How to Turn Large Companies Into Customers - Forbes

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ENTREPRENEURS 12/02/2013 @ 12:58PM 11,104 views

How To Turn Large CompaniesInto Customers

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One of the biggest challenges early-stagecompanies face is capturing the keyinitial customers that vet theirtechnology and lend credibility in themarket. These usually largeorganizations, known as anchorcustomers, may also be key partners thatoften accelerate commercialization.

The problem is that many small andmid-size businesses find it extremelydifficult to engage larger companies, as Idiscussed previously. It can take monthsof preparation before they are ready tomeet with key decision makers atpotential anchor companies. I haveexplained these preparations and nowwould like to provide some insights on how to effectively engage an anchorcustomer.

It’s a five-step process:

1. Define a Commercialization Pathway

If you’re running an early-stage company, you can go one of three routes tocommercialize your product: 1. you can “go it alone,” 2. you can partner withothers or 3. you can sell your IP or equity.

It is important to evaluate these options carefully before you engage ananchor customer because that will affect who to target, what you want out ofthe relationship, and how to conduct your meetings.

Defining your best commercialization pathway involves assessing yourcapabilities in areas like product development, funding sources, market

Rebecca O. Bagley Contributor

I write about strategies that accelerate the pace of innovation.

Opinions expressed by Forbes Contributors are their own.

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access and production scale-up. If you have significant gaps in light of yourgoals, you may seek strategic partners or sell some of your assets.

Ask yourself: Which of the commercialization areas require attention? Do Ihave the capital to develop these capabilities? Can I find these capabilities inan anchor customer? The goal of any partnership should be to fill yourcompetency gaps and meet your goals for timing, growth, cash flow, etc.

2. Select the Anchor Customer

The right anchor customer for your business is one who provides neededcapabilities and itself benefits from the relationship. Determining who meetsthese criteria is a critical step. Thankfully, you have already done yourhomework in the in-house research and voice of the customer (VOC)activities I outlined previously. Based on that knowledge, rank potentialanchor customers from best to poorest match.

The next step is to create a detailed report on your target anchor customerthat puts all the relevant information you’ve gathered into a useful structure.Having as much organized information as possible is crucial, sinceearly-stage companies typically get only one shot with an anchor customer.

An effective report includes information on the anchor customer’s overallprofile, product and business data relevant to your offering, and a history ofthe target company’s relationships with third parties. If you did not collectsome of this information during the market opportunity assessmentactivities, consult the target company’s financial statements, publicinvestment assessments and published news items. If new informationreveals a poor fit, you’ll have to start over.

3. Sell the Engagement Meeting

Capturing the attention of potential anchor customers and persuading themto meet, requires skills and practice. Unlike VOC interviews, this is a salesactivity. You need a clear scheduling strategy and must know who you aretalking to and what your “hook” is.

It is helpful to prepare a scheduling script based on the anchor customerreport. It should include an opening that clearly states who you are and ahook that explains why you want to talk to the company and what’s in it forthem. Don’t forget to confirm you are speaking with the right person, havepreferred meeting dates and times in mind, and remember to confirm alllogistics at the end of the call.

The first 30 seconds of your call are crucial. Be concise and professional.Reference shared connections or previous interactions, if possible. Decidebeforehand if you want to ask for a non-disclosure agreement. Remember


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that it can be a turn-off and could be construed as distrust.

Before you pick up the phone, practice, practice, practice. 4. Craft the Pitch

A credible pitch is a critical component of your anchor customer engagementmeeting. You need to be prepared to convince anchor customers that yourproduct addresses their needs. A solid pitch consists of a visual presentationand commentary and lasts no longer than 25 minutes, not including Q&A anddiscussion of next steps. Its purpose is to ignite conversation and follow-upquestions.

Whether you use PowerPoint or another visual aid, make sure it looksprofessional and conveys seriousness and thoughtfulness. Limit the use ofcolors and graphics, use appropriate font size, proof-read the document,make sure it’s peer-reviewed and rehearse out loud.

Critical elements of your pitch include:

Opening that states why you are making the presentation

Overview of your organization

Overview of your product

Detailed data on your value proposition in order of importance

The “ask” detailing your objectives

Next steps and closing remarks

What next steps you are proposing depends on what commercialization pathyou have chosen. Possible next steps include NDAs, requests for quotes orproposals, and end user testing. Be familiar with the ones most closelyaligned with the relationship you seek.

5. Engage the Anchor Customer

A successful anchor customer engagement delivers a concrete, desired result.In many cases, that will be the opportunity to have follow-up discussions. Toaccomplish that, you have to inspire confidence, guide the conversation intoareas of particular interest to the prospective customer, and be an activelistener.

The initial meeting is your chance to prove you listened and have done yourhomework. Learning the anchor company’s perspective is as important aspresenting your pitch. The focus is on finding mutual interest for arelationship and laying the groundwork for later negotiations.

If you have developed and practiced your pitch thoroughly, you’ll do fine.Just remember to have a conversation and to listen for the meaning behindwords. Analyze the anchor customer’s responses and tailor your approach


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This article is available online at: http://onforb.es/1bb5UDM 2015 Forbes.com LLC™ All Rights Reserved

accordingly.

Negotiating a deal is a skill mastered through practice. There are severalnegotiating essentials you should keep in mind. For further insights, I suggestyou take a look at Keld Jensen’s posts.


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How to Turn Large Companies Into Customers - Forbes