Technical Difficulty Rating: 2 out of 10
If you are a regular reader of my blog you may already know that several years ago, I brought my own product to market, selling it in hundreds of retail locations in multiple countries.
Much of the progress I was able to make with my product was due to cold emailing. This means emailing people you don’t already know and without an introduction.
Cold emailing is not a method I would recommend to find an investor, because that almost always requires some type of connection or introduction, but it does work quite well in many other situations.
For example, I was able to use cold emails to not only get a large national retail chain interested in my product, but also to find a manufacturing partner that ended up investing in my product. I also used cold emails to build an international network of sales people that sold my product to various retailers.
I happen to be an introvert, and at the time I was living in a small town in Alaska, so selling via email was much more feasible for me than selling in person. Also emailing wasn’t nearly as intimidating as making cold phone calls.
That being said, you can usually start with a cold email, but eventually that’s going to lead to a phone call, which will then likely lead to an in-person meeting.
Cold emailing doesn’t allow you to completely avoid selling by phone or selling in person, but it’s the best way I found to initiate the relationship.
How I got a national retail chain interested in my product
My product was a small consumer lighting device that was designed to illuminate the surface of anything that it was attached to. It was a very generalized product that had lots of applications.
One application was using it on a remote control to illuminate the buttons while watching movies in the dark. So the first retailer that I decided to pursue was Blockbuster Video.
At that time Blockbuster Video was a huge, globally recognized corporation with thousands of store locations.
I approached Blockbuster first, instead of a general retailer like a Walmart, because I knew they got pitched a lot less products than a general merchandise retailer.
At the time Blockbuster Video was a globally recognized brand with thousands of stores.
It all started with a very simple cold email.
I first emailed the Vice President of Marketing at Blockbuster. I wrote just a few short sentences and embedded an image of the sales flyer for my product. The flyer was critical because it allowed the buyer to immediately understand the purpose of the product within only a few seconds.
You must keep in mind, these are exceptionally busy people you are reaching out to. They only have seconds to spend on unsolicited emails or calls.
Within about a day I got a reply back from him. Of course, his reply was very brief and basically said, “Looks really interesting. Let’s discuss.” He gave me the name of the head buyer and he copied this buyer on his response to my email.
That was huge because now I was able to communicate with the buyer after having been referred to him by his boss! The buyer’s boss just said my product looks interesting so the buyer couldn’t ignore me.
We did some emailing back and forth and then proceeded to a phone call.
I had to try calling this buyer probably a dozen times, but I eventually got him on the phone to discuss my product. About a week later, I had a private appointment to present my product to him at their headquarters in Dallas.
When I flew to Dallas to present my product I was incredibly nervous. I was literally a wreck the night before, and didn’t sleep much at all.
Going from a small town in Alaska to presenting my product to a multi-billion dollar corporation was quite intimidating. The fact that they were headquartered on the top floors of a massive skyscraper didn’t help lower the intimidation factor.
But, going out of your comfort zone is absolutely required to succeed as an entrepreneur. I was highly motivated and was willing to push through any of my fears.
I was only at the prototype stage at that point, so I didn’t actually get an order from them during that meeting. Instead, I got what is called a Letter of Intent (LOI).
An LOI is a non-binding letter that can show a company’s interest in purchasing your product once it becomes available.
Unfortunately Blockbuster went bankrupt before my product made it in their stores. But, their interest alone in my product gave me a huge boost. Their interest was ultimately key to my product making it to market.
Now that I had a large retailer interested, my next focus became finding a manufacturer.
How I got a manufacturer to invest in my product
To find a manufacturer, I did a lot of googling and created a list of manufacturers that produced products somewhat similar to my own.
You don’t necessarily need a manufacturer that produces the exact same kind of product, they just need to already have the technology in place to manufacture your product.
For example, if you have an electronic product, you need to find a company that manufactures electronic products.
It is key to focus your efforts mostly on finding manufacturers that are not running at full capacity. By not operating at full capacity they will be more likely to go the extra mile to help you because they need the business.
I decided to focus on U.S. companies that had fully owned factories in China. This way I could get the best of both worlds.
Dealing with a manufacturer that speaks English would really simplify the process and give me more direct control over product quality. Yet, I knew that at high volume my product was going to have to be manufactured in China.
When reaching out to manufacturers make sure you don’t email every single manufacturer on your list at one time. Instead, start by emailing a group of them and evaluate their responses. Based on these responses, you will gain insight on how to improve your next batch of emails.
