Marketing for Deep Tech Startups
During unfavorable sales periods, such as the harsh COVID-19 times, many companies with high cash availability, like startups that have recently raised funds, decide to slow their sales processes and invest in development, generating sales opportunities for companies that provide development. Having identified such opportunity, Inveready designed a go-to-market strategy for one of its deep tech startups.
How to reach a hundred million of revenues yearly?
Christoph Janz identified 5 different strategies (illustrated below) that can lead to that target: “hunting flies”, “hunting mice”, “hunting rabbit”, “hunting deer”, and “hunting elephants”. For the startup in question, characterized by its highly specialized and differentiated product with low virality, and following Janz’s model, only two ways could be convenient.
The first one is the “hunting elephants” strategy, where the startup would sell yearly licenses of €100k to a thousand big corporations. This strategy is like the golf club technique, mainly offline: it has a high Customer Acquisition Cost (CAC) and requires exceptional sales and networking abilities.
In the second, the portfolio company would mainly “hunt deer”, selling ten thousand yearly subscriptions of €10k. This would require a specialized internal sales team whose job would mainly be online, quite adequate for COVID-19 times.
The startup was advised to “hunt deer” without ignoring the possible elephants it finds on its way. For the long term and when the company has good traction and reputation, it can assess a focus shift to “hunting elephants”.
But, how would a startup go around that? What are the best marketing strategies to put into practice?
Average Revenue per Account (ARPA) per year. Source
The “hunting deer” strategy should be mainly based on Account-Based Marketing (ABM). ABM is personalized marketing on steroids targeting key commercial accounts with big value. In the long term, ABM aligns marketing, sales and account management and generates a return on investment significantly higher than traditional marketing.
In ABM, the first step is to define strategic accounts. The startup should pick those accounts that bring the biggest monthly recurring revenue (MRR), considering both potential amount and client longevity. Also, for each target company, all parameters, such as industry, size and margins, must be set.
The objective of the second step is to determine how to influence each decision-maker or interested party of the target company, and for that, an in-depth research is needed. Social media (LinkedIn mainly) and internal Customer Relationship Management (CRM) programs are good starting points.
Third, the startup designs for each targeted individual-specific solution that are creative and visually attractive. Those solutions in the form of messages or campaigns, or “signals”, can start as online advertisements and evolve into emails, for instance.
In the fourth step, the startup selects the best channels for each campaign, keeping in mind where the interested parties spend most of their time online. Some recommended tools for this stage are LinkedIn Account Targeting, Facebook Ads, and Google Ads using specific targets (these could be integrated across many types of websites, for instance, news pages).
Last, the signals are sent across the previously chosen platforms. It is recommended to control the frequency of the signals and to balance remarketing, for which investing in a CRM tool such as Salesforce, Hubspot or Pipedrive could be of great use.
The second go-to-market strategy, which could be conducted in parallel with ABM, is Channel Marketing. This one consists of finding a partner to distribute and commercialize the service, product, or technology of the portfolio company (in this case the startup). Generally, a co-branding relationship is established to create synergies. Four phases of the Channel Marketing process can be distinguished.
First, the startup looks for the perfect match for a potential collaborator, for instance, an OEM, Service Integrator, or Value Added Reseller (VAR).
Second, the company develops and organizes the strategy and methods that it will use in the campaign.
Third, the startup contacts the target partner in a very personalized manner.
Finally, once a partnership deal is secured, it is assessed and deepened in a way to develop the market.
But the job is not done there
For both strategies, the startup should continuously monitor campaign results, preferably with a CRM tool. This is done by designing a funnel detailing all stages of the sale process, placing each sale prospect (or leads) in its appropriate stage and assigning a unique sale conversion probability to each stage. The size of the sales pipeline is the probability-weighted average of the sales prospects values.