Wouldn’t it be great to NOT spend an average of 30% of billings acquiring that trophy?
The story usually sounds like this:
“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.”
“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).
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.
“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.
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.
Catherine McQuaid on Hunting Big Game