When Small Isn't Beautiful
You can overcome customers' fears about your company's size
You're small. You're unknown. Why should we take a chance on you?" That's the sales objection entrepreneurs love to hate--and you may have heard it a thousand times. When your company's small size makes a potential customer question its stability and capability, no pat answer will do. In fact, how you respond to doubts about your company's future can determine whether you have any future with some buyers. "There are words all entrepreneurs fear," notes Richard Maradik, CEO of $3-million DataMark Inc., a three-year-old direct-mail-services company in Nashville, "like 'Let me come out to your place' and 'What are your revenues?' and 'Can I see your client list?' Those are words entrepreneurs fear because we're never as big as we act."
When you own a small, growing company, your best bet is preparation. Advance planning is the secret to overcoming sales objections related to size--or, better yet, making sure they never come up. Here are 10 tactics that entrepreneurs have successfully used to break the credibility barrier.
Turn your first references into "celebrity endorsements." Eric Schechter, founder of Great American Events Corp., a $2.2-million event-marketing company in Scottsdale, Ariz., wasted no time making his early customers the stars of his first marketing campaign. Schechter says he granted his first big-name accounts certain price and product concessions in exchange for endorsements. "I asked if we could use their photos in print ads, in our video, and in our direct-mail pieces," he says. In return for better terms, the customers agreed to be photographed and filmed and to take dozens of calls from prospects who'd see their faces plastered on brochures. "The testimonials made us seem bigger than we were right away," Schechter says. "They broke that barrier of newness."
Remove the perceived risk with guarantees. MTS-Group Inc., a recruiting business based in Waltham, Mass., tells potential customers that if they're not completely satisfied with its rÉsumÉ-database service in 60 days, they'll get more than their money back. They'll also get six months of free job-posting advertising on the Internet. But MTS-Group, which has close to $2 million in revenues, doesn't just blindly broadcast its generous guarantee; the company also takes steps to make sure that customers won't need to use it, according to president Dan Miller. For example, MTS asks some new customers to take a brief training program to ensure that they know how to use the rÉsumÉ service effectively.
