How to win business from blue-chip corporations
Trevor Clawson finds out how you should be selling to premier league players
Few events in the development of a business are quite as momentous as winning your first really big customer. For a food manufacturer, this might take the form of an order from Tesco or Sainsbury’s; for a software venture, it could be a contract to supply a multi-national banking group; or for a cleaning company we might be talking about the jump to servicing the offices of a major commercial landlord.
Whatever the scenario, winning a big client provides a golden opportunity to accelerate the speed of expansion of your business. And it’s not just a case of a single major organisation getting into bed with you. News that your company has successfully closed a deal with a Barclays, a Marks & Spencer or an IBM should give your business the kind of credibility that will make it much easier to pursue some of the other big fish in your chosen sector. As Praveen Vijh, co-founder and brand manager of cereal bar producer Eat Natural puts it: “Once you’ve sold to one big client, it gives you a great story to tell others. And it gives them confidence that you can deliver.”
The problem is, of course, it isn’t always easy, even to make the initial contact with big players – who, after all, have would-be suppliers banging on their doors, making calls and firing off exploratory emails on something close to a 24/7 basis. And even if you manage to pitch your product and get that all-important first order in the bag, there’s no guarantee you will be able to maintain the relationship in the face of stiff competition from your rivals. What’s more, there’s always the danger the whole thing will turn into something of a poisoned chalice if your client uses its market power and negotiating muscle to squeeze your margins to an untenable degree. In other words, selling to premier league businesses can be tricky – so how do you make it work for you?
A Foot in the door
In an ideal world, you or one of your sales team should be able to pick up the phone, talk to a senior buyer and fix up an appointment to pitch your product. Sadly, the reality is often very different. If you have to talk to a decision maker, the chances are you’ll have to fight your way through all the protective layers senior figures in major companies tend to wrap around themselves. As John Calcutt, CEO of airline services company Watermark Group Plc confirms. “What you’ll hear a lot is the person you want to speak to is unavailable. You have to come up with some sort of strategy to get through.”
It has to be said that if your business already has a track record, getting your feet under the buyer’s table is likely to be a whole lot easier. For instance, organic chocolate maker Green & Black’s, began by selling sugar free/natural ingredient peanut butter to health food stores before having the opportunity to sell to supermarkets. In the process, the company built an industry profile, putting itself on the radar screen of the multiple retailers. Media coverage also played its part. “Safeway and Waitrose both saw our product on the news,” says Craig Sams, Green & Black’s president. “They wanted it immediately.”
Eat Natural also had the benefit of a solid track record, having sold successfully to independent grocers, restaurants and health stores for four years before breaking into the ‘multiples’ market. “When you have that kind of experience, it makes it easier to move into the multiples space.” says Vijh. “It shows them you know the market. Supermarkets are receptive to new ideas, but you have to give them a sales story that shows the consumers want it.”
The ‘sales story’ is particularly appealing in the retail market. Shelf space – be it in Sainsbury’s or B&Q – is valuable real estate. And the buyers are only going to put your products on show if they feel they will sell better than those already there, or that they will open up a new market – as has been the case with organic food.
While this is less relevant if you’re selling a service, such as cleaning or catering, you still need to demonstrate knowledge of the market in general and an awareness of the client’s own particular circumstances and requirements. Vic Tippins, managing director of catering consultancy Catercheck, sees it in simple terms. “Whatever you do, you have to ensure what you are offering is exactly what the client wants,” he says. Tippins built his business on the premise that major companies were finding it difficult to keep their catering costs under control. As such, the company offered consultancy services, such as contract monitoring and auditing, that would help them rein in their catering spend. Its client list currently includes IBM, BMW and BAA.
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Even if you’re selling essentially the same product or service to a broad range of clients, it will help if you can clearly demonstrate you are approaching each potential customer as an individual entity. For instance, New English Wines is now selling its products to most of the major supermarket chains, but, as CEO Frazer Thompson is anxious to stress, the approach has been different every time. “You will always need a different story for say, Waitrose and Morrison supermarkets,” he says. Each client has its own core values and clientele, and the way in which they market products to consumers will vary accordingly, he explains. So to judge how you should approach each organisation, it’s important to be clear about the people who account for their footfall, buy their products or pay for their services.
