Sales Blog with Sales Tips

Do you have a large customer base of mid-sized accounts or do you only have a few large customers you rely on? Your answer to that question will determine your success over the long haul.

Staying Power
I don’t think I’ve ever known of a top producer over an extended period who built a successful account base with a few large customers. What I’ve observed is quite the opposite. Sales professionals who are rainmakers do so year after year with a large number of medium-sized customers.

Experienced sales professionals know better than to put all of their eggs into two or three customer baskets.

The Problem With Selling To Really-Big-Companies

1. They beat you up on price. Everyone is after Really-Big-Companies so the downward price pressure is enormous.
2. You’ll waste lots of time on their government-like bureaucracy. And “may the force be with you” if one of your Really-Big-Customers is a government entity.  Double jeopardy.
3. Don’t be in a hurry to get your invoices paid; they aren’t.
4. They have people on the payroll to keep metrics on your performance. If you fall below their thresholds, you’re out. You’re a number. You have to watch your step on every order.
5. Since they eat up so much of your time, you can only maintain a limited number of these Really-Big-Companies as customers. Do the math. If you have three of these and lose one, you’ve just lost 33% of your sales. In short, you’re very vulnerable. A large account base of mid-sized customers allows you to spread the risk. Remember, 100% of sales professionals lose 99% of their customers over time because of normal attrition. I’ve seen too many examples of sales professionals who thought they were exempt from this universal sales law.
6. You’ll most likely be dealing with the purchasing department. Selling to purchasing departments is rarely a good thing from a sales perspective.
7. Whether you call it supplier reduction or vendor consolidation, Really-Big-Companies are constantly trying to reduce their number of vendors. See number four above.
8. You’ll rarely be selling to high-level decision makers, even if you are able to break free of the purchasing department. You’ll be selling chiefly to mid-level managers who are usually just information gatherers and recommenders.

Sales Tips Wrap-Up
I’m not saying that you shouldn’t take big orders from Really-Big-Companies. To do otherwise is not too smart. What I am saying is that long-term, high producing sales professionals usually achieve their results with a large number of medium-sized customers. This kind of account makeup normally results in better margins, fewer competitors, time savings, reduced credit problems, less account vulnerability and better access to decision makers.

Further reading:

• Being a Name Brand Salesperson for a Really-Big-Company [What it's like to sell for a Really-Big-Company]

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©2009 Scott R. Sheaffer

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Summary: Selling name brands for big corporations might look easy on the surface; it’s not.

It was my first day of my new job. I had worked for years for small companies and was incredibly excited to finally be selling for a really-big-company. This was a Fortune 10 company that everyone knew; I could finally let the products and services sell themselves and relax a little. I had paid my dues and I was now on selling-easy-street. I could not have been more wrong. Before you answer the siren song of a really-big-company sales position please consider the following.

Quota/Budget. Those really-big-company executives may have gotten their executive position for all the wrong reasons but they definitely are smart enough to know that brand name recognition normally translates into an easier sale for you. They compensate for that fact by giving you a large sales budget like you’ve never seen before.

Competition. As Reggie Jackson used to say, “Fans don’t boo nobodies.” The more visible your company is, the more likely your prospects and customers are going to be a target of fierce competitive activity.

Bureaucracy. You only thought you had to do a lot of paperwork when you worked at those smaller companies. Really-big-companies will bury you in meaningless and redundant paperwork, CRM systems, ERP systems, SFA systems, expense voucher systems, ad infinitum systems.

Account Base/Territory. You can’t believe how much really-big-companies segment sales territories. Since market share is high, they figure that you don’t need very much geography or accounts/prospects to meet your quota. The fewer companies you have to contact the more important it is that you don’t damage any sales opportunities, especially considering the big sales budget that is assigned to you. Every sales presentation can become a do-or-die effort.

No doubt there are some advantages in selling for a really-big-company. But don’t take a sales job for one of these companies thinking that it is going to be easy. Life and work have a way of always balancing advantages and disadvantages. Nothing that pays you a significant income is going to be easy.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

Why is it that all salespeople want to sell to really-big-companies? We like nothing better than customer name dropping of really-big-companies at parties or on the golf course. When a really-big-company shows interest in our products or services we can hardly stand the excitement because we’re soon going to get a really-big-company order, make lots of commission and become famous. While some of us have sales positions that require us to sell to really-big-companies, I am not a big fan of them myself.

Experience has shown me that the most successful salespersons have a lot of middle sized customers. They have enough customers to cover them if they lose one or two (and you always do) and they aren’t held hostage by a few really-big-companies. Keep in mind that there are only 500 Fortune 500 companies but there are literally millions of not-so-really-big-companies to go fishing for.

So what is not to like about really-big-companies? I have three complaints. One, every competitor and their mother is also trying to sell really-big-companies. The sales effort required (i.e., hassle) to sell these kinds of companies can be significant. Two, despite their apparent size and capital, they can and do beat you down on price to the point that your profit margin can be embarrassing. Three, once you do sell them they can take an extremely long time to pay their bills because of their inherent bureaucracy. I used to work for a Fortune 500 company that told vendors up front that, “If you want to do business with us you’ll have to wait at least 120 days for your bills to be paid.”

There can be advantages to selling to really-big companies. One that comes to mind is that you can use them as a reference company. “Hi, I’m Joe Blow with XYZ, Inc. and we count Really-Big-Company as one of our customers.” Be careful when doing this, however, as some really-big-companies might not want you disclosing the fact that they buy from you. For more information check the back of their purchase order that will contain a lot of extremely small print legalese.

Some of us have sales positions that require us to deal exclusively with very large corporations. But for the rest of us my experience has shown me that you get a lot more return on your sales efforts with medium sized companies. If you construct an account base around lots of medium sized companies you have more insurance against losing that one really-big-company. There is a related really-big-company category that is the mother of them all, governments. But that’s for another post.