Gathering Relevant Business Intelligence (BI) Using a …illinois.edu/551/idea_validation__ken_welch.pdfIdea Validation and Opportunity Assessment Before proceeding, rate your chances

Gathering Relevant

Business Intelligence

(BI) Using a

Pro-Active Sales Process

Invention to Venture

UIUC 02/26/11

Virtual Sales Dept ©

Idea Validation and

Opportunity Assessment

Idea Validation and


• You have a good idea for an enabling

technology.

• You may even have a working

prototype

• You’ve made up your mind to build a

company based on this technology


UIUC 02/26/11


Idea Validation and


Before proceeding, rate your chances by taking this Success Indicator test (Check 0ne):

#1- I have identified a problem and have created a technology to solve it.

#2 - I have created a technology and need to find a problem that it can solve.


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Idea Validation and


Success Indicator Scoring:

#1 - I have identified a problem and have created a technology to solve it. – If you checked this, proceed.

#2 - I have created a technology and need to find a problem that it can solve. – If you checked this, go back to your lab and find an answer for question #1.


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Idea Validation and


Assuming you answered #1:1. Write out a benefit statement that a prospect for

your technology will understand.2. Emphasize how your invention helps a prospect

solve his or her problem better, faster, cheaper.3. Make it more concise until you can deliver it in

22 seconds or less (hint – eliminate any detail of how the technology works.)


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Idea Validation and


To Assure Success or Attract Investment You Need Answers to These Business Intelligence Questions:

1) Who will buy?2) How much will they pay?3) How many potential buyers are there

(How big is your market)?4) How do you best identify and approach

prospects?


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Idea Validation and


What process can you use to find the answers?

1. Research – UIUC Resources– Jeff Kurtz - OTCR Program– Ron Watkins - Illinois Business Consulting– Andrew Singer- Technology Entrepreneur Center– John Clarke & Amara Andrews- LAUNCH Program

2. Put up a web page and determine if anyone will enter an order

3. Proactively Ask someone (many someones) to spend money and buy an instance of your technology


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Idea Validation and


Attempting to actually sell your early stage technology can return very practical business intelligence:1) Define market size, competitors,

pricing and sales cycle2) Define your sales process3) Help guide development


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Who Am I?

• I’m a 40 year professional sales driven entrepreneur who has never had a salaried job

– Last 10 years have worked with early stage software technologies, particularly math and physics based

– Clients have included Fortune 500 companies, venture firms and local technologies helping them validate their investments, make their first sales, or expand into new markets

– Have licensed an OTM Technology and am incubating a company for my older son.

• UIUC Graduate


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Definitions

•Sales is NOT the plural of a four letter word-A “good” sale results from a positive decision by a qualified

prospect for your product or service.

-Good quality, profitable sales result from a process, not (just)

the overwhelming charm of the salesperson.

-Repeat sales and referrals result from satisfied customers

-Sales (process) includes a follow-up and is not a one time

event


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Definitions

• Qualified Prospect• Has a need for your product/service

• Has funds (Power to buy)

• Is Identifiable

• Is Approachable


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Thought Provoking Views

Regarding Sales

•Companies buy from people, not other companies•Decision Makers are people

•Xerox, Circuit City, and Car dealerships are examples of bad choices

•Benefits sell your product or service. (What can it do for me?)

•The capabilities merely qualify you for consideration.

•Although a prospect may show interest in your solution, ultimately it must

advance the prospect’s ability to accomplish his/her goals.

•Many failed companies have resulted from the seller giving

facts without a benefit statement•This allows a prospect to make an unfavorable decision (This software is

powerful. Prospect thinks expensive and hard to use.)

Idea Validation and


3 Basic Models for Distribution

1) End User

2) Center of Influence A. DistributorB. Rep Model

3) OEM A. Your product makes someone else’s better


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Commercialization Sales

Process for End User

Technologies

Idea Validation

for an

End User Technology


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Technologies

• Identify 100 potential users (suspects)• Develop a 22 second capability

statement• Develop sales collateral• Call 100 potentials• Follow up with email • Send sales collateral to prospects• Record results


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Technologies

• Identify your target suspects– Need your technology– Ability to Pay– Approachable

• Can you communicate with a decision maker?

