When a large trade association asked Chris LaBossiere and his team to make a presentation overseas on four days’ notice, it finally dawned on him just how much effort can go into winning a giant client.
The CEO of Yardstick Software Inc., an Edmonton-based provider of web-based employee testing and training services, was almost 18 months into a campaign to ink a major deal with the large international industry association. After making four trips and more than 100 phone calls to the association’s Montreal headquarters, pitching his case to multiple decision-makers at escalating stages in the procurement process and accruing about $100,000 in sales expenses—a major sum for a company with revenue of $6 million—he believed he was on the brink of a deal. He had successfully convinced the association of Yardstick’s competence and quelled concerns about his 16-person firm’s capacity to handle the project, which involved automating an international testing process.
So, when LaBossiere received the unanticipated request on a Thursday to present to the organization’s board of directors in Switzerland the following Tuesday, the frustrated CEO’s first instinct was to ask whether the association would at least cover the cost of the flight. Dead silence. Some of the people on the call were scarcely familiar with Yardstick, much less the effort it had already expended up to that point. So, LaBossiere gritted his teeth and booked a flight, vowing to himself that it would be the last trip made in pursuit of this business.
“It was a huge risk,” LaBossiere explains. “There was never any assurance we were going to get anything, and the higher our proposal got in their organization, the harder it was for us to convince them they should do business with a small company like ours.”
Securing a “marquee” client is a milestone in the growth trajectory of most SMEs. A blue-chip customer on your roster gives your firm a potentially lucrative revenue stream, access to new business avenues and instant credibility. “It can take your company to a whole new level, financially,” says Jill Konrath, Minneapolis-based author of Selling to Big Companies. “And it’s proof to the rest of the world that you’re a solid company.”
And these days, conditions are such that many large businesses prefer to buy from smaller firms. To start, SMEs tend to specialize in niches that large suppliers cannot or will not pursue, and are widely understood to be more nimble, adaptable, responsive and committed. In today’s here-today, gone-tomorrow economy, many large firms believe that buying from multiple small suppliers within each purchasing category reduces risk. Compounding this is the fact that following aggressive recession-era cost-cutting, many giants are operating with far fewer resources than before. Therefore, they need help in areas as diverse as staffing, marketing and manufacturing.
“In general, a smaller company can be much more adroit at adapting to meet a big company’s specific needs,” explains Greg Gulyas, Toronto-based chairman of the Centre for Outsourcing Research & Education (CORE).
So, big companies want small suppliers, and small companies want big clients. Yet, a long, complicated, frequently maddening sales cycle separates these complementary goals. Talk to any entrepreneur who has pursued a deal with a large client and you’re likely to hear variations on LaBossiere’s story. Given the complexity of large firms, SMEs often have to exert great effort to capture the interest of the right people or comply with a series of rigorous rules and bureaucratic burdens that increasingly comprise today’s procurement processes. And the size disparity can feel like a significant disadvantage when facing a team of corporate decision-makers in the boardroom or at the negotiation table.
It’s unfamiliar turf to those accustomed to making deals on a handshake, but it’s worth getting to know the territory; if you want to reap the rewards of having megaclients, you have to learn to play by their rules.
Many leading Canadian SMEs have done just that. Their experiences demonstrate how you can win big-company business while saving time, energy, money—and your sanity.
“The scales have tipped”
Perhaps the most daunting part of selling to giants is figuring out where to start. Large companies often present as monoliths; it’s hard to get the name and contact information of any decision-maker, much less the one in your area. And the choice may come down not only to the purchasing department, but also legal, logistics and accounting. In some cases, the process is formal, with decision-makers grouped into a project team to manage a structured tendering process and provide guidelines for how to proceed. In others, you’ll have to chase down and pitch to multiple stakeholders within the organization who may or may not be in communication with one another. It’s in your best interest to understand how any giant on your prospect list likes vendors to pitch.
