earn a potential customer’s trust and get their contact details, your lead magnet must offer significant value to those people you want to reach. Simply inviting people to sign up for your newsletter no longer generates the results it once did. The same can be said about primitive and plain lead magnets: creating a lead magnet just to have one won’t make much sense nor benefit your business. Remember, the value you share in your lead magnet can differentiate your marginal users. The only potential customers who will take your lead magnet are those to whom it is meaningful (for example, if somebody signed-up for the trial version of your software, it’s obvious that this person probably has a need for this or similar software, and that makes him a valuable lead).

If your products or services require more consultation and care before someone decides to buy, you should apply the multiple step lead generation approach. This means that you propose a so-called soft offer with no obligation from customer’s side and later (when the customer moves along your sales funnel) you introduce additional lead magnets that deliver even higher value, but require a bit more effort or commitment from the potential customer (for example, to complete more fields in your contact form or to provide credit card details). This step-by-step approach helps build the relationship and trust by encouraging a potential customer to make small commitments and eventually, purchase your product.

No matter what marginal user group you are targeting and if you are using a multiple-step lead generation approach or just a single lead magnet, to create an effective lead magnet it must contain:

Promise—explaining what you are offering in exchange for their contact details

Clarification—making it clear why you created the lead magnet and who it’s designed for

Key points (bullet points)—summarizing and emphasizing the value of the lead magnet

Call to action—clear and concise instructions about what action the potential customer should take

Once you’ve created your lead magnet, it’s time to implement the process, which works as follows:

A target customer visits your website and sees your free, highly valuable lead magnet. Be sure to place your lead magnet in the most visible part of your website and make sure that visitors see the promise of your lead magnets.

A potential customer enters his contact information into an opt-in form on your website to get access to your lead magnet. Be sure to capture and store those contact details automatically. Setting up an opt-in form is much easier than you think and most email marketing platforms provide solutions that you can integrate them into your website.

You set up an autoresponder message via your email marketing platform to automatically send your new subscriber a link to download or access your lead magnet. There are many options and they range in pricing and functionality. Probably one of the best choices for early stage startups would be a free account on MailChimp, which provides services for free until your list reaches 2000 contacts. By the way, the freemium model worked as a great lead magnet for MailChimp!

Your target customer almost instantly receives an automated email message with the link to access your lead magnet. You don’t need to do this manually, your email marketing platform or any other email autoresponder solution does it for you.

You start building a relationship with your target customers and earning their trust.

Test your magnets and update sales funnel, if needed

Even before implementing the process workflow that we have just discussed, I recommend that you show your lead magnet to at least ten different people who fall under your target customer persona. Ask them how they view your offer from their perspective. Is it clear and appealing? If none of them is interested, well… you already know that you haven’t found a market fit yet and you will need to do some changes in your lead magnet before employing it in your sales funnel on a large scale.

Here is a brief checklist for an efficient lead magnet. Run through it on your own, as well as with those first ten interviews, and finally check how it performs in the sales funnel.

? Does your lead magnet appeal exclusively to the target audience? Focus on developing a lead magnet that is interesting for your marginal users, not everyone. Otherwise, you’ll be wasting your time and resources in the next stages of your sales funnel. The goal is to generate leads that are as targeted as possible instead of attracting just a curious crowd.

Does your lead magnet have a high perceived value? Perceived is the key word here. It doesn’t matter how valuable you perceive the lead magnet to be. The main question is how your potential customers perceive the value you are proposing. The good news is that an effective lead magnet doesn’t have to cost much. It just has to be something of value to your audience. The higher perceived value of your offer, the more you can ask in exchange. While most lead magnets are used for collecting email addresses if the offer is really valuable you can ask potential customers to do more. For example, LinkedIn gives away $50 coupons for advertising services. Even though Linkedin incurs no direct costs, the perceived value to the target audience is quite high. Therefore, Linkedin asks you to create a company page and provide your credit card details so that you can be charged if your advertising exceeds $50. So, make sure your lead magnet has a high perceived value.

Is your lead magnet offer specific and relevant to the product or service you are willing to sell? A great offer isn’t just good for the person who receives it; it must be useful for your startup, too. Especially in the case of lead generation, you want your offer to tie into the product or service you’re selling. That way, it will help advance the sale, and maybe even inspire or at least educate your target audience to take specific actions.

Is it easy to understand and take action on? Make it simple. Don’t add a lot of conditions or steps. Your lead magnet should seek an immediate response and action from the viewer. If possible, stick with one step: click here to download, type in this discount code, register here, call this number, etc. The simpler the better!

Is it visually appealing? Lead magnets with great designs are more likely to increase your conversion rates and compel visitors to opt in for your offers.

Does it help create and facilitate a long-term relationship with your target customers? Too many businesses are trying to pitch and sell at the very first contact with the customer. As we’ve already discussed, earning trust and building a relationship helps to open the door to the long lasting business without being pushy and annoying.

[simsislovesimsislife]

Execute, Measure and Learn

The learning process never stops, especially after the product launch. Marketing metrics help to measure the output of your efforts and make more effective decisions. Your product might be awesome, your marketing plan might be very original with effective growth hacking solutions built-in, but with poor execution and no measurement, you won‘t get great results. If you don‘t measure, you can‘t learn. This and penetration pricing is extremely important in marketing. I‘ve prepared and helped to implement marketing plans for more than 50 companies in different industries and have never seen a case where the marketing plan could have been implemented without any changes. As one professor said, “It’s a bad plan if it was not changed during the implementation.” So, without measuring, how you will learn what changes are needed?

The execute-measure-learn process in marketing saves you from wasting your time and resources for things and activities which are not important, helps avoid similar mistakes in the future, and allows you to achieve your goals faster.

You have to stay persistent, but not stubborn, and miracles can happen. As Rennie Popcheva-Capri, the co-founder of Embrioo, remembered, they started just with a laptop, $1,000, and not more than 100 people in the neighborhood as their network, and without having an investor. Today Embrioo is an open innovation platform that disrupts the existing model of how new ideas, concepts, and inventions are shared and commercialized. Embrioo is an award winner at Creative Business Cup, Copenhagen; award winner at Sheffield University Innovation Challenge; 2015 Forbes Annual Awards, Best Startup; featured at TEDx and at Forbes in 2014; recently announced as one of the best ideas coming from Europe; and Winner Ideas from Europe Challenge, 2016-2017.

Execute: define marketing tasks for each week

Track your marketing plan calendar and update it accordingly (personally, I use an Excel spreadsheet for this purpose). If you are good at time planning, I‘m sincerely happy for you. But for most startup founders, time planning is a very hectic issue, because so much has to be done and there is so little time. Review your marketing plan and pick up to three marketing goals you want to achieve within a week. Yes, pick only three goals at maximum you want to achieve within the upcoming week. There are four main options that you can do with all your tasks concerning the implementation of marketing plan or in any other area of your startup development:

Do it by yourself—Pick the most important tasks that you can do the best, and do them. Focus not only on your weekly marketing goals but also on the bigger picture. Having a one-page marketing plan would help a lot.

