Co-founder at Kraftblick
We are talking with Alexander Sambuk, former Chief Operating Officer of Luxoft Excelian Financial Services [part of a custom software company with a staff of over 10,000]. He also worked in Intel Corporation, Boeing, Deutsche Bank, and other companies.
Our conversation is about enterprise companies, their mindset, and what potential contractors should do to close deals with them faster.
— Alexander, you’ve worked at several large corporations: Boeing, Intel, Luxoft. Which impressed you the most?
— They all are interesting in their own way: each has its own atmosphere, its own level of creativity. I find it difficult to pick one.
— How should a small company build communication with enterprises? Is it better to start with a small one with a staff of 5,000 to 10,000 people or, instead, immediately start working seriously on bigger clients?
— What should a company do if it really wants to work with a particular corporation? How do you avoid spending months in discussion and the endless presales that everyone is so afraid of?
It’s necessary to get in touch with decision makers and communicate with them.
It’s too early to talk about a deal until you have established contact with one of them.
In the case of a customer with, say, 5,000 to 10,000 employees, aim for establishing contact with the director general or a second-level person (a subordinate to the director general, department director or vice president).
If there are no more than two heads in the chain, then this is the right person to be talking with.
Anyone who is lower in the corporate hierarchy, even someone who has a budget, will need to coordinate how the money gets spent, and this process of coordination will take a long time.
Accordingly, for larger customers, your target audience moves lower in the hierarchy.
In megacorporations, the CEO and his or her first deputies are high strategists. It’s not their business to care about how exactly internal automation is arranged and which employees are executing the plan.
In this situation, you should aim at the third or fourth level.
— What else can help reduce the endless back-and-forth?
— It depends on how much the decision maker is interested in buying from you.
Your target maybe just looking around to see what’s happening in the market, or perhaps already eager to buy something, or working through a long list of corporate procedures that will require exploring seven alternatives, getting agreement from the purchasing committee, etc.
Whatever the case, you need to determine the mood of the decision maker and find out what the process of making a decision will look like for them, in what time frame, whether the decision is tied to annual budgeting, whom the decision-maker consults with, and who needs to give final approval.
— What would you advise if a purchase is unlikely? Is it better to let communication develop in a natural way or to use some kind of technique?
— Let’s assume that you’ve come to the customer as a company that offers some software. Even if it doesn’t work out for you right now, you have made yourself known as a company that sells cool stuff.
At some point, it’s necessary to reduce the intensity of communication, perhaps wait until the client is ripe for sales, or simply make sure that the client is no longer interested.
Make contact from time to time, but do this delicately so as not to pester the client.
If the customer simply cannot make a decision, you need to take that as a fact. You did everything you could, and now it’s better to contact more promising leads.
— Let’s take the example of Boeing. What kind of offer would it be interested in? Without what it is better not to plunge in Boeing?
— A strong social network is necessary.
All large corporations with a staff of 30,000 or more have approved supplier lists and a protocol for accepting new suppliers.
Obviously, it’s impossible to gain entry there by walking in off the street.
Large companies prefer to work with large companies because they follow similar principles and, among other factors, it’s easier for big suppliers to ensure a huge volume of deliveries.
For a small software company, the only chance to get approval from a big corporation is to fill a specific niche and do it exceptionally well.
You need to know how to do something no major supplier is doing.
Few people know how to do, for instance, VR. It’s necessary to find out where there is demand: in Boeing or another corporation that could be the customer of your dreams.
This can be done exclusively through personal contacts.
In every case, when small companies manage to interact with large ones, their success is associated with personal contacts.
— We often encounter a situation when a software company comes to Kraftblick with the following request: “We want to work with large corporations. Get enterprise leads for us.” How realistic is this?
— If there are no personal contacts, this is a lot like the student sipping tea at his desk and imagining his post-graduation million-dollar salary.
It’s a worthy dream, but is it likely to happen now? Probably not.
Is it worth trying for? I think yes.
— Is it safer to stick to working with medium and small companies? After all, corporations don’t always pay in advance, and they have powerful lawyers who can bring an action if necessary.
— If you are a niche supplier, this corporation will need you, and there is a manager who is very interested in you and will probably cover you if something goes wrong.
But you shouldn’t make mistakes, and the rules of the game also need to be understood.
Yes, these deals include post-payment, with a large delay in payment. There are also going to be additional procedural issues, certain checks, and audits.
Is it scary? No, not scary.
— What should a company do when it is about doing a small pilot for three months, and the enterprise wants to carry out preliminary due diligence, check finances, etc.? Is this normal practice?
— Financial due diligence that is outside the context of IPO, mergers and acquisitions is unusual, and I would not agree to it.
— If a company wants to work with corporations, is it important to have an office in the United States?
— It depends on what you mean by “office.”
It is highly desirable to have office space in a business center if you have any local representatives and a back office. After all, these people must have some place to work.
Permanent work from home is ineffective. So you will need at least a small room with a table, chair, and Internet connection.
As for whether it is possible to sell in the United States without having a local representative, there are various examples. In my experience, it is better to have such a representative than not to have one.
Is it necessary to have a legal entity in the US? Not necessarily, but then you definitely need to have a legal entity in the EU, preferably in a well-known country.
— How realistic is it to attract attention by writing a letter to some enterprises’ decision maker on LinkedIn or simply via email?
— The chances of success are zero.
Linkedin conversion rate for an enterprise high level representative to respond to a “cold” message is less than 1%. For some it is 0.2%, for others 0.8%.
When I see dozens of messages on LinkedIn, I click on them only to avoid looking at the eyesore of all that bold font. I click, run an eye over them and forget. Attachments, links? Almost nobody opens them.
If you have set up an automation that allows you to target tens of thousands of potential customers, great, let it work. Then 0.8% of the exhaust is good.
If you do everything manually, then give it up.
— When we are talking with prospects at Kraftblick, people often say, “We want to build a system and get away from word-of-mouth. The co-founder left somewhere, got to know someone, brought someone, but it’s hard to raise a team based on this.”
— To get away from word-of-mouth, you need a brand and you must be everywhere.
You need to be widely known or recommended, or they’d better come across you in Google search results.
