Customer Courtship: Sampling

Sending products to customers can have more nuance than you might think

In February 2024, I published this piece on sending samples to your customers. A brief excerpt on an example strategy I advocated:

I recommend trying something related to varying the chemical composition. If you are concerned purity is going to be an issue try and send one with 99.99% purity and send another with 95% purity. You might be almost certain the 99.99% pure sample will work and the 95% pure will not and then your customer tells you that both are just fine.

I was referring to a situation where you might only have a single chance with a customer to get “a hit.” Your potential customer will invest time and money to see if your product will work for them. Your hope as a potential supplier is that something you make sort of works. This ultimately leads to a courtship where you are sending multiple samples to your customers every month with a hope of getting something to work. You know you are progressing when you get requests for larger samples (hint: be ready to scale up quick). I glossed over this process at a high level, but I wanted to take some time and really get more nuanced on what this process means for the product team and how long it actually takes to get something worth “scaling up.”

The Courtship

The situation of sending samples is the absolute core of what it means to do specialty chemical product development. You are in a 1 to 1 conversation with another business entity. There are likely confidential disclosure agreements, be careful to know if they are 1 way or 2 way (lawyers, please chime in via the comments if you can have a pithy distillation of what that means). Are you protecting the customer’s confidential information? Can share yours? Or are you both protecting each others information? Think of this as a pre-courtship contract.

For a potential customer to take multiple samples from you and to try and find actual value means that they are investing into a potential relationship with you—the supplier. Your customers are typically looking for very specific applications for your samples and thinking about the following quesions:

1. Is there value here for an existing product?

   1. Can I lower my costs on an existing product so that I eke out some % additional margin?

   2. Can I gain performance to an existing product and charge more and capture additional margin?

2. Can this drop in and be a secondary or tertiary supplier for an existing product?

   1. If my primary supplier gets hit by a natural disaster and sends me a force majeure letter can I rely on this supplier (also is this supplier not located in the same area as my current supplier or using a different supply chain)?

      1. Can I play my suppliers off each other to get a better price (see 1(a) above).

3. Can I develop a new product with this thing and stay ahead of regulatory advances?

   1. Europe is planning to ban all tin catalysts OR has already banned dichloromethane, can I use this chemical to revamp my portfolio and be in compliance?

   2. I have to label that Formaldehyde is in all my stuff according to Prop 65 in California and this is annoying can this product help me formulate away formaldehyde?

   3. Can I formulate away PFAS from my durable water resistant coating?

4. Can I develop a category redefining product/process, patent it, and completely change [insert industry here]?

   1. Tie layers enabling multilaminate extrusion.

   2. Water reducers, slump management additives, and curing accelerators to create the category of concrete admixtures.

   3. Cumene process from benzene and propylene makes phenol and acetone affordable and enables bisphenol A, epoxy resins, and polycarbonates to become useful engineering polymers

There might be some more categories than the ones above, but you need to determine which motivation your customer has in mind and adapt to that expectation OR lead them towards the one you think they should be investigating. Mismatching on your expectations and the customer’s here can lead to disastrous downstream effects much like in dating when one person wants to get married, and the other is just looking for a good time.

Let’s think of some examples:

1. You are making poly(hydroxy alkanoates) PHAs, a compostable/marine degradable plastic that is biobased could replace typical petroleum plastics for food packaging such as bottles and containers. The value add that you see here is no more persistent microplastics and a plastic waste free Earth.

   1. A Coca-cola or Pepsi Frito Lay may look at your PHA samples and see slightly worse performance than traditional plastics at a similar or higher price point. It’s really difficult to get alignment on categories 1 and 2, which is the obvious commercial play, so you are hoping they go down categories 3 and 4. Worse, with category 3 you are completely reliant on governments providing the incentive to change and category 4 can take a long time (5+ years).

      1. Do you have time to get this to be profitable?

      2. Danimer Scientific entered into an agreement with Mars Wrigley in March 2021 for a 2 year deal and I’ve heard… not much of anything and it’s February 2025.

2. You are making new chemicals from fermentation technologies that are similar, but not exactly the same stuff that your potential customers are currently using.

   1. Any potential customer for a relatively quick sale is going to place you in categories 1 and 2. Can you work with existing products in the portfolio?

      1. Can you verify for your customers that they can get similar performance with your product prior to sending it to them?

      2. Be ready with a price that is close to expectations of your potential customer and know where you break even or are slightly profitable.

   2. If you are hoping for category 3, can you send examples of your stuff working in a formulation they might use that demonstrates removal of the “bad thing,” and replacement with your thing?

Knowing how and why a customer will use your product is just as important as being able to make your product in a lab or even at scale. If you just want to make cool stuff in a lab and do fundamental research, then academia might be the place for you. If you want to make money in this business, it’s difficult and nowhere near the profit margins of a software business. Your best bet is a 1-2 year process for pure replacement/drop in stuff and 5+ years for category defining products. Remember that even if your customer has great internal results they might still need to send their own samples to their own customers and see if that value proposition has carried through. This can take years.

Finally, when you customers give you feedback (it might take a few months), how can you adjust or fit their needs and how much are those adjustments going to cost you. If someone says, “it worked great, but it was little bit too viscous for us, can you make it a lower viscosity?” Can you even do that and still be profitable or is it as easy as “add some solvent” and you are good to go?

You won’t know till you send the samples.

Tony

PS: If you are successful, you might be able to look like these guys running a manufacturing trial at a customer’s site:

Really great book btw and I recommend it to anyone doing product development in chemicals.

If you are starting to sample customers let me know in the comments if you are having problems or what your experience is like right now.