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Seven errors entrepreneurs make when selling to large corporates and how to avoid them

Friday, 27 February 2015 | By Shane Goldberg

The dream of many tech startups is to partner with, or sell their solution to, large companies that will either pay them a truckload of money or on-sell their products through their huge distribution channels.


Unfortunately, many entrepreneurs don’t realise how difficult it is to sell to a large corporate.


Here are seven common errors startups regularly make when selling to corporates and how to avoid them. 

1. Making a complicated pitch which doesn’t tell the story

In a corporate, just like in any company, people are busy. This means that when you pitch to a corporate representative they have very little time to listen to what you have to say. Thus, your pitch has to sell the value of the product to them straight away. No matter how good you think your product or offer is, if you can’t explain its value to the buyer quickly and succinctly, they won't buy it.


Too often tech entrepreneurs are enamoured with their solution and try to sell based on product features, not on value delivered. That must be avoided at all costs.


There are three key things that you must do to make your corporate pitch focused, succinct and successful:

A) Make the value easy to understand quickly.

It is critical to explain the value of the offering to the people you are selling to in a simple to understand way that can be grasped straight away by someone who probably has five minutes to really think about your offer.

B) Sell based on insights

Traditionally the best way to sell B2B has been to articulate how your offering solves a current problem for the corporate or fill a niche they aren’t already in (this is called solution-based selling). These days, buyers in corporates are very savvy and often know as much or more about the market than you might think. Adopting a new sales approach like Insight Selling is more productive. Focus on providing key insights to the corporate rep, which teaches them about your product and how it can fulfil a hidden need they may not have been aware of.

C) Talk in numbers

The more you can include numbers the better (revenue, cost saving, customers, etc). They are what grab the rep’s attention. Just make sure the numbers are relevant to the buyer.

2. Misunderstanding the goals of the company and KPIs of its employees

Despite what you may think, not every person you are selling to is driven solely by revenue, sales or cost reduction. In fact, large corporates often have very diverse goals and KPIs. It’s important to use the KPIs relevant to the buyer and company when selling the benefits of a particular solution.


Companies might be going down the path of customer acquisition (in which case you need to focus your pitch on customer numbers), cost reduction (“Here’s how much we can save you money”) or profit maximisation (“Margin is key”). Find out the key drivers and focus on them in your pitch, it will give you a much higher chance of success.

3. Being unaware of the risk aversion and failure minimisation culture

The entrepreneurial ecosystem and the nature of the companies involved encourage a culture of risk-taking. It’s important to remember the vast majority of corporate environments are the opposite of this. Generally a corporate environment is by nature focused on risk aversion and failure minimisation, and usually the people working in a large corporate reflect this.


As a consequence, buyers and IT departments are very reluctant to take a risk on a new product and put their necks on the line without understanding whether it’s going to work.


This means that when you pitch, you need to position your offering in a way which minimises this risk for the buyer and the IT department they will be leaning on to install and maintain the service. This may be through minimising the upfront investment required, offering a pilot or trial, or providing lots of case studies or examples of where this has worked previously.

4. Targeting the wrong people

So you’ve managed to find someone in the company you are trying to sell to who is willing to listen and you’re making good inroads in getting them to understand what you are offering. Surely a sale must be just around the corner, right? Unfortunately not, as it depends a lot on who you are talking to and what influence and power they have in the company.


Often the people who are willing to talk are not actually the ones who can actually purchase new products or services. Finding those people is essential for your success. If you don’t, you can find yourself going round in circles and being stuck in an endless cycle of conversations, meetings and pitches.


Spend some time before you contact a company to try and work out the best people to approach; it will pay off in the long term.

5. Underestimating integration costs

For startups, making changes to systems or adding new code to your product is easy to do and doesn't cost much. Unfortunately, this doesn’t translate to a large corporate environment.


Many startups underestimate the huge investment often required to integrate new products or solutions with the core systems of the company. Even something that might seem like a very minor change can cost the company a lot of money given how careful they need to be to avoid introducing problems into their critical platforms (e.g. CRM, ERP). This additional cost can often make or break a purchase decision.


The best way to avoid this error is to design and plan your solution so that it needs minimal or no integration with core corporate systems for it to work. If this type of architecture is not possible, then when pulling together your business case, and even your pilot/trial offering, you really need to consider the integration costs or your offering will be shot down, no matter the value being delivered.

6. Overestimating the availability of capital and having an inflexible business model

Finding money to pay for something in a corporate is far from easy. Even though large corporates often have a large budget for investments in new products and services, the process for any individual or group to access this money is often very long, complicated and arduous, and can depend on the time of year and specific operational and/or capital expenditure position of the particular team involved (at different times they may have more capital or operational budget available than others).


In fact, from what I have seen, it’s much harder to spend money in large corporates with all the controls they have in place, than it is in a small to medium company where control is much more delegated to the front line.


If you are not open to adapting your approach and business model to suit the money the buyer has available, your sales attempts will fail.


Having a flexible business model is key. Be open to changing your model depending on what the person you are dealing is most comfortable with, and go into any meetings with a few different models in mind. There are a myriad of ways a deal can be structured (upfront payments, licensing costs, revenue share, etc.), and having options available to your counterpart gives them the flexibility to choose the model that will fit into their corporate environment and access the funds they need.

7. Being unaware of other solutions already in the company

A key issue I see tech startups encounter when pitching to a large corporate is a lack of understanding of the current technical environment in the corporate, and the capabilities of the solutions they already have. Nine times out of ten, the corporate will already have a piece of software that can do part of what you are selling (probably with some tweaking) or an existing vendor who can build something similar for them with some work. If this is the case, IT departments will almost definitely try to find a way to use what they have or a current vendor before going with your solution. That can break a deal.


To overcome this you really need to:


  • Understand the current environment and the capabilities of the solutions the corporate already uses.


  • Clearly articulate the differentiating factor in your solution, be it capability, cost or flexibility (or something else).

    Shane Goldberg is principal and founder of CustCore Consulting, which helps businesses grow through a focus on improving end-to-end customer experience, sales effectiveness and go-to-market.

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