Yet Another (ex-)VC Blog

Many sales, investments, and business development deals come to be because of a compelling event.

What is a compelling event?

Simply put, its something that happens that makes your product/service/investment proposal so attractive that the customer, potential partner, or potential investor move from “interested” to “buyer”.

Some examples of compelling events in a sales context:

• Exploding product discounts: “We’ll give you 25% off list price but only if you buy before the end of the quarter.”
• Technology upgrade cycles: (Example:) Enterprise IT departments typically replace servers every 3 years.  If you are a new server vendor trying to displace an incumbent, this would be a good time to tell your story to the customer.
• End of fiscal year:  Many companies havea “use it or lose it” approach to budgeting, meaning any money not spent in the current fiscal year cannot be carried over to the new fiscal year and is lost to the business unit.  Also, the business unit runs the risk of receiving less budget in the following year because its often assumed that since the money was unspent, it wasn’t needed.  This is a great time to approach customers to see if any of that spend can be directed your way.

…and in an investment context:

• Signing a big customer: Is that investor on the fence?  If you bring in a big deal, the investor may want to invest and you may be able to get better terms.
• Getting your first term sheet: If you’ve got one term sheet, you’ve got a better chance of getting a second term sheet than if you had no term sheets.  Especially if that first term sheet is exploding.  And two term sheets is going to mean you’ll most likely get more favorable terms than if you just had one.

These are just examples but my point is that you always want to think about ways to create compelling events, or leverage events around you to make what you’re selling compelling to your potential buyer.

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