This article was originally posted on the Tech City UK website.
For small startups selling to big corporations, there are some big challenges. We caught up with Import.io’s Founder and CEO, David White, on how they manage relationships with larger companies, including several Fortune 500 companies
Brands for brands sake
There’s a temptation among startups, to go after the big brands. But while big brands may add credibility to your business and impress investors, they are also incredibly difficult to negotiate with and put a lot of pressure on your sales team.
Big brands know they are big. And they know you know it too. Right off the bat, that puts you in a bad negotiating position. They’ll ask for discounts, demand the world for POCs, be slow to respond and negotiate hard on contracts.
Not to mention, as soon as you mention to an investor that you’re in negotiations with a big brand, you put yourself in a tough spot. You don’t want to have to go back to your investors and say you lost the deal. Now you have to close it. Everyone is watching you.
As a startup, to win big brands, you’ll likely end up giving discounts. Which makes big brands a poor source of revenue. Big brands are not a good place to start.
Do what you’re good at
Spend time understanding your product’s value. How exactly will you make or save your clients money? Everything boils down to that. Don’t try to sell to corporates with the same big picture, change the world stuff you might pitch to an investor or at a startup conference.
Once you know your business value, start targeting companies you know are the perfect use case for your product (regardless of size). It takes a few deals to really work out what your clients want, how they want it and how best to do it internally. You also learn a lot about how clients see your value by actually doing the work.
Smaller companies are faster to close, more flexible and overall easier to work with – great for a startup. Once you’ve got a few deals under your belt that you really understand and can deliver, move on to deal velocity.
Who you know doesn’t matter
Intros are incredibly helpful, but no matter how big your network is, it has limits. You can’t fill an entire sales pipeline based purely on who you know.
Incubators are a great place to get introduced to big brands. Many of them have programs to help startups expand their network and meet big companies. There are also a couple of organizations – like getKITE – that help corporates find and connect with startups.
For outreach campaigns, look for people who work in a company’s innovation department, they are generally more receptive to your approach. Once you’re in the door, try and transition to the actual department responsible for buying or using your product. Innovation departments are usually looking 5 or 10 years into the future, not good when you need to make a sale now.
On your first reach out, send something interesting that you’ve written. It’s all well and good citing Financial Times articles, but that only proves you read smart articles. Actually writing something clever about the problems in your industry or a good case study, shows that you can do smart stuff as well. It helps builds your credibility. This kind of content is also good for targeted ad campaigns.
If you really want to get someone’s attention, do a study on them. For example you might find a way to prove that 30% of the data your potential client uses is inaccurate. Blind approaches are tricky. When they work, they’re amazing. But when they don’t, you’ve spent a lot of time on nothing.
Get on the phone
No big company ever decided to buy something based on a website alone. Get them on the phone as soon as possible, establish a rapport and find out how you can help them.
Big companies are primarily worried about two things.
Track record – do you have any experience solving their problem? Talk about testimonials and case studies.
Solvency – will your company be around in two years? Talk about your investors, your other clients (this is where major brands are helpful), your team size and any other big numbers you can come up with.
Some people will be impressed by buzz words like machine learning or data science. But in general it’s best to stay away from these generic terms.
Sign on the dotted line
When talking to big brands it’s very important not to become a deer in the headlights. That will only give them more negotiating power. You want to build the strongest negotiating platform you can. If you are going to give a big brand a discount or a special contract, try to get a marketing use case out of them. That way you can use the name to attract other business.
Either way, corporates have huge legal departments, meaning creating a contract you are both happy with can take months. In early conversations, try to understand how important their problem is and the timeline. If they need something for a big project due in 4 months, you know you can close that deal sooner than one still waiting for a project’s budget to be approved. Aim for 12 month contracts with 3 month opt out clauses to give yourself some breathing room before you have to spend weeks renegotiating. And finally, always read the fine print!
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