Delegate it to somebody—Our opportunity to do certain tasks is mainly limited by the time and skills we have. Decide which tasks should be delegated to your colleagues, partners, freelancers, or maybe somebody else (for example, maybe your family members or friend could give you a hand in certain moments).

Schedule it for later—Don’t worry that not all tasks will be finished as planned. We are just humans after all. If you are not able to complete some tasks as planned, re-schedule them.

Cancel and forget it—Circumstances may change and you shouldn‘t stay blindly connected to your initial marketing plan. If some tasks or measure which you planned a while ago lose their priority, don‘t bother with them. Delete and forget! Replace them with more efficient marketing solutions.

Measure: weekly checkpoints and reports

Even if you are the only founder, do a report for yourself. At least a brief report, including what were your weekly marketing goals and which ones you‘ve achieved. Take a few minutes to think about obstacles you‘ve faced and opportunities you might have found or still need to discover. Having periodic checkpoints helps you progress much faster and sometimes avoid painful mistakes. The in-depth interviews with successful startups revealed that there are three main types of checkpoints:

Weekly checkpoints

Monthly checkpoints

Milestone checkpoints

Learn: what didn‘t work as expected and what to do next

When achieving marketing objectives, the flow of events may turn in another direction and the actual results may not match the expected results. If the end-result is worse than was expected, you need to identify the cause of failure and determine what has to be changed. 1. Determine the reasons behind the failure

In which stage did the failure occur: in the strategic decision or tactical implementation?

What has been proven ineffective: just a certain marketing measure or the entire concept?

2. If there is no basis for thinking that failure was brought about by a certain strategic decision (all your hypotheses still remains confirmed), then you need to change the tactical measures. It is cheaper and easier to switch tactics than to change the entire marketing strategy or even the whole business model.

3. If tactical measures have proven effective (generally meaning that the offers are presented to clients on time and on the spot), but the end-result is not what was expected, then you need to conduct further analysis.

Internal analysis: Did you really present an irresistible offer to your target customers? Is your company and are your partners actually doing what you‘ve promised to do? Can the client doubt anything?

Market demand analysis: Did the market itself shrink or change? What trends are currently dominating the market? Do they differ from those that served as a basis for the prepared strategy and business model?

Competitor analysis, both quantitative and qualitative: How many competitors are there in the market? What do they offer? How actively or aggressively are they executing their marketing strategy? In which areas do you face competition and why are you losing?

SlideModel provides their customers with more than 12,000 PowerPoint templates and designs. The business is built on a subscription-based revenue model, and the templates are downloaded directly from the website. The founders of SlideModel thought the main marketing strategy would be based on online advertising like Google AdWords and so on. They spent money on online ads for several years until they figured out that there were other channels with a higher ROI. Due to increased competition, online advertising became much more expensive, and the lack of ad campaign optimization didn’t allow them to achieve higher ROI. So, once you implement any marketing decisions, measure the results and don’t wait years to do so.

If you have planned and set up your marketing system, have significant traction, and see a profit, now it’s time to focus on implementing one or more growth engines, automating your marketing, and undertaking and many other tasks designed to scale your business.

Have you prepared a consistent marketing plan? Are your variable costs per customer low enough compared to average customer lifetime value? (creating a customer journey map template with examples) Is the overall conversion rate of your sales funnel/pipeline high (that is, do newer marketing communication costs pay off well)? If all those parameters are good enough, you just need to increase sales volume. Adding more potential customers to your sales funnel/pipeline should give you an opportunity to scale your business and get your well-deserved profit.

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Get ready to up-sell, cross-sell, and down-sell

Selling one product and giving your customers one offer (even if it is irresistible offer) is not enough. At least it’s not enough for smart entrepreneurs. Up-sells and cross-sells are one of the most cost-effective ways to add revenue to your startup and value for your customers. And the more revenue on average you get from your customers, the more you can spend to acquire new customers and grow your business much faster. Up-selling and cross-selling are mutually beneficial when done properly, providing maximum value to customers and increasing revenue without the recurring additional cost of most marketing channels. So, is there any reason why you should leave money on the table?

Would you like other people to sell your products without resulting up-front costs for you (just paying a commission from actual sales)? Or, if you have just one or two different products and have nothing to make up and up-sell or cross-sell offers, why not offer to sell other peoples‘ products and earn decent commission on that? Affiliate networks could help you in both cases.

Create at least three up-sell offers and test them

Up-selling is the practice of encouraging customers to purchase a comparable, higher-end, and more expensive product than the one offered initially. It means you can increase your revenue per sale by selling more to the same customer during the same purchase (this includes various upgrades in quality and quantity). Up-selling often employs comparisons of different offers in order to market higher-end products to customers. Showing potential customers that other versions or packages may better fulfill their needs can increase average order volume and make users even more satisfied with their purchase. If you want to succeed in up-selling, you should help your customers to visualize the value they will get by ordering a higher-priced item.

So, now it‘s your task to create at least three ideas for how you could increase the value for your customers and earn extra revenue per sales. Think about how you could upgrade your main offer to a higher-end offer. It might be a good idea to review your data from the hypothesis verification and customer interviews. Maybe there is something that was desired by certain customers? Even if this target segment is small, why not try to test this offer as an up-sell. If done correctly, your mainstream customers will stick to the main offer, while this particular segment would have a chance to upgrade their offer and get more value out of it.

Most startups wonder how much they should discount the up-selling offer. The answer is that you should test it. There is no stock answer because your industry, your product, and your customers are all variables. Most empirical research shows that the bigger the discount, the higher conversion of the up-sells. Some e-commerce experts recommend offering at least a 25% discount, while others say that the emotion of the special offer and how the additional value is communicated is a far more important factor for successful up-selling compared to the size of discount (which can be just 10% or even less).

By the way, it‘s not a big technical issue to implement the up-sell on your website. There are many third party solutions that can help implement up-sell strategies, even for those entrepreneurs who have no coding skills. As an example, OneClickUpsell is just one of great apps for up-selling if you have your products on Shopify. If you have your website built on WordPress, you can use the WooCommerce plugin with built-in functionalities for up-selling and cross-selling.

Choose at least three different cross-selling strategies and test them

Cross-selling is the practice of encouraging customers to purchase related or complementary items. Generally, you identify products that satisfy additional, complementary needs that are unfulfilled by the original item. Usually, cross-selling proposes products users would have purchased anyway, but cross-selling can also encourage users to take a look at products they didn’t previously know you offered. Cross-sell helps to increase the average customer lifetime value by selling more to the same customer over the time. In e-commerce, cross-selling is often used on product pages and during the checkout process. It is similar in physical stores—when the customer is ready to pay, the seller politely asks if the customer would like to add a particular product, and explains how great this offer is for the customer.