Formal tendering processes used to be favoured only by government entities. No longer. In recession-spawned efforts to provide greater corporate transparency to shareholders, reduce liability and develop long-term supplier relationships that can translate into better service or prices, growing ranks of large corporations—especially publicly traded firms—are applying multi-stage procurement policies to everything they buy, from paper-clips to real estate. While these processes can benefit potential suppliers, in that they explain the particulars of the buyer’s need and how to tender a bid, they can tax a small company’s resources. A potential supplier may have to respond to calls for expressions of interest, requests for proposals (RFPs) and several rounds of presentations before they’re considered for a coveted spot on a preferred vendor list—or just a one-off deal.
The speed at which large companies have adopted this approach has transformed how Annex Consulting Group Inc. does business. Three years ago, the Vancouver-based IT staffing and consulting company, which works with several of the largest companies in British Columbia, went through tendering processes for only 30% to 40% of its business. Today, it’s 70%. “The scales have tipped,” says president and CEO Stacey Cerniuk. Annex has submitted 98 proposals, some as long as 300 pages, in the past three years. For some time, Cerniuk prepared all these proposals himself, until he realized how much of his attention it was siphoning from other aspects of his business. He has since hired a full-time proposal writer, but the bidding process still occupies a big part of Cerniuk’s workday. The difference from when he started the company in 1998 is undeniable: “My job as CEO has changed.”
Cerniuk believes that the sooner you master exhaustive tendering processes, the more success you’ll have. And he believes the best way to do that is to bid on any requests you know your firm can fulfil, even if you’re unlikely to win the business.
A few years back, Annex bid on an RFP issued by a multibillion-dollar organization, even though Cerniuk was sure the contract would go to a competitor. “We submitted a great proposal anyway, with the intent of raising awareness,” he says. Annex didn’t land that deal, but its proposal caught the eye of the procurement department. “When they issued another RFP later, we were considered more seriously,” says Cerniuk. “We started winning contracts, and eventually made it onto the corporation’s formal vendor list.”
The rigid procedural requirements of formal bidding can be uncomfortable for entrepreneurs used to a more personal approach to sales. In rare instances, SMEs are able to circumvent the tendering process by, say, calling the CEO directly. But CORE’s Gulyas stresses that this approach is risky, because for many larger firms, any deviation from the procurement process could expose the buyers to unwanted legal liabilities. “You really have to understand and respect their processes,” Gulyas explains. And forget about traditional client-wooing tactics; if you think you can win over a buyer by treating him to a steak dinner, think again. Many giants with formal procurement processes forbid any gifts that might sway the decision-maker. Some even shuffle their buyers among departments on a regular basis to prevent relationships from becoming too friendly.
“They have abdicated the responsibility of calling back”
Not all big companies apply a formal protocol to every purchase. Some don’t like to publicize what they’re looking to buy; others prefer not to deal with the bureaucracy of the tendering process. Whatever the reason, there are many instances in which you’ll find yourself crafting unsolicited pitches. When you don’t know which person to contact or what the company needs, it can feel a bit like casting a message in a bottle.
It helps to have chutzpah. In 2007, Mark Cahsens, founder of Oakville, Ont.-based toy and sporting goods manufacturer Great Circle Works Inc., had just come up with his first product, a miniature sled called the Zipfy. The serial entrepreneur figured Canadian Tire was a good place to start pitching. So, he walked into the giant company’s head office in Toronto and asked the front-desk receptionist for the name of the buyer in his category. Much to his surprise, she shared it. “I followed up with a phone call, a message, spoke to the assistant and eventually got a green light to submit information,” Cahsens says. From there, he set up a meeting, in which his presentation ultimately won him a sale. The rest is history for his firm, which has since scored deals with major retailers in Canada and the U.S., including Costco, Toys “R” Us and Target.
