10 Reasons – part 2
Why FINTECH Startups Fail… and what you can do to solve them
Mistake 5: “Bob is our guy! He knows the presidents of three banks that he assures us are done deals, so we don’t need more sales support for this year. After Bob makes those sales, we might start our sales recruiting efforts.”
Solution: “We are very sensitive to testing the sales and marketing when we go into a business,” said Banks. “That to us is often more critical than the technology. We like to see a sales and marketing focused CEO, because our belief is from the top down, building a sales centric organization will end up being the one that wins – versus all sales put on one salesperson.”
The most successful startups are those with happy, loyal salespeople that are committed for the long haul. “Bob should be incented to see this venture work because he’s got a big upside,” continued Banks. “And if Bob doesn’t see an upside because all the equity is hoarded by the founders, or he doesn’t truly believe in what this business is doing, then these are the kinds of things we need to know going in.”
It’s always a great idea to have other salespersons ready in the wings, just in case your star salesperson decides to quit. Too often we see startups pick up a seasoned sales representative that is really just there until they find another job with a larger, established organization.
Look, it’s great to have Bob, who’s been in the business for 20+ years, and has three banks all ready to sign up. But have a backup plan for Bob’s departure because there’s a good chance that he’s still shopping his resume and will be gone as soon as he gets an offer from a big, established FINTECH company.
Give your salespeople compelling reasons to stay committed to your venture. Offer equity stake incentives. Let them know your long term objectives. Have you shared your exit strategy with your salespeople? Do you see your company as a potential acquisition? Do your employees know how they will be rewarded when the exit event occurs in five years?
Mistake 6 We’re still working out all the kinks in our pricing and product offering and we’re still trying to identify our true target market, but we’ll figure that out as we move ahead in our sales process
Solution: If your organization is still trying to figure out what it is and to whom that you’re selling, then don’t make it up on the fly. You’ve only got one chance to make a great first impression. Consumers, and especially financial institutions, have little confidence in companies that can’t effectively convey what they do; why their prospects should buy, and exactly how much it will cost – in time and money. If needed, spend more time on R&D to build a viable offering. Never let your salesperson hit the road with a product or service that is, or appears incomplete.
Mistake 7: “Our first sales meeting with a prospect is next week. Bob, please get started on a sales presentation.”
Solution: Fintech startups often put years of blood, sweat, tears, as well as their life savings into their ventures. It is their masterpiece – their vision. And they want to tell their story the best way. Successful startups don’t cut corners, and they most certainly don’t wait until the last minute to build a sales deck. Every element of their sales presentation is as polished, perfected and prepared as a Shakespearian play.
Great sales presentations don’t just happen overnight. Your organization should be working on sales decks months before going to market. Key words, phrases and value propositions are refined. Responses to all possible buyer objections and concerns are identified and addressed. Buying triggers, pain points and calls-to-action are evaluated, prioritized and carefully placed throughout the pitch.
It’s hard to say exactly what’s in a bad sales deck, but everyone knows it when they see it. The digital world continues to chip away at everyone’s attention spans. Every audience, young and old now demands engaging, but succinct information in a presentation, and it also has to look cutting edge. The 50 page PowerPoint bullet presentation is dead. Brief, simple, but well produced videos or animations that are self-explanatory are the new norm.
Mistake 8: “Our solution is ready, but we want to stay under the radar until we’ve gained momentum.”
Solution: CEOs of successful fintech startups never fly under the radar. In fact, once their company takes flight the most successful fintech startups do their best to fill up the entire radar screen through aggressive public relations and bold marketing. Yes there may be sales setbacks and implementation hiccups. But it is more important to establish firstto-market advantage though PR and marketing than wait until new entrants come along and fill the news and marketing void.
Shout out to the world what your company is doing and how it can help fix things. Although your company may be a startup, the news media is constantly looking for subject matter experts for industry issues and trends. Establish your startup and your management as the industry experts of your field through bylined articles, op-eds, blogs and other social media outlets
Mistake 9: “We are presenting at Finovate next week, but our website is still under construction.”
Solution: Nothing looks more bush league than a startup company with a website homepage that only says, “Coming Soon,” or “Under Construction.” It might as well say. “Sorry you found our homepage. We’re not ready for any business.”
No matter what the product or service offering, every fintech company’s website is its most important sales and marketing tool. According to research conducted by the CEB Marketing Leadership Council, on average, customers are nearly 60 percent of the way through the purchase decision-making process (from information they’ve compiled on the web) before even engaging a sales representative. Financial companies want more knowledge, insight and market validation before making a purchasing decision.
Likewise, according to Demand Gen Report’s 2013 B2B Buyer Behavior Survey, nearly two thirds, or 64 percent of respondents, said a vendor’s content had a significant impact on their buying decision. According to the survey, 34 percent of respondents strongly agreed that the winning vendors provided a better mix of content to guide them through each stage of the researching and decision-making process, indicating that diverse and useful online content can largely influence the success of a deal.
Before your fintech startup makes its first sales call, build your website. It should provide product and service information that answers 90 percent of all your prospects’ questions. Have a Contact page with a real street address and phone number for a live sales representative – not a request for your prospects contact information. Include Executive Biography information and photography to personalize your startup. Build a News Media section, and if you don’t already have any coverage about your startup, then include links to related industry issues. Remember, your website is your storefront. You want to give prospects compelling reasons to come in to your store, spend time and come back frequently until they make a purchase.
Mistake 10: Our product is standalone. We don’t need the blessing of any of the core providers or anyone else.
Solution: In 2013, Matt Harris of Bain Capital Ventures, speaking at a Technology Association of Georgia Fintech conference, said, “Small fintech vendors will have a harder time selling to banks without partnering with one of the big cores.”
With escalating concerns related to CFPB, cybersecurity and other banking regulations, I believe it is even harder today for startups to sell to banks than it was three years ago. For many, if not most financial institutions, the cores are their technology gatekeepers. It doesn’t matter if it’s standalone or integrated, nothing passes through without the core’s blessing. It is the cores that banks most heavily rely on for technology implementation advice.
Once again, before your company reaches its startup event horizon, make a strong effort to form partnerships or at least alliances with the cores. Yes, there is a chance that the cores may already have, or are developing similar solutions as your startup. However, we’ve often seen cores purchase fintech startups if their solution was superior to that of the core.
Startups should also seek validation with industry consultants, analysts and media. Keep in mind that these groups influence the cores as well as the financial institutions.