LETTER OF INTENT (LOI)

(tool)

Brief description

Is a short, written contract that is simple to read and not legally binding between two parties, that agree they intend to do a transaction with each other. Even though it’s non-binding, they are making a mental and written commitment to the transaction once it is made available.  The LOI is ideal for evaluating key partners and B2B customer segments (not ideal for B2C customer segments).

Step

Prototype Testing

Input

Solution or MVP that can be benefit from demonstrate commitment and clarifying the expectations

Output

Viability | Commitment from potential stakeholders or customers |

Feedback and learnings

Time

Preparation, medium

Execution, hours to days

Analysis, medium

Difficulty

3/5

People

2-6 (participants giving feedback)

1-2 (coordinators of the experiment)

Quick Guide

  • Define your target users (stakeholders or customers), specific objectives and what you aim to achieve with the LOI about your solution or MVP (interest and commitment of potential clients to purchase, invest, acquire, use or participate).
  • Create your letter of intent (LOI) template.
  • In the template state the purpose of the document, the names of both parties, their respective roles, and the description of the transaction.
  • Approach to your users and explain your solution, and if you have prototypes show them. Be very open about the fact that you don’t have it yet.
  • Explain and show the letter of intent to your target users.
  • Ask them to sign the LOI that confirms the transaction once it is made available.
  • Have other person taking notes of the users quotes and body language.
  • Review how many LOI were signed and follow up with those who signed to continue the conversation.
  • Once the deadline is met or it becomes available, make sure you follow through on what was agreed to in the letter of intent.

Benefits

  • Formulate the key aspects of your solution in a concrete way.
  • Obtain commitment beyond a verbal agreement but also feedback to fine-tune the specifications of your solution.
  • Integrates different experiment techniques and prototypes (video, life-sized prototype, presales, mock sale).

Helpful Tips

  • Be clear and transparent so the users know exactly your desired transaction and what they are signing up for.
  • Deliver the letter of intent face to face and go through the letter together to get instant feedback.
  • Regulation may vary depending on the country, reviewed your letter of intent through the legal area to get their feedback and check compliance requirements before to sending it.

Application

BASIC LOI FORMAT

Download

[Your Name]

[Business or Brand Name]

[Address]

[Optional – Email address]

[Today´s Date]

 

[Name of Recipient]

[Title]

[Business or Brand Name, if applied]

[Address]

 

Dear [Name of Recipient] we hereby submit a non-binding letter to express our interest in [insert more detailed description of transactions here]

This letter of intent will not be, under any circumstances, legally binding for any of the parties and may be subject in the future to further amendment or modification. In any case, the conditions of the transaction must be stipulated in a contract.

 

Sincerely,

(Sign here)

[Your Name]

Let’s learn and share your experience with racu