Landing & Managing Proof Of Concepts
At Bowery Capital, a fair number of our SaaS investments focus on landing large contracts with Fortune 500 customers. High revenue, great logos, and excited prospects are juxtaposed by long sales cycles, multi-stakeholder discussions, and epic procurement battles. Often times in the beginning, founders struggle to properly use a tool in their arsenal called a Proof of Concept (POC, aka a “Trial”) and face challenges in how to execute on it effectively. Converting prospects to POCs as well as managing proof of concepts can be the difference between early founders staying on track for a Series A, or relying on bridge financing. We thought it would make sense to put pen to paper and lay out some key considerations when thinking about the Proof Of Concept (POC) phase of sales. This work is a compilation of much of what we have seen through our Acceleration Team.
1. Focus On Branding & Exclusivity With Your Messaging. While managing proof of concepts, structure and name your POC process and program. Companies in our portfolio use names like “Lighthouse Program” or “First Movers Program” and may only allow their first 10 customers to be in it, with the benefit to the customer of getting a discount, early access, and face time with the founders of a new product before their competitors get to utilize it. Using names like this to structure a more formal effort in the beginning makes it feel bigger than it is, and it also gives you a more formal reason to reach out. Focusing on the prospects that are later stage in your funnel and enhancing their interest by pitching exclusivity in the program can also be helpful. Utilizing language like, “you will be our only automotive partner through this program” can increase close rates, because it’s directly linked to one of the main things that influences people in economic situations: presenting a scare, valuable, and fleeting resource.
2. Document, Document, Document. After closing the POC, make sure you and your team put together a Statement Of Work (SOW) that clearly shows what you are going to deliver, specific features, metrics, who owns what, and your goals for success in working with the client. This is key to success for managing proof of concepts. Get both you and the new customer to sign on the dotted line if possible. You now have a “rules of the road” document which will be useful in the future. If you sense your customer asking for features left and right (i.e. “feature creep”), you can refer back to the document. Don’t budget for creating this feature if it is not in the document, or a key part of your prior conversations with the client. Always document everything so you can refer back to “who said what when”, especially since this will be key for leverage during your negotiations with this customer down the line.
3. Have A Sales Rep That Just Focuses On POCs. Have someone own the POC segment and the program that you put forth. Ensure they are well trained in the consultative selling method and don’t just jam a purchase order down the throat of this prospect. In fact, they should think of themselves more as an enterprise AE with additional user-research skills and goals (at least in the beginning). Nothing kills these deals more than an individual contributor that is incentivized to close a deal quickly, by pushing something that is not going to close. Even worse, individuals like that won’t relay critical information back to the product team and founders who are trying to find product-market fit. Use your sales reps that mimic more of an engagement manager or someone who has deep understanding of the customer success process and systems.
4. Define The True Purpose Of The POC. Demonstration of “full value” quickly is almost impossible when managing proof of concepts. With that in mind, figure out what matters most to the customer and continue to pique interest around that. The purpose of the POC should be to de-risk any previous points of contention on whether or not the client should utilize your solution. Overall you will narrow the scope of what you are doing but in all likelihood you will enhance the ability to succeed. We recommend finishing the POC with a memo or presentation to discuss all of your work together, stakeholders involved on both sides, problems identified and addressed, and what you’re excited to accomplish with the customer moving forward. This binds your end users with the end decision makers, and creates an exciting foundation to launch off of into the customer signing a full contract.
While there is no silver bullet to the POC process, we hope these tips and tricks are helpful to any SaaS founder attempting to move in this direction.
If you liked “Landing & Managing Proof Of Concepts” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog.