Startups and innovative SMEs: To sell to key accounts, don three costumes!

Collaboration between big companies and start-ups or innovative small or medium enterprises (SMEs) is notoriously difficult. Anyone working with both worlds has felt the differences in terms of organisation, decision-making methods and relationship to time.
Yet the stakes of a value-creating exchange remain high for both parties. Start-ups and SMEs are looking for growth. Major groups are looking for technological innovation or user experience.

It is the responsibility of the start-up or SME executives to propose a vision of what joint value creation might look like. Even if their company is small and young! There’s something paradoxical about putting even more burden on their shoulders. The initiative is theirs because they have determined that ‘winning major accounts’ is a key stage in their entrepreneurial adventure.

No panic! The challenge is to master some soft skills and approach methods: they can be acquired quickly and at little cost.

First of all, executives need to revisit their own perception of what a large company is, in the light of their past education and professional experience. A proper market study of the key account will help.

Then, like an actor playing several characters in the same movie, he has to play three roles: the strategist, the key account sales manager and the negotiator. By taking on these three roles, they will have the best chance of discovering the value of their offer in the eyes of the key account. They will then be able to activate the right negotiation levers to move towards signing a balanced collaboration contract.

Taking stock of your knowledge of the targeted company

As soon as a major company is identified as a key target, a market study must be carried out, as if the company were a new country to be conquered.

The activity is about describing the target company, its organization, its position in the market, its decision-makers, the activities, the business priorities, the needs, the challenges it faces, the projects it is carrying out, its competitors, its culture and its relations with innovative suppliers. The overview enables to highlight what we thought we knew, what we already knew, what is new and what remains unknown.

It is an opportunity for the senior manager to revisit his preconceptions of the target company. Indeed we are influenced by many biases that distort our understanding of the customer, limit the scope of what is possible, and create execution risks. Here are the most common ones:

• The sub-contractor bias: the executive defaults to a relationship where the client decides and the sub-contractor executes. This is to place oneself in a relationship of dependence.
• The expertise bias: focused on the performance of their solution, the executive underestimate the organisational, managerial, cultural and economic conditions required for successful adoption.
• The privileged relationship bias: the executive has built up a strong relationship with an innovation director, an R&D director, or a support function director. He/she does not extend their network of relationships to other decision-makers and stakeholders, and therefore tends to overestimate the influence of his/ her ally in the final decision. This can lead to unplanned demands or disappointments.
• The executive bias: the executive engages with high ranked contact persons, but does plays down the fact that some employees further down the hierarchy, such as users, may veto the project.
• The paranoid bias: he/ she suspects the big company of ‘value predation’, or even stealing its know-how. He/she manages to protect the know-how and patents, but struggles to create a climate of trust.
• The past failure bias: a past failure with one large company will have such an impact on the company’s approach to future conquest that the executive will overlook the specifics of each organisation, and minimise the role of circumstances.
• The scalp-seeker bias: Above all, the executive wants to bag an order within a given timeframe. Adopting such a conquering mindset entails risks: inaccurate offering, blunders, or missing out on co-development opportunities with the large company.

Three roles: key account sales representative, strategist and negotiator

1-The Key Account Manager (KAM)

KAMs are very common roles in large companies. Their expected added value first and foremost that of ambassadors. The KAM immerse themselves in the customer’s environment, learn its culture, build relationships across a broad spectrum of functions and responsibilities, and observe how decisions are made. The KAM recruits sources of information, supports promoters, motivates allies, identifies detractors and prepares for key meetings. Internally, the KAM is the voice of the customer, helping to focus the efforts on the needs and priorities of the key account.
KAMs are also a sales representative: organising meetings, providing information, attracting attention, arousing interest, generating desire and encouraging action. They are best placed to test their contacts’ commitment to move to the next step. They are in the best position to understand and quantify the market value of the innovative offer for their customer.

2-The strategist

The strategist defines the company’s strategy, while remaining agile and ready to develop it further. He formalises the business model, the way in which value is captured, and the sales strategy. Aware of the vulnerability and limited resources of his/her company, he seeks to build a progressive roadmap. This is why strategists seek to keep open options, and are eager to mitigate the risks associated with working with a much larger company: contractual risks, economic dependence, lack of visibility over the milestones of the collaboration, or asymmetry in some expertise or information flows. The strategist will monitor the power game and the progress of the collaboration, ensuring that it remains in line with the initial ambitions.

The big company will scrutinise the start-up’s ability to deliver the expected value, and to collect any evidence of its robustness. The strategist will therefore seek to reassure the key account by providing credentials and references.

3-The negotiator

The negotiator kickstarts discussions based on a proposal crafted by the start-up or the innovative SME. Fully wielding this power of initiative is crucial to generating impact, for four reasons:

• Surprise: Making a good first impression, trigger a good surprise.
• Impact: the offer can be a great opportunity, because the big company is actively trying to solve a problem, or seeking to acquire new skills or capabilities, and is willing to invest money to achieve its goals.
• Value selling: The offer can impact hundreds of people and thousands of operations. The potential economic gain can be calculated. It can be significant. If the return on investment respects the group’s rules (usually 3 years), the major account is ready to invest a sum greater than the start-up could figure out. The start-up must proactively address the estimated value creation potential of its offering, and claim a fair cut. At worst, it will be contradicted and will draw valuable conclusions about the true value generated. At best, the collaboration will aim to confirm the expected gains.
• Anchoring: When the start-up or SME’s proposal is first put on the table, it creates an anchoring effect. Further discussions will always refer to it. The proposal should span the stakes, the milestones, the timetable and intellectual property. This is all the more important given that large companies impose multiple routines on their panel of suppliers. While some of these are unavoidable, others can hamper the deployment of the proposed innovative solution. By highlighting the potential for progress provided by its offering, the start-up or SME encourages the large company to adjust its framework.

What it takes to be successful

Like climbing a mountain at high altitude, winning a major company requires ambition and meticulous preparation. The development cycle of a major account is measured in quarters.

Yet start-ups and innovative SMEs are still expected to be bold, because they convey a message of transformation and impact, and therefore challenge established practices. We all need a good story, a strong narrative we are prepared to believe in, because it resonates with our convictions and aspirations. It is the responsibility of the start-up or the innovative SME to propose a narrative of change that is desirable to all stakeholders within the large group.

While remaining a small entity, the innovative start-up or SME could benefit from adopting the codes of large companies and understanding their mindsets. This can imply recruiting people with experience of working in large companies.

There’s no need to apologise for being small! Just assert your strategic autonomy and your ambition to grow in the market. Innovative start-ups and SMEs need to protect their right to engage with other companies in the same sector, and not fall into the trap of an exclusive relationship from the outset. Executives need to contemplate the scenario of a break-off if their company is not ready, or if the agreement terms are unbalanced.

Nothing should prevent the startup of innovative SME from seeking to take power in meetings, whether by proactively proposing an agenda, asking questions, requesting meetings with the final decision-makers, challenging the as-is situation, testing the strategic alignment between both parts, or checking that commitments are reciprocated.