It’s also worth thinking about your company’s image. Tippins says even when Catercheck was a one-man business, he was careful to ensure he was creating the right impression. “I made sure everything looked the part – that our business cards, brochures and letterheads all looked totally professional,” he recalls. If you have the budget, you can also do a huge amount to raise the profile of your business by attending trade shows or by sending samples out to buyers.
If you don’t have in-house knowledge of the market, you can always hire talent on a temporary, permanent or part-time basis. “There are interim management companies who you can bring in to help you find the right people to talk to and put you in contact,” says Thompson. “Or you could hire a non-executive director with industry contacts.”
Tippins agrees specialist help can reap benefits. “One of the biggest challenges I faced was making the first appointment,” he recalls. “That wasn’t something I was particularly skilled at, so I decided to hire someone who was good at making appointments.”
If all this fails, you may be tempted to resort to subterfuge to make that first contact. Calcutt suggests one way to get past an over-protective PA is to inform them you are a doctor calling with the result of their employer’s tests. This is, however, an option that should only be tried by those with a Masters degree in chutzpah and lying could come back to haunt you.
When you do get to talk directly to a buyer, there’s general agreement it’s important to be brief, but effective. “Buyers are busy people,” says Vijh. “You need to be clear and concise.”
That’s not to say you should rush your presentation. The secret is to give them everything they need to decide whether or not to commit to buying from your company. This will include information about your business – customers, supply capacity, etc (see getting in shape box) – and the product itself.
The story you tell will, of course, depend on the nature of the sale. A retailer will want to know why your goods will capture the imagination of its customer base and that can be a complex sell. “You need to surprise and delight the buyer,” says Frazer Thompson. “You have to explain the emotional function your product will fulfill with the customers.” That won’t necessarily be the case if you are selling products – be they paperclips or catering services – that are to be used in-house by the company. In these cases, the questions the buyer will be asking are likely to be much more direct – namely what your product can do for them and why it’s better value.
And according to Tippins, potential customers may not be totally sure of exactly what their needs are. This situation can be challenging. After all, if they don’t know what they want, how can you sell your product to them? But it can also be turned to your advantage as long as you enter into a constructive dialogue. “You have to listen to what the customer says,” argues Tippins. “By listening to them talk about their companies, you can decide how to push your business.”
Sooner or later, of course, the question of money will rear its ugly head. This is a real area of concern for smaller businesses as large companies are more than capable of using their market muscle to screw down prices or insist on onerous contract terms. As Tippins puts it: “The bigger an organisation is, the more careful it tends to be with its money.” This is particularly true of commoditised products where there’s little to choose between the offering of one supplier and another. If a company is buying goods in bulk, prices are likely to be the main consideration. And if you’re very unlucky, you might even find yourself competing in a reverseauction situation (often conducted online), where you and your competitors vie to offer the lowest prices.
On the other hand, if you’re offering something unique, then other considerations will come into play. “I’ve always been a great believer in avoiding commoditisation,” says John Calcutt. “If you can prove what you’re offering is indispensable, it’s a stepping stone to getting a good price.”
Paul Mason, managing director of Datascan, a company supplying scanning technology to companies ranging from Clarks shoes to Colgate-Palmolive agrees. In the early days, the business tended to sell pieces of equipment, such as bar code readers, but it’s now increasingly called upon to install complete manufacturing systems. “When we were selling boxes, it was very competitive, but the more uniqueness you can bring, the less competitive it becomes.”
And one thing you shouldn’t be tempted to do is sell your product at a silly price just to get that first big order. For one thing, a major sale will put pressure on your business just to meet the extra volumes, and if margins are tight you could find yourself losing money once you’ve factored in the extra investment needed to fulfill the orders. And it’s a strategy that’s unlikely to benefit your company in the longer term. The truth is that if you’ve undersold yourself once, you’re unlikely to get those margins back in subsequent dealings, even if your product does prove to be a rip-roaring success.
“Don’t be overawed,” says Tippins, “You have to be clear about your own worth – and you have to illustrate this to them. I have walked away from work when the money wasn’t right. If it’s not going to work for you, you have to have the balls to say it.”
Maintaining the relationship
Even a relatively small order from a major customer can open the door to a lot more trade further down the line, but you can’t take it as a given. Relationships with customers of any size need nurturing if they are to flourish. First and foremost, you need to prove yourself reliable. “It’s important to develop relationships, but the starting point is delivering on your promise,” says Eat Natural’s Praveen Vijh.
