Questions

What concessions are reasonable to make for selling an enterprise application to your first customer?

We have built a software solution to a problem that we know our target market has. We have spoken with a number of people with buying power inside different potential customers and they have all confirmed it. As we prepare for our first meetings, I am expecting that we will have to make promises or concessions in order to make the sale.. predominantly because we don't have any other customers. What are concessions or promises that historically result in longer term problems for young companies with large enterprise customers? What are easy concessions to make that would result in big smiles on the customer exec's faces? Any feedback would be much appreciated.

3answers

This is the Billion $ question for which there could be a Billion answers. I can share my personal experiences based on some the mistakes I made during my early startup days (post 911). First, I am concerned that you have built an enterprise software solution without a 'First Customer' or even 'First Few Customers'. I am aware that you or members of your team may have industry insights, but it always helps to work WITH your initial few clients as you design and develop an enterprise application, so that you have the opportunity to interact with the client and make changes and enhance the solution to meet the real needs of the client.
Given that you now have an application and a potential client, your key task now is to research the client needs and issues in great depth (not just the industry in general) so that you are ready to pivot your presentation in response to the client needs. However great you think your application is, I can assure you that if it is not tested with several potential clients during the design, development and testing stages- you should ready for some surprises.
Coming to the question about concessions, it depends if you are coming from a position of strength or weakness. Needless to say, you are always better off when you have a tested solution that addresses the most critical needs of the client and you are OK walking away from a bad deal. If you do not have a customer and badly need the 1st so that you can showcase them to other prospects, I believe that it is OK to allow them some concessions such as a 30 day free trial, a performance guarantee, some extra licenses, free training or upgrades for 12 months, etc as long as they allow you to use their name in for marketing and publicity. Access to the CEO/Founder is a big deal to the Customer - so offer it if you can.
One final advice- instead of a formal sales presentation, tell your story in a way that is emotional and compelling. Talk about the wealth of professional experience of your Founders, show that your firm cares deeply about the customer, how your product can help improve their business. Weave these into one seamless narrative that is authentic and honest. Be confident but also be humble- remember that you are the startup. Start by asking questions and let the client talk about the issues.
Let me know if can be of any more help.
Good Luck!


Answered 6 years ago

For your first few customers as long as you don't give your product for free for a chunk of time i.e. anything above 3 months all concessions are fair game.

I remember, when we were starting out for the first few customers we went above and beyond to make it easy for them to use the product, if that meant being on call we were there, doing manual data entry we were there, getting them there prospect list we were there.

And giving all of that concessions is very profitable for you over the short term as they become great reference customers for you, which is what you'll need to scale, raise money and get more customers.

I know my next comment will be contrary to popular wisdom, but everyone will tell you do not let the customer drive your product plan or development cycle. Do not build custom features. You have to heed to such advice carefully. It depends on what your solution is and if you are focussed on a specific industry, If it's already on your product plan and you just intended to do it later and need to accelerate it in order to keep the customer happy do it. If it's something that is not on your product plan but the customer is asking for it, figure out if this is something that other customers are/will ask for if not don't build it. e.g. A big customers wants us to integrate to this proprietary CRM. You say NO UNLESS you are going to loose them to a competitor who is willing to do it.

Do not ever make a concession that you will be unable to deliver on. You will loose their trust, which is the most important thing you need to work on with new customers especially when you are new. Be honest and tell them that you will be unable to deliver on what they are asking for in the given timelines. They'll appreciate that a lot more than you failing to deliver.


Answered 6 years ago

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