To Discern Customer Interest, Follow The Money

Sunday, 06 July 2014 17:04
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If you ask a technology provider to describe the interest being shown in their technology, an answer that sounds like, "We are seeing a lot of interest from quite a few big name companies" sounds impressive but reveals nothing. Most likely, regardless of whether or not the provider actually realizes this, it signals there aren't any imminent deals. Otherwise, their answer would be far more specific and would detail deal decision deadlines. It is only if one seeks specifics that the truth becomes much more clear.

Curious to learn more? Read on, dear friends...

To Discern Customer Interest, Follow the Money

"If money isn't being spent, it's simply a conversation."

How to Read Customer Interest

A customer's true interest in a technology is demonstrated by the money (or monetizable resources) it spends on it. The more money spent, the greater the interest level. I like to say: without money being spent, it's simply a conversation.

The most basic interest level is exemplified by an inquiry. Many customer inquiries is an encouraging sign, but that's all it is. Despite the seeming significance of parties executing a confidentiality agreement, this too is only consistent with basic interest. The same can be said of a materials evaluation. So, what signals real interest?

Beyond Basic Interest A development agreement signifies more substantial customer interest. Under a development agreement, a customer will typically pay a technology provider to perform
product development work on its behalf. According to UCLA's Office of Intellectual Property, "an option agreement provides the (customer) a time-limited right to obtain a fully license agreement by exercising the option to obtain this license. Options are typically used in instances where a customer would like to do further research and development to evaluate the technology prior to entering into a full license agreement." Development and option agreements are expressions of meaningful customer interest as actual dollars are being spent, sometimes involving non-trivial amounts.

Licensing and or supply agreements legally define the business relationship supporting the customer's impending use of a technology. While of course, a technology provider should seek to negotiate provisions that protect his interests, the structure of such business agreements also serve to reveal the customer's commitment to the technology. For example, a well negotiated licensing or supply agreement should require the customer to guarantee minimum performance and or payment amounts to ensure its continuance. Agreements that reflect a customer's financial commitment to utilize the technology (versus simply to control it) are the truest and most accurate indicators of interest.

In Conclusion: Details will reveal the actual level of customer interest being shown in a particular technology.

Since 2005, BFS Innovations has helped its Fortune 500 clients with technology scouting, new business creation and development services. Contact Michael today at This email address is being protected from spambots. You need JavaScript enabled to view it. or at 614 937-2408 to discuss your company's needs.


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