Letter of Intent

This document contains the most important features of your solution together with a request for a promise to purchase it in the future. It is used to formulate the key aspects of the solution in a concrete way and test the commitment of customers beyond a verbal agreement.

A letter of intent is a powerful supplementary document to help gauge customers’ actual interest in your offering. It typically includes a set of terms and specifications of your solution, as well as a provisional price that needs to be signed by potential customers, underlying the intent to buy the offering when it is available. While it is generally unenforceable it helps you in two ways: it requires you to be very clear and specific about what you are going to offer, and it makes the offering more tangible for the customer, inviting a more in-depth consideration of the value of your solution.

Helpful Tips

Be clear and transparent: Your letter of intent should not be ambiguous. Customers expect and want to know exactly what they are signing up for. This is a great opportunity for you to provide specific details about your offering.

Deliver the letter of intent face to face: Go through the letter together with customers to get instant feedback. The goal of the test is not just to obtain signatures but also fine-tune the specifications of your offering and understand where customers might have questions.

Check with legal: Especially in a corporate setting, run your letter of intent through the legal department to get their feedback and check compliance requirements. You don’t want to accidentally sign a binding contract with a potential customer that you can’t deliver on.

Combine it with other formats: The letter of intent works best in combination with a more informal presentation of your solution. Formats like Explainer Videos, Toy Prototypes, Flyers, Mockups, as well as more advanced prototypes and MVPs work well together with the letter of intent and help flesh out your offering.

Squeezy, a nutrition company, tested the actual customer interest for their starter pack by adding a letter of intent to its offer. By signing it, the customer agreed to pre-order the pack.

How to Guide

Compose the letter of intent. Keep it general and internally decide upon the final version and in consultation with legal.

Select a handful of contacts that you would like to approach with your letter of intent. Use visuals/prototypes to show your solution. Remember: this test includes obtaining a (non-binding) commitment to buying your product, so the user should clearly understand your solution.

Note what they are willing to pay, use the chance to get as much feedback as possible, and try to keep them informed and onboard them as early adopters when your offering is ready.