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Mar 28, 2019 17:04:25

Saying no to big customers

by @hum | 914 words | 🐣 | 215💌

Sarah Hum

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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.


Time is our most valuable resource

Of course, Big Company X also demands new features. As a product team, our naive reflexes told us: We can handle this. Let's just move things around. No big deal.

Stop right there. It is a big deal.

As startup founders, we know that at any given time, there are a million things we can work on and only so much time.

The feature requests usually fall in one of two buckets:

  1. They will benefit all other customers
  2. They will only benefit Big Company X

When features fall in bucket #1, great. It sounds like an opportunity to improve your product across the board. Still, is it the most impactful thing for you to be working on? Put your product manager hat on and see if these features are worth prioritizing.

When features fall in bucket #2, don't build them. Don't add features to your product that few people will use. This is feature bloat and it makes your product less focused, and more confusing. Building the wrong things can give your competitors an edge.

Time is a limited resource. Consider not only the time it will take to build features but also maintain them.

When you build your business for a few big customers, you're left vulnerable to their demands. A diverse customer base means you can make decisions without the bias of a single organization.


Don't forget why you started your company

We started Canny for these reasons:

  1. We believe feedback is a problem for all software companies.
  2. We want to build a great, sustainable business.
  3. We want to have fun!

Don’t get me wrong, there are benefits in selling to enterprises. Namely, they pay more and they churn less.

Here's why we don’t sell to enterprise:

  1. Selling to enterprise would mean not selling to a majority of businesses.
  2. We’d rather have many small businesses paying a small amount, than a few businesses paying a large amount.
  3. Enterprise sales is not fun (for us).

Our team’s strengths lie in building great products. We knew we’d be more successful (and have more fun) building a product-oriented business instead of a sales-oriented business. We decided Canny would be self-serve and focus on mid-sized companies.

This answer might be different for you and that's completely fine. Just know that there are fundamental differences between SMB and enterprise sales. Tomasz Tunguz has a great post outlining some of the differences between each path. Ask yourself if selling to enterprise is right for your product and team.

It's also okay for that answer to change. In fact, many teams start out with SMB and move up to enterprise. It's a solid strategy if you know what you're getting into.

Originally published at canny.io

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