Think about your own or third party products you could cross-sell. If needed, find partners whose products you could cross-sell and earn additional revenue through decent commissions. Once you have a list of products available for cross-selling, choose at least three cross-selling strategies and test them in practice:

Complementary or similar product—Propose complementary or similar products to the one the customer has chosen.

Complementary service—It’s not just an opportunity for additional revenue, but a good way to overcome the client’s objections against a product which requires an installation or advanced maintenance that the customer might not be able to manage alone.

Automatic cross-selling—This is generally the idea of “Customers who bought this product also bought….” This feature automatically selects matching products based on the order history and buying habits of your customers. This method has become an essential tool for online shops and there are no reasons why startups who sell their products online should not use it.

Incentivize—This includes tempting offers such as “free delivery on orders more than $20.” The call to action is designed to encourage customers to just buy that little bit more. You might also try a discount or gift voucher for orders over a certain amount.

Sold separately—this concept is based on the fact that if customer wants to get a complete product A, he has also to purchase product B and product C. You must be absolutely clear about this in all your communications, because otherwise, some customers might feel that you have cheated them by offering a great price deal, but the product is not really complete.

Sell the look—Offer your customers an idea of how his product will look in combination with others. If they like the overall look, there is a possibility that they will buy all the products at once or at least few of them. It’s different from “Sold separately” strategy because it’s not necessary to buy products B and C to successfully use the product A.

Bet on customer’s taste—Once the customer has found what he is looking for, you can manually or automatically suggest products of the same style, color, or material. Showing additional products that customer yet has not seen but might like is a common strategy. It’s different from automatic cross-selling because in this case, you have to propose individually selected products that match the estimated style and interest of the particular customer.

Expert recommendations—Using quotes from industry experts, thought leaders, or famous people, who are already your clients, can usually help to drive customer’s attention to certain products, especially if these products are highly sensitive to perceived value and it’s hard to measure the objective value.

Discounted second buy—Usually a discount is offered for the next item or next purchase. The most basic example: “buy two, get third for free“ or “Thank you for buying! Here is a 20% discount coupon for any products you like (coupon valid until...).“

Exclusive chance—Special offer for a limited time or selling-out a limited number of items. This offer is available only for those customers who already bought something related to these products. This cross-sells strategy is based on scarcity, meaning there is a limited possibility to get something exclusive. Be sure to act honestly.

Up-selling and cross-selling are not just about gaining extra revenue, it’s an opportunity to engage with your customer and grow a relationship. Don’t brag and, by all means, don’t push unwanted products! You should offer something that brings higher value to the customer. The goal here is to make customers feel like you are trying to help them to get the most out of their purchase. This is a different mindset: instead of concentrating your thinking about your wish to maximize your revenue and profit, you should think and act in the way that the customer would benefit from the deal as much as possible. This is the key to successful and long-term business.

No matter how small you are and at how early the stage of your business, think about up-selling and cross-selling from day one. ZaliZali could barely be called a true startup per definition we have discussed, but this small raw food company makes a great example for cross-selling and up-selling at an early stage. ZaliZali makes different sprouts and greens (like sunflower, alfalfa, peas, wheat grass, barley greens, mung, adzuki, garbanzo, green lentils, etc.) and sells them directly to the customer. Even though ZaliZali is working in a small market (Lithuania), they have already learned and implemented cross-selling by providing an additional service (healthy food educational programs for children) and new side products. They also did a great job in up-selling. They introduced a discount program and free delivery to encourage larger orders, as well as adopted a simple strategy based on the concept of multi-level marketing: certain customers became sales agents who distribute products among their friends. If the company continues to validate their learning at this rapid pace, their experience could become a strong foundation for a business franchise model.

Create a repeat or subscription-based sales model

Selling Products and services to the customer is what we are working towards and what we expect to happen. Selling to the customer as often as possible is what we wish for. Selling to the customer just once and getting revenue multiple times is what dream about.

It is likely that not all businesses are equally suitable for subscription or membership revenue models, but you can at least consider it at least for few minutes. If you had to implement this type of revenue model, what would it look like?

I had a client in my practice that was selling fruits in the local market and on a wholesale basis to retailers in other towns. He wanted to expand sales and get more stable revenue. Nothing fancy, nothing related to startups. But after a while, we came to a new solution, the “fruit subscription!” The fruit seller offered to deliver fresh fruits to local companies 2 to 5 times a week for a regular monthly fee. Most of the companies were used to spending money for coffee anyway. Fruits are more healthy (contain vitamins, fiber, “good” carbohydrates, etc), but companies never thought to offer them for office employees like an alternative for a coffee break because it was too much trouble to buy the fruit, deliver them to the office, wash them, and serve them on the table. The fruit seller offered a one-week free trial and delivered seasonal fruits to offices and took care of all the details. The result was fascinating! Nearly 70% of his customers signed a “fruit subscription” agreement after the free trial. The new approach, even in such traditional industry, created a stable and meaningful revenue stream. In addition, the fruit seller got meaningful word of mouth advertising, became better known, and attracted new retail clients (the same people from offices came to his local market and bought fruit for home). If the fruit seller could imagine a subscription business, I’m sure that you also could come up with and interesting idea for how to create a stable, ongoing revenue stream.

If your business is quite specific or you simply can’t come up with a subscription or membership revenue model, focus your attention on repeat purchases. Even if you are selling one-time sell products (which are sold only once and there are no related additional products or services), take some time to give it some thought. But if you are like most businesses, there are two ways to increase repeat purchases or continued use of your products or services:

Loyalty programs that help to retain customers and even to encourage them to recommend you to their friends. This could include providing exclusive discounts or special access for loyal customers, retargeting customers with abandoned carts, emails and promotions for a repeat purchase, using email to send personalized offers and suggesting products, surprising and delighting your customers by giving a small unexpected gift, etc.

Customer lock-in or high switching costs. If it’s relatively easy for your customer to switch from your products to your competitors’, customers will be more price sensitive and you’ll probably have a higher churn rate. You may want to consider tactics for locking in customers to your product or solution (through long-term contracts, unique technology, or data that can’t be easily transferred).

Consider your down-sell strategy

If your customer declines an upsell offer or even quits your sales page or physical store, you can offer them a lower-priced offer called a down-sell. You can downgrade main offer if you feel that it’s too expensive for the customer. It doesn’t mean that you should have to apply just a plain discount and keep everything else the same as your regular offer. Maybe there are some unnecessary features that could be excluded from the offer and this way, the final price of the offer could be lower. You still want to keep an attractive profit margin for you and leave an incentive for the customer to buy a regular offer later when he needs additional features and benefits.

