Entrepreneur’s Journal: How to snare big-time customers

Entrepreneur’s Journal: How to snare big-time customers

Most young companies dream of getting their first heavyweight customer — a huge player, central to their industry, like Google Inc. (NASDAQ: GOOG), or better yet, a General Electric (NYSE: GE).

Snaring such a customer can change an entrepreneur’s fortunes
overnight. Of course. But how do you gain the attention and trust of a
large and important company? It’s certainly tough — but there are some
strategies to help out.

First of all, make sure you are in a
niche that large companies don’t consider core to their business,
advises Steve Waldis, who is the CEO and founder of Synchronoss Technologies (NASDAQ: SNCR). The company develops software for the telecom industry and even powers the activation for Apple’s (NASDAQ: AAPL) iPhone. This was the result of a deep customer relationship with AT&T (NYSE: T).

According
to Steve: "We developed a solution focused on the order management
process that is a critical and often very complex process but not core
to our customers’ business. Our customers can now focus on marketing
and building out world class networks, and we can focus on connecting
the two. Basically, smaller companies need to constantly differentiate
and continually provide added value to larger organizations by focusing
on their niche while maintaining a superior level of customer service."

Chris Cabrera, the founder and CEO of Xactly Corporation (which develops sales software), also knows how to snag big-time customers.

He
says that big companies often see working with small companies as a
risk. They wonder, will your company be around tomorrow? Can you scale
your solution?

To deal with the pushback, a small firm may want
to try using new technologies, such as on-demand software. With this, a
customer does not have to pay large up-front fees. Instead, there is a
monthly or quarterly subscription payment.

Indeed, flexibility
in pricing may be what it ultimately takes to get a large company to
give you a try. You should consider other things, such as delayed
payment terms, pilots, trials, escrows, and even money-back guarantees.

Another way to mitigate the risk is to highlight your
expertise. In other words, hire top people who are experts in their
fields.

Something else: it’s critical to show your commitment
and that you’ll provide strong support. "Giving out your cell phone
number can really drive the message home," said Cabrera.

He
also recommends sharing your product road map. "One thing large
customers understand is that their size and complexity often makes
their needs unique," said Cabrera. "Embrace such challenges and let
these customers engage in helping to shape your future product
direction."

Finally, you might want to partner with a larger
company — to get the halo-effect from their credibility. But there are
risks. "Partnering is always a good idea so long as you can secure that
your brand identity is preserved and that you can protect your IP and
financial viability," said Michael Gregoire, the CEO of Taleo Corp. (NASDAQ: TLEO).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

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