More from the Tie-Midwest Panel Discussion - Lessons For Start-Up Businesses Selling Into Major Corporations
Dave Weinstein, the President of the Chicagoland Entrepreneurial Center was the moderator at the TiE-Midwest panel discussion on sales cycles for startups. I had blogged about it a few weeks ago. This is Dave's summary on the Illinois IT Association website - Lessons For Start-Up Businesses Selling Into Major Corporations.
The bottom line is that companies will employ different tactics at different stages of growth to help close sales with the big guys.
Early on, companies seem to have more success in selling pilots to divisions and departments of major corporations. As businesses prove themselves and secure more client references, they are able to win more enterprise-wide contracts. This sometimes requires the assistance of a channel or strategic partner. Whether you’re a product or service company, the following key insights from the panel are useful to remember while chasing the big deals:
1. Build credibility with your target client by selling a value solution to a current pain point or demand issue.
Don’t try to sell something without doing your homework and understanding the business unit you’re targeting. This is one of the biggest mistakes entrepreneurs make when meeting with a corporate buyer.
One of our CIO panelists, who is also a major buyer of technology services, said that his company gets a great deal of pitches from entrepreneurs touting the next “big innovation”. His lesson is that it means absolutely nothing if the product or service doesn’t address a current pain point.
2. Evaluate the risk and benefit from the perspective of the buyer.
A start-up with few clients that has a unique solution for a specific pain point might make the benefit outweigh the risk of purchasing a product or service from a firm that has the potential to go out of business.
3. Demonstrate your viability as a business.
While this is difficult when trying to win your first big client, it can be accomplished through selling a pilot or prototype. Have your venture capitalists, bankers or outside advisors call the prospect to help validate your viability (especially in terms of cash position).
4. Honesty and integrity in the sales process rule the day.
Both CIOs on the panel waxed poetic on the integrity of the sales process and how overselling is a key flaw for anxious entrepreneurs. They also said that entrepreneurs should expect the same integrity from the buyer.
If the buyer tries too hard to price the purchase too low, they aren’t the right people to do business with (even if you could name them a marquee client), the CIO panelists said. Over time, this could cause you to be forced out of business.
Most corporate purchasers understand that they are buying from a small business and they don’t want to put you at an economic disadvantage that would hurt both parties in the future.
5. Never give products or solutions away for free.
Giving away free services doesn’t validate your business and ruins the value proposition you’re offering.
6. Entrepreneurs should not celebrate sales. Instead, celebrate when goods or services are used.
This is a great mantra that sparked an interesting discussion. The panelists discussed software that was sold and never used and how that kills the reputation of an entrepreneur more than not having sales at all.
7. Know when to punt.
Learning when to move on from focusing on a hot prospect seems to be a key for entrepreneurs transitioning from the start-up phase to the next phase of growth. Speaking from experience, this is a huge lesson for entrepreneurs. Knowing that not all clients are good clients and understanding who not to pursue can be just as important as knowing who to target.
Entrepreneurs who learn how to pre-qualify leads with good customer intelligence and can articulate a value proposition to a current pain point are more likely to win the business of major corporations. Selling pilots or prototypes may be the way for start-ups to win their first big accounts.
Whatever type of company you run, approaching sales with integrity and honesty seem to endure the test of time. If you have a product or service of value, someone must pay for it. Having a client for the sake of saying you have a “name-brand client” means little if you’re not compensated or your product is collecting dust in a cabinet.