Another way to get through to people with buying power is to look at a giant company as a collection of divisions and departments that operate as their own mini-companies. The smaller you can break down a megafirm, the better, says Michael Raquet, Collegeville, Penn.-based author of Selling Big: Growing Your Business Within Large Companies. Top-level corporate decision-makers tend to be extremely hard to reach and—here’s the hard truth—uninterested in what you’re doing. But the hurdles become smaller at lower levels of the organizational tree. Still, even within subunits, you should prepare to make many calls before finding the right person. “There are a lot of gatekeepers in big companies, even in their divisions, and the decision-making process may involve multiple people,” advises Raquet. One more strategy: if an acquaintance has an in’ at the firm—something that’s easier than ever to determine, thanks to online resources like LinkedIn—it can’t hurt to ask for an introduction.
Even with a name and contact information, getting a receptive ear can require no small amount of perseverance. Jill Konrath says the cold call is where most SMEs get stuck in the large-company sales cycle. In the likely event that you don’t immediately get a live person on the phone, you have to leave a message that demonstrates that you’ve done some work to identify the firm’s pain points. And you have to deliver it quickly—Konrath says you have only the first five to seven seconds of a voice-mail message in which to capture the recipient’s attention. (If you’re sending email, you have just 90 words.) “These decision-makers are stressed out and overwhelmed, because there are fewer of them doing the work than there were pre-recession,” explains Konrath. “They sit with their fingers on the delete’ button.”
Even if your message is expertly crafted, it’s not realistic to expect a callback right away. Most SMEs, says Konrath, take this as a sign of disinterest and give up after a few tries. This is a mistake; in her research, it takes 10 to 12 tries to get through to a decision-maker in a large company. “They’re so crazy busy, they have abdicated the responsibility of calling back,” says Konrath. “Even if they are interested, they justify inaction by saying, If this vendor is really serious, they’ll call me back.'”.
“Many stakeholders are involved”
Once you do get the chance to pitch a giant, you should expect to do it again—and again and again. To large firms, a small supplier lacks the built-in reassurances of longevity or capability that typically accompany a major vendor, so they usually demand evidence that your products or services add value, that your company is not going to fold and that you have the capacity to handle the demands of a large company’s business. The more they’re interested, the more you’ll have to prove.
You can draw on your current client base to demonstrate your longevity, customer satisfaction and value proposition. Acquire testimonials from satisfied customers and make reference to long-term contracts. You should also be prepared to disclose information about the security and size of your other sources of revenue, which will be the ultimate proof of your stability.
You will have to demonstrate you’re ready to bat in the big leagues—especially if you’ve never had a large customer before. It helps to have people on staff who have worked for or with big companies in the past. This strategy works wonders for Vancouver-based web and mobile app developer Appnovation Technologies Inc., which has earned orders from the likes of MTV, Sage Software and the World Wildlife Fund, thanks in part to its practice of playing up the experience of its staff. “Everyone on our team has experience working at large companies or agencies,” explains James Heise, director of business development. “The client sees that there are people on board who know how they work.”
It also falls on you to demonstrate the resources you have in place to take on the work. If you’re in manufacturing, you may have to show that you have the capacity to ramp up production and have access to plenty of warehouse space—or that outsourced providers are standing by to fill the gaps. If you provide a service, you may have to explain your ability to add personnel or reference the software you’ve invested in to automate certain processes. In some cases, you may want to consider partnering with other small companies in your sector—even if they’re your competitors—to create joint ventures capable of doing the job.
Throughout your efforts to prove your worth, keep in mind that the people you’re dealing with may have differing needs, advises Sam Chebib, president and CEO of Markham, Ont.-based Nightingale Informatix Corp., which sells electronic medical records technology to large public and private organizations, including the Nova Scotia government. You may find yourself pitching representatives of the finance department one day, operations the next and the CEO on the third. “Package your solution in a way that appeals to the person you’re selling to,” Chebib advises. “You have to be able to address the issues and concerns of all stakeholders, because many are involved in the process.”
“It’s easy to feel like you’re inferior or that they won’t take you seriously”
If capturing the interest of large companies requires a healthy dose of self-awareness, negotiating a fair deal demands ironclad self-confidence. “When you’re small, it’s easy to feel like you’re inferior or that they’re not going to take you seriously,” says Toronto-based Michael Assad, co-founder and CEO of Edentity Web Systems Inc., a provider of cloud-based content-management systems. The fact is large companies have entire departments with mandates to get the best price and level of service. They know how to use their size to get what they want. When you’re sitting across the table from a behemoth, it can be tough not to cower.
