As an entrepreneur who has been both the recipient and provider of angel investment funds, I really enjoyed a recent Kaufman.org article titled The Rise of Angel Investing. There are lots of great nuggets to be found in this article, but I especially enjoyed the part about the timing of angel investments and how the ability to generate this funding can either make or break a company. Viewing the graphic below will demonstrate the point. If the startup doesn’t receive the needed funding at or before the valley phase, it might not be around for long.
So how does this “valley of death” timing issue apply to B2B marketing and sales? Simply this: If you wait until the product launch or commercialization phase to crank up your marketing engine, you may be too late to generate positive results. This doesn’t just apply to startup companies; it is also important for each product launch at existing companies. Putting the word out today doesn’t necessarily lead to revenue today (or even tomorrow). There is a lag time to move prospects from “aware” to “interested,” and from “engaged” to “customer.” In some industries (e.g. enterprise software), this sales cycle can be six months or more – so the sales leads you close today first came to your attention quite some time ago.
The scary part about being in the valley of death is the fear that no matter what you do, a successful outcome is not assured. This is why it is hard to raise money and it is why we B2B marketers hold our breaths, hoping and praying that the next campaign will be the home run that leads to product launch victory.
So how do we improve the odds of victory? One strategy is to apply lean business planning and minimum viable product (MVP) principles to ensure that the investment in the product is reasonable in relation to the upside potential. Another important step is to test the viability of the marketing message and lead generation potential very early in the process. You can do this with online methods such as pay-per-click and SEO during the R&D part of the process. In fact, you may collect some data in your early marketing tests that help get your product development on a better path.
The good news is that the valley of death can be a lot more comfortable if you have a good sense of how the product will sell based on your early testing. As the book says, Hope is Not a Strategy, and when you ask investors (or your CFO) for money based on data, not just great intentions, you are much more likely to get that funding and achieve a successful launch.