How to do presell in a b2b environment
March 5, 2021
In this episode we discuss how to do presells in a b2b setting.
How do you do pre-sales in a B2B environment? So pre-sales are pretty common in a director consumer environment. You have pre-sales on books and music all the time. You have pre-sales, and I guess in the Old World when people used to have DVD players, I haven't seen a DVD and forever you have pre-sales with even cars and trucks like Tesla did. And those are pretty long presales because I think people were waiting on those for a year and a half for two years before they got their model three.
So pre-sales are pretty common in the direct-to-consumer world. But how do you do that in a business-to-business setting in a B two B setting? It's a little bit more difficult, right, because cash flow is super important to businesses and they're not gonna want to just take their cash and put it into something that's not gonna bring them fruit right away. Because to them, that is all you know. All of a sudden it's an investment. It's not like they're actually getting anything out of it, and especially if your company doesn't come through with actually creating the product that they need. Then they lost out on the return that they could have had on the money that they gave you. So it's really difficult to get B2B businesses to actually give you money in a pre-sell.
But the way that you can do it, however, is if you need to validate product-market fit, and you still need people to give money for your idea instead of pre-selling the entire amount, just pre-sell a deposit. So if you go to a company and you say I will have this product for you, this is the launch day, and because you're coming into it in the pre-sale right now, you will get this kind of discount, and all you have to do is just put down a 10% deposit. That deposit won't be that much cash for the business. They'd be more willing to probably give that cash to you. And then what you can do is take those deposits and try to get more deposits from other companies. Say yes, company A gave me a temperate or you don't even have to tell them the amount you can say the company gave me a deposit and you can start increasing your ask because you will have momentum. And you can say, Well, if you put a 20% deposit down, then you know we'll give you this thing at this kind of discount and you make it an investment for them.
So now, instead of having cash tied up in something that they're not going to get any kind of benefit for, these companies are thinking for themselves in the future, and they're coming into your product with a preset. But just what they deposit, however, you might be asking yourself. Okay, so I have money from deposits of these pre-sales, but it's not enough money for me to actually go out there and develop.
So if I'm using the GPS framework, which is a real customer, lists pre-selling minimum Bible markup, develop your solution and scale your solution. If you're using that method, the vertical method, then how do you actually develop if you only have a partial amount of the money and that part is actually easy? If you have businesses that are actually giving you money, then you've already validated your product-market fit. It is not too difficult to go to an investor or to friends and family and say, Hey, look, I have five companies that put down an X amount of money for this product, and all I have to do is just build this product and ship it to them.
Of course, there's gonna be some risks in building it. Some fulfillment risks and you would have to explain those risks. And the investors, whoever are investing in your product would have to invest in you and any risk that might be involved in actually seeing that product come to market. But because you have product market, uh, fit already validated, it's really easy to handle that money because these investors know that there's companies that are already on a waiting list with money in hand, waiting for this product to come out. So it's pretty much a no-brainer. So if you're looking to do pre-sales with B two b, don't think of it in the same way you would do direct-to-consumer presales. Go out there, talk to the market and start to get deposits, and then use those deposits this leverage for either more deposits or more investment. I will see you guys in the next episode
Continue your journey with me on my other channels:
So pre-sales are pretty common in the direct-to-consumer world. But how do you do that in a business-to-business setting in a B two B setting? It's a little bit more difficult, right, because cash flow is super important to businesses and they're not gonna want to just take their cash and put it into something that's not gonna bring them fruit right away. Because to them, that is all you know. All of a sudden it's an investment. It's not like they're actually getting anything out of it, and especially if your company doesn't come through with actually creating the product that they need. Then they lost out on the return that they could have had on the money that they gave you. So it's really difficult to get B2B businesses to actually give you money in a pre-sell.
But the way that you can do it, however, is if you need to validate product-market fit, and you still need people to give money for your idea instead of pre-selling the entire amount, just pre-sell a deposit. So if you go to a company and you say I will have this product for you, this is the launch day, and because you're coming into it in the pre-sale right now, you will get this kind of discount, and all you have to do is just put down a 10% deposit. That deposit won't be that much cash for the business. They'd be more willing to probably give that cash to you. And then what you can do is take those deposits and try to get more deposits from other companies. Say yes, company A gave me a temperate or you don't even have to tell them the amount you can say the company gave me a deposit and you can start increasing your ask because you will have momentum. And you can say, Well, if you put a 20% deposit down, then you know we'll give you this thing at this kind of discount and you make it an investment for them.
So now, instead of having cash tied up in something that they're not going to get any kind of benefit for, these companies are thinking for themselves in the future, and they're coming into your product with a preset. But just what they deposit, however, you might be asking yourself. Okay, so I have money from deposits of these pre-sales, but it's not enough money for me to actually go out there and develop.
So if I'm using the GPS framework, which is a real customer, lists pre-selling minimum Bible markup, develop your solution and scale your solution. If you're using that method, the vertical method, then how do you actually develop if you only have a partial amount of the money and that part is actually easy? If you have businesses that are actually giving you money, then you've already validated your product-market fit. It is not too difficult to go to an investor or to friends and family and say, Hey, look, I have five companies that put down an X amount of money for this product, and all I have to do is just build this product and ship it to them.
Of course, there's gonna be some risks in building it. Some fulfillment risks and you would have to explain those risks. And the investors, whoever are investing in your product would have to invest in you and any risk that might be involved in actually seeing that product come to market. But because you have product market, uh, fit already validated, it's really easy to handle that money because these investors know that there's companies that are already on a waiting list with money in hand, waiting for this product to come out. So it's pretty much a no-brainer. So if you're looking to do pre-sales with B two b, don't think of it in the same way you would do direct-to-consumer presales. Go out there, talk to the market and start to get deposits, and then use those deposits this leverage for either more deposits or more investment. I will see you guys in the next episode
Continue your journey with me on my other channels:
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