– Sales Cycle• How many stages to a decision?• Price of product/service vs. budget• Layers of management/Purchasing officers

– Who is your competition and why are you better?




Technologies

• What would motivate a prospect to purchase your product or service?• Market Pressure – New facility (Business or church)• Regulatory Pressure – Compliance Tools• Market Inefficiency – Whole Life Insurance• Quality• Price• Convenience• Component to make their product better


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How Do You Find

Likely Prospects

Define the Market for Your Invention

Identify Firms active within the market

Data Mine for Persons/Positions

Target Key Decision makers with power to buy


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Sample Web Page

Prospects:

•Section508 Coordinators (FOIA)

•State Agency Webmasters and CIO’s

•Community College IT Deans and Webmasters


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Technologies

•Keys for an Effective “Cold” Approach:

-You have 22 seconds to get your message across

-Emphasize benefits (what it can do for the customer)

-Avoid reciting facts

-Call before Mailing/emailing

-Build interest in the information

-Point of 2nd Call – Send more information to start a

dialogue


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Technologies

What Metrics Should You Expect?

Out of each 100 calls

• 20 should ask for additional information

• 3 - 5 should express interest in purchasing


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What if the Purchase

Metrics Don’t Conform?

• Out of each 100 calls fewer than give buy 5% buy signals– Benefit message too weak– Price too high– Unsuitable market– Product not compelling– No real demand– Sales Cycle is longer than anticipated– You haven’t called the right people or made enough calls!


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Be Prepared to React to

Prospect Input

Listen, Listen

Prospects will tell you what they

really want

Two Ears, One MouthGive Them What They Want

Don’t create a solution and go

looking for an problem

Heinz Ketchup Solution

Restaurant pagers example

Idea Validation and


Results of the process:• You’ve improved your idea• You’ve identified your market• You have a range of acceptable pricing• You can project market penetration results to

10,000 prospects to calculate cost of acquisition• You can prepare a reality based business plan to

present to investors


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Idea Validation and


Another result of the process:

You can design a launch

sales plan.


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Thanks for your attention

Questions/DiscussionKen Welch

[email protected]

mailto:[email protected]


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Decision Cycles

Samples of Various Cycles

Related to Price and

Decision Path


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Simple Sales Cycle

- Retail Walk-In <$100

Customer Sees

Item In Display or

Responds to Ad

Then Walks In

Decision in first 5 minutes

•Product Availability

•Product Suitability

•Salesperson

•Atmosphere (Sales Culture)

24 Hours


UIUC 02/26/11


Simple Sales Cycle

- Retail Walk-In $10,000+

Customer Sees

Item In Display or

Responds to Ad

Drives In

Decision in 1 Hour/Close in 48 Hours

•Salesperson

•Atmosphere (Sales Culture)

•Product Availability

•Product Suitability

•Follow-up

•Customer Suitability (Credit)

48 Hours

Car

Business

Example

UIUC 10/06/10 Virtual Sales Dept ©

Sales and Marketing Buying

Cycle for a Software Co. (XYZ)

1 - Prospect Finds

Project Requiring

Products

2 - Prospect Researches

Products – Finds youNOTE: Prospect is usually an integrator

operating as an independent business or is a

captive within a large company.

3 - Prospect Gets your Quote –Decides to use in Project Bid

THIS IS THE BUYING DECISION!!!5 -Prospect Wins

Bidding Process/

Receives Approval

6 - Prospect Orders Proof of Concept Prototype Units

THIS IS THE ORDERING DECISION

7 - Deployer

Orders

Deployment

Prototype

NOTE: may be the

integrator or a

deployer/integrator

4 -Prospect

Submits Bid

OR

Seeks

Project

Approval

8 - Deployer

Places

Ultimate

Order

Complex Sell Cycle Example

$50, 000 Sale + Purchasing Dept Involvement +Government Approval = 18- 24 Month Sales Cycle

Documents

Gathering Relevant Business Intelligence (BI) Using a …illinois.edu/551/idea_validation__ken_welch.pdfIdea Validation and Opportunity Assessment Before proceeding, rate your chances