The Internet Has Changed the Sales Cycle Causing the Purchase Market to Change, Buyers Have EVOLVED and Acquiring Customers has Changed!

With the advent of the internet and social media sites has changed how buyers shop. Prior to the internets explosive growth phenomenon when a buyer needed a product they would turn to a local salesman, request brochures and other information from which to make their decision. Sales teams were the sole focus for information to make a purchase and involved early in the process. Decisions were made from the information of that sales force. Today, buyers no longer need to engage with a sales force to get the necessary information for the early stages of the buying cycle. Buyers now come to the point of purchase fully informed from online research by learning about the sellers’ product and services offering, product reputation, history without ever talking to the sales force. Buyers have compared comparable product offerings and pricing before ever seeking to make a purchase. They determine who has the best value proposition and control the purchasing process now.

This monumental shift of the control of the buying cycle has now moved from the seller and the power moved to the buyer. Buyers no longer need informed sales forces to guide them. As a fact if we engage a sales force with the buyer too early we risk losing the sale entirely.

Success in the buying cycle now is all about marketing intimacy of your prospective demographic. Understanding your target audience, targeting your message and talking to them in the language of the product offering as they know or understand it is more critical than ever. Focusing on the right channels by creating the right memorable communication experiences is the new closing modality that will resonate and convert.

(This new internet buyer is highly knowledgeable of the product offering and by such has created a more challenging environment for marketers who seek to drive high quality leads to their sales team. Quality leads is about being ever present in finding the right people at the right time.)

It takes at least 10,000 hours (5 Years) of dedicated practice in a given field or area of expertise allows a person to become truly “expert”.

Having years (and thousands of hours) of dedicated focus and practice within a specific niche is obviously highly valuable and allows a person to have a unique, proprietary perspective on that niche (and usually highly valuable expertise). But how many hours is “enough” to achieve expertise status? One take on the subject we (and many others) found interesting was Malcolm Gladwell’s in the book Outliers where he popularized the theory that 10,000 hours of dedicated practice in a given field or area of expertise allows a person to become truly “expert”.

10,000 rule of hours practiced to claim to be an expert

Dos And Don’ts When Making Your Venture Capital Pitch

Getting a meeting with a potential investor is the first step; now you’ve got to get that presentation perfect and make your pitch. The good news is that venture capital companies are run by real people looking for specific information and expertise from you. Show that your proposal has the potential to become a money-making business by talking about the things that your potential investor deems most important.

Do emphasize the strength of your team

An under-equipped, passionless team can stop a startup cold, even if the product is brilliant and the market is ready. A VC is looking for a team that is passionate (enthralled by the idea and ready to share the passion), complete (able to cover all the necessary areas of the business), committed (you don’t want a key team member walking away at a crucial moment), and motivated (the business should offer them payback, too).

Do demonstrate your understanding of the market

Know your target market inside and out. Do your research, do it again, double-check it, and then do some more. If you’re not able to accurately identify and describe the market you’re attempting to get a share in, a VC will immediately hear warning bells. It’s not enough to have a great product; you’ve got to have a market ready to pay for it. And it’s not even enough to have a great product and a great market; you’ve got to demonstrate your understanding and ability to reach that market, get its attention, and then get its business.

Do demonstrate the profitability of the market

Some markets are saturated; some markets are new or underdeveloped. Show what your target market has to offer in terms of money-making potential for your investors. Get data on annual spending, demographics, growth and any other factor that influences the buying power of your market. Then show how your business will get a share of that buying power.

Don’t ignore or underplay your competition

A VC knows that competition is part of business. Pretending you don’t have any, or that they don’t matter, is the mark of an inexperienced (and overconfident) startup. Be prepared with detailed information about your competition: who are they, what is their size, their growth, their market share, their weakness, their strength? How are they like you and how are they different?

