Dec 28, 2020
As a B2B startup who should you target as your customer?
Elephant hunting — perhaps you should think twice?
With business-to-business (B2B) startups, there is almost nothing more exciting (or seductive) than hunting and bagging an elephant-sized customer. It can produce huge revenue growth, fast. It can provide you with highly leverageable customer names and references. It will excite investors. And once you get an elephant, it can feed many mouths (and egos) at the Company for a long time. What could be better? Hmm, not much….assuming that you can bag that elephant, and have the right weapons and knowledge to do so, before you run out of time or money.
All too often we see early-stage B2B founders focused on elephant hunting, while the real opportunity may be all the smaller prey that can be hunted — and bagged — far quicker, in greater numbers, and at a lower cost.
Small/mid-sized customers actually purchasing and using your product is often much better than potential giant customers on the horizon….giants who may or may not ever become actual customers. These elephant-sized prospects have all the time in the world to make decisions, have far more complicated decision making units, and competing high-level priorities that are being sequenced (phased in) in much more organized fashion.
Does this mean you should forsake the pleasures and benefits of hunting elephants? Absolutely not! But it does mean you should think very carefully about it, and be prepared to answer the following questions:
- Where does elephant hunting fit into your sales and growth strategy; near vs. longer term; and are the pachyderms lower-hanging fruit vs higher up your sales tree?
- Do you have the human resources it takes to hunt and satisfy elephant-sized customers? And do your sales, engineering and customer success people have the skill-sets and experience to hunt and satisfy this species of customer, or are they going to be learning on the job while exposed on dangerous plains of the Serengeti?
- Does your CEO have the bandwidth and skill to take down the elephant, as this strategy often demands in the early days inordinate amounts of the CEO’s time, or at least a perception that the CEO has to ‘make the kill’. And are we prepared to put the fate of a fragile and under-nourished company all in the hands of one individual who at the same time is being pulled in 6 other directions?
4. Does your company have the financial resources to survive and thrive in the face of typically slow decision and purchase cycles? (There is a reason you’ve never heard the expression ‘as fast and decisive as an elephant.’)
5. Will elephant hunting enable you to build a growth trajectory fast enough and steep enough to satisfy current and potential investors? (Remember that nothing excites potential investors more than actual sales; potential sales to elephants are like sales projections — no one pays much attention to them.) Example:
a) Month 1: “we are waiting on a decision from [insert massive brand].”
b) Month 3: “they are still interested but the committee wants more information,” or “they pushed the meeting back a month.”
c) Month 5: “they said let’s revisit this next quarter.”
6. Have you assessed what species of target feels the most pain, and can experience the quickest and most palpable pain relief/ ROI from your product? (Quick pain relief and ROI tend to speed purchase decision-making.)
Ask yourself why you don’t want to go after smaller and mid-sized prey? Is it because they don’t have the pain your product or platform is able to relieve? Or perhaps they can’t afford to pay what you believe you need to charge? Or will it require a more complex and expensive marketing effort vs going after elephants?
Or are you just less excited — intellectually, emotionally, financially — about hunting SMBs? Or would ‘getting an elephant’ just make things so much easier?
There may not be a perfect answer to these questions. But what we do know, for certain, is that if you answer them dispassionately, after taking ego and big-game dreams out of your calculation, you will improve your chances of 1) hunting the right prey, 2) putting food on the Company table, and 3) driving the sales curve up and to the right.
Happy hunting!
-Andy Greenfield, TIA Ventures
Twitter: TIA_Ventures
