NEWSLETTER NUMBER 6

Title:  "Secrets of a Successful Solicitation"

 

A successful solicitation, whether it's to sell a product or service or to find a licensee for an invention, depends on preparation, exposure and persistence.

Preparation

In any presentation, you will maximize your chance of success, if you view your product or proposal through the eyes of the prospect.  It seems like just plain common sense but it's surprising how many presentations focus on a product's features and not how the prospect will benefit by making the purchase, or licensing the item.

In addition, many presentations lack facts, figures, market research, i.e. substance.  An inventor's favorable opinion or bias toward his product is expected but that doesn't form the basis for a buying decision.  The issue is not whether you love your product and see a need for it but whether others, many others do.  Convincing them takes preparation, thoughtful preparation.

Exposure

Okay, so you've done a good job putting your presentation together, you've got the facts, figures, features and benefits down cold.  The next step is exposure, lots and lots of exposure.  Not exposure to just anyone but targeted exposure to qualified prospects.  Solicitations take time and can result in a fair amount of expense (i.e. creation and production of presentation materials, phone expense, travel, postage or shipping, administrative labor, etc.), so you must make your shots count.

Persistence

By persistence we don't mean making a nuisance of yourself by harassing your prospects.  You will have to recognize the point at which your repeated contacts become counterproductive and back off or you will alienate the prospective client.   By persistence we do mean following up every lead to its logical conclusion and contacting your prospects regularly during the evaluation process to assure that all materials have arrived, they have everything they need and their questions are answered.

Some of Solve-It! Marketing Company's best accounts turned down our proposition one or more times, but we knew they would benefit (as would we) if they took our product on, so we stayed in touch, kept them aware of developments and finally they convinced themselves that they ought to buy.

Here are some Dos and Don'ts for a successful solicitation:

Dos

1)		Make a list of all prospective licensees (get the names from trade pubs, research manufacturers of similar or related items in retail stores, ask for and work referrals, use the library and internet, attend trade shows and exhibits, etc.)
2)		Refine the list as you learn more about these companies.
3)		Contact each prospect and find out who the right person is to talk to (i.e. President, V.P. Marketing, Head of New Product Development).
4)		Call him/her, introduce yourself and describe invention and ask if his/her company would be interested in something like that.
5)		If so, mail the materials with a succinct, effective, focused cover letter to his/her attention.
6)		Follow up by phone one week after mailing to see if they received the materials and to "take their temperature".  Be prepared to discuss licensing if they are interested.

Don'ts

1)		Never mail a cover letter addressed "To whom it may concern".
2)		Don't bother with mass solicitations.
3)		Don't wait for the prospect to call you back.
4)		Don't ramble in your explanation of item.  Be prepared with a concise description of features/benefits.
5)		Don't be greedy.  If a licensing proposal is made to you, look at it, realistically.  The expense of a royalty (3 - 8%) is based on the net selling price (wholesale price) the manufacturer receives.  But as a percentage of its gross profit, it may be much higher, 2 or 3 times higher.  The point is, that no matter how desirable an invention may be, there are limits to what a licensee can offer as a royalty.   The lower its manufacturing margin, the less it can afford to pay in royalty and still make a fair net profit.  Manufacturers will reject an item that does not project out to be profitable.  Similarly, when negotiating upfront cash, remember, the licensee expects to recoup that money over unit sales.  High volume products (or the prospect of a high volume introduction) will give the inventor more leverage in these negotiations.

The licensee is probably not going to make its best offer on the first go round.   So the inventor can usually make at least 1 - 2 counter offers to their proposal.   But the inventor must recognize that this is not an endless process and that at some point an inventor's demands may become too onerous and the prospect will back away.

Approach the negotiations with an eye toward a fair and reasonable arrangement that allows both parties to make money.  Remember, the more successful the licensee is with your product, the more money you will make.

If there are questions you would like to have answered in future newsletters, please submit them to harold@solve-itmarketing.com and we will do our best to include them.

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