
Selling to the Fortune 500, Government, and Other Lovecraftian Horrors - zeeshanm
https://training.kalzumeus.com/newsletters/archive/enterprise_sales
======
codingdave
Government is totally different than enterprise. Government is extremely price
conscious, and may even have regulatory requirements that dictate a purchasing
process. There may be formal request processes, approvals, public hearings and
comment processes, etc. There can be formalized criteria that dictate who wins
an RFP. If you try to lump enterprise sales and government sales in the same
boat, you will be in for failure.

And the whole limit that this article is talking about exploiting, of sticking
under a specific amount... That is called frequently called "DOA" \-
Delegation of Authority. And the trick stated, to keep your price under a
specific DOA level, is questionable. People who aren't trusted to spend more
than $500 also likely do not have a large budget, so your $500 a month would
kill their yearly budget, and you would lose the sale anyway, or at best
become a target for cost reductions in the future.

Sure, using tricks like that might quicken a sales cycle and avoid annoying
bureaucracy. But in the long run, you will still lose. You are a pain point in
the budget of a 1st line manager, instead of a prized vendor in the large
budget of a higher manager. When the day comes that the corporation challenges
all its managers to shave 15% of their yearly budget, guess what list you end
up on? Trust me, you do NOT want your monthly bill to be falling in the budget
of a low-level manager.

Instead, Deal with the pain. Put up with the bureaucracy. Do the PO process.
Get in as a line item on a budget higher in the hierarchy. You then are really
considered a cost-effective solution, and higher-level leaders don't like
admitting mistakes, so they will put their political clout behind keeping you
in that organization.

~~~
protomyth
"Government is extremely price conscious, and may even have regulatory
requirements that dictate a purchasing process."

My nightmare scenario is when of the K Street wonders (or I street) gets their
software required for a grant program. It is always awful which leads to a
nice side business in training classes. I've had to deal with too many of
these wonders.

To give a nice example, one piece of software needed an "update". This update
came in the form of a PL/SQL file that needs to be applied. This file was 762
megabytes. No install program just a list of steps to run the sql file that
took over 4 hours to complete.

~~~
devonkim
Actually, that seems like it was generated by some half-ass SQL generator
written by a summer intern. Wait, are you running my code from 12 years ago?

The problem I've had with the RFPs I've responded to in this regard is that
training may or may not be accounted for in the original RFP and if you try to
increase your bid to accommodate the knowledge transfer sessions and
especially the three to four that you have to schedule eventually because the
people you need to train are all on PTO for three weeks at a time all for
critical stakeholders.

~~~
protomyth

      Actually, that seems like it was generated by some
      half-ass SQL generator written by a summer intern.
      Wait, are you running my code from 12 years ago?
    

If it is a SQL generator, they sure do a good job of randomly formatting and
adding interesting comments.

I would prefer the software to require little to no training. Given what is
gathered then typed in, it seems like they took the forms that are required
and ran them through a blender then an input wizard. This is par for the
course. They are already getting training on data gathering so having the
program match the damn forms might be a bonus.

I am in awe of what can be shipped these days.

------
kevan
> Stop thinking like a human. Think like a corporation. Corporations are like
> humans whose smallest increment of currency is the largest paycheck you've
> ever received.

This is a pretty important point. The financial scale that a company operates
at can be hard to reason about if you aren't involved in that part of its
operations. Buying $500 licenses for an IDE in my department seems
prohibitively expensive from my perspective, but for the company it probably
costs less than the furniture in the office.

~~~
sokoloff
There's little "probably" about it.

I assure that most office furniture is absurdly over-priced and indeed would
dwarf a $500 license. Just a desk chair with modest comfort and ergonomic
features will be priced in that ballpark, with anything that you'd consider
"nice" being higher than that.

------
kephra
I did a few enterprise sales, e.g. to Deutsche Post AG or Siemens, and I have
to disagree to point 7 here. At first German companies do not sent a check in
an envelope, but use Germans much better banking network for wire transfer.
Unlike US direct debit and direct credit are free of charge and execute within
a day between two banks, and nearly instant at same bank. The other thing
about point 7 is a "trick" I learned more then 30 years ago: Offer 2%
discount, if customer pays within 7 days. Everybody who can count will do,
even enterprise.

------
LargeCompanies
I have ZERO CLUE and or social skills to seal the deal with Fortune 500
companies.

I am basically a solo founder (have a tech partner, but he's 25% in vs. me
500% in) whose work grabs the attention of the biggest companies in the world.
I publish my work on the iNet and or demo it and in doing so VP and higher ups
of Fortune 50 to 500 companies reach out wanting to do business and or it
could be just flirt and or figure out how my partner and I achieved what we
have accomplished.

Examples... 1\. Two months after announcing our work we were invited out to
the valley to demo our tech to an entity out there. They were total jerks to
us and baited us to tell them how we accomplished X. That was a low day ..
felt like we flew out to the valley to get kick in the stomach by a giant.

2\. Fast forward 16 months later and just about every massive tech company has
reached out to us showing some level of interest. Not sure how they find out
about us (a east coast start-up), but they do and we get excited but then
demoralized as nothing happens.

3\. Most recently I demoed our tech at a hackathon. After my demo a VP of
Fortune 500 company was super excited and said i want to use this at my end of
the year board meeting. Ok, awesome let's make this happen I thought. Though
first big wig you will need to sign a document and half licensing agreement.
Oops that small document that protected us killed the deal and well NOW I AM
CRAZY TIRED OF DEALING WITH THESE UPS AND DOWNS.

We can and have a history of making cool things, but totally lack the social
skills and business acumen. It time to hang things up and possibly open source
our work. Many companies bottom lines will hurt once we and if we open source
it. Though of course we will remain living our meager lives.

Done starting up after 10 years, broke, in debt, 4o years old and family-less
(she is tired of waiting for it to happen too.. back to the corporate world so
i can have that family ive always wanted).

~~~
sskates
Sorry to hear that the experience was tough. One thing I'd recommend for
anyone new to it- get help from someone who's been an enterprise sales person
before. This can speed up the learning curve dramatically. Even then it's not
automatic- it took me 6 months of hard full-time work and lots of no's and
wasted time like the above to really get a feel for the enterprise sales
process. It's more work than learning a new programming language and framework
but less work than learning to program.

~~~
ams6110
Another thing to do is try to determine whether you're talking to someone who
actually has the authority to make a decision. Givaways are things like
"Sounds great, let me run it by my [manager|committee|VP]" etc. You may be
thinking you're on the path to a sure sale only to find out that the person
holding the purse strings doesn't even know what's going on, or has already
made another decision, or there's no budget, etc.

------
shin_lao
_A typical phrase you will hear from customers at this point is "We don't want
to be your biggest client."_

This is not something you can get around easily. Some companies have strict
rules such as "we can't be more than 30% of your revenue".

The reason behind that is that if a customer represents a very large amount of
your revenue, you can be considered as a _de facto_ subsidiary.

The real way around it is to work with a larger intermediary company.

Patrick's story is interesting but it won't work against hard formal
processes.

~~~
logicallee
where would the client get this information? (can't you say whatever you
want?)

Also this seems easy to massage, you can just resell a commodity under cost to
generate all the 'revenue' you want (at negative margin.)

~~~
shin_lao
Obviously I don't know the laws of every country in the world but I would be
surprised that lying about the revenues of your company isn't at least a
felony.

------
MichaelGG
So where should you draw the "Call for a quote" line? I'm a few months from
launching a B2B tool with a great value (improve telco tech support efficiency
by a good factor - I've had a prototype install running at one company for a
few years and they simply cannot operate without it).

I'm thinking of SaaS at launch. My lowest monthly plan is probably $250 to
490. (In addition to a free "personal" edition for people playing with
projects.) My average price point I think will be in the 2k to 5k a month. I
have a verbal commit from a medium sized customer at $10k.

How much do I publish online? Do I run the risk of alienating one segment by
simply being available to another?

~~~
adam
The thing you really have to watch out for here if you have lower prices
published is the big guys seeing that and thinking they can get your services
for that much too. You have to have your story really nailed of why the 2k-5k
services are worth that much more. Usually this is in the form of service
level agreements, support levels, response times, security, etc.

As an anecdote, we had "small business pricing" published on our site and
organizations like The World Bank, Koch, and a few others were paying
$279/month which was insane. We made a few thousand a year on those plans, and
a few hundred thousand on "enterprise" clients.

We don't have small business plans anymore.

~~~
MichaelGG
Thanks for the reply!

Bigger customers will need more user logins and more processing capacity. So
they segment alright that way, although I'm not sure how many axes to include
(users, TB/month, peak messages/sec, feature set, etc.). But a <$500 plan
won't include more than a TB a month, and even medium users will need that
much.

------
beering
I'd say there are many different levels of "enterprisey" sales, depending on
the deal size and whether you're selling to a small, medium, or large entity,
and whether it's public or private. A competitive bidding process is nothing
like a discretionary purchase.

Pros: * Sometimes they're not spending their own money. Especially if they're
spending grant money, simply price your package for the amount of the grant.
They may have no incentive to save money if it's use-it-or-lose-it. *
Enterprises or gov't sometimes have plenty of money to throw around,
especially in the above scenario. Come up with as many frivolous "add-on"
features as you can, put ridiculous price tags on it, and watch clients
inexplicably check all the boxes. SMS notifications for only $5000/year? Deal!
* Big government contracts may be for 5 years of service paid upfront. Think
about what that does to your cashflow.

Cons: * Your soul withers away.