When I began emailing manufacturers I had the advantage of being able to say that I already had interest from Blockbuster which was a globally recognized company.
Focus on finding a manufacturing partner, not just any contract manufacturer.
Mentioning Blockbuster immediately got me through their filters. They could see I was serious, because I had already gotten a major retailer to express interest in my product.
Several manufacturers emailed back saying whether they were interested or not. There was one that especially stood out.
It basically read “We get pitched products all the time and we ignore 99% of them, but we feel that your product and the progress that you’ve made warrant an exception.”
Soon, I was able to meet with the manufacturer. In fact, they ended up flying the general manager of their Chinese factory all the way to Alaska to meet with me.
We reached an agreement which was a massive success for me and I was quite thrilled. I cannot overemphasize how important it was to find not just a manufacturer but a manufacturing partner.
By partner, I specifically mean a manufacturer that doesn’t just fill your orders. There are countless contract manufacturers out there that will be happy to take your money and produce your product.
A manufacturing partner instead believes in your product enough to potentially invest money and resources to help you get it to market. They have a vested interest in helping you succeed.
My new manufacturing partner helped me succeed in three ways:
#1 – They financed the cost of the molds required to produce my product
When you scale a hardware product from prototype to mass manufacturing, you will need high-pressure injection molds to produce the enclosure (or any custom plastic pieces).
These molds are really expensive, especially for high volume production. My product was a low cost, high volume product that required very high volume molds. For my product these molds cost over $100,000.
My manufacturer amortized the cost of these molds over the first 100,000 units. Amortization is essentially a loan. I was able repay them for these molds by paying $1 extra per unit for the first 100,000 pieces they produced. This allowed me to pay them back for the molds slowly as I ramped up manufacturing volumes.
#2 – They gave me net 90 day terms which eliminated cash flow issues
Most manufacturers, at least initially, will require you pay them 100% upfront before they’ll produce anything.
That can improve over time as you develop a relationship. They may eventually lower the upfront amount to 30-50%, but the key is they’re going to want something up front.
On the other hand, any retailers that purchase your product will not pay you for at least 30 days after they receive their order (sometimes as long as 90 days). There lies the biggest obstacle for hardware companies: cash flow.
You must finance the production of your product until you eventually get paid by your customer. Typically, you will have to finance any orders for at least 60-90 days.
My manufacturing partner knew this was a huge barrier for my small startup. But, because they had a vested interest in me succeeding, they agreed to net 90-day payment terms.
This allowed me to get paid by my retail customers before I had to pay the manufacturer. My cash flow problem was essentially eliminated and I was free to grow my startup as quickly as possible.
#3 – They provided engineering assistance
I had gotten my product to the point where it was close to being ready for manufacturing, but it still wasn’t fully optimized for mass manufacturing.
Their engineering department helped me tweak the product (at no cost) to make it more feasible to manufacture at high volume.
How I built an international team of 20 sales people
After I landed the manufacturer, my next focus was building a team of salespeople to pursue retailers. I looked for what are called independent sales representatives.
These are just salespeople that are independent, meaning they work on their own. They already have established relationships with retailers, so they can more easily get your product in front of the decision makers.
The real beauty of independent sales representatives is they work on a commission basis. So unless they sell your product, you don’t pay them anything. In fact, you don’t have to pay them until the customer actually pays you.
Sales reps are an ideal option for start-ups because you probably don’t have the money to bring on full-time salespeople.
Just like I had done with Blockbuster and my manufacturer, I now used cold emails to build a team of sales representatives. I first joined a non-profit organization called MANA which offers the largest searchable database of independent sales representatives.
Fortunately, now I was able to leverage two points. I already had a large retailer interested, and a large manufacturer that was willing to fund manufacturing.
I could confidently tell my sales people, “I have a national retailer already interested, and if you land any huge orders, I’ve got the manufacturing capabilities and funding to fulfill that order.”
No sales person will bother trying to sell a product if they know the order cannot realistically ever be fulfilled.
Independent sales representatives working on a commission basis are the best choice for start-ups.
I started off looking for a lead sales representative. I focused on finding one sales person that I felt loved the product and that would help me get the product completely ready for retail. This lead sales rep was also able to help me find other reps to join our sales team.
I highly recommend you also start by finding a lead sales rep, and then build out your team from there.
Using cold emails, I was able to expand out to roughly about 20 sales reps in several different countries.
