I've seen it happen way too many times: cleantech startups that miss their revenue forecasts, but not because they're losing sales opportunities to other vendors. Instead, it's just because it takes longer to get opportunities in the pipeline to a "yes."

It's understandable how this happens. The cleantech startup will have an offering that's an economic no-brainer for the potential customer from a payback period standpoint, and the potential customer makes all the right noise about being interested. But day to day, energy spending simply isn't a priority for most of these potential customers, so their decision-making slips. And then it's compounded by the fact that the customer feels like, even if this offering has great economics, they still will need to research all the recent proliferation of other available such offerings to make sure they're not missing out on an even better opportunity. So sales expected to close this quarter slip into next quarter -- and quite often, the quarter after that.

What's missing is a sense of urgency, some compelling reason for the customer to say yes now. And I haven't seen enough cleantech startups that have sales teams that are good at creating that urgency. Because I haven't seen too many examples of cleantech startups able to create this sense of urgency and drive timely sales, I don't have a complete answer to this vital question. But here are some ideas I've seen used in our portfolio and elsewhere:

 

1. Instead of trying to create urgency among customers who don't have it, do a better job of finding the customers who do.

What does this mean? This means fill the top of your pipeline funnel a lot more than you are.

In many other sectors, this is the role of well-running channels. They go out there and identify and aggregate the 10% of potential customers who are already ready to say yes, and take their cut for doing so, because otherwise the vendor would need to reach out to 10X as many potential customers -- a costly proposition. But of course, for most cleantech markets, the channels are either ineffective or missing altogether. So you're just going to have to do it yourself.

Fortunately, thanks to advancements in marketing, there are a whole lot of new ways to get in front of prospective customers. So it may well be worth investing in skills, either internally or externally, in the fields of direct and internet marketing -- and effective (not just paint-by-numbers) PR, as well as to explore other ways of getting a lot of market reach, very quickly. Because you probably should have 10 times the sales pipeline you currently have, if you want to meet your sales targets. Some cleantech startups clearly spend way too much money on PR and marketing. But most don't spend enough.

 

2. Inspire greed. Inspire fear.

Did you ever notice how every month seems to be Ford Truck Month? It's how they get the customer to feel a sense of urgency -- high sticker price but a time-limited "special deal" to spur customers to get in by the end of the month or supposedly lose out on a bargain.

One of the companies in our portfolio has gotten customers to pay attention to certain dates by (truthfully) saying they're holding certain inventory for the customer, but if they don't say yes by a deadline, then the inventory is released to other customers. This works in their case because their solution is in high demand, and if the inventory is released to other customers, there will be a delay before the next inventory comes in.

Whether it's a special discount, or a potential missed opportunity, the point is to set a deadline that inspires either greed or fear in the customer. I do see a lot of discounts offered in the cleantech space -- but they're often not tied to a timeframe. They're just a lower price offered to try to entice a customer. But unless there's a deadline and consequences for missing the deadline, next month is just as good as this month for many buyers.

 

3. Change the message.

All I hear out of entrepreneurs is "payback periods." That's the standard metric used. It's all about two-year payback periods or less for C&I customers, and perhaps longer than that for residential customers.

But from what I can tell, that's not compelling to these customers. With the high upfront capex requirements of many cleantech offerings, even a two-year payback period comes across as delayed gratification, and may not stack up well versus other corporate investment opportunities right now. And it also misses out on the additional value after the payback. 

I've started to see use of "pays for itself X times over." So if it's a two-year payback and a 20-year equipment life, it pays for itself 10 times over. This seems to be more effective messaging.

But perhaps the messaging can be improved further still. I'd love to see more cleantech startups get enough knowledge of their customers that they can phrase things in terms very directly related to that buyer's economics, such as, "This will boost your profits by X%" or however the buyer is compensated on their annual bonus. Get 'em in the annual bonus, and their attention will follow.

 

4. Develop a better understanding of the buyer's process.

Far too often, the missed expected sales dates happen not because the buyer was unduly delayed, but because the startup didn't understand all the hoops the buyer was going to have to go through to officially say "yes" and sign a purchase order.

This seems to be particularly true for utility-facing startups, where the sales cycle will be dramatically impacted by the timing of things like rate cases with the PUC. 

Know your customers' purchasing decision processes -- and their own potential delays. And then factor that into your decision as to which ones to prioritize, when.

 

5. Help them get comfortable

This one is more of a brainstorm than anything that I've got proof works in the real world. Tread carefully.

But I do see that one of the major reasons for delays in purchasing decisions is because the buyer realizes they need to do research to make sure they're really looking at the best available option. And because of lousy channels and lack of other general information, this can be a pain -- and time-consuming. They can't just easily piggyback off of research others have done because it's hard to find, and there aren't good buyers' guides or comparative shopping sites, etc.

What if cleantech startups provided that info for them?

"Wait a minute," you might rightfully object, "Did you just say I should tell prospective customers about my competitors?"

Well...yes. At the right time. And in the right way.

It's worth finding any authoritative research that has been done on the market and buyers' options (and if it doesn't exist, think about even creating it, perhaps via a third party) and having it readily at your disposal. Sure, it's not what you lead with in the first conversation, perhaps. But when a customer seems to need to do their research on all their options, help them discover and assess all of their other options, in as trustworthy a way as possible. 

Because the sooner the customer feels comfortable that they've assessed all their options and you're still the right choice, the sooner they'll be able to say yes.

Providing transparent information might not only help them get there sooner, it might also help you build a relationship with them. And if you don't stack up well against the competition in a transparent comparison, perhaps you're not supposed to be selling to that customer anyway.

Just a thought.

 

Whether it's these or in other ways, get more aggressive about creating a sense of urgency with your prospective customers. You can't assume your channel partners are going to be competent at finding and closing deals. You can't assume customers are going to recognize and act upon good value in a timely fashion. Force the action. Or move on to the next sale quickly.