Up-selling and cross-selling are great strategies, but only when your customers are getting more value. But sometimes customers don‘t want additional value. To the contrary, maybe they need just a few features or benefits, but your main offer forces them to buy a whole bundle at relatively high price. When you down-sell you build trust and demonstrate you are acting in your customers best interests. Be aware of how many customers view your offer but don‘t buy. That is your potential for down-sell. Sure, not all of them will become your buyers, but at least some of them could. Your task is to figure out how you could downgrade your main offer and test these solutions in the market.

Find partners for affiliate sales

It would be foolish not to try to employ affiliate sales in your marketing strategy. Whether you want to find people who would sell your product or to find products which you could add to your cross-sell strategy and earn commission, affiliate networks might be very valuable. The best thing is that if you want other people to sell your product, you pay nothing for advertising until particular results are achieved (for example, you get visitors to your site, signups to the product trial, or even sales). If you already have a good traction and would like to add a few additional products to your cross-sell strategy, affiliate networks can help you find such products and secure your commissions. The affiliate network operators act as a third party guarantee (if you generate sales, commissions will be guaranteed to be paid by an affiliate network operator). Affiliate programs may follow different models and you need to decide what fits you best:

Cost Per Click (CPC) model pays for “clicks” no matter whether if the referral traffic helped to generate a sale or not (similar approach as Google AdWords).

Cost Per Action (CPA) model pays for specific actions including simple form submissions, downloads, surveys, sharing on social networks, etc.

Cost Per Lead (CPL) model pays for leads (usually a “signup” that involves email or credit card verification as it makes the lead more valuable).

Cost Per Sale (CPS) model pays for actual sales and it means that product seller shares a percentage of sale value with the advertiser.

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How to craft an irresistible offer

As defined by Mark Joyner (2005), the irresistible offer is “an identity-building offer central to a product, service, or company where the believable return on investment is communicated so clearly and efficiently that it’s immediately apparent you’d have to be a fool to pass it up.” Do I need to explain why each startup should have such offer? Actually, it’s the very essence of the startup’s success. Everything we have done up until now has been in preparation for creating your irresistible offer.

When you engage in any marketing activity, the irresistible offer must be your spearhead. If you have defined your customer’s key touchpoints and have developed irresistible offers for certain touchpoints, your product launch will be far more successful. Even if you are not yet ready for to launch at large scale, and the irresistible offer will help you to gain significant traction, thus you’ll become more interesting to other customers and potential investors.

Warning! An irresistible offer is not a magic bullet. You still need to have a good product or a service which will be the foundation of your offer. Otherwise, marketing simply won’t work or it will be something like cheating on customers. As one man said, don’t blame advertising if you are not successful selling a dead horse.

Draft an offer with high ROI for your customer.

Everything is simple, especially if you continuously read this book and work on given tasks. Now your task is to create the best deal for your target customers and protect them from any risks in taking your offer. This is just a draft explaining the essential value you are delivering to your customers and how you secure them from any risks.

Once you’ve clearly stated what great value you provide for your customers compared to their costs (not only price but time, needed efforts, convenience level, emotions, etc.), it’s time to clarify and overcome possible objections and fears. If you were running your market experiments thoroughly, you should already have a slew of reasons why customers don’t want to buy your product. If you did the tasks related to customer touchpoints, you should also have some ideas about how you could reduce the resistance. Here are most common solutions for how you can eliminate or at least reduce your customers’ risks: money back guarantee, special payment plans (for example, take the product now and pay later if you are happy with the product), giving a free sample or freemium version, warranties, pay for results, free support, or extra help if something unexpected happens.

To tell the truth, it’s amazing how Hostaway has crafted and communicated their offer. Actually, this is a great example of crafting an irresistible offer. The offer is crystal clear at soon as you hit their landing page: if you rent your property for vacations, you can get more bookings, save time (manage one platform instead of four), and avoid double bookings.

The offer becomes even more appealing when you see such elements as:

Starting with a free 14 days trial

No credit card required

Additional credibility built by showing “As featured in”

Another important aspect is that there is one clear call to action (button text “Try now for free”) displayed at least three times on the landing page to increase the exposure of the main offer. Pro-active online support is another additional element that helps increase the conversion rate. If we check the pricing page, we’ll see additional elements that make the offer even more irresistible:

It has a clear and simple pricing, (click here for more on pricing)

Explains benefits in details,

Provides a guarantee ���if you get a double booking while using Hostaway, the entire monthly fee is on us”

Unique selling proposition (USP) for each key touchstone

you are building and improving a sales funnel/pipeline where the customer has to advance from one stage to another before they can finally purchase your product or service. Sometimes somebody gets lucky and sells their product without crafting a USP (or irresistible offer). But most of us are working in highly competitive markets, therefore, we have to put extra effort to sell our products and services.

If you develop your main unique business proposition for the final stage, that’s Great. But if you were to craft a USP for each major touchpoint in your sales funnel/pipeline, it would encourage your customers to move faster towards the final stage of buying your product and maybe even becoming a repeat customer. It doesn’t matter if you decide to craft only your main USP or a few USP for key touchpoints, it should be clear, simple, and brief. Your USP should be the message which answers these customer questions:

Should I pay attention to this message?

What are you trying to sell?

How much will it cost for me?

What’s in for me? What value will I get?

Why should I trust them at all?

If you want to make your USP even more appealing and effective, think about how you could make your offer meet the following characteristics:

Easy to accept—Eliminate any obstacles for customers buying your product (for example, what should a customer do if he can’t pay in the online shop because he doesn’t have a credit card with him).

Urgent or limited—If your offer is valid forever, customers will think they have unlimited time to think about it and there are fewer chances that they’ll come back and purchase (for example, tell them that the offer is only valid until a certain date, or the exclusive price is valid only for the first 10 clients).

With added value—Instead of a discount, you can add something on top of your main offer making it even more attractive.

With no risk—Don’t wait until the customer asks, tell him at once that this offer is risk-free (for example, Linkedin offers trial membership in premium account benefits for one month for free so you can see for yourself if you like the value).

Even though we can’t call B2BProspex a real startup as per the definition we agreed on, I think their value proposition might serve as a good illustration of an irresistible offer. This data entry outsourcing company is based in the USA, has been experimenting with quite a few things, and came up with the offer. It helped to build trust in front of the clients (removes risk) and to show that the company here is in it for the long run. As Murtaza Amin, the founder of B2BProspex, reported, more than 250 clients have been a part of this offer, and only twice have they had to give money back.

