"The final copy was exactly what we wanted, fitting our length, style, voice, and formatting requirements."  

Erik Griffin, SOHO Prospecting

TechPromo Newsletter, April 2006

Marketing Newsletter For Technology Promotion

Plus This Quick Tip -
How To Get The Best Response From A Postcard

You're in charge of a new product launch, something you're really proud of. You studied the new market and talked to customers to be sure they need it. Then you defined the product and its development schedule with what you discovered. You made your pitch and got a green light from the CEO.

Lining up your product team was relatively easy - people wanted to work with you. The CEO trusts you, her right-hand man, to find financing to get started - and that's all you need, right?

Well, no. There's a lot more to it than a visit to your venture capitalist.

No Credibility - No Financing
Private placements raised over $416 billion in the United States in 2002. They're a popular way to raise capital without a complicated IPO or SEC registration, especially for startups needing $100,000 to $20 million. Companies circulate a private placement memorandum to prospective investors. A PPM discloses the company's purpose, its product, its officers, and use of the money it raises. Any shortcomings show up like spots at the dry cleaners. The PPM needs to be flawless to attract investors.

How Not To Market Your Company
This doesn't always happen. I got a sales call recently from a new firm formed to improve and resell distressed east coast real estate. Its president described the company and his own experience as a stockbroker specializing in initial public offerings, and asked if I was interested. After I satisfied his minimum requirements of some interest plus enough net worth and a healthy pulse, he sent me his PPM. That's when his business unraveled.

I expected strong risk factors in the PPM - they scare off conservative investors and keep the company out of legal trouble. I winced a little at language citing a disciplined approach and an emphasis on satisfaction, quality, value and workmanship as critical success factors in the competitive housing market. The biggest turn-off came when I read about money use and management.

Too Much Overhead
The company will pay its three managing officers and any employees nearly half the proceeds from the first placement. This sharply cuts the amount available to invest in property, the purpose of the business. Unpaid salaries from employees not yet hired will go to the officers - a big chunk at the start when there are no other employees. It'd be much better to use that money for more property.

No Experience
None of the officers have any real estate experience. Before he was a stockbroker, the president owned an auto towing business. The corporate secretary has owned and operated consumer furniture businesses. The third officer is a consultant, a telemarketer with an unspecified college background in history, psychology and business.

To compensate for their lack of experience, the company will rely on a third-party real estate brokerage where the president has family. This seems more like nepotism than good business strategy.

Know Your Audience
People who put up investment capital aren't making impulse buys. They're as sophisticated as a vice president approving a $200,000 wafer inspection station for a semiconductor fab area. When there's a lot of money and risk involved, the investor wants to see a company's credibility and a track record in their market.

Super salesman Jerry Sanders started Advanced Micro Devices in 1968 after a disagreement with management at Fairchild Semiconductor. Sanders had an electrical engineering degree, but knew he needed people with recent experience in design engineering, operations and other parts of the semiconductor industry. So he gathered Jack Gifford and six other veterans from Fairchild. His goal was a company making both analog and digital circuits, second-sourcing others' chips to begin with. Sanders' age and the track record of his team gave him the credibility he needed to raise $1.5 million to start AMD.

The Right Touch When You Talk To Them
The real estate investment company's president used a brash, hard-sell approach to lead me into buying interests in the company. When he called to follow up after I'd read the PPM, he couldn't understand why I wasn't eager, even when I pointed out his inexperienced management team. He said I was passing up a f****** great opportunity.

A pushy sales pitch may work with consumers buying shoes or even publicly-listed stock, but not with large investments - or businesses looking at capital equipment. And unprofessional language never convinces anyone.

What's Your Marketing Plan?
The company's PPM discussed its real estate acquisition and development strategies in very general terms. The approach to marketing developed properties was also vague, referring to unspecified "…non-traditional [and] traditional advertising vehicles and media sources to maximize the impact of its marketing budget." A unique market niche wasn't there. In a very competitive real estate market, this didn't give me confidence in the company's success.

Vague strategy and management without a track record equals no sale.

It pays to have direct experience in your product area. If you don't have it, you need to hire it. A marketing plan for an underserved niche needs to be clearly presented to anyone who approves or invests in your product. At the very least, you need a strategy that makes your benefits and features stand out from everyone else's.

Pitch To Everyone
Print marketing to investors or businesses must speak to three or four different audiences. A PPM or IPO agreement has to meet legal requirements, but it also needs to show investors why they should tie up their money with your company. Those investors may represent a venture capital firm, but they also have personal concerns like career advancement and risk avoidance. You need to satisfy those concerns while you describe your product benefits and market knowledge. (See TechPromo Newsletter, March 2006 - Who's Your Audience?)

Show The Details
For the real estate investment company, investors need to see exactly how you plan to acquire foreclosed property ahead of the competition. They need to know how you plan to get through the permit and renovation jungle with less time and cost. And they need to see exact cost and resale figures to get an idea of their return on investment. Hard numbers are much more convincing than vague trends or general descriptions.

If your new machine improves wafer throughput 23% while increasing chip yields at least 12% in a 65nm process and costs 8% less than your old machine, say so. Engineers, managers and buyers are all interested in those numbers for different reasons. Use separate marketing sections to emphasize numbers and features each decision maker wants.

If they don't see the numbers they need - and your credibility in the industry - they won't buy.

Mark Bohrer is a business writer and former engineer. He's based in Silicon Valley.

You need a niche - just looking for distressed real estate isn't enough.

A postcard has one big advantage. There's no envelope to open - it always gets looked at.

You won't use one to tell your whole story. But a teaser headline about something your prospect needs, followed by a lead to a free report she can only get if she goes to your website or faxes in a reply - that's where a postcard shines. Or you can offer a useful freebie she gets only after she signs up online or mails you her contact information.

Good Pull With More Offers
A postcard with a short, irresistible message will pull a two to four percent response depending on your offer. Giving your prospect a choice of hard and soft offers works best. The hard offer involves calling a salesperson, going to a seminar, or some other active step. A hard offer alone gives a lower response. Adding a soft offer - the free report, free item or free catalog - gives a better rate, as much as five to ten percent.

Choice = Higher Response
Your prospect's more likely to respond if you give her several ways to do it. A double-postcard with a post-paid business reply card she tears off lets her fax or mail her information. Include your email address and URL, and she can also communicate to you online. A double-postcard's initial cost is a little higher, but the cost per customer may actually go down with the improved response. Some people are old-fashioned - they prefer dropping a card in the mail. Make it easy for everyone to choose you.