Bricks and mortar retailers finally seem to be realising that if they want to attract and retain customers, and increase basket size (the amount purchased per transaction), they need to differentiate their offering and effectively merge their online, offline and mobile channels.

BStCapital’s portfolio includes three businesses aiming to improve the interaction between customers and retailers:

MoBank delivers a cutting edge m-commerce platform that allows customers with smartphones to browse inventory and make purchases securely via their smartphone (HMV, Waterstones, Next, etc. are already on board).

Nearbuy Systems aims to make your trip to a ‘big box’ retailer more rewarding with instore directions/navigation, a concierge service and vouchers/coupons delivered to you on request or simply as you browse.

Shoparazzi is a new app which makes finding stores, labels and sales as easy as possible (and will do a lot more as the product develops).
 
Whilst these three businessess (and many others) are enabling retailers to operate smarter, offering customers new ways to buy and locate products and find stores, the retailers themselves need to up their game.

By way of one example, I was trying to track down an item of clothing today.  I went to the House of Fraser web site on my smartphone. Although nicely designed, I could not find the item of clothing at all.  I, therefore, decided to access House of Fraser’s web site from a PC and, oddly, this did show the item, but was showing it as out of stock.  Rather than giving up, I phoned their customer services team (via an 0844 number – fail) and was told that they did have availability in several stores (Lakeside, Edinburgh and Glasgow). I was given a different 0844 number for each store (they couldn’t just transfer me – fail).  I phoned Lakeside and was told they had the item of clothing, but it was damaged.  I then phoned Edinburgh and, finally, a nice chap found the item of clothing for me and I paid for it over the phone.  It should be delivered on Monday. I was persistent because I really wanted the item of clothing, but if I hadn’t been they would have lost a sale. In fact, I may never have found the product in the first place if I hadn’t check the web site from two devices.

I wonder how long it will take retailers to become truly switched on to the potential of this emerging technology and to understand that they need to be equally effective across all channels to maximise market share.

I just read an awesome blog post by @bfeld entitled ‘Suggestions for Angel Investors’ and thought I’d put down a few thoughts of my own on how Angel Investors can get the most out of their initial meeting with entrepreneurs…

1. Tell the entrepreneur about yourself - I usually start with this. After all, you’ve seen their executive summary, business plan, web site and possibly resumes/CVs of the key members of the team. The least you can do is tell them about yourself. My little intro tells them my background (law, telecoms, investing), what I spend my days doing, a brief overview of what’s in my portfolio and why, and how much I look to invest.

2. Be frank about how much you have to and/or want to invest – in the UK we’ve all been brought up not to talk about money (it’s vulgar, apparently), but there is no point in wasting an entrepreneurs time in the unlikely event that your money isn’t considered a big enough tranche*. It also sets the context for your discussions.

3. Make it interactive – entrepreneurs will often want to run you through a presentation (often the presentation you’ve already been emailed). I usually skip this bit and start with a few open questions – a two-way conversation with the entrepreneur is far more valuable that him/her simply presenting to you. Blend questions about the business with questions about the individual(s).

4. Research - go into your meeting with knowledge of the product/service and the market. This allows your questioning in 3. to be more targeted and more effective. For example, when you ask about competitors in the space and the entrepreneur says ‘none’, you need to be in a position to test that assumption.

5. Keep it short – in my view the maximum length for an effective meeting is 40 minutes, but an hour might be more realistic. You should be able to make the decision to have a follow-up meeting - and even invest – quickly. Remember that the entrepreneur you are meeting probably has 15 other tasks to complete that  day and will appreciate your concision.

6. Start adding value – don’t hold back making introductions and offering advice until you invest. You can be a positive force in the ecosystem by being an open book and offering help and advice to all the start-ups you meet with assuming that there is at least some interest to either move forward with an investment or you just want to keep the door open. In fact, as an Angel looking to grow presence in a market, getting a good reputation with entrepreneurs for being helpful will ultimately increase quality deal flow.

7. Follow-up – no matter how the initial meeting goes, follow-up. If you don’t want to take it any further, it takes only a minute or two to thrash out an email on your Blackberry to say it was great to meet them, you wish them good luck, but it’s not an investment for.

Any other tips for successful first meetings…?

*I’ve often seen business plans that ask for £500k in one lump or £100k tranches. Aside from the increased administrative burden, I’ve never understood the rationale for this. I think having a broad shareholder base can be a real asset especially when the business requires introductions/leads to gain early traction. I’d rather have 20 hungry shareholders helping me than one or two.

Sometimes the oldest ideas are the best – give away something for free and you’ll create interest (or buzz) around your product or service. But with so much noise to break through, how do you make sure that your ‘freebie’ is a success? I think there are a couple of key ingredients.

