6 Tips For Startups When Selling To Big Companies

Oct 07, 2022

It’s a great startup strategy to hunt deer. (See this classic Mark Suster blog about rabbits, deer, and elephants.)

Deer are SMB companies who can buy your software for ~$1,000/mo. They put on a credit card with no legal, no contract negotiation, and no collections.

It’s predictable cash every month with a short sales cycle.

Of course, elephants, I mean, large companies have problems too.

And they have a lot of money to spend on solutions…as long as they don’t trample you in the process!

I sold to and managed relationships with enterprise customers at multiple companies. Every company was unique but certain patterns came up regularly.

Here are 6 key strategies if you’re a startup selling to big companies!

6 Tips When Selling To Big Companies

1. Charge Enterprise Prices

IBM expects to pay $1 million dollars for your software. I don’t even know what your software is but IBM expects to pay that much.

If enterprise companies are your target market, make sure you charge enterprise prices!

2. Expect a Procurement Haircut

All contracts with big companies go through Procurement. Procurement’s job is to save the company money. Procurement’s success is measured by how much they negotiate down a price.

Expect a 20% haircut from Procurement and factor that into your (already high because it’s enterprise - see #1) pricing.

3. Include Implementation Services

Large companies expect to pay for software implementations.

They know they are high maintenance! #sorrynotsorry

Here’s what it will include:

Hundreds or thousands of people, systems, and tools to account for
Custom use cases
Extra security
Hand holding
Undoing. Redoing.
A product tweak or two.
Lots of meetings
Lots of trainings

It will take more time and people than you think. Plan ahead to cover your costs and provide a great experience.

4. Plan for Legal Fees

If you do a big contract with a big company, lawyers will be involved.

Lawyers want to add value. They do this by redline-ing the crap out of the boilerplate contract and terms of service you copied from the internet.

You’ll want to make sure there’s no Goliath-vs-David funny business so you’ll get a lawyer too.

ICYMI: Lawyers are not cheap.

5. Set Up Support Ground Rules

Every large company will ask for 24/7 support. This usually gets resolved amicably.

YOU: We offer support from 9a-6p Mon-Fri.
BIG COMPANY: Okay, fine.

Sometimes they really do need more support coverage. They should pay for that. (Theme of the blog . . .)

Once you price it out for them, they may realize that standard support hours are fine. Staffing for 24/7 support is expensive!

It’s also helpful to discuss who has access to support. Does every user have access or do they need to go through designated power users on their side before it gets escalated to your team?

Clarify upfront to prevent confusion, frustration, or excessive support tickets later.

6. Offer a Monthly Credit Card Option

Do Tips #1-5 make enterprise sound like a major headache? Are you throughly discouraged?? Fear not, my friends. There’s a less painful option at your finger tips.

Offer a month-to-month option that can be billed via credit card.

Most department heads can put a certain amount of spending on a credit card, no questions asked. At the very least, no lawyers or procurement asked. 😉

This strategy worked great at Rigor. A department within a Fortune500 company would sign on, paying monthly via credit card. Once we had internal traction and proven ROI, we’d start discussing a larger annual contract. Navigating the corporate approvals and negotiations went much faster. We also got fewer questions and concerns about our startup status.

Large companies can be amazing partners, fantastic marquee customers, and a huge revenue boost.

When startups move upmarket and start selling to larger customers, you’ll often hear:

It’s the same product with a different sales process.

Be prepared. Understand typical big company process and dynamics so you can align accordingly.

What tips do you have for selling to enterprise companies? What do you wish you would have known? Any strategies that have worked well for you?