The Pitch: Identifying Products, Services and Customer Acquisition– August 13, 2019 by Jeff Kovacs

Our blog series shares the key lessons we have learned about developing and presenting effective investor pitches. 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 “The Pitch.”
 
Today’s post shares the next steps in the pitch process – identifying products, services, and your marketing and customer acquisition plan.
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1. Identify Your Products and Services – Energize Investors!

Clearly defining your products and services to prospective investors is central to developing their understanding of the problem your team is solving. There’s nothing more frustrating as an investor than hearing an entire pitch and still not understanding what the company’s products or services provide. If an investor can’t concretely grasp the company’s products or understand their services, they will assume they are similar to other products and services they know. The competitive advantage of differentiation is lost.
 
So, take the opportunity of your pitch to energize investor interest. Help investors understand how your products and services are uniquely positioned in the market to improve upon existing solutions or completely leap frog those solutions to new and better outcomes. Products and services that don’t make large incremental improvements or solve a big problem in a new way will never get funded.
 
The key to differentiation is to understand the connection to caring. Consumers will buy products and services that they care about. Creating an emotional connection between users and your products and services leads to quicker adoption and a competitive advantage. Customers who can’t find a reason to care about your product or service will continue to use existing options. Only alternatives that are so starkly superior to their current solution will compel them to change.
 
Engaging your customers about their product experience can provide meaningful feedback from early customer adopters. This feedback can be invaluable in understanding 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. In turn, this enhances or creates differentiation and broader market acceptance. Investors are looking to fund companies and teams that can learn quickly, adapt to the feedback provided, and bring customer-responsive products and services to market rapidly.

2. Identify Your Marketing and Customer Acquisition Plan

A company may have the best products or services on the market, yet without a comprehensive strategic marketing plan, your target customers may never find them. The marketing strategy must be based on thorough market research and focused specifically on those customers most likely to be early adopters of the products or services. Investors want to see that management teams understand customer needs, buying patterns, and emotional attachments to the products and services. They also want to know that management teams have invested the time and expertise necessary to gather this information and craft the detailed marketing plan. The plan allows investors to understand the resources necessary to fund these initiatives and the timeframes involved. In addition, it provides management and investors with the information necessary to develop sales forecasts based on solid market research which, in turn, reduces the risk that the sales model will be a work of fiction.
 
Complementary the marketing plan, a customer acquisition strategy drives the sales and marketing teams to design a focused, targeted customer marketing campaign. Included in this strategy is an understanding of the length of the sales cycle, the “stickiness” of the customer relationship as well as the costs of customer acquisition. Customer acquisition cost is an important 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.
 
Look for the next installment of The Pitch, focusing on traction, founders, and team and competition.
 
Please contact a member of your service team, or contact Jeff Kovacs at jkovacs@cohencpa.com for further discussion.
 
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.