Do show how you will gain competitive advantage

Competition definitely doesn’t mean that the business is a bad idea; you just need to show your understanding of the competition, and then your strategy for growing and gaining despite the competitors you will have in the market. Identify your competitive advantage and show how you will articulate it and convince customers to come to you instead of to your competitors.

Don’t be afraid to ask for adequate funding

You’re at the VC firm to get money, so don’t be shy about asking for it. Talk in realistic figures about what you’ll need to fund all aspects of your startup. Don’t throw out low numbers that show an inadequate knowledge of what it will cost to make your business succeed. Big numbers may scare you, but they won’t scare away an investor who is convinced of your business’s ability to succeed. Low-balling, however, will make you look like an amateur.

Do assume that you will succeed on revenue projections

Be as cautiously optimistic in revenue projections as you can be, because investors will cut your numbers by some percentage to get their own version of realistic revenue projections. Don’t make numbers up. Be positive and don’t be afraid to assume success. If you’ve done your research as thoroughly as you should have, you can afford to be positive.

Don’t underestimate the timing on your break-even target

Some businesses will take longer to reach break-even point than others. As with the funding request you make, it’s better to be realistic and show you understand all the factors involved than to be naive about how long it will take your business to break even. Create a realistic time line that fits with the actual progress your business must make to reach the break-even target.

Don’t ignore key risks

Investing is a risk, no matter how sure a thing a particular investment may seem. VCs understand this, and they aren’t afraid of risks, in general, just of unidentified and overlooked risks. Be ready and able to identify the key risks your business will face.

Do show that you have a plan for each major risk

It’s the role of business leadership to know the risks ahead and to have a plan in place to overcome them. What will you do if you face the potential setback? What is your contingency plan for each key risk?

Don’t get too detailed on the technical side

Be ready to answer detailed questions about the technical aspects of your business, but don’t make them the bulk of your presentation. At most initial meetings, VCs are looking at the technical concept in general and the business model in particular. If the business model is strong, the next step may be to dive into technical questions. Don’t put the tech side ahead of the business side, however.

Do take time to research your audience

Gather as much information as you can about the people who will be watching your presentation. You may discover pertinent information, trends or questions that are normally asked by particular people. The more prepared you are, the better your presentation will be.

Do target your presentation to the firm/audience

Take another step beyond knowing the individuals in your audience and find out about trends in the VC firm which will be hearing your presentation. They may have a track record of supporting business startups such as yours, or your idea may be something out of the norm for them. Knowing about the firm will allow you to tailor your presentation to what they value most in potential investments.

Do leave time for questions

Plan for your presentation to take about 2/3 of the time you’re given, and leave the rest of the time for questions. This time is when you may find yourself explaining in more detail about technical aspects of your business, or when you’ll have more opportunity to show your team’s expertise, your knowledge of the market, the profit potential and the preparation you’re making for all the competition and risks you will face.

Really good article. A couple additions:

1. For VC funding, it’s not enough to “know your market”. You need to demonstrate that it’s a very large market. VCs don’t fund great companies that serve small markets, they need BIG outcomes so they only fund ideas / companies that attack what at least appear to be very large markets.

2. What can really differentiate you from the thousands of other pitches a VC sees is some sort of proof that you have an unfair advantage developing the business: a critical patent, a set of relationships that are hincredibly vital to getting launched properly (LinkedIn and the way Reid founded it are a perfect example of this), or a team that is exceptionally well-suited to execute the strategy.

3. Barriers to entry. VCs fund businesses that don’t have barriers to entry all the time, but they always want you to have barriers to entry explained in your pitch. Have answers to this.

Annie Mueller is a freelance writer based in St. Louis. She covers small business topics with a focus on lean/zero budget start-ups, business blogging, and simple (sane) ways business can use social media without selling their souls to Facebook. Her work can be seen online at Investopedia’s Financial Edge blog, Young Entrepreneur, Wise Bread, Organic Authority, Modern Mom, and her own site, AnnieMueller.com. Find her on Twitter: @AnnieMueller.