Ways in which small IT services companies can develop large customer relationships
Our protagonist here is a small services company – 50 to 250 people – clocking $0.5-$2M (roughly Rs. 2.5 to 10 crores) in revenues looking to develop larger customer relationships to grow.Northern India has had this old adage – “Shaadi barabar walon mei hi hoti hai”, – i.e. “Marriage happens between people of similar stature”. Granted that love marriages continue to change this equation in personal lives, but love is alien to businesses and hence they stick to rationality and process. A $1B business wants to do business with other $1B companies and not with $1M companies! The way out is a large dowry – in our context, an investment from the smaller company to make this happen. There are 3 things that our protagonist can do in this situation:
Develop an unfair relationship advantage: Getting a relationship going at a senior level is the commonest and easiest way in. Its not easy but has been a way from time immemorial to get into companies. There are many ways companies do this – lets look at some.
Be onsite: These things just can’t be done on email, phone. Face time is critical. One has to “show” one’s face many times. If you are hanging about in the right places, chances of serendipity are much higher. New York, London, San Fran, you get the picture. Not Noida, Gurgaon and Bengaluru.
Network, Network, Network: Look up your college alumni network, your wife’s college alumni network, all your past personal and professional acquaintances, reach out to people, attend some not-so-useful events, pro-actively reach out. Bottom line, make things happen. It’s not going to happen automatically.
Hire Sales: Many companies try to engage with middlemen and I just haven’t seen it working. Hiring a sales person in the US is a $200K punt, but sometimes there is no other way. If you don’t have the ability to develop your own networks, you have to buy networks. The right sales people come with at least a few relationships that can be developed and can get you a foot in the door.
The end result of all these exercises is that you have a senior enough “sponsor” in this company, an insider who wants you to win.
Develop a thin wedge: Assuming you have gotten inside the premises and developed a sponsor, it is quite unlikely that you are going to beat Infosys at their own sales game. You don’t want to pitch against them. You need a “thin” wedge; something specialized that you can do better than others. Answers typically lie in lifecycle specialization (testing, maintenance, UI, R&D etc.) or domain specialization – the founders come from a domain and know it very well. This thin wedge helps you win the first pilot and helps your sponsor position you well. You can always mine the account later for other things.
Be patient and willing to invest $$$: Elephant hunting is a slow and patient process. Sometimes breaking into a large customer with a pilot can take 12-18 months and you are $300K-$400K down by that time. Hence, you also need to have multiple balls in the air. If you can get 3-4 clients to a pilot stage in 12-18 months and keep turning that flywheel, your chances of success are high. Many companies give up too soon. This does not require a full time of a person but requires management mind share and resolve.
Bottom line is that the process is long and can be expensive – the lure of an additional FD or buying your very own office space is always beckoning. Remind yourself of why you got into entrepreneurship. Was it to secure your future and buy FDs? I hope the answer is no. I hope you want to take the moon shot and in services businesses, this is the path.
In the next article, we will look more closely at account development – making your relationship more significant with an existing customer.
