Just a few big name clients can make or break a startup in the enterprise space. Landing business from Fortune 500, or even 100, corporations gives young companies validation and legitimacy, not to mention revenue. However, it is extremely difficult to land these clients as a small startup. Large corporations with large budgets also come with large needs, which means their CIOs and IT buyers are understandably skeptical that startups are up to the task.
If your company is geared toward the enterprise market, here are four things we’ve learned at Panaya that have helped us amass over 1,500 customers in less than 5 years, including over 60 percent of the Fortune 100.
Startups pitching to enterprise companies tend to focus on how their product is valuable from a technical standpoint, or how it can reduce costs and improve efficiency. While these are important aspects, it is more important to emphasize how your product can help the organization reduce risk. Enterprise customers are notoriously risk averse. Their IT environments are complex and they have little tolerance for downtime or any events that affect their operations. Reducing risk is one of the top priorities (and pains) of CIOs who are tasked with keeping an organization’s IT infrastructure running smoothly. A startup that positions their value around their ability to reduce risk will command significant interest.
For example, a lot of IT projects and maintenance are still done manually. This approach is not only slow and costly, but also provides less consistency because different people work differently. Basically, this approach is risky. If a startup can convincingly demonstrate their ability to reduce risk for the organization by using data to assess the scope of IT projects and make smart resource estimates, then the organization is going to listen. The same principle can apply to other areas of an organization as well. A product that provides intelligent lead scoring can reduce risk for sales and marketing teams, or a product that centralizes all HR activity can reduce risk around adhering to compliance standards and regulations.
Startups can also reduce risk during the selling process by offering recommendations from existing customers. CIOs, CTOs, and the VPs of IT tend to believe their peers more than vendors, so if a company in a similar industry with similar pains or of a similar size says “this tool is great,” that greatly increases your credibility. The potential client has more trust that your product will live up to its claims, and this reduces risk on their end.
While enterprise customers may be risk averse, that doesn’t mean that they are conservative when it comes to technology. These customers want to use the best, most innovative technology available to remain relevant and keep ahead of the competition. That said, they are not going to break their routine or move away from what they are comfortable with unless you bring to the table a product that is significantly different, better, and drives real change within their organization.
The first step toward building a disruptive product is to shut up and listen. Learn about the enterprise customers’ pain points, not just the tasks they perform. Where are the inefficiencies? Where have costs increased over the years? Where are changes happening in the marketplace? How can we think outside of the box to creatively address these issues? It is also smart to focus on one specific area you are/can really be an expert in, rather than trying to go wide from the outset. It’s better to excel at one thing than be mediocre at five, especially if you are the only company excelling at that thing. Even if you have broader ambitions for down the road, tackling one specific need is a great first entry point into an organization, and then the sky’s the limit.
A small size enables startups to be nimble and agile, but it can also impose some limits. This is why cooperation is the best friend of a startup selling to large organizations. Cooperation has a multiplying effect on your ability to reach a broader audience and segments of the market. Also keep in mind that the projects and activities of your clients do not happen in silos. Every department works with multiple vendors and each vendor may work across multiple areas of an organization. Within each department, there may be multiple people to talk to or ways of doing things. The reality of working with a large corporation is that it involves a tremendous amount of cooperation. It’s like participating in an orchestra where everyone has to be in sync for the performance to go smoothly. The customer needs to know you can play well with others and are committed to achieving their overarching goals.
Working with partners is about creating the “triangle of win”—the partner and customer need to see the value, as does your own company. There needs to be trust, as well as a shared vision for the future. Remember that in addition to better serving the enterprise customer, a partnership should benefit your company as well. It is important to draw a map of partnerships that are relevant to your industry or segment so you don’t take on more than you can handle, and can focus on building strong relationships and building rapport in the market. A few great partnerships are more valuable than 10 weak ones.
It’s All about the Users
The “consumerization” of the enterprise has been talked about for a couple years now, but it remains just as relevant today. Gone are the days when enterprise technology can get by if it is laborious to implement or badly designed. The software-as-a-service model requires companies to constantly prove their value because if the end users (who are usually not the buyers or management) aren’t using it, the organization won’t renew. SaaS (News – Alert) startups don’t live on maintenance and have to keep users happy. This means it should be possible for your solution to get up and running in a couple hours. The product shouldn’t require heavy training and should be intuitive and easy-to-use. I always say that users may not be able to say yes to a product, but they can definitely say no.
Once your product is up and running, you should be collecting as much data as you can to identify trends, preferences, and user behaviors from across your customer base. These insights can not only be used to improve your product, but also to keep your customers informed of how other organizations are managing similar challenges. You can turn your company into a trusted source of information for your area of expertise.
From the outside, large corporations like GM, Sony, AstraZeneca, Verizon (News – Alert), and Coca Cola can seem impenetrable to small startups, but that doesn’t have to be the case. If your product solves a real need, then no customer is out-of-reach—if you can clearly and convincingly convey your value proposition, and live up to those claims.
About the Author: Gaby Koren is VP Sales America at Panaya.