The following is a guest post by Aydin Mirzaee, co-founder of FluidSurveys.com. Aydin shares his experience in this field, claiming that selling to large organizations is a significant factor in the success he has today. Here are the tips he has to share from personal experience:
Convincing Large Organizations to Trust Startups
The vast majority of the time large organizations will be skeptical about buying from a startup for a number of reasons. Validation is the best way to get around this issue. Getting great testimonials from beta customers who were involved in the product development phase before the sale is an excellent way to validate the product.
Pilot Projects are also popular with large organizations. If it’s possible to get the targeted organization on a reduced rate pilot project and have them use it for 6 months to a year, after that why wouldn’t they buy you instead of the competition? They are already familiar with the product at that point.
The Decision-Making Process
With large organizations it is important to is to understand first that the product user will not necessarily be the purchaser and, that there are almost always several decision makers involved in the purchase.
As a general rule, the product should not be pitched to just one person. There are a number of people involved in making decisions and information could be relayed incorrectly if it isn’t being relayed by you. Ideally you should present to as many decision makers as possible (either in-person or as a conference call).
A tip here is to avoid talking about price until the key purchasers are present. Rough numbers are fine but the final quote should be given after the full presentation.
The Right Price
The way that the product is priced is another key component in landing sales with large organizations. The concern is always pricing too high vs. too low and if you’re charging too little, prospects might believe it’s not a worthwhile product.
Here the advice is to prepare pricing numbers for entire enterprises. For example with FluidSurveys.com, the requirements will differ in large organizations from those of an individual user. Because of this, tiered pricing tends to work best for large organizations (i.e. first 100 users costs $X and the next 200 users costs $Y). This is applicable to all sorts of products, not only software. You have to give the impression that you are not coming up with pricing on the spot and keep in mind that large organizations need all the numbers to plan for budgetary concerns. This is why it’s important to have answers to all the budgeting questions upfront.
The Bankruptcy Question
One last hurdle for startups to jump is the bankruptcy concern. Large organizations tend to worry about what would happen to their data if the startup goes bankrupt, or has other financial issues. The best way to reassure these enterprises is to have good measures in place in the event that bankruptcy does happen, and be able to easily explain them to large organizations.
The most favorable way to alleviate these concerns from organizations is to give them the ability to download all of their data at any time or keep all of the data (and possibly the software itself) with a 3rd party (this is called escrow). The agreement and the conditions for the release of that data would then depend on the end situation.
In the end, Aydin emphasizes that the key is to be able to answer every aspect that big customers will be worried about, and better yet, explain it to them ahead of time as that goes to show that you are used to dealing with big organizations.
FluidSurveys.com is concrete proof of what has been discussed here, as they clients that are government organizations, educational institutions and Fortune 500 companies. With Aydin’s formula for selling to large companies, it is completely possible for startups to sell their products to large organizations.