The problem is there may well be factors beyond your control. For example, if you’re selling consumer goods to a number of different retailers, you can certainly take responsibility for delivering the right goods to the right place at the right time. However, what you can’t dictate is the reaction of that retail group’s customers. And if a product doesn’t sell, it will sooner or later be taken off the shelves. What you need to do in these cases is to invest some money in promotion. This is not a nicety – it will probably be expected by the retailer in question. However, don’t expect to have control of the in-store marketing. For instance, some supermarkets have a policy of promoting on price alone. Fine for some suppliers, but not so great if yours is a premium brand.
Assuming your customer is happy with the products, the next stage is to develop the relationship further, either by selling more of the same or by keeping the client up to date on new product or service lines. This is arguably one of the most cost-effective ways of acquiring new business. “It tends to be much cheaper to sell to an existing customer than to a new one,” explains Tippins.
Continued personal contact is important, but beware: you do have to strike the right balance between regular contact with a valued client and the kind of over-enthusiasm that will probably result in the buyer dreading your monthly, weekly or even daily phone call. “You have to be careful not to piss people off,” says Tippins. “Only contact them when you have something to say.”
It may well be the client won’t need too much encouraging. Paul Mason says, once his scanning technology supplier Datascan has installed a system for a client, the company tends to be the first port of call when more work needs to be done. “People come back because they’ve used you before and they know you,” he says. “There’s a lot of loyalty.”
Personal relationships are important, not least because, once you’ve established the trust of a buyer or main contact, they will tell you things about their companies and plans for the future that will help your own research and development. To that end, John Calcutt makes sure he never forgets the personal angle. “I always make sure I remember birthdays and the names of wives and children,” he says.
In terms of increased sales, large companies offer an opportunity not only to beef up supplies to one department, but also to different parts of the organisation and promote new products. Equally important, once you’ve sold to one major client, what it should become easier to sell to others, as your track record has been established. However, don’t expect it to be a walkover. In selling to airlines, John Calcutt has found making sales to one major player sometimes makes rivals more reluctant to get into bed with you. And companies who begin selling to one industry sector can find it difficult to establish themselves in others. “We started selling to the automotive industry,” says Mason. “Since then we’ve moved on and we also sell to companies like Colgate-Palmolive, but it took a lot of time and effort to break in.”
At the very least, though, the lessons you learned making the very first sale should stand you in good stead, if only in terms of confidence building. “I suppose we’re a small fish, reflects Mason. “But we’ve never thought ourselves a small company. We just get stuck in.”
GETTING IN SHAPE
Before chasing a major customer, you should ask yourself one fundamental question: Is my company ready for this?
While a contract to supply a major customer can turbocharge your bottom line, it can also put enormous strain on your own business processes and infrastructure. William Kendall, chief executive of Green & Black?s chocolate, recalls the sudden impact winning his first major supermarket order had on the business when he was at the helm of the Covent Garden Soup Company.
?When Sainsbury?s took our product, we were surprised by the volume. We were running a one shift business. All of a sudden that had to rise to two or even three shifts. That kind of increase in production can have major implications for any business.?
And, as Kendall stresses, there aren?t too many second chances if you get it wrong. Once again, he cites his experience dealing with supermarkets. ?Many suppliers don?t really understand the complexities of running a multiple retail business. Missing a delivery slot by 20 minutes can have massive implications for the customer. It can create a domino effect that can cause nightmares for store managers when deliveries don?t arrive.?
Kendall says major customers ? with their complex, ?just-in-time? supply chains ? will seldom put up with a supplier that can?t adapt to their way of working. ?They can be supportive ? but only up to a point. If you can?t fix the problem and you continue to get it wrong, they will find someone else.?
For many businesses, this will create a catch-22 situation. Increasing operations to supply major customers may require major investment, but it may be hard to justify extra spending until you have some big clients.
Kendall concedes this is a particular problem in terms of supplying the retail trade in general and supermarkets in particular for the simple reason there?s often a huge gap between the ?corner store? market and the multiples with very little in between. This means you may not have the opportunity to scale-up your operations gradually over a period of years. Instead, you are faced with an overnight jump in manufacturing and supply.
Nevertheless, whatever sector you are operating in, you will only succeed if you have the capacity to deliver what you promise.