Accelerate Time to Revenue with Early Customer Engagement

This blog discusses how to start customer engagement early to accelerate time to market and first revenue

Hopefully most of you have read my article on developing long term relationships. The materials space is extremely relationship based. Industrial materials innovation has historically been slow and market forces have forced consolidation of suppliers into large multi-national organizations with decades of history with their customers. You are a threat to this status-quo. You aren’t just challenging business agreements, you are splitting up friends. You are an unknown. A risk. Their current supplier has been with them through thick and thin. They have pulled strings in times of need. They have sweat equity up to the gills. Oh, and they know that their product works already. Any new entrance has a steep up-hill battle to convert customers.

 

Many advanced materials companies start with providing samples. They spend years and millions of dollars developing their technology. They assume, if we just get some material for them to try, they can’t help but buy our product. I call this the “if we make it they will come” fallacy. Waiting to talk with customer after you have samples is a common mistake for material startups. They think that there is nothing to talk about before you have something to test. In fact, waiting to have material is far too late to start talking to customers. You miss a huge opportunity to establish early relationships, meet decision makers and influencers, and verify market need.

 

The last point is the most important. If you don’t talk to customers before you have material, how do you know that what you are making is worthwhile? This is similar to the concepts described in The Lean Startup. There is more to a product than a single material property. Understanding what product would get a customer excited is critical. Often it is a combination of properties, packaging, and usability that must all fit before you have a full product. Early conversations with customers give you an opportunity to understand these needs before going to customers. Many times, I find that understanding the entire list of product needs before scale-up influences process parameters and operating targets. Nothing replaces setting a clear finish line before you start the race.

 

Think about all the things that happen before a customer starts testing; identify the customer company, contact the decision maker, introduce the technology, identify a target application, baseline product specifications, generate interest and (finally) allocate resources for testing. This process can take months or years depending on the industry.

Now, at some point you will have to produce samples. But starting relationship development in parallel internal development shortens the time to testing and (hopefully) revenue. Not to mention this provides an opportunity to line-up multiple companies for simultaneous trials. The multiplicative effect of developing customer relationships means that you will leverage your capital investment quicker. Decreasing costs and improving utilization equate to improved profitability. The new workflow looks like this:

 

In addition to working in parallel, you are also lending time for the customers to get to know you. With so much time and touch points, there is opportunity for calls, dinners, and facetime, they get to know you. This helps them become comfortable with you and your company. Customer hate materials start-ups. They worry that you will run out of money and drop off the face of the earth. Any investment in time or resources will be lost. Giving your customer to vet you early on also helps them mitigate risk. Increasing comfort and decreasing perceived risk both help you achieve long-term success. Essentially, you are forming a relationship before you even start trials.

One trick I like to use is starting a relationship development drip campaign. In the early stages of development, progress is made over time. Development results, building milestones, new hires all are milestones in the companies progress towards commercialization. These are all opportunities for you to keep your target customers updated on your progress. Startup companies usually fail to keep customers updated, leaving them in the dark with where you are in the commercialization process. Customers want to know what is happening with your organization. They understand the fits and failures that go with developing a new technology. Allowing them to see how you manage through uncertainty, learn, adapt, and overcome challenges brings them into the process. Communications take very little time. They can be an email or phone-call overview monthly or quarterly updates. Provide opportunities to ask questions and provide input. Over time, everyone becomes more comfortable with each other. Do it properly and you will find that business leaders in the organization will start to ear-mark resources for your product.

The caution here is to not oversell or disclose proprietary information. Be consistent and honest, but keep key intellectual property secret. Speaking generally about progress helps, these should not be technical review calls. Instead, they should address the concerns the customer has; timeline to samples, capacity, and overview of current capabilities. Be timely with updates and responses. Importantly, don’t sell vapor, make promises or be over-confident. Talk about what you know and what you have accomplished. Blanket any projections with caveats and conditionals.

Early communication with customers helps them become comfortable with you and parallels your efforts towards commercialization. Clear consistent communication gives a foundation for developing relationships. Ideally you accelerate time to revenue.

That’s all for now!

Thoughts on this article? Please post comments and questions below!

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