How Startups Build Successful Enterprise Partnerships — Part 1
Note: This is Part One in a series to help startups build enduring enterprise partnerships.
“You don’t close a sale. You open a relationship.”
As a startup founder, you have been on a roll recently. Your startup has successfully prototyped a minimally viable product (MVP) destined to change the world. Angel investors and VCs are beginning to respond to your fundraising round inquiries, indicating a positive signal of interest. On top of that, your startup has been recently profiled on VentureCrunch*, a prominent news publication, creating a short, but exciting burst of interest from new followers across social media channels.
One of those interested is a Director at a Fortune 500 company. She recently read the article, wanting to learn more about your startup. In addition, you are confident that your product is perfectly aligned to the needs of the Fortune 500 company. With a bit of luck and a great pitch, you are one step away from acquiring several million end-users, along with a ‘stamp of approval’ from a publicly listed company. Or are you?
The initial pitch appears to go well. She likes your product and indicates that she’ll bring it up the corporate food chain to see if there might be any interest. The dream of signing a contract that will transform your startup starts racing in your mind.
Several months pass. Despite a number of follow-up calls and pitches to some of her colleagues, no real traction is made. Eventually, the opportunity goes radio silent. No feedback, and no clear next steps. What’s happening here?
What should startups think about when trying to land an enterprise client?
Welcome to the ambiguous, challenging world of enterprise business development (EBD). If you were to compare “sales” to an art form, EBD represents the multi-faceted skills of an architect, blending multiple disciplines (i.e. artistry, mathematics, etc.) into a single craft. Successful EBD requires a combination of industry knowledge, tenacity, charisma, political adaptability, negotiation ability, people skills, and patience, centered on a compelling product that provides real value.
EBD requires delicate strategic maneuvering across multiple stakeholders in order to influence a decision, all within the multi-faceted political contexts of the enterprise. Unlike traditional sales, which is typically a transaction focused on a single buyer, EBD requires the seller to become part-Detective and part-Evangelist: 1) gathering critical information in order to understand the dynamics at play within the enterprise, and 2) carefully crafting a compelling vision that will resonate with the majority over time.
“What’s important to keep in mind is the enterprise client is not a single person, but a complex, ever shifting set of circumstances within an organization where people and strategic objectives can change.”
EBD necessitates a fundamental shift in mindset away from the traditional sales mentality of ‘Always-Be-Closing’, popularized in Mamet’s Glengarry Glen Ross. The most successful EBD experts have carefully built a track record of establishing trusted ‘client-advisor’ relationships, focused on serving their client’s best interests. They have cultivated the relationships over countless phone calls, in-person meetings, and conferences. Enterprise clients keep coming back to the EBD expert because there is a fundamental level of trust established. This results in a pipeline of new and larger deals, all by the same enterprise client.
What’s important to keep in mind is the enterprise client is not a single person, but a complex, ever shifting set of circumstances within an organization where people and strategic objectives can change. This requires you, as the potential vendor, to pay close attention to the evolving dynamics as you build a relationship with the enterprise, and to be willing to pivot when necessary to adapt to the changes. For that reason, we recommend the word ‘sales’ be eliminated from your vocabulary if you are pursuing EBD, as it naturally implies closing transactions in high volume and frequency. Establishing yourself as a ‘trusted advisor’ and ingraining that mindset in your DNA will be fundamental to building a successful B2B partnership that will eventually transform your business.
What are the advantages of startups doing enterprise business development?
Off the bat, EBD can be daunting. Unlike a traditional sale that can take place in a matter of hours, EBD can take 12–24 months from ‘ new lead’ to ‘contract’, depending on the maturity of the enterprise relationship. The timing cannot be understated. For many startups, the 12–24 months is longer than their expected lifecycle.
Given the timeline and level of attention required, why would a startup want to pursue an enterprise? Simple: opportunity and scale. Some key insights:
- One enterprise deal can fundamentally transform a startup. Not only can a startup land a large revenue-generating contract, but the startup can also gain access to millions of potential end-users (i.e. enterprise customers).
- Enterprise deals can grow upon themselves. Landing the first deal is the entry point (“letter of acceptance”) into the institution, not the exit point (“graduation diploma”). Once you are in, the chances of identifying other client opportunities rise dramatically, increasing the likelihood of expanding your business. This is due to the established relationships you start to build internally. It’s not unreasonable to go from a single ‘Statement of Work’ to multiple deals in a matter of months.
- Credibility. Larger enterprises have a tendency to choose mediocre solutions from established firms rather than cutting-edge solutions from emerging startups. Why? The answer is relatively straightforward: enterprise decisions are oftentimes based on minimizing risk, and startups struggle to position themselves as the ‘safe’ solution. It’s better for an enterprise executive to execute a workable solution with low-risk, rather than a great solution with higher-risk. If the startup solution fails, the decision could be perceived as a poor judgment call. Interestingly, if the low-risk decision does fail, it’s less risky for the executive since the argument can be spun: “You cannot blame the executive for choosing the lower risk option.” If you can land an enterprise deal, this provides the ‘stamp of approval’ to give your startup credibility to become an established “lower risk” vendor, increasing the likelihood of future deals.
In summary, a single enterprise deal could provide significant revenue streams for the startup, the opportunity to grow the business, and the credibility to pitch new enterprise organizations. It’s quite an incentive for landing the first deal!
Parting thoughts (until Part Two):
As your startup begins to build a B2B client portfolio, keep in mind that an enterprise relationship requires a significant time investment and willingness to adapt to their ever-changing needs. Enterprise relationships are inherently complex, and keeping abreast of the organization’s strategic and operational challenges is fundamental to adding real value and building trust. Those who are successful in building an advisory capability geared to their client will become the most likely to land a contract. The reward of this long-term investment of time and energy is a potentially handsome outcome, not just from the client itself, but for future business development opportunities as well.
In Part Two, we will start to deep-dive into the inner workings of a large enterprise and how decisions are made from within the organization. Stay tuned!
Originally published at elevarco.com