------
angrybits
I like the bit about reacting to sign-ups from boeing.com emails, I wonder if
anyone out there is curating a "whale list" that gives the domains you should
care about.

~~~
cykho
Great idea - I just looked this up - NASDAQ has a nice list in CSV format
along with market cap: [http://www.nasdaq.com/screening/company-
list.aspx](http://www.nasdaq.com/screening/company-list.aspx)

------
HillRat
Nice piece, but selling to enterprise customers and selling to the government
only tangentially overlap. While most of the advice is transportable, the
number one rule of selling to any government -- federal, state, or local -- is
_get on the approved vendor list_. Getting on GSA is fundamental; getting on
as many state-level purchasing schedules as possible is the next step.
Unfortunately, this almost certainly means you'll end up giving a chunk of
revenue to companies whose sole business model is "we're a GSA-certified
vendor" and who will handle the regulatory runarounds for you. But the rewards
are significant -- schedule vendors are often exempt from RFP requirements, so
you can skip the usual pain point of writing RFQ responses and bidding for
business, and get right to the selling.

------
chatmasta
"common engineer misapprehension that BFE sales requires playing golf,
inviting clients to steak dinners, and having budgets beyond to reach of small
businesses."

Can engineers not play golf? I'd like to read a post on how to get in on
_this_ sales process -- ultimately, that's always where the money is!

~~~
zhte415
The ability to play golf, unless one grew up in a golfing family, appears to
be included as part of the package in certain promotions. A direct download to
the brain. "Now I know golf" Mr Anderson may say in later life having
capitulated to Mr Smith.

It is inexplicable.

~~~
mcguire
Playing golf is irrelevant. Hanging around on the lawn with a stick and a ball
and the right company is the important part.

------
lifeisstillgood
The UK government is trying hard to remedy a lot of the issues raised here for
software development. GCloud (catalog of SaaS services - once you are an
approved supplier theoretically your "ally" patio11 suggests merely has to
click and purchase is real. A similar setup for software development is
underway right now.

What I am saying is, the essential problem of sales to enterprise is still
making something someone wants, and finding that someone and persuading them
to sign.

Edit: not disagreeing with anything patio11 says - in fact I think I am
supporting the main point - government and enterprise sales ain't so different
and they are gettin more similar each day.

~~~
cykho
I'd be wary to think they are converging. The enterprise sales cycle is
getting shorter and more user driven (more folks can charge a per-user
individual fee as opposed to site licenses). This makes the process more
accessible than ever. Government on the other side is increasingly
consolidating vendors under systems integrators creating an ever higher
barrier to competition ([http://iq.govwin.com/corp/downloads/Deltek-
WashTechTopSI.pdf](http://iq.govwin.com/corp/downloads/Deltek-
WashTechTopSI.pdf)).

------
porter
Thanks Patrick, you always write great and actionable content.

------
ommunist
A single best piece about software sales I have read during the last 5 years.
Very inspiring. Thank you.

------
hayksaakian
These are practical tips I have used to success.

Highly recommended reading.

------
kjs3
I didn't see where he says "don't sell to them, sell to the organizations that
sell to them". There's an entire ecosystem of resellers/VARs/distributors/etc
that, for a cut, will shield you from many of the issues you'll face in the
Gov or Enterprise world.

For example, I've been "sold" as a consultant via a government
subcontractor(1) that took care of bidding, billing, contracts and renewals,
etc and simply paid me the rate I asked for. Similarly, I've had products that
a distributor took on and did all the legwork to get on the GSA lists so all
we had to do was fulfillment and support. They would even structure the
financials such that it met whatever DOA requirement the end customer needed,
but paid us up front.

(1) FWIW, the entity that subcontracted me was another small biz that was
taking advantage of the "8A" category of small business set asides. If you fit
in one of the categories, it might be an option as well. This is obviously a
US-centric option.

[https://www.sba.gov/category/navigation-
structure/8a-busines...](https://www.sba.gov/category/navigation-
structure/8a-business-development-program)

~~~
devonkim
Ironically, this is a part of how some actually decent, large software
companies that you'd think could afford the BS overhead and broaden out their
revenue streams by using the partners. Google, for example, has a number of
enterprise integrators that deal with the terrible BS of anything related to
organizations that spend more time trying to figure out what to do than
actually doing anything.

------
rokhayakebe
How about not selling to these guys, period. I just have this feeling that
once you take money from a Fortune company, you are their employee. Same goes
for the government.

~~~
rokhayakebe
Thanks all for the feedback, but I still prefer to not sell to the government.
You may be right that it is less scary than it looks, hence a lost
opportunity, but I prefer to never deal with them as a customer.

~~~
eru
And that might even be the right thing for you. Not everyone has to sell to
anyone.

~~~
cykho
Noone should sell to everyone :)

------
the_why_of_y
Wow, running a business in a third-world country without ~zero-cost over-night
electronic money transfer between banks must suck... sending paper checks, by
snail mail, in 2014?

"they will ... send a check to an address picked randomly from the set of them
printed on the invoice. (Make sure you give them one easy, obvious option for
where to send the checks, and that that mailbox is monitored for discrete
envelopes containing paper worth potentially tens of thousands of dollars. You
can get a check reissued but it will be extra pain and take another several
weeks.)"

~~~
serve_yay
I'm sure he cried all the way to the bank.

