The problem with selling your product to big companies: Middle men. The people who buy your products aren’t the same ones who use your products.
That disconnect is terrible for your business. You wind up making and selling products to appeal to people who aren’t using them. And that means you aim to impress the wrong people.
Let’s say you’re a gym owner trying to sell memberships. When you sell a big corporate client, you’re dealing with one individual at that company – and that may be a person who never even works out! So you impress this guy with nice dinners, tickets to the big game, fancy talk, brochures, lists of your equipment, and promises of low prices. You sell him on the sell, not on the product.
On the other hand, when you sell individual memberships to one person at a time, you sell your product. If your treadmills are always broken or your instructors are lame, individuals will go somewhere else. If everything’s great, people will stick with you and tell their friends. Your success is linked to the quality of what you make, not how well you wine and dine some guy in purchasing.
You want your success to be aligned with the quality of your products, not the quality of your promises. And the best way to do that is to build for small companies (1-10 people) or individuals who aren’t aligned with any company — freelancers, independent contractors, people building their own business during nights/weekends, etc.
Brian
on 03 Sep 09The other aspect is reliability of income.
If you have one big customer that makes up 50% of your profit, and they leave, you’re in big trouble. But, if you have 500 little customers, one leaves and you hardly notice.
The other benefit is that you don’t have to kill yourself to impress one client. I know that sounds bad, but I have had some customers that were so demanding and painful, that I dropped them without thinking twice. They were .5% of my income and 50% of my headache.
fitzage
on 03 Sep 09I had this problem when I was trying to get management to get us Safari Books Online subscriptions. They first recommended the company that Gannett had a corporate account with, so I checked them out. They were horrible. The website was obviously not designed for readability, but designed to sucker enterprises into deals.
I did a search in their online books for mysql and it came back with a single result. I did manage to convince them to go with Safari instead, though.
Nate @ Inkling
on 03 Sep 09You guys kick ass. Thanks for the thought provoking posts.
But there’s some smack of myth and some generalities in this post.
Selling to large companies doesn’t have to be Zed’s “steak and strippers” experience.
Most of our business is from clients with enormous workforces, and I can promise, no amount of steak or strippers has gone into winning their business.
And I’m positive it wouldn’t work for us either. Our clients want to know that we offer a solution to their problems. And we are forced to prove that often, not just to someone in “purchasing”. No matter how big they are.
Nor do we feel compelled to offer promises instead of just great stuff because our clients our big. So:
“You want your success to be aligned with the quality of your products, not the quality of your promises. And the best way to do that is to build for small companies”
First part yes, but the second part doesn’t seem quite right.
It’s great advice to tell people to make sure they are building and honestly offering something people want and can solve their problems.
But just picking to build things for small companies doesn’t give someone that kind of integrity. Hopefully they already have it.
I’m not saying picking something to build for small clients is bad though, there’s definitely pros and cons to both, I just don’t agree with the cause and effect drawn here.
I think building things for large companies can have it’s own pain, but there’s a ton of opportunity there in helping these companies improve. It would be a shame to discourage finding those opportunities by portraying that you’ll become a sleazy salesperson to do it.
Ralph Haygood
on 03 Sep 09I’ve long suspected this is a major reason why “enterprise” software is often lousy: in many big organizations, the people who decide what gets bought are too distant from the people who actually have to use the stuff.
David Andersen
on 03 Sep 09I like what you’re saying about selling, but the statement “The people who buy your products aren’t the same ones who use your products” isn’t anything close to a universal truth. Not even close. So you dilute the value of your message by trying to stand it on something so tenuous.
Kevin Dewalt
on 03 Sep 09Hmm…I have to say that I agree with Nate on this one. And I’m speaking as someone who is trying to sell to lots of small guys and realizing that – for my current start-up – it is not working out as expected for reasons that I won’t detail.
The flipside of your argument is that the investment to sell a small client can be equal to that of a large client.
Please understand that your argument is very true for YOUR business and the clients YOU serve who want the solution YOU are offering.
I’m sure you agree. Why not state so?
Johan Strandell
on 04 Sep 09Obligatory link to Khoi Vinh about enterprise software:
If It Looks Like a Cow, Swims Like a Dolphin and Quacks Like a Duck, It Must Be Enterprise Software
Jamie Lawrence
on 04 Sep 09On a personal level, I completely agree with you. However, the largest and most profitable companies in our industry (I’m looking at you, IBM) rely on selling their software to people who won’t be using it. Quite simply, you wouldn’t buy Lotus Notes or Rational Clearcase if you had to spend every day using them!
I’d argue that the disconnect between who buys and who uses is always disastrous for the quality of the software. However, if you’re big enough, it can be very very good for business. Unfortunately.
Geoffrey
on 04 Sep 09Great insight. I think you’ve also described the big problem with health insurance.
Nick B
on 04 Sep 09Great post, I agree completely. I thought my best customer was my biggest client. After running some numbers it turned out they were bringing in 4x the income of an average client but taking up nearly 10x the time. Bad situation, and they didnt respect my time or work nearly as much as my smaller clients. 4 small clients beats 1 large guy for me.
Joel Sutherland
on 04 Sep 09There are two other reasons that I haven’t seen mentioned yet:
1. Network Effects – When you work with more people, more people know you. It will be much easier to grow through referrals.
2. Specialization – I believe than a company can only be great at one thing. When you work with big companies, you need to be great at what you do AND be great at enterprise sales.
This philosophy is at the core of my web design company’s strategy. We charge much less than our competitors. We make up for it through our inexpensive customer acquisition costs (not one salesperson) and technical chops (can afford top talent with no sales).
BS
on 05 Sep 09I know many users of SAP software suffer from this.
A few friends of mine work at companies that make them use SAP and they HATE it. But, they (the users) were not the ones who purchased it.
One of my friends in particular is pretty bitter about it. He did not get to go to football games or get wined and dined by SAP sellers, some big shot did. He was not part of the decision making process at all. But now he is stuck using SAP and hates it saying SAP is mostly bloated overkill for what they need to do. The Big Shot at the company has never touched the software, he just liked all the big buzz words from the sales guy.
dave
on 05 Sep 09It’s not about selling to big companies vs. small; it’s about selling to the end user.
There are plenty of end users at large companies with the purchasing power to buy software, and there are some very real advantages to selling to them.
Once you make that first sale, you have an internal evangelist who can effectively sell your product to many others in similar positions at the company. It can spread from workgroup to workgroup based on word of mouth. And then workgroups might start using it to work together.
So you wind up with scale and network effects that you’d be very unlikely to realize outside of a big company setting.
And then if you want to make a big corporate sale, what better way to lead than by saying to the top people, “Did you know that five hundred people at this company are already paying for this software today?
I will add, just so it seems like I’m not on the attack, that I’m a big fan of your products and of what you’ve accomplished. But the “our way is the only way” rhetoric really bothers me.
JF
on 05 Sep 09But the “our way is the only way” rhetoric really bothers me.
We’re not saying our way is the only way. We’d never say that because we don’t believe that. Our way is one way that’s worked well for us. We just choose not to add a “it depends” disclaimer on to everything we write. It always depends and your mileage may vary depending on your own situation.
dave
on 06 Sep 09Thanks, Jason.
I wasn’t asking for footnotes and fine print. I guess my question was this:
Why let an excellent, positive point about something that has worked well for you - selling to end users - turn into a broad negative generalization about an entire sector that’s outside your model?
ML
on 07 Sep 09Why let an excellent, positive point about something that has worked well for you – selling to end users – turn into a broad negative generalization about an entire sector that’s outside your model?
Because that sector often delivers inferior products and gets away with it because of the issues mentioned in the post.
If, as you wrote, you’re selling to a large company where the person with the purchasing power is also the end user and is a great “internal evangelist,” then that is a nice situation for sure. But do you really think that’s the typical scenario for people who sell to huge companies? Don’t you think that the larger the organization, the more things get mired down in bureaucracy?
This discussion is closed.