By Andrew White, Founder and CEO, FundApps
So, you’ve sat in your room for a year, avoiding social contact, hacking away. After a year you emerge blinking into the light with a shiny piece of software that you know will be PERFECT for every bank on the planet. What now?
Let me take you through a few of things you should probably know before heading out.
1. Look the part
We’ve all seen Mark Zuckerberg rocking a hoodie and that’s cool. But you’re not Zuckerberg and you’re still going to have convince people to invest time and money in you and your company. Don’t go overboard, a pinstripe suit and a tie isn’t necessary, but turning up in a pair of Converse mightn’t be the best plan if you’re presenting to a senior person at a bank.
2. Expect lots of meetings, but draw the line
Large organisations are [unfortunately] driven by consensus. Even if there is an ultimate “approver” multiple people will be required to give the nod to progress. So you will have to get those nods via meetings, demos and lots & lots of emails.
BUT, beware wasting your time. Many large organisations harbour frustrated entrepreneurs who will fall in love with your business and keep inviting you in to demo to different groups. Ditto you might find a champion who loves your service but they’re not in a position to help you close the deal, even if they keep assuring you that they are. It’s hard for someone to admit they don’t have the power to make something happen.
So my advice is, read up on sales strategy, ensure you ask hard questions “Who is the ultimate approver?”, “Do you have budget this year?”, “When can we expect approval?”, even if you feel you’re being pushy. Honestly, “No” is the 2nd best answer in sales.
3. Be prepared for dreaded “Procurement”
So you’ve got all the nods, you’ve given them a good price, it’s a done deal, right? Nope, not even close. Most large organisations have a so-called “procurement department”, which strikes fear even into the bravest souls. Basically procurement departments are incentivised to drive your price down to as close to zero as possible. Typically they will be remunerated by how much discount they can get from you. Here’s where you need to do some soul searching and work out what truly is the value of your product or service, which can be tricky. Some ideas for pricing:
a. Benchmark against competitors or similar products.
b. Try and work out what cost savings the organisation will gain by using you
c. Make it up
Discount is a dangerous thing. Even if 10% sounds fine, you are causing yourself lots of future problems. Industries are small and if it becomes known you’ll give discounts at the drop of a hat, word will spread and everyone will expect it.
Feel free to give them, but justify them. “Sure, as our first client in xyz area, a 15% discount is doable”. Or ask for something in return, “20% discount if we can use your name in a press release”. NEVER give a discount without any form of explanation or pushback.
One of our favourite war stories was when a very large prospect told us “With 50% discount you’ve a good chance of getting the deal, with 30% you might stand a chance, but unlikely”. In the end we gave them 15% discount and asked for a press release and they agreed. Stand your ground, you’ve the awesome new service that’s going to transform their business!
Once you’ve got the nods, agreed on price etc. you’d think you’d be home and dry? Wrong. You still need to sign an agreement. First tip here is to get your own SaaS agreement drawn up by a good lawyer. This will be something you’ll keep on using, so don’t be afraid to spend money on it.
You will not be able to scale if every time you need to sign a deal you have to use the customer’s agreement. Thankfully this is largely accepted nowadays, but occasionally you’ll be asked to use the customer’s “paper”. Push back strongly. Your agreement has been written to reflect exactly what your service provides. Their agreement will be generic and not fit for purpose.
If they do accept using your agreement you can probably expect their legal team to “red-line” your agreement. Again, push back. Their legal team is incentivised to get the best agreement possible from their side, which might include asking for totally unreasonable things. Work out what you’re willing to accept and don’t waiver. Things like unlimited liability or assigning IP etc. are totally unacceptable.
Hopefully this has given you some pointers for your future success. If I were to summarise it, “Be flexible, but stick to your guns” would be a good start. At the very start of FundApps we were asked to do an on premise installation (rather than our cloud model). We desperately needed the cash, but we said no (explaining in detail why it was a bad idea) and the prospect accepted it and here we are 5 years later with 30 happy cloud clients!