How to Pitch a Retail Buyer
By Kate Whitcomb, Partner @ HAX
As a buyer for Target Corporation, I heard hundreds of pitches from potential vendors and spent over $500m of Target’s inventory budget on products. Now that I run the Stage 2 program for HAX, my day is all about helping startups ace the sales process – which includes preparing them for meetings with Target, Best Buy, Apple, Amazon- you name it.
What I realized in switching to this side of the table is that there are some little known pitfalls and best practices that make the difference between getting your product on shelves or becoming lunchtime fodder for buyers. Read on to learn my secrets on how to first get a meeting, and subsequently ACE your meeting.
FIRST: GETTING A MEETING
If you’re a startup, how do you even get a meeting with a buyer? If you don’t have existing connections, you will need to find some.
You could, for instance (a) meet a buyer at CES and request an in-person meeting (b) work with a sales agency to help you find the right buyer (c) hire a VP of Sales who’s well connected enough to help you schedule meetings. Because this is not easy, HAX operates a two-stage program – the latter half which is designed to both prepare founders for a meeting, and introduce buyers. We schedule 10+ retail meetings with every startup who goes through one of our programs, and we prep you to knock it out of the park.
Regardless of the source, you’ll need two things to ace your meeting: 1) A really, really good sales presentation (the topic of today’s post!) and 2) A person capable to deliver it.
Most startup founders can deliver a good sales pitch. If you’re ready to ship your product, you’ve got enough charisma to get through a number of hurdles, including high-pressure sales meetings. But the reality is that buyers say “yes” most frequently to people they already know- which is why hiring a sales agency or a good VP of Sales is a great way to close a deal after the initial introduction meeting (read more on this here). Regardless, a founder must ALWAYS be capable of delivering and acing this initial pitch. Always.
SECOND: ACING THE PITCH
Now, the good stuff. What should this pitch look like? The basics: this pitch is a slide presentation, ideally printed and bound for when you present it to the buyer. You should plan on spending a maximum of 15 minutes presenting the pitch, with room for a product demo near the beginning of your presentation. Most buyer meetings are 30 minutes, and are held in-person at the retailer’s headquarters. You should plan on the meeting starting 5 minutes late, and you’ll need 10 minutes for Q&A. I’ve coached 100+ startups in this tried-and-true format, and spent $500m of Target’s money on companies who got my business through a good pitch. So trust me, this works!
Here is a visual guide to the ideal deck, slide by slide. Let’s dig in! Caveat: this guide is targeted at tech startups, but the steps apply to any new product.
Think of each of the above tiles as a slide, but the entire presentation should be a story. A quick presentation tip? When you present a slide, do not read it out-loud to the buyer. Avoid saying things such as “now this slide is about…”! You should present the deck as a cohesive story with a beginning, middle and end.
Your first slide will be a lifestyle image and your company tagline. Before you introduce the presentation by saying something similar to: “Hi, I’m Ben, and I’d love to introduce you to our product”- you should have established a rapport. Safe things to say to start the meeting?
“Thanks for taking the time to see me, Jessica. I know you’re swamped. I really appreciate it.”
“This is my first time in [Seattle, Cupertino, Minneapolis, Bentonville]. I’m really excited to be here- thank you for this opportunity Carlos.”
Then get into your intro. Introduce yourself, the name of your company, and the one-line sentence that sums up the mission of your company.
“Good morning! I’m Santiago, the CEO of PulsePet, and we’re making the world’s first smart bone for dogs.”
Then, quickly turn to your agenda slide, which should summarize the topics listed in the graphic above. The main point of this slide is to establish context for the meeting- quickly mention the topics you plan to cover and how long it will take you to cover them (ideally under 15 minutes).
Now, this is the most important part! Here you introduce the growing market your product is addressing, then define the problem/white space in this market, then introduce the solution (which is YOUR product!).
The market size slide can take on many different forms. It can simply be a bar chart if that makes your point. Below, HAX alum SwapBots does a brilliant job presenting the market, problem, and then introducing the product itself.
Remember: buyers decide in the first five minutes if they like a product. So this is the most important part of the entire presentation. No pressure.
Be sure to have your product sitting out on the table throughout the conversation. When you get to this point of the pitch, you can pick it up and show the buyer how it works.
Here are some demo dos and don’ts:
– Practice the demo ahead of time (many times)
– Make sure the demo is under 3 minutes
– Have a plan in case your app doesn’t work (take screenshots ahead of time, have a video demo ready, etc)
– Leave a sample at the end of the demo. Put it in a simple gift bag with a thank you note included
– Rely on wi-fi or cellular data
– Show a product that isn’t the final version
– Ask for feedback on the hardware of the product. This is a rabbit hole you want to avoid!
