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March162022

Pitching for Results – Products, Services, Marketing and Customer Acquisition

Jeffrey Kovacs, CPA, CGMA

3.16.22 | Industry Insights

Our Pitching for Results series continues as we share the key lessons we have learned about developing and presenting effective investor pitches. We hope to share additional lessons through this series. Whether you’re a company seeking investment, an advisor helping companies create their pitches or investors attempting to find that perfect investment, we hope you find value in our insights.

This installment begins with the next steps in the pitch process.

Identify Your Products and Services

Clearly defining your products and services to prospective investors is central to developing their understanding of the “Big Problem” your company is attempting to solve. We have witnessed countless pitches where an investor can listen to a pitch and, at the end, begin to ask questions of the entrepreneur that indicate that they were not able to clearly communicate what the company’s products or services are attempting to address. Investors must quickly and concretely grasp the company’s products or understand their services, otherwise, they will be unable to differentiate the company from its competitors and fail to see the value proposition provided by the company’s products or services.

A crucial first step to energizing investor interest is to differentiate your products and services from your competitors and demonstrate their uniqueness and novelty. The best pitches help investors understand how your products and services are uniquely positioned in the market to improve upon existing solutions or completely leapfrog those solutions to new and better outcomes. Investors look to invest in companies that produce products and services that make significant incremental improvements or solve a big problem in a new way.

An emotional connection to a product or service is one of the most important key differentiators a company can develop. Consumers will buy products and services that they engage with and care deeply about. Creating an emotional connection between users and your products and services leads to quicker adoption and a competitive advantage. Customers who are indifferent about your product or service will continue to use existing options until other alternatives prove themselves so vastly superior to their current solution that they feel compelled to change. Entrepreneurs need to demonstrate why current and future customers care so deeply about the product so the investor can connect the potential investment to the company’s ability to scale.

Engaging early customer adopters about their product experience can provide meaningful feedback regarding user needs and expectations. These experiences can then be used in a series of iterative experiments that lead to rapid product or service feature modification, enhancing or creating differentiation and broader market acceptance. Investors are looking to fund companies and teams that can quickly learn, adapt to feedback, and rapidly bring products and services to market that are responsive to customers.

Identify the Marketing and Customer Acquisition Plan

A company may have the best products or services on the market, yet the target audience may never find them without a comprehensive strategic marketing plan. The marketing strategy needs to be based on thorough market research and focused specifically on those customers most likely to be early adopters of the products or services within the total addressable market. Investors seek out management teams who understand customer needs, buying patterns and the emotional attachments to the products and services. They also invest in management teams who take the time and have the expertise to obtain and synthesize the appropriate information and craft detailed marketing strategies. Investors need to understand the capital necessary to fund these initiatives and the time frames involved. Furthermore, management and investors will use this information to develop sales forecasts that are based on solid market research, thereby reducing the risk that the sales model will be incomplete and inaccurate.

Sales and marketing teams will design a focused, targeted customer marketing campaign based on a well-crafted customer acquisition strategy. Key elements of this strategy include an understanding of the length of the sales cycle, “stickiness” of the customer relationship and costs of customer acquisition. Customer acquisition cost is an essential metric for investor understanding of the company’s profitability and cost structure. It also provides insight into opportunities to reduce costs as operations scale. These costs should be identified initially on a per customer basis and monitored over time. Timely monitoring provides feedback on the effectiveness of the strategy and opportunities for changes as necessary.

Stay tuned for the next installment of Pitching for Results, where we will discuss Traction, Team and Competition.

Questions: Contact Jeff Kovacs at 646-954-9910 | jkovacs@berdonllp.com or reach out to your Berdon Advisor.

Berdon LLP New York Accountants

 

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