For the past few months, I've been writing about the strategies I've developed to license product ideas in exchange for passive income. Because speed to market is more important than ever, I focus on determining whether a concept is marketable or not as quickly as I can. I want to know: Does it have legs? Preferably before I've spent even one dime. All of which is to say, the way I see it, you aren't really in the game until you've begun contacting potential licensees to pitch them on your idea. If you're a professional, this is an entirely different mindset than what you've been taught.
Prototyping is fun, that's for sure. But if you want to license your ideas for a living, you can't work in a vacuum. You need to test early and often. When you reach out to potential licensees for product licensing consideration, what you're really doing is opening up a dialogue. Is your concept a good fit? What could be improved? What obstacles do they envision? Put plainly, you need feedback. These are your would-be partners — their input matters.
Rarely do companies exclaim, "Yes, as is, this is perfect!" Having to revise is much more common. You can't afford to overthink the design process. For example, when my student David Fedewa—now an inventRight coach—reached out to companies about his new dishtowel hanger, he discovered the prototype he had developed was too large. After he redesigned it to be smaller, he licensed it. The insight you receive from potential licensees is priceless. In time, you will develop a clearer understanding of what they're looking for and a rapport.
So please, don't procrastinate.
To succeed, you will need to draw on your creativity and be persistent. Getting in, which is what I've termed it, isn't challenging but it does take practice.
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Adopt the right mindset. Companies that have embraced open innovation are actively looking for ideas like yours. When you think about it, you're doing them a favor. Act accordingly. You are trying to find a home for your idea.
Understand and embrace that you are in the driver's seat. Although more and more companies are establishing specific procedures for reviewing outside product submissions, there are still many that don't have any. Open innovation may be completely unfamiliar to some smaller companies or some employees within larger companies. After you make a few calls, you're going to know more about this process than the telephone operators you encounter, which is why you will need to guide people to get them to do what you want them to do.
Let your marketing materials do the selling for you. Don't make the mistake of trying to pitch your concept over the phone or in an email. Think of the task at hand like this: You're merely trying to drop off a package, which is your sell sheet. You're a deliveryman. You're not selling. You need to get your sell sheet in front of someone who will see your product's potential and want it to become a part of their company's product line. If you're selling over the phone, you've already lost.
Seek out marketing managers and salespeople. Submitting a product idea without getting permission first is no different than sending junk mail. How much junk mail do you open? You need to touch base with an employee — ideally a marketing manager — before you email him your sell sheet. Marketing managers are actively thinking about how to increase profit through new products. The sales department doesn't care where ideas come from; it loves new ideas too.
Protect yourself to an extent you feel comfortable with before you get started. I've written at length about the benefits of filing a provisional patent application. As far as non-disclosure agreements are concerned, most companies will not want to sign yours. Reasons why you might want to sign a non-disclosure agreement are outlined in this article I wrote for Inc.com. My advice? Don't ask for one right away. Wait until they contact you for more information to ask. Remember, you want your marketing materials to leave some questions unanswered, so they have to get back in touch with you. Make use of the 12 months of patent pending status your PPA affords you by hitting the ground running as soon as you file.
Keep it brief. One of my students is having a lot of success opening doors on the phone by stating the following: "Hi, my name is Ani and I am a product developer. I have product information I need to submit to your company for consideration. I usually speak with a marketing manager." That's it. When she gets put in touch, she says the same thing and asks for the individual's email address so she can send them her sell sheet. For some companies, this will be enough. For others, you will need to ask for an employee by name. LinkedIn is very useful in that case and in general. Many of my students and coaches rely almost exclusively on LinkedIn to get in touch with marketing managers and salespeople at the companies they want to submit their ideas to.
Less is more when it comes to getting in. Lengthy explanations are not required. It's not about you. It's not about your beautiful design. It's about how you and your product benefit them.
Take great notes. You need to follow up with every company you contact, so you must take good notes. Who did you talk to? On what date did you talk to him or her? What is his or her title? What is the company's submission procedure? Write everything down.
Don't give up. Employees respond differently when asked about open innovation. This happens to me all the time at trade shows. If one person isn't interested in reviewing your idea, or isn't getting back to you, seek out someone else. Be relentless, but not a pest.
Follow up until you get a yes or no. If you don't follow up, all of your efforts will have been for nothing. It's that simple. In my experience, product developers rarely follow up as often as they should. Most companies will need to see an idea several times before expressing interest. The employees you submit your idea to have other priorities. It can take time to get your idea to the right person. And crucially, in order to move on, you need a no or a maybe from every company you submit an idea to.
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As far as when to call is concerned? Anytime.
As you continue licensing ideas, your contacts will become invaluable. In time, the companies you are trying to license your ideas to will grow to trust you. They will let you know what kinds of products they are looking for. One of our students has licensed six dog toy products now. Six!
A few more tips:
— Do the math. You only need one company to want to license your idea. The more companies you call, the greater your chances of success are.
— You want to seek out someone who will benefit from championing your idea. If you take your idea straight to the top, and try to get in touch with a CEO or president first, there's a good chance he will pass it back down the line. On the other hand, if the company is small, that may work out fine. It all depends. These are guidelines.
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Harness your creativity to get the job done. In this article, I've just scratched the surface of ways of getting in. In further articles, I'll be exploring pull-through marketing strategy and how to use trade shows to get in.
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