(1) Make sure that the product or service you are giving away has real value and is free of excess restrictions

(2) Ensure maximum distribution for your offer to give it every chance to go viral (perhaps pair it with a cool video or other stunt)

(3) DATA, DATA, DATA: it’s not so much about quantity, but about quality – use the offer as a chance to obtain data about your customers that is important to your business

As an example, one of our portfolio companies, Wrap it up!, created a simple, but compelling offer – a free wrap for lunch. You can see below the results…

The Wrap it up! offer successfully addressed the three key elements above:

(1) The offer was valuable – a completely free lunch offered to hungry city workers keen to try something new

(2) The offer was distributed via email and on a new discounts/offers platform called BView (http://www.bview.co.uk) – the wide distribution achieved through the BView site and its partners meant nearly 400 people showed up

(3) Email addresses were collect to allow continued dialogue with new customers and to reinforce the offer

Perhaps your start-up/portfolio company could gain traction via a free offer?…

I spent most of today watching the live stream of #leweb and particularly enjoyed the debate about whether the US (specifically, Silicon Valley) or Europe is the most attractive place to launch a start-up - if you didn’t catch the debate live, it’s available here.

One point that was hinted at, but not discussed fully, was the way in which the US is one homogenous market whereas the EU is made up of 27 different markets, differentiated by language, culture and fiscal policy. The panel talked about culture and language differences making the spread of ideas, products and services less fluid than in the US, but what about fiscal policy? Could a uniform tax break for individuals (aka angels) investing in start-ups across the EU encourage the flow of capital across borders and to the best ideas (regardless of the nationality of the originator of the idea and the investor)?

At present, UK tax resident individuals investing in start-ups in UK qualifying companies are entitled to certain tax breaks under the Enterprise Investment Scheme which are very attractive (more so than most start-ups realise). A £25,000 commitment benefits from 20% upfront income tax relief with the result that only£20,000 of ‘real’ money is required. In the event that the investment performs badly and is a total loss, a further relief against either income tax or capital gain tax liability of up to 40% (50% from April 2010) is available taking the total net amount risked to £12,000. EIS offers fantastic downside protection for angels.

But EIS is only available for UK tax resident individuals investing in UK qualifying companies – what if relief was available to all EU residents investing in any EU qualifying company? Angels would be encouraged to look further afield to find the best ideas and opportunities available and entrepreneurs with great ideas would be able to speak to investors anywhere in the EU on the same terms. My view is that this would increase the likelihood of great companies raising their crucial seed round before VCs arrive for Series A, B, etc.

Given the recent collaboration between the UK and France on the ‘super tax’ for bankers, perhaps they could continue this with more positive measures for start-ups?

Start-up founders create great brands

Founders of start-up companies (at least the ones we are fortunate enough to meet) are typically creative, innovative, passionate and driven. The natural consequence of this is that they come up with fantastically marketable and distinctive names for their new services and products. One brand name that immediately springs to mind is Huddle* - it’s short, snappy, looks good on the screen and sums up what that company is all about; bringing people together to collaborate effectively online. Google would also be a good example.

But don’t always leverage them successfully offline

Most founders understand how to market themselves online, using social media, online advertising, Adwords, a blog and other methods to create early traction. But many may be missing a trick by not using simple, cheap methods to promote themselves and generate interest offline for their online businesses.

Take the humble flyer. You can get 10,000 high-quality flyers printed for £100 or so. Then all your need is a few members of your team (free) and 4 branded t-shirts for, say, £20. Then pick a busy location where your target customers are likely to be walking around and start handing them out – be enthusiastic, sell sell sell and don’t leave until you’ve handed them all out. It’s very cheap, creates great brand awareness and will bring in a few customers.

If flyers don’t fit your brand there are other options. How about giving your customers or investors golf umbrellas (about £5/unit) emblazoned with your ingenious brand name? Every time it rains at a sporting event or when they are out with friends, your brand gets some exposure. Everything that can be branded should be a candidate for branding (obviously judgement is required here) – how about the bag you carry to your office, your car, the t-shirt you wear while jogging or at the gym… These are all very cheap/free billboards to promote your product or service.  And people will often stop and ask you questions about your smartly decorated bag/car/t-shirt as our experience in Spain proved.

Spain 2004 – flyering + posters + t-shirts + 15 hour days

Five years ago I worked on the launch of a new Spanish telecoms service on a tight budget. We printed 50,000 flyers and 1,000 posters, we ordered 9 branded t-shirts (team of 3 people) and we flew out to Spain for a 3 week marketing blitzkreig (staying at a house owned by a family member, thankfully, otherwise we’d have been camping). We targetted our marketing to English-speakers so put a flyer on every British plated car, went to EVERY town and village on the Costa del Sol, put posters up on bridges, roundabouts and public telephones, spoke to everybody we could about the new service and the result was more impressive than we thought possible. By the end of month 3, we were pushing nearly 200,000 minutes per day through our new Spanish service. And what it took was (a) a web site and (b) a lot of offline graft.

Although it is getting harder to breakthrough the noise and get your message across, you cannot go far wrong with simple, cost-effective marketing techniques and a lot of hard work.

Good luck.

*There are plenty of others so please don’t take offence if we didn’t pick your company as an example. We look forward to a comment full of praise from Huddle.

 

Thanks for checking out our blog.

We hope to write a short article once every couple of weeks kicking-off with a piece about effective branding for start-ups on a budget.