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Closing On Early Stage Sales
Startups can sell to big companies if they work smart and have allies
(Tysons Corner, VA -- March 25, 2003) “I hate to tell everybody this,” began Doug Clark, co-founder CEO of Métier, speaking at today’s Netpreneur Coffee & DoughNets meeting, “but there are a lot more people out there who don't want to buy your product than do.”
Learning how people like Clark have overcome that daunting fact is what drew some 300 technology entrepreneurs to this morning’s panel discussion. He was joined for this discussion on “Early Stage Sales” by Ken Kiser, Director of Mid-Atlantic Sales for Foundry Networks; Jeff Payne, co-founder and CEO of Cigital; Larry Schlang; President and CEO of Bantu; and moderator Esther Smith of Qorvis Communications. The event was hosted by the Northern Virginia Technology Council and sponsored by Comerica, Ernst & Young, and Fenwick & West.
The discussion focused predominantly on how startups and other small companies can close early customers, especially established companies that can provide traction and credibility for a startup. Although sales is almost never an easy task, it can be exponentially more difficult for entrepreneurs because big companies are often averse to doing business with small firms. In addition to lacking the kind of proven track record for their products or services that big customers like to see, small companies are also seen as risky partners because of high failure rates and a lack of supporting infrastructure. Whatever the reasons, entrepreneurs will have to work twice as hard and three times as smart to close these necessary customers, and they’ll likely have to do it on a fraction of the budget.
According to all of the panelists, the key success factor is visibility.
Kiser, a sales veteran who has made his mark at several tech companies, advised, “Make sure that your company is visible so that when opportunities or requirements get generated in these large organizations, they find you. Of all the successes I had when I was at a small company called CacheFlow, the biggest deals were from calls into us. It wasn't from the salesperson or the calling room where everyone is dialing, dialing, dialing, dialing. That I found to be almost completely ineffective for the big accounts.”
If the trick is to get your name recognized in the market, how can you do it on the limited budgets that most entrepreneurs work under? That will depend on the nature of your product and market. Be rigorous about defining, characterizing, and refining your target market so that you spend your time and money wisely. Then, think about integrated efforts, including email campaigns, advertising where feasible, and targeted trade shows, advised Kiser, not the mass expos that draw huge numbers of vendors.
Other techniques? Payne finds that writing and speaking engagements are productive for building the company’s reputation for quality. Over the last 10 years, Cigital employees have written 11 books and sought out many speaking opportunities which they view as education and information efforts. At Bantu, Schlang says they get good results from PR-focused efforts. “We'll get leads from articles or press releases, but, even more gratifying, is when we get a customer to walk us into another customer, either directly or indirectly.”
Throughout the discussion, panelists offered tactical and strategic tips, as well as personal war stories and lessons learned on topics ranging from sales techniques, to avoiding overselling, to the federal marketplace, account management, working with partners, and whether sales consultants can help.
One point was made over and over again: it is essential to cultivate a white knight inside the prospect.
“That is the most important part of any sales process when you're the little guy,” said Kiser. “You have someone who is motivated, because it's their idea so it's a career move. The best play is where you attach your product or service to somebody's play politically inside their organization so that they really get behind it.”
Payne added, “A white knight is not ’Lenny, the server guy,’ it's the CIO, it's someone at the right level, the person who can ink the checks. If you've done a good job, the white knight in your relationship is right where they need to be, so that when you're ready to give them the sticker shock, the relationship is strong and they're ready to sign the contract.”
A white knight is the key to success in large organizations for many reasons. For one, he or she can help you shortcut a multi-step process. For another, they’ll get you in front of other decision-makers, including people whose influence you may not have been aware of. “You know you're into something worthwhile,” said Kiser, “when you're being introduced by your champion to somebody who doesn't like you. They're telling you, ‘This person has an objection. I need your help to overcome it.’”
Equally important, you need a well-thought-out, structured approach to customer acquisition, from prospect to closing to maintenance and referrals. Said Payne, “We have a defined sales process, and it's really a sales and marketing process. I believe very strongly that those two functions have to be very well integrated from a lead generation and a sales perspective.” Cigital’s seven-step process helps their team stay focused on finding and closing the right deals. [See sidebar.]
Whether you follow Cigital’s system or another, “Do everything you can to control the process,” advised Clark. “Remember, you can't make money until they sign that contract, so you've got to have the strategies to get the close as soon as possible.”
To be effective and profitable, that sometimes means getting to “No!” as soon as possible, as well. A small company can’t waste time and resources on a prospect that has little or no chance of actually buying from you. “At a certain point,” said Payne, “you always have to be willing to walk.” And Clark added, “It's certainly about relationship and strategy, but, in the end, it truly is a game of numbers.”
Copyright 2003, Morino Institute. All rights reserved.