What Is a Product Demo?
Last Updated: By TRUiC Team
A product demo, or product demonstration, is a very important tool in the sales toolkit of startups, especially within the B2B (Business-to-Business) SaaS (Software-as-a-Service) industry. These demos allow companies to showcase their product's capabilities, explain how it works, and highlight how it can solve potential customers' specific problems. In essence, a product demo is meant to provide prospects with practical insights into a product and highlight its benefits more vividly than any standard sales pitch.
Demos are typically done after a lead has been qualified via the sales funnel process, from visitor to lead to opportunity, and finally, to customer. They're often delivered remotely by sales reps or account executives using online meeting applications, and the role of a demo in a sales process can be influenced by factors like the average contract value (ACV), where demos are much more critical for ACV over $1k.
Recommended: Check out our list of the best product demo videos to inspire founders.
Understanding Product Demonstrations
At its core, a product demo is a sales tool that allows prospective customers to understand exactly how your product can solve their specific problems. It's the “golden ticket” in your sales process, more often than not being the major determining factor in whether a deal is closed or a prospect is lost.
So, what actually goes into a product demo? Well, it typically occurs after a potential customer has been qualified through the sales funnel journey and they’re ready to learn more about your product before jumping on board. The demo itself is typically delivered by a sales representative or an account executive and can be done remotely using online meeting tools like Zoom or GoToMeeting that allow screen sharing and video.
The key components of a successful demo are understanding the customer's needs and demonstrating how your product specifically helps solve their pain points. It's not just about explaining the features of your product but showcasing the solutions it provides and cultivating a relationship with the potential customer. After all, people are more likely to buy from those they like and respect.
Why Product Demos Are Important for Startups
For startups, the struggle lies not only in creating an exceptional product but also in convincing the world of its value. That’s where product demos come in. In this section we’re going to cover a few reasons why product demos are so important for startups:
Boosting Sales
The main purpose of a product demo is to convert leads into paying customers. For startups especially, it's important to have an impeccable demo because it can significantly improve your close rates. The better your demo the higher the chances you have to close a deal. Mastering the demo isn't just an added benefit — it has the potential to majorly impact your annual sales opportunities to the upside.
Building Customer Relationships
Demos also serve as an opportunity to build a rapport with potential customers. If your startup wants to move beyond a transactional business model and create a loyal customer base, establishing trust is key. People prefer buying from those they like and respect, which is exactly why a well-executed and personable demo can build that relationship faster and foster mutual respect.
Educating Prospects
A great demo doesn’t just sell your product but it educates your prospects about your solution. It helps them understand how your unique offerings can solve their specific pain points. Remember that the goal here is not just to showcase product features but to highlight how these features provide solutions to customer problems. Always focus on the customer.
Align with User Journey Stages
A well-orchestrated demo aligns with the stages of the buyer's journey, going from awareness to consideration to decision. Each stage requires a different type of demo such as demo videos for awareness, live demos for consideration, or interactive demos for decision making. By having a relevant demo at each stage startups can effectively guide prospects through their buyer's journey.
Types of Product Demos
When it comes to product demonstrations, different approaches work best for different audiences depending on the product's sophistication. Here are six types of product demos that are commonly used and have proven to be quite effective for startups:
Video Demonstration
A video demonstration is a pre-recorded presentation of your product's main features and benefits. Companies like Loom and Grammarly use this method to engage their potential customers. These types of demonstrations are successful because they allow the viewer to learn at their own pace, pause or replay sections, and flexibly consume content. With high-quality graphics and a captivating narrative, it's a compelling way to introduce your product.
Slide Presentation
Slide presentations, even though they’re seemingly old school, work remarkably well for complex products where details matter. This demo type allows for the systematic unfolding of product features interspersed with relevant use cases. Companies like Airtable use this method to communicate their value proposition effectively and ensure that their audience doesn’t miss essential functionalities due to information overload.
Live Demo (Remote or In-Person)
The next category is the live demo that’s capable of being delivered remotely or in person. This approach is interactive allowing prospective customers to ask questions and get immediate answers. It offers the unique chance to build a connection with the customer and gauge their pain points or reservations. Sales reps from Zendesk and Salesforce have been known to close deals using this high-engagement method.
Prototype Demo
In situations where the product hasn't launched yet or is in an ongoing development phase, such as a stealth mode startup, companies often turn to prototype demos. Showing a tangible mock-up version of what their final product would be like gives both investors and future customers invaluable insights into its potential. However, remember that this requires meticulous planning so as not to give a false impression of the end product.
Webinar
Similar to live demos, webinars typically involve a live virtual presentation usually catered to a broader audience. They often combine the demo with educational content about the industry, product implementation, or common challenges that the product can solve. Webinars are an excellent platform to host guest experts as well, lending further credibility and attracting a larger audience to your product.
Free Trial
Lastly, there's the free trial method — possibly one of the most effective sales techniques for SaaS companies specifically. By offering prospects a risk-free opportunity to use and test your product, you can convince them of its suitability for their needs. SurveyMonkey uses this technique to convert potential customers by letting them experience firsthand their product's ease of use and depth of features.
Creating an Effective Product Demo
Creating an effective product demo can boost your sales and revenue by significantly improving your close rates if done right. Below are several tips to help you get your product demo right from the very beginning:
1. Understand Your Audience
Knowing who you are addressing is the most important step for an effective demonstration. The demo should be customized according to your audience's needs and interests and highlight how your product can solve their issues. It’s important to actually listen to their feedback as this can help refine your future demonstrations.
2. Use Quality Visuals and Storytelling
Your product demo should not only showcase the product but also tell a story. Use engaging visuals that capture your audiences' attention and make sure that the story demonstrates how the product can solve a particular problem or enhance their life in some way. When done right, this can add a personal touch and make your demo more relatable.
3. Practice and Plan
A well-planned demo leads to better execution. Make sure you rehearse your demonstration to sound natural and avoid any errors. Limit technical language and ensure that your technology works flawlessly during the presentation.
4. Engage with a Personal Touch
Connecting with customers on a personal level, learning about their issues and offering solutions through your product builds rapport. This level of engagement builds trust and relationships which lead to higher chances of closing the sale.
5. Follow Up
Never skip following up with your customers after the demo. This shows that you care about their experience with the product and you value their feedback. Following up gives them a sense of being valued as customers and increases the chances of them purchasing the product.
Frequently Asked Questions
When do you need a product demo?
You'll need a product demo after a lead has been qualified through the sales funnel process which typically involves transitioning from visitor to lead to potential customer. It's often the determining factor in whether a deal closes or a prospect isn't won over.
Who conducts a product demo?
The demo is most commonly delivered by a sales representative or an account executive. It can be presented remotely by using online meeting tools that enable screen sharing and video such as Zoom or GoToMeeting.
How do you make a product demo?
Making an effective product demo requires understanding your audience's needs and highlighting how your product can meet those needs. It should be engaging, using visuals and storytelling to carry your message. The essentials of an effective demo include an outline, a description of your product and its value, allowing customers to try it out, and explaining how to purchase it.
How long should a product demo be?
The length of a product demo can significantly vary based on several factors such as the complexity of the product, customer engagement model, and sales approach. Nevertheless, it's important to make sure that the demo is long enough to effectively highlight key features and demonstrate the product's value proposition, but brief enough to keep the audience engaged.
What are some common mistakes to avoid during a product demo?
Some common pitfalls to avoid during a product demo include overly technical language that can confuse your audience, poorly working technology that may disrupt the demo, and not practicing the demonstration enough. Not understanding customers' needs can also lead to a demonstration that misses the mark, and keeping the demo too focused on features instead of real solutions can also be unproductive.
What is the difference between a sales demo and a product demo?
While both demos aim to sell a product a sales demo is typically more focused on building relationships with potential customers and showcasing how the product can solve their specific problems. On the other hand, a product demo is mainly about presenting the product's functionality. That said, the lines can blur and often these terms are used interchangeably.
