If you’re a fintech provider selling to financial intuitions, read on. Fintech is booming. The financial technology sector is currently experiencing high growth and investment paired with fresh ideas and innovations. Startups often promise to revolutionize the way that banking operates, but despite the amount of thought that goes into making innovative financial technology, many traditional startups fail for the exact same old reasons. Here are three problems that regularly bring down fintech startups.
Mistake #1: “We have absolute faith in our concept.”
Startups often fail to understand the vendor market because they failed to do the proper research. Fintech startups cannot skip the research step and go straight to development. All organizations need to study their market, their competition, potential competition and tangentially related companies. They need to go to fintech expos and have personal conversations with bankers to conclude beyond a reasonable doubt there is a gap in the market for their product.
It is surprising how many traditional startups genuinely think their product is going to change the financial landscape only to learn financial institutions aren’t interested; their product creates a solution to a nonexistent problem; or has even already been created by another vendor or bank’s IT department. Diligence in initial research is paramount; this not only includes vendors, but potential clients.
In a way, fintech startups and financial institutions operate with fundamentally different outlooks. Startups are comprised of individuals risking it all on their new product, while financial institutions are made up of people who manage risk for a living. This gap leads to another prevalent disconnect between startups and potential clients in the market.
Though a startup might think their innovation and technology are a necessary tool for financial institutions to stay relevant, people cutting the checks at financial institutions don’t share the same vision. Often the only reason they are purchasing the product is pressure from the retail side. Startups need to understand this in order to manage their expectations and prepare their sales strategy.
Mistake #2: “Our solution is so great it will sell itself.”
Fintech startups dream of becoming the next Venmo or Uber, but no matter how great an innovation is, it will not sell itself. Sales and marketing should not be an afterthought. If there are not carefully thought out plans in place or people hired specifically trained in sales and marketing, a financial technology product will not succeed. In the same way that product development requires time and diligence, creating a sales strategy requires planning and skill.
Having an experienced marketing or sales professional is necessary, but startups should rely on more than an individual team member. Many fintech startups suffer setbacks after their key salesman with 20 years of experience, who promised they had customers in the bag, quits shortly after joining the startup for a more stable paycheck at an established fintech company. Having a multifaceted, clearly outlined sales strategy is vital to avoiding this problem. A successful sales strategy will have already planned for any obstacle that may arise before it happens.
Fintech development occurs at lightning speed; financial institutions, on the other hand, do not. There is the potential for very long gaps between starting marketing efforts and seeing results. Sometimes even a year may pass between a fintech startup making initial contact and closing a sale. This means a new company that only has enough capital to last them a year without sales may need to reconsider their approach. The long sales cycle is a hard pill to swallow for companies whose product may be considered outdated in six months, but it is a reality that must be planned for.
Mistake #3: “Our website is still under construction.”
To be successful and make sales, an optimized website needs to be fully constructed. Credibility is necessary to close a deal, and the information on a website can either build credibility or hinder it. Having a potential client visit a website after conference that only contains the phrases “Coming Soon” or “Under Construction” will discourage anyone from doing business with the startup.
According to research conducted by the CEB Marketing Leadership Council, consumers are nearly two-thirds of the way through the purchase decision-making process before approaching a sales representative. Fintech startups repeatedly make the mistake of not using their website to its fullest extent and then complaining they aren’t making sales. A successful sales plan starts well before the marketing or sales efforts begin. A startup’s website should be viewed as a lead generation tool, not just a checklist requirement.
Demand Gen Report’s 2013 B2B Buyer Behavior Survey found 64% of respondents said a vendor’s online content had a significant impact on their buying decision. Additionally, 34% of respondents strongly agreed that the successful vendors provided a mix of content to guide them through each stage of the research and decision-making process. Integrate all the elements required for a successful sales strategy into the website; include product features, marketing materials and media coverage. If the startup doesn’t already have any coverage, include links to related industry issues. A website is the space to prove credibility and jumpstart sales.
Kelly Williams is the Executive Vice President at William Mills Agency. Kelly has worked at the William Mills Agency, the nation’s foremost public relations and marketing firm for the financial industry, since 1991. To learn more financial mistakes fintech startups regularly make and how to avoid them, read his white paper “10 Reasons Fintech Startups Fail.”