Back when Steve Vestergaard started Destiny Media Technologies—a Vancouver-based firm that originated as a video-game developer in 1991 but now provides software that helps media companies securely distribute digital content—he was hungry for what he calls a “big beachhead” account. So, when he finally arrived at the negotiation phase with a major publisher, he panicked and signed the first deal they offered: a flat-rate contract. “We signed the agreement that was in front of us, even though our lawyer recommended changes, because we didn’t want to lose the deal,” he says.
Although Vestergaard believes there is value in accepting a less-than-optimal contract in exchange for the credibility that comes with landing that first big customer, there’s no need to give in to every request; in his view, most SMEs have more power at the bargaining table than they think. “It’s OK to say no, as long as you have a good reason,” says Vestergaard. “You’re not going to lose a deal because you’re putting reasonable terms in the contract.”
Large corporations have different needs in the negotiating process, and it’s helpful to research these before sitting down at the bargaining table. This is one of Assad’s favourite strategies. Before beginning the negotiation process with a major drugstore chain, for example, he did some web research about the company’s procurement goals and asked people in his network about the tactics its negotiators tended to deploy. He discovered the retailer was notoriously aggressive on price, so he came to the table with an initial quote that was much higher than normal. After several rounds of back and forth, the two parties agreed to an amount that equalled what Edentity would normally charge. “Playing the game was key,” Assad says. “In the end, if they feel they’re getting a good deal and we’re getting a fair price, everyone’s happy.”
Assad is able to keep his confidence high during negotiations by remembering that he’s dealing with people who are just trying to do their jobs—not a faceless corporation. “They’re not collectively trying to screw you,” he points out.
Kyle Hall, CEO of Vancouver-based digital photo-processing systems provider PNI Digital Media Inc., adopts the same attitude. When his firm first sold its services to the likes of Wal-Mart Canada and Costco, it was a 25-person David negotiating against retail Goliaths. “We chose to approach them as individuals,” Hall says. “We keep in mind that they have revenue targets to hit and customers to serve. It’s our job to make them successful.” This tack positions PNI as the trusted ally of its clients, which helps to level the playing field while deepening relationships.
Cultivating such warm-and-fuzzies can really pay off. A champion within a large company is invaluable; if he loves what you do, he can recommend your services to other divisions, introduce you to decision-makers and provide testimonials you can use when courting other giant clients—all efforts that can significantly shorten your sales cycle in the future and lead to repeat business opportunities.
“We’re getting a great client that’s going to make us more profitable”
After two gruelling days touting Yardstick in a Swiss boardroom, Chris LaBossiere returned to Edmonton, still not sure whether his efforts had been in vain. It was a very real risk; deals with big companies often fall through, even in the latest stages of negotiation. This can devastate your company in more ways than one—if you become consumed with chasing the white whale, you may neglect your firm’s day-to-day operations, opportunities to sell more to your existing customers or the chance to gain lucrative new ones. These grim consequences were racing through LaBossiere’s mind during the flight home.
As it happens, three weeks after LaBossiere’s command performance in Switzerland, he found out Yardstick had won the association’s business—more than 18 months after starting the sales cycle. He now recognizes that much of his aggravation was caused not only by the bureaucracy and demands of the association but also by his own mistakes. Chief among them was not doing enough upfront research about the process. He was unaware that he would have to make his business case repeatedly—an infuriating process that left him wondering whether the sales process would ever end. But LaBossiere, basking in the post-sale afterglow, is finally confident that it was all worth it: “We’re getting a great client that’s going to make us more profitable.”
MORE ON WORKING WITH BIG PARTNERS:
- How to Land a Whale »
- The Art of Landing Big Clients »
- Don’t Get Lost When Partnering With Big Players »
- 6 Ways to Make Your Company Look Bigger Than It Really Is »
- How to Turn an Unwanted Offer Into a Huge Opportunity »
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