I never met any of these sales reps until after they were already selling my product. While I continued to work with my sales team almost exclusively remotely, they did help out in person if I attended a tradeshow.
How to Cold Email the Right Way
Now that I’ve presented three stories on how I was able to succeed with cold emailing, I wanted to share a few quick tips on how to correctly cold email someone you’ve never connected with before.
Rule #1 – Keep it brief!
If there is one rule when it comes to cold emailing, or emailing in general with busy decision makers, it is you have to keep it brief.
I cannot stress this enough.
I don’t mean brief as in a few paragraphs, I mean only a few short sentences. No matter how great your product is, your email will be ignored if it can’t be easily read in a few seconds.
Most entrepreneurs are so excited by their product that they find this a very difficult rule to follow. But if you want to break through to decision makers you must keep it brief.
Rule #2 – Do not include any attachments
Never include attachments with your cold emails. First of all, because of computer viruses most people are very leery of opening email attachments from those they don’t know already.
Secondly, an attachment requires the receiver to perform one additional step to view it. You want them to be able to see everything quickly in one single step.
Instead, wait until they reply and ask for further information, then you can send them any necessary attachments.
Rule #3 – Embed a graphic or visual in your email.
Create a graphic that quickly conveys your product. An image is worth a thousand words and it can really help them to quickly see the purpose of your product.
Be sure to hire a professional graphic artist to create this graphic and it must look professional.
Rule #4 – Contact the right people and don’t use any generic email addresses
Another key to success is finding and contacting the right people. First of all, don’t even bother with using generic email addresses such as email@example.com or product submission forms.
To get their attention you need to do more work.
First, you must find out the names of people at a company who can make decisions about new products. For a lot of companies this may be multiple people. For retail chains they will typically have “buyer” in their title.
Before I reached out to the decision maker at Blockbuster, I knew his name and I had researched as much as I could about him. These days pretty just about anyone is going to be on LinkedIn, so you can get some details about them there.
Secondly, you need to find their direct email address. This can be really challenging and will take some time. Many times the best way is to guess.
For example, you may find that many companies require very standard email addresses such as firstname.lastname@example.org. So if you know the person’s name then you can make a good guess at their email address.
Rule #5 – Present yourself as a professional company
Don’t ever contact a company as just Joe Smith saying you have this idea for a revolutionary product. If you do you won’t be taken seriously and they will likely ignore you.
Instead, set up a legal business and have a company name first. Be sure to include your company name and contact details in your email signature. You should also have at least a simple website with perhaps a single page showcasing your product.
While including your own name in your company name may sound like a good idea, you will seem more professional by leaving it out. That instantly screams to them that you are just a one person operation.
Remember, retailers and manufacturers don’t deal with individual people, they deal with companies. You have to sound like a company and present yourself like a company to be taken seriously.
Rule #6 – Avoid unproven claims
You absolutely must avoid making any unproven statements or claims. For example, don’t tell them your product will sell millions, or that everyone is going to want your product, or how your product is going to revolutionize the industry.
Stick with the known facts. For instance, if you have done a sales test and have real data to show, or if you ran a successful crowdfunding campaign, then share that with them.
If you make any unrealistic, unproven claims they will completely dismiss you as an amateur.
Rule #7 – Show that you’ve made some progress
My last recommendation is be sure that you have more than just an idea. An idea doesn’t have any value. The value always is in the execution.
You’re going to have to execute some before you reach out to others. First of all, it’s going to prove to them that you’re serious. Anyone can have an idea, and they know that. They will only be interested in ideas from those they believe can execute on those ideas.
Ideally, you will have some type of prototype. It doesn’t have to be a ready-for-production prototype, but you need some kind of prototype to get started.
When I contacted Blockbuster the only things I had, in addition to my idea, were a mostly working prototype and a sales flyer.
By the time I was ready to begin reaching out to sales representatives I was able to say, “I have a prototype, I have a large retailer interested, I have a manufacturer, and I have funding.”
I was able to leverage each success to achieve the next step.
When done right cold emailing can be massively successful. And you don’t even need to leave the comfort of your computer, at least initially.
Through the power of cold emails I was able to get interest from a national retailer, land a manufacturer and investor, and build an international sales team.
And I did this all from a small town in Alaska (and later while living on the remote island of Kauai, Hawaii). If an introvert like me can do it, so can you!
If you found this article helpful or if you have any questions please leave a comment below.
Are you ready to discover the smart way to develop a new electronic hardware product? If so then check out the Predictable Hardware Report.