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Having a great idea, talented team and good intentions isn’t enough to attract investment and continue growing your startup. In order to consistently succeed in raising the funds necessary to continue working on your product, it’s necessary to show investors what return on their investment they can eventually expect – and few things please investors like a consistently improved ROI.
While most VC’s and angels keep the official number to themselves, estimates are that experienced investors expect between 30-40% return on their investment if it is an early stage startup. Simply put, they expect $0.40 back on every $1.00 put in – not an easy task for a startup that has increased expenses when trying to introduce a new product to the market and enhance existing features in order to differentiate themselves.
So what’s a B2B startup to do in order to improve ROI?
1. Have a clear monetization plan
If you are looking to maximize ROI, it’s important to know what your monetization plan is in order to leverage that as a starting point for all future measurements. A comprehensive monetization plan will leverage your products key differentiator and use it in order to build traction and increase overall sales.
Depending on your products, monetization could include a variety of options such as pay-per-use, freemium, subscription or advertisement based models. Without a clear monetization plan, it will be very difficult to understand how to improve ROI and to measure future improvements.
2. Complete successful Proof of Concepts with Enterprises
Probably the most effective way to ensure confidence in eventual ROI and increase potential investor funding is by completing successful PoCs. By connecting to an enterprise level company and showcasing your products abilities to improve an existing situation or meet a particular need on an infrastructure that can be easily scalable is the best way to gain attention – if done properly and with a small budget.
If you are spending extensive resources attending networking events, flying out to conferences or trying to mingle without knowing who you need, improving ROI will be difficult. If your goal is to complete a successful PoC while maximizing ROI, consider using an alternative PoC solution such as the prooV PoC as a service platform. prooV connects startups with enterprises and simplifies the entire PoC process, reducing the time it takes to launch and complete a PoC exponentially.
3. Focus on Your Data
If you are looking to improve ROI, it’s important to understand the raw data you already have available. Whatever your product is, if you are looking at your next investment level, you probably have data just waiting to be analyzed.
Using that information to predict future product integration and understand what your product’s main selling points are and what the least use features are will help you understand where to focus your time and resources.
If data analysis indicates that a particular functionality or feature is not used, it might be a great indication that there is no need for it and you would be better off focusing on meeting your consumer needs rather than developers’ dreams.
4. Embrace the DIY trend
Investors understand that a startup is often synonymous with bootstrapping; do not be afraid to use that to your advantage. If you are looking to maximize ROI, consider embracing the DIY trend.
If you are looking to connect with journalists and get the news out there about your product, before investing in pricey PR, try a $100 premium linkedin membership and reach out to key decision makers and journalists yourself.
Have great content but not enough budget to distribute it? Try sharing your content on user generated content amplification sites such as Reddit and Tumblr – the worst that can happen is you will get a couple of link-backs and the best case scenario will result in a viral piece of added value content that will get you featured everywhere you dream.
Believing in your product is half the battle – you have to believe in yourself and your ability to sell your product solo!
5. Test Everything – Everywhere
ROI is all about finding the best way to increase conversion at the lowest possible cost. Therefore one of the best things you can do is constantly optimize and test every possible feature and functionality in order to see what will yield higher conversion rates.
Whether optimizing your CTAs, testing various layouts of newsletters or using a new SaaS tool, focus time into understanding what aspects of your product convert consumers and which don’t. The most important thing to remember when testing is that it’s ok to have poor results – just don’t let that be the final word – improve and test again and again until you find something that works!
