An Elevator Pitch is a quick and concise way to introduce your business to someone in a short amount of time. It should be clear, concise, and to the point. You want to make sure that you capture the listener’s attention and leave them wanting more.
A great tool to communicate your idea to the world is the Elevator Pitch: a finely-tuned explanation of your business’s key value propositions meant to spark interest in your idea in under 60 seconds. In this phase, you will synthesise your learnings from previous lessons and walk away with a fully-formed Elevator Pitch. An elevator pitch is an essential part of any startup’s marketing arsenal.
Even if you don’t often use it, you should know how to deliver an effective elevator pitch when it arises. This article provides four tips for startups to follow when crafting an elevator pitch. If you’re looking for more help, follow our News and Articles Page for more tips and advice.
A well-crafted Elevator Pitch will be invaluable as you push your business forward. It can open doors with potential partners, customers, future employees, and investors. The heart of every great Elevator Pitch includes four essential components:
#1 – Nail The Problem: As we learned, great businesses start with a well-defined problem and the ability to identify how painful that problem is. Now, we’ll concentrate on how to articulate it in your pitch effectively.
#2 – Explain The Solution: You’ve zeroed in on how your solution will fix a super-specific problem. We’ll look at what information to include – and not include – to boil it all down to a punchy, value-driven solution statement.
#3 – Identify The TAM: Now that you’ve investigated your market, it will be critical to communicate a realistic, quantifiable understanding of the true market potential in your pitch.
#4 – Highlight Your Competitive Edge: With a high-level understanding of the other players in your space, we’ll cover simple, effective ways to call attention to their shortcomings while emphasizing your unique advantages when pitching your idea.
In its shortest form, if you were pitching your business to a potential investor, they would want to know these critical pieces before listening to (or caring about) the rest of your business plan. Simple, right? Well, not so much. A seasoned Founder may iterate on this pitch hundreds of times until they get it right. It’s not just words but an understanding of the business that comes with many cycles and experiences. Until you get it right, the constant revision makes this so hard. It would be best to nail your Elevator Pitch before you do anything else – like create financial projections or put a funding plan in place.
Step 1: Nail The Problem
Founders often overlook the importance of giving the Problem more weight than the Solution. Instead, they get so excited about their Solution that they forget to explain why the problem is so important. A well-articulated Problem makes your solution’s value and entire plan 10x more effective.
Let’s use the example of Netflix, which initially solved the problem of people travelling to the video store to rent a movie. Netflix sought to avoid video stores altogether and instead deliver movies in an envelope to your mailbox, allowing you to keep the movie as long as you’d like. At the time, the Netflix problem statement would probably look like this:
That’s a pretty simple problem statement, and it’s accurate. Notice that it doesn’t include any reference to the solution. We’ll get to that later. A good problem statement focuses entirely on the problem so the audience can build a powerful case for that problem. A great problem statement tells more of a story and provides an emotional connection to the solution. Building a better story takes more effort, but the payoff is real because you can draw your audience into your world and get them excited about your journey.
- Pick the Biggest Problem. There’s a good chance that your product solves multiple problems, and that’s wonderful. Right now, however, it’s time to lead your Elevator Pitch with just one of them – the biggest problem you solve.
- Pump up the Pain. You don’t have to address a life-threatening problem to make it powerful. In your pitch, you need to focus on the detail of the pain in your problem. You can present even “convenience” differently if it isn’t given enough character.
Step 2: Explain The Solution
Once you’ve articulated the problem, your next step is illustrating how your solution beautifully fixes that problem. This requires just as much effort to keep the answer short and punchy as the Problem Statement. Founders assume that their audiences already understand why a product is important. Therefore, they want to rush into their demo. Take a moment to ensure your audience understands your solution’s value before you crack open your laptop and start your demo! Sell the trick, then perform it!
- Connect Directly to the Problem. Your Problem Statement should set the stage for your Solution to shine. In the case of Netflix, we did a nice job explaining how painfully inconvenient going to a video store is. We want our solution statement to connect directly to that problem – before we get into any other part of the Solution. In the case of Netflix, our solution allows anyone to watch movies streamed directly to their home or delivered to their mailbox (in case you forgot, Netflix also delivers DVDs!)
Voila! We’ve given a potential investor an easy-to-digest Problem/Solution statement in just two sentences.
Step 3: Identify The TAM
Solving the Problem beautifully is nice, but if you fail to give investors an idea of the Market Size of the Problem in your pitch, you’re not likely to get them very excited. The Market Size explains just how much potential for growing your startup has. Investors want to know you’re solving a painful problem in a giant market.
If you combine those two factors and properly communicate them in your Elevator Pitch, you’ll surely generate much more interest. Investors want to invest in good companies that can have huge outcomes to make up for all the bad investments they might have made. They’re thinking, “If this startup isn’t going after a big enough market, it won’t be able to create an exponential outcome for me.”
The 3 Pies of the Elevator Pitch Market Size
Your Market Size is broken into three pies, from big to small:
- Total Addressable Market (TAM). Addresses the question, “How many people could potentially use this product?” It doesn’t mean how many people will use your product. This is the question you’ll get asked the most; the answers are often the most wrong. We’ll get to that later.
- Served Addressable Market (SAM). Filters the whole TAM by how many of those customers you can acquire. Remember, you can only serve as many customers as your sales and marketing channels will acquire. You can’t serve customers who have never heard of you!
- Target Market. Determines who are your most likely customers. Imagine you ran a banner ad online and presented it to 100 people. They all watch movies. Which of those 100 is most likely to click and buy? That’s your target market.