The second part of the offer makes it nearly irresistible: 10 hours per month for any back office work absolutely for free and with no obligation on the part of the client. B2BProspex does anything that the client might need (and that company offers), and even if it is a small project of only 10 hours, B2BProspex does it for free. This keeps clients from thinking of any other provider. Actually, two of their biggest clients who brought them tens of thousands of revenue over the years started with a small project ($200 $300). Sometimes, this type of offer might be risky because it might attract nonpaying clients, therefore I don’t recommend using it blindly for everyone and in every case. But, for B2Bprospe,x it helped to get new leads faster than anyone else and also allowed them to maintain extremely high client retention rates.

Make your selling proposition believable

The bigger and bolder you make your USP (high value, no risk), the more difficult it is to prove and the harder you’ll have to work to sell your believability and credibility. It’s paradox: if you offer an average value, just a few potential customers will get interested and maybe somebody will buy. But if you provide a great offer, most of the potential customers will get interested, but they still won’t buy it. That’s because they will think the offer is too good to be true and there is a catch somewhere. Your task is to overcome their skepticism by making your USP more believable and eliminating any possible doubts. There are few things that can boost your credibility if provided in the right way and at the right time (remember customer touchpoints once again):

Social proof—If customers see that many other people use your product or service, your offer becomes safer and not so risky.

Technical and factual proof—This is very applicable for technology startups because sometimes it’s very simple to prove that you’ll be able to deliver the offer by showing technical data or facts.

Credibility and qualification—Provide any pieces of evidence that prove your credibility and qualification. Even if it’s not related directly to the product or service, showing yourself as credible person or company will make your offer much more believable.

High profile clients and endorsements—If there are famous people among your clients or even if ordinary clients can give a positive testimonial about your product, this is worth its weight in gold to build your credibility and make your offer even more attractive. Showcase your high profile clients (with their permission, of course) using video and written testimonials.

Awards and recognition—If you or your startup were awarded for some kind achievement at least partly related to the product or service you are selling, don’t hide that. If a third party awarded and recognized you, it’s a solid reason for customers to trust you more.

Logical—If somebody thinks that your offer is too good to be true, show them why this offer is logical not only from customer’s perspective but yours as well. If it’s clear that this offer is also beneficial for you, there is no reason to be suspicious that you might be cheating and earning money by some other means.

Sintrafico, a startup based in Mexico City, creates smart mobility ecosystems that empower companies and governments to achieve a more efficient mobility, evolving traditional cities into Smart Cities. Sintrafico claims to have (and proves it) the largest real-time data network in Mexico which helps to monitor and analyze road speeds, congestion, traffic incidents, road safety, parking lots, road tolls, emergency systems, weather, public transport, carpooling, and bicycles, among others. It uses the data to create smart mobility solutions and analytics. Sintrafico serves different customer segments and helps them to:

Reduce insurance claims and accident response times by up to 15% and keep them informed minute by minute of the adjuster’s progress toward their care

Identify the impact that mobility has on their current and potential real estate locations, more accurately valuing the potential of each location through smart areas of influence, traffic gauges, and more

Quantify vehicle impacts, exposure times, and impact paths of their outdoor advertising and locations

Even though Sintrafico targets different customer segments with different value propositions, this startup did a good job strengthening the believability of all its offers. If you visit their website, you’ll find many reasons to believe, including such fact statements as:

more than 500,000 cars online

200 million speed reports per month

500,000 car incident report historical data

1 million locations analyzed and 10 billion reports processed

and many more facts!

Decide which message style best fits your brand identity

If you remember when we talked about brand, we said that brand is not just a logo, but the overall experience for your customer. Therefore, it’s very important to determine how you’ll communicate your USP. Your messages should be aligned with your brand identity. There are few general rules to be followed when crafting the final message of your USP:

Use the customers’ vocabulary (not your professional jargon). Don’t try to look smart, it’s better to be similar to your customers.

Speak about their problems and pains, especially those which they are facing at current touchpoint where your USP is being communicated.

Show your solution as the perfect choice. Know what’s most important for your target customers and address those aspects in your USP.

Make the message personal as much as possible. The best message is one that makes each customer who reads or hears it feels like the message is addressed specifically to them.

Once you choose the style of your messaging, you should keep the same style in all your marketing communications, in order to build a consistent impression and make your brand becoming recognizable.

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How to Land Early Customers?

When you’re selling to customers, knowing how to talk about your business pricing strategy concisely (as well as when to stop talking and just listen) is key.

Tyler Bosmeny, co-founder and CEO of education startup Clever, has discovered in his life of sales that it’s important to search out the innovators.

Sure, this is the smallest market — just 2.5% of the total population — but it’s the most pivotal and most likely to take your calls as an early company.

Finding Your Sales Leads

If you start there, he said you’ll start to realize that this is a numbers game.

At Clever, Bosmeny’s initial contact list was 400 companies made up of personal connections, friends of friends, and cold emails. But of course, the people you know personally are always going to be your strongest supporters.

It can be hard to meet new people when you’re heads down building a company, but Bosmeny said one of the best ways to meet potential customers and partners is at conferences — and not the big ones.

The smaller, less glamorous conferences can give you more opportunities to make lasting, one-on-one connections with people.

Making the Sale

Be Sure to Listen

As you’re going through your call list of 400 people, Bosmeny said the most important thing to remember during your conversations is to shut up.

“The best salespeople in the world … don’t talk a lot. They ask a lot of questions to then fully understand the person’s problem.”

Don’t Forget to Follow Up

After that initial conversation, it’s all about the follow up. Persistent follow up.

During his talk at Stanford, Bosmeny showed a timeline of what his follow up can look like on a good day, and it’s clear that a lot of emails and calls go unanswered.

You’ll run into people who are difficult to keep tabs on, but that doesn’t always mean the answer is no.

Avoid the Maybes and Ifs

What you do want to avoid is being dragged along on a “maybe.”

“Your goal should be to get people to a ‘yes’ or ‘no’ as quickly as you can,” he explained. Maybes can be a huge time suck.

Another word that may cause you some grief is “if.” Some people will only want to use your product if you add a new feature.

Bosmeny has two solutions for these predicaments that will help you to avoid creating a one-off feature (which is never a good idea):

Sign a sales agreement, which includes that you’ll add that feature after the prospect becomes a paying customer. 

Better yet, say that you’ll wait to get validation from other customers that this is a need for them as well.

Steer Clear of Free Trials

Another thing he said to avoid is free trials. Ultimately, in these early phases, you’re of course looking for money in sales, but it’s more than that.

Bosmeny explained, “Your goal is to sign some deals, get some reference customers, get some validation, and get some revenue.” In the case of free trials, you’re not getting any of these things.

He usually responds to these requests with something like: “We don’t do free trials. We do annual agreements and what we’ll do is for the first 30 or 60 days, if for any reason you’re not happy, you can opt out.”

[joe-brown1991]

Identify and seize customer touchpoints

You should have already made at least a brief sketch of customer touchpoints during the feasibility study. Now it’s time to take a deeper dive and to use this technique to prepare for the launch to the major market. Furthermore, after conducting a series of experiments, you’ve probably gained new insights about possible customer touchpoints: what actions customers take, how they choose their priorities, how they feel about one or another aspect of your product or service, which communication channels worked best and delivered your message most effectively, and so on. Let’s not forget that your sales funnel/pipeline also is a bundle of customer touchpoints; you are taking customers from one stage to another, closer and closer to the purchase.

Identifying all possible touchpoints with the customer is very important when preparing for launch because it helps you better understand your customer’s needs and behaviors, and helps you plan your marketing actions accordingly. If you do it right, you’ll be able to:

Create highly valuable and almost irresistible offers for your customers

Communicate the message about your offers in a more efficient way

Find and employ low-cost, high-efficiency communication and distribution channels

Design an awesome brand experience and initiate word of mouth digital media advertising

Make a list of areas where customer can have a touchpoint with your brand We‘ve talked about service design and the customer journey map during the feasibility study. Later, you developed your sales funnel/pipeline based on a series of experiments. Now it‘s time to use both of them: customer journey map and sales funnel/pipeline. The task is very simple: write down all possible areas (exact touchpoints) where the customer can have an interaction with your brand. There are two popular ways to make such list:

The sales funnel approach lists every possible area of customer interaction according to the sales funnel stages and tasks.

The POEMS method lists every possible area of interaction with People, Objects, Environment, Messages, and Services that might be engaged by the customer.

Use the approach convenient for you. The goal here is not just to employ the use the methodology, but to write down all possible touchpoints with your customers. I’ve even met some startups who use both of those approaches: the first is to make a list and the other is to double check the list.

Make a list of possible contexts when the customer can have a touch with your brand: For each of the touchpoints which you have just outlined, the customer can complete several actions or activities. There is no one-size-fits-all scheme that defines when a customer can have a touch with the brand. It will be different for each industry and business. But generally, customer activities can be grouped into a few classic categories where the customer:

Is yet not aware of a problem or need

Understands that there is a problem or a need

Is looking for and evaluating possible solutions,

Is buying the solution

Is using the solution

Has already used the solution

This can be expanded to cover key areas for your marketing for startups. You should also include your findings from customer interviews and experiments. It may be that there are some specific situations which don’t fall into one of the categories listed above.

Now that you have a list of the customer touchpoints and the context or activities when the customer can engage with those touchpoints, you should complete a simple table to map the customer journey through these checkpoints. Look at the example in Table 43 with activities listed across the top and the touchpoints down the left-hand side:

Map out the customer journey through touchpoints

Take each of your target customer personas and map their journey from the initial stage, through purchase, and then after using your solution. It’s very important to stress that you don’t have to do a customer touchpoint map for each individual customer. In most cases, that would be a terrible waste of time. So, create a customer touchpoint journey for each of your target customer segments. You should have at least two: new customers and existing customer (repeat sales).

Complete this task from the customer’s viewpoint. Don’t map out how you expect customers to act according to your sales funnel. It’s much better to interview a few of your target customers and create the customer journey map accordingly. Try to keep it as simple as possible. The idea is to outline the context to help identify areas for possible improvement, whether it’s improvement of your offer (value delivered to customers) or improvement of the method by which this value is delivered. Table 44 shows the basic example of new customer journey through the touchpoints with the brand.

Identify key touchpoints and do in-depth analysis

Each startup can experience different issues such as low conversion, high customer acquisition costs, the fact that most customers are unaware of the problem they have, sales process taking too long, customers have doubts about the product, low customer retention and repeat order rate, and so on. You should have identified your main challenges during your experiments when you tried to sell your product to a limited market segment. Now it’s time to look deeper into these challenges and eliminate the issues that are causing them.

State the main issue, concern, or problem from customer’s journey perspective. If you don’t see any problems or challenges, I’m a bit worried about you and your startup project! Every business at some time has at least something to solve or improve in order to grow and prosper. Once you have picked a certain problem, ask yourself why it is happening and how it could be eliminated. Look at your customer touchpoint journey map and identify the key touch points would seem most connected to the issue.

Traditionally, you first notice what your customer does or does not do (for example, doesn’t buy your product online), then you can listen to what your customer is telling you directly or indirectly. But this might not give you the complete picture. If you want to really understand why your customers behave in one way or another, you should get into their heads and try to figure out what they see, smell, and hear, and how they feel. Human emotions are unconscious and they are directly influenced by what we see, smell, and hear. A customer’s perceptions, emotions, and thoughts are the result of what he saw, smelled, heard, and felt. And the customer actions are formed by those perceptions, emotions, and thoughts. So if you want to influence your customer’s actions, see what you can change about what he sees, smells, hears and feels in each key touchpoint.

Source: https://thoughtleadershipzen.blogspot.com/

[quiznakheadcanons]

Consistent targeted actions

An excerpt from the thought leadership zen blog

Contacting more investors will get you more meetings, but it won’t necessarily get you more money or better deals. DocSend and Tom Eisenmann (2015) did a study of 200 funded startups that raised $360 million in total. According to the results, if you do everything right, you’ll likely have to contact 20 to 30 investors to get funded. The good news is that you don’t need to contact hundreds. (Realistically, if you talked to 100 investors and none of them decides to fund you, there is definitely a serious problem in your business idea, your team, the whole industry, or even you!) In any case, it doesn’t make sense to continue arranging new meetings with potential investors until you solve the core problems with your startup. Then you can focus your efforts on the quality of your connection to the investors.

Sometimes it’s just plain luck to get a good offer for funding your startup just by being at the right place at the right time. I don’t refute that, but do you want to count on plain luck? The better you prepare yourself, the better your odds will be. The more targeted actions you take and the more effort you put into them, the more chance you’ll have to strike a good fundraising deal.

Focus on building a profitable and scalable business

This is the main reason you will get funded or not. You must do everything you can to build a profitable and scalable business. Define a business that is open-ended and continuously improving. If you are building your startup on a one-time sales concept (selling to the customer once), it probably won’t be a very scalable business. It would be much more attractive if your customers keep making repeat purchases and referring you to their friends. But don’t try to solve every customer problem at the same time. Build a strategy for continuous innovation, while offering follow-on, complementary solutions to grow your revenues.

Investors like business ideas that are based on solid market research from outside experts, especially if these experts forecast a billion dollar opportunity. This type of startup is much more likely to be scalable and investment worthy. You don’t necessarily have to hire expensive outside consultants if you are able to follow the guidelines we’ve discussed in the previous stages.

Collokia, is a machine learning-based, collaboration platform with commercial offices in the USA and development offices in Uruguay and Hungary. They initially raised $500,000 in seed money and one year later has secured an additional $1.3 million in seed funding, led by software giant Globant and Fundo Pitanga, a Brazilian venture capital firm. It wasn’t that difficult, mainly because of the contacts and reputation of the team. But Pablo Brenner, founder of Collokia, acknowledged that raising funds for global innovation from outside the USA is very difficult, as most local and regional VCs prefer investing in well-proven business models, and not in innovative technologies. So the spectrum of potential investors became very narrow even for such a well-established startup as Collokia. Therefore, you must be ready for the same challenges: prepare proofs of your business concept and focus on building a profitable and scalable business from the very beginning.

Leverage and automate your business to the maximum

Every startup should know that there are certain things they have to do that don’t scale. But once you have figured out your processes, try to leverage and automate your business as much as possible. This will help your business scale faster (maybe even without additional money) and save you time, which you can use for building relationships and meeting investors. Following are main areas where you should constantly look for automation and leverage possibilities:

Production and delivery automation. A startup that is labor intensive is not very scalable. Start looking at technology and outsourcing to automate your production and outsourcing before you begin to scale the business. If you still need additional employees to scale the production, building online training videos and clearly documenting processes is the least what you can do.

Marketing automation. Focus on automating your sales funnel/pipeline and use leverages to reach more potential customers. Direct marketing is highly useful at the initial stage when you need to get feedback from customers, but generally, it’s not scalable (except e-mail marketing automation, which we’ll discuss later during traditional Marketing shortcomings).

Revenue stream automation leads to consideration about licensing and franchising. All of your resources, including time and energy, are limited, thus you probably won’t be able to take on all the markets in the world (if you think you can, you might be overestimating your capabilities or your business model targets to a rather low volume market which won’t be very interesting for angel investors and VCs). Many markets already have major players. It’s up to you whether you want to compete with them or to make them you partners which, actually, can be much more effective for scaling than trying to out-compete them. Consider all possible partnerships forms including exclusive distribution, licensing, and franchising.

Startups who have found ways to grow the business by automating and leveraging production, marketing, and revenue streams will be far more attractive to any investor.

Become visible and regularly update your online presence

Try to become more visible on larger and smaller online platforms for startups like Angel List, F6S, Startup Valley, InnMind etc. Create your profile, submit projects, product photos, and upload videos. Some of them are large and well know while others are for niche prop projects and target a specific sector or geographical market. It doesn’t require much time to create your profile and to post few updates when they are available. These platforms just on their own won’t necessarily bring you investors, but once you get in contact with your targeted investors, don’t miss an opportunity to show that you are a serious startup and your professional profile is available almost everywhere. There are two totally different scenarios after you send your one-pager or pitch deck to potential investors. In one case, they might get slightly interested and decide to look and see what other information is available about you online or they might feel that your startup is being listed on too many platforms or not enough platforms.

If you want to create a good profile, look at the startups being featured on AngelList. Don’t copy them, but get an idea on how to improve yours. Also, a good idea is to check startups in your sector who succeeded in fundraising and were featured in media. If you know something about Google remarketing, you might consider keeping your full pitch deck and additional information for investors on your own website. You can put a link to this website in your profile on all platforms. You can create a remarketing (sometimes called retargeting) campaign addressing just visitors to your website. In this way, you would have a chance to remind potential investors about your startup when they visit your website, map this through your web analytics. Set up it once and it won’t need any extra maintenance work.

Find out where your target investors are active, what they read, what they watch, and what they post. And especially, find out what events they attend and make sure you are there! Don’t go overboard on sales, but be polite and subtle. Highlight your startup and your progress, reveal the opportunity for investors, and put out your call to action. The goal here is not to strike a fundraising deal right then and there, but to increase the awareness of your startups and start building a relationship with potential partners.

Create a list of 30 to 50 targeted investors

A good idea is to start by making a list at least 30 investors you would be happy to work with as well as a list of at least 30 investors to whom your pitch should be highly interesting. Find the match between those two lists and come up with a list of between 30 and 50 investors you’ll try to reach. List them in the priority according to your own preference. Just keep in mind that time is limited, thus you should focus your efforts and don’t spread yourself too thin. As we have already discussed, if none of them will agree to invest, something may be wrong with what you’re pitching or how you are developing your startup. Take their feedback seriously and make needed changes (at least in the pitch) before contacting other investors.

Set the right mindset for fundraising

The main mindset for successful fundraising is to be willing to put yourself out there to meet anyone in the first place. Even though you don’t need to talk to hundreds of investors, it’s still a numbers game. Usually, it is advisable to have at least several meetings with different investors before making a final decision on the partnership.

Decide which of the founders will be responsible for fundraising and meeting investors, while others make sure the business performs well during the fundraising process. Being a good storyteller helps people to remember you and initiate discussions. So it might be wise to see who among your founders is the best story teller. Start building personal relationships with potential investors, partners, and people who might connect you to them today, even if you are not fundraising yet.

Perseverance and patience are two of the best personal traits needed for fundraising. Rejections will happen and the hurt might feel personal. Just anticipate rejection in advance and don’t be upset when it happens. Just keep going!

The best time to raise money is when you don’t need it because you are able to walk away if the deal is not good enough for you. Having your startup development and fundraising milestones defined will help you know when to walk away. If you face a situation when an investor asks for more than 25% of your equity, you should be very careful. If you give up too much of your equity and control over the decision making too early, future investors might have strong doubts about your capabilities to successfully develop the business. Don’t get involved with the wrong people either, even if their financial proposal looks great. Sometimes it’s better to refuse an offer rather than to take the money and obligate yourself to work with people whom you don’t like or whose values are too different from yours.

Reach out your target investors daily

Once you have created a list of 30 to 50 target investors and ranked them according to your preference, you should start to focus on the top 5 angel investors or VCs you’d love to work with. Don’t be in too big a hurry to contact them with cold email or regular online form submissions. These approaches have some chance of success, but not much.

The best way to approach an investor is to identify a specific partner, principal, or employee in the investor’s company. Find them in your network and get to know them: check their Linkedin profile, read their blog and tweets, and see if they were featured in media. A good idea would be to get an introduction from another founder who has been funded by them or another third party who has had recent and frequent contact with the target investor. It’s not always as difficult as it may seem. For instance, you could make the first connection by recording a personal video where you address them individually (say their name and explain why you are seeking their attention rather than another investor). Furthermore, in the same video, you could reveal how you took your previous funding round and hit all the milestones agreed with your earlier investors. Then you can explain how the amount of the current round will help you reach the next stage of your startup, when you plan to raise additional funds, and what they could expect in terms of the valuation of your company, thus, the benefit of becoming an investor for the current stage.

Once you start receiving calls for meetings, try to schedule meetings with a few investors on the same day. Such meeting organization will help to create artificial urgency and make you look more important (as opposed to just another startup) in the eyes of investors. Don’t be arrogant with them (actually don‘t be arrogant with anyone). During your meetings with investors, try to have a discussion with them instead of pitching them. This is not a pitching competition. You are looking for partners and if you are sitting at the same table, it means you have at least some interests in common.

[chamberchamberchamber]

Setting up fundraising milestones

The first step in preparing to communicate with potential investors is to determine what your cash requirements are over time. The easiest way to do this is by visualizing your company’s cash burn rate and projected development milestones. Basically, this means you know how much money you burn (or use) each month developing your startup marketing strategy and how much time is needed to achieve each particular milestones of your project. By checking the remaining cash balance in your account you will have a clear view of how far you can go.

Therefore, if you set up your startup development milestones first, it will be much easier to communicate with investors and explain to them what amount of investment you need, for what purpose and when you need it. Having a clear picture of your investment needs will make the whole fundraising process more consistent, smooth, and with much greater chance of success.

Identify the key milestones of your startup development

Unlike the typical financial goals of any newly established company (that is, sustainable revenue and profit margin), startup milestones are specific events. Usually, they mark the most important points in a startup’s history, such as validating problem-solution-market fit, creating a prototype, hiring key employees, launching the product, getting a certain number of customers, and first revenues. Planning for these milestones allows you to focus on what you will be working on and put all your efforts into achieving them. Identifying and planning milestones also makes you think when and in what order you and your team should try to execute something. Following are the general types of milestones:

Market milestones (first customers, pricing strategy verification, distribution channel verification etc.). These milestones can be defined as gaining proof from market that, for instance, you can effectively reach a target audience of at least 1 million customers, that the product is useful to particular segments (gaining first 100 paying customers), that there is market (gaining first $100,000 in revenue), the business is scalable (growing to $1 million revenue per year), etc.

Product milestones are related to prototype production, product launch, and updates. The examples could be building a working prototype, delivering the first batch of product to retailers, or introducing an upgraded version of the initial product providing some kind major enabler.

Human resources milestones are attached to hiring or otherwise onboarding key people that will make a strong impact on your startup. Building a full management team would an example of a human resource milestone.

Funding milestones include not just the fundraising rounds (contrary to widespread opinion), but significant proof that your startup is ready for fundraising. For instance, the proof that your business idea is worth of potential investors’ attention, the proof that you are ready to talk to and negotiate with investors, and the proof that you are efficient with money (you know how to use funds to get the maximum result and you actually do that).

All investors seek to minimize risk without losing the opportunity to invest in a hot startup with huge potential. Investors are looking for the least risky point at which to invest. Therefore, the best time for a startup to seek funding is either right before or right after achieving key milestones. It depends on your chosen potential investor’s attitude. In any case be sure your fundraising strategy uses these milestones to your benefit without getting caught between them with no cash in reserve. Some fundraising experts advise that you should try to raise as much money as you can. There is, of course, a contrary opinion: you should not try to raise more money than you actually need to complete your key milestones and become a self-sustainable company (start earning a profit). The argument is simple: the more money you raise, the more equity investors will require in exchange.

Once you have a clear picture of your key milestones laid out on a timeline, you should be able to find a variety of points when you could start the fundraising process more efficiently and with a clear perspective how much money, for what purpose, and when it will be needed to develop your startup.

Estimate your financial needs relatively to key milestones

An investor may not necessarily know the exact amount your business will need to grow to the next key milestone. Therefore, you should calculate how much money you will need to achieve each of the key milestones. Investors usually rely on your ability to make and communicate your financial plans. If they can’t rely on that, they don’t invest! The reasonable investor will review your cash needs relative to your stated goals (the milestones you want to achieve) and check the structure of your monthly cash burn rate (the amount of money you spend each month). Investors might make weighted assumptions about ways to reduce your cash burn rate. Therefore, be ready for a scenario where you will be offered a smaller amount than you are seeking in order to achieve your next key milestone. Usually, this form of communications works quite well:

“This is what I need: {ideal amount of investment you estimated to be sufficient to achieve the next major milestones} to achieve {major milestones you are targeting}, but this is what I can accomplish {one or two smaller, but yet meaningful milestones} with this {smaller amount} investment.”

Decide on the right time to start fundraising

If you are not a bootstrapper, probably the best time to start fundraising was yesterday! The process of when you start looking for investors until you close the deal and get funds into your account may take quite a long time. During my global research on startups, I found several cases where quite interesting startups (with market validation and prototypes ready) were not able to get funded for a year or even more. It’s not unusual for the early stage startup round to take up to eight months from having the initial meetings until you close the deal. Just keep in mind that a lot of work must be done before any investor will agree to meet you. A study by Tom Eisenmann (2015) showed that it takes 12.5 weeks on average from meeting until the deal is closed in early stage investment rounds. There’s no doubt that your chance of success and the time required depends heavily on your communication, networking, and fundraising skills. The main task for you now is to estimate when you should start meeting with your chosen potential investors in order not to stall the development of your startup. You definitely don’t want to get into the situation where you run out of money without achieving key milestones.

Define your preferred conditions

Not all investors and investment conditions are equally good. So be sure you know what you are looking for. Even though it’s just a guideline, it’s always good to know in advance what investment conditions would satisfy you. Special attention should be paid to tranche investments as they are quite popular among investors who are ready to fund a startup but still want to minimize their risk if the upcoming milestones are not met.

Typical tranche investment is similar to the investor giving you half of the investment once the deal is signed, and half the investment when your revenue reaches a predefined amount. Most investors think that such approach is a good tool to motivate founders to reach a milestone and reduce the risk of their investment. However, trenches can be damaging in the long run, especially if milestones are not met or the startup lacks just a bit to meet them. This might demotivate founders if these situations are not discussed in advance. Another danger is related to reduced creativity. If the chosen milestone is easily achievable, this might limit the creativity of the whole team as nothing forces them to think how to grow the business faster. Tranche investment also might be a signal that maybe the investor is not ready for a full commitment or that there are some unaddressed doubts, neither of which is good.

If you find a deal for tranche investments, here is what you should consider:

Agree on simple and clear milestones without any possible interpretations and unexpected conditions.

Reduce the amount of money and set a closer-term milestone to be achieved (discuss the possibility of setting smaller milestones instead of one major one).

Define what help you can and should not expect from the investors (for example, if you need an investor with good connections to enter new market and you set the milestone related to export revenue, but the investor won’t take enough time to help you with his connections, technically the milestone might not be completed and that will be your responsibility).

During the negotiation process with investors, all these conditions might be put under question and modified. But at least you will have a clear vision and be able to declare your preferences and expectations to investors who become interested in your startup.

This is an excerpt from Thought Leader blog. Please visit the blog for more articles.