4. Key Features
This part serves to review your key specs in order to remind the buyer exactly what your product does. This should blend smoothly into the next slide, which will compare your product to your competition’s. If you include wholesale cost on this slide, it can also serve as your one-pager to send to potential customers as a “sell-sheet”. If you don’t choose to add wholesale cost/retail price to the slide, you will be asked- so be prepared to verbally address the topic. More notes below on cost/price.
Note on wholesale costs in Consumer Electronics: wholesale cost (what you charge to the retailer) is generally a 30-40% discount to the final retail price in box box retailers such as Best Buy or Target. Wholesale cost will be around 50% of the retail price in specialty retailers such as Apple and Brookstone.
Your wholesale cost is NOT your bill of materials (BOM). Your BOM should be at most 25% of the ultimate retail price. The difference between your BOM and the wholesale price is profit (duh). Now, to save you from the easiest and most common mistake I’ve seen startups make: never, ever, ever tell a buyer your BOM price. When a buyer says “what’s your cost?”- they mean wholesale cost. Not BOM. Your BOM is a secret that you reveal only to your investors and team. Make sense?
Now is the time to answer the question the buyer is thinking: “how is this different from the 30 other similar products I’ve seen?” This slide should be a simple chart to compare your product’s features to your close competitors’. Keep this honest, simple, and focused on the features you presented in the previous slide.
6. Key Milestones
At this point, you’re probably almost out of time. That’s okay, because the buyer is experiencing what a business professor once described to me as a state of MEGO (My Eyes Glaze Over). Move through the remaining slides quickly. The “key milestones” section is your chance to brag about your accomplishments- make this short and to the point.
Here, you need to prove that your company is able to drive sales, both online and in-store. Most retailers are short-staffed and employees are not trained to sell complex tech products. It’s up to you to drive awareness and foot traffic. This is your chance to flex your CMO skills.
The first marketing topic you’ll (briefly) cover is your core consumer groups. This is your chance to prove that your product is a perfect fit for the retailer’s customer base. Here is an example of the demographics of major retailers. If your product isn’t interesting to the customers of the chain you are pitching, you shouldn’t have set up the meeting. You’ll want to briefly tell this story through good stock photos and basic customer details- a few examples below. Be honest about your core customer groups: the buyer will call your bluff if you if what you present doesn’t make sense.
The next marketing topic you’ll cover is packaging and displays. You have 3 seconds to entice a customer into learning more about your product, so your packaging and display strategy needs to be buttoned up! Not sure what a retail display is? Go to any chain store, look for the branded plastic or cardboard displays that hold boxes of products. They may be free-standing or sitting on a shelf. Those are displays, and they are paid for the the vendor, not the retailer. Most packaging providers can also help you with your retail display. See below for an example of displays in Target’s Connected Living space.
It’s fairly critical to have a real-life mock up of your packaging to show the buyer. That way, the buyer can picture exactly what your product is like when it’s ready to sell. Don’t make her use her imagination. For your display, a 2D mock-up is generally sufficient.
The final marketing topic you’ll cover? Retailer-specific marketing efforts. This is what YOU will do to support the retailer. Make a calendar showing promotions over the year, often during key weeks for your category (Father’s Day, Black Friday, etc.). Remember that you pay for the lost margin to the retailer when your product is discounted- so keep that in mind!
You’ll next want to think about some creative digital ways to drive traffic to the retailer you are pitching. Bring on the logos! Make some simple mock-ups of digital ads that say “Available now at Best Buy” or “only on Amazon.com” along with your logo, the retailer’s logo and the picture you’ll use in the digital ad. These are easy to mock-up. I’ve also seen successful teams mock up a weekly ad in a certain retailer’s weekly circular that show the product on sale during key time frames.
8. Product Roadmap
You have to briefly prove that what you’re presenting today is just the beginning. Why? Because retailers don’t want to work with single-SKU vendors: they want to enter a long-term relationship with new brands. The paperwork to onboard a new vendor is staggering, and if you have future products in the pipeline, that upfront work can amortize over future successes. This is a simple slide to make and to present: don’t spend more than 30 seconds on this slide.
At this point, the buyer may have already jumped in and started asking questions. You may never get to a real “closing”- and that’s fine, some buyers are more active during sales meetings than others. If you do, simply wrap up and ask what questions you can answer.
Sound like a daunting process? Working on launching a smart tech product? We can help- apply for the HAX program and join the ranks of 80+ happy alumni who have gone through our program.