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Mar 26, 2019 12:15:47

Saying no to big customers

by @hum | 428 words | 37πŸ”₯ | 120πŸ’Œ

Sarah Hum

Current day streak: 37πŸ”₯
Total posts: 120πŸ’Œ
Total words: 56546 (226 pages πŸ“„)

Imagine this:

It's the early days. You have under 100 customers but things are looking pretty promising. It's a normal day at the "office" when you hear the familiar *ding* of your Intercom live chat. It's a lead and they’re from Big Company X.

Your mind starts racing. We HAVE to close this deal, no matter what. How much are they going to pay us? How much can we get them to pay us? Everyone, stop what you're doing! This is it, we've made it!

Hold up.

If you're a low-touch SaaS company like us, Big Company X is probably not your ideal customer. When you're starting up, any opportunity is exciting, especially the big ones. The chance to double your MRR? Heck yeah! It's hard to step back and think about the implications of saying yes.

The consequences are often more harmful than they seem. You risk wasting your time, building the wrong things, and losing yourself in the process.

There were several times we almost said yes. Instead, we learned to say no.

--

[Startups] get a little bit of inbound interest, and they just say yes to that inbound interest without being fully aware of how you have to play the enterprise game to win.

Steli, Startup Chat


Big companies have big company needs

It's easy sniff out a big company. Their websites say it and they ask questions like:

  • Can you do training sessions with our staff? (I guess so?)
  • Can we set up a demo with your sales team? (What sales team?)
  • Does the product have reporting? (Try our API!)
  • Do you support IE? (No)
  • Can you share details of your last penetration test? (Excuse me?)

These are high-touch companies. Closing the deal involves going through a long sales process. We've heard horror stories of founders doing several demos only to find out nobody even has the authority to make the purchase.

It’s going to take a very high amount of time, money, and resources for you to really close an enterprise customer. The demands are going to be really high, they’re going to move very slowly. You’re going to need a lot of energy and effort and senior people on your team to close these customers.

Steli, Startup Chat

Our biggest customers are the most demanding. Keeping them happy involves dedicating special attention to them. When the account is a large percentage of our revenue, we feel we have to bend to their needs. We feel obligated to fulfill them, or risk churn. If you have some of these customers, you know the struggle.

From Sarah Hum's collection:

  • 1

    @hum Another thing to keep in mind, expectations from investors (assuming raising a round or raised a round) about keep doing specific type of deals.

    Abhinaya Konduru avatar Abhinaya Konduru | Mar 26, 2019 14:04:52
    • 1

      @itsabhinaya Interesting, thanks for bringing that up Abhinaya! We don't have any investors so aren't familiar with the pressures there. What are your thoughts? Do expectations from investors influence the customers you take on?

      Sarah Hum avatar Sarah Hum | Mar 27, 2019 17:01:50
    • 1

      @hum Sometimes, it really depends on who the investor is. Especially if the mini experiments are working with one type of customer vs. another type of customer.
      At the end of the day if the experiments are working then you are likely to go that route and try to adapt to it as fast as you can.

      Abhinaya Konduru avatar Abhinaya Konduru | Mar 27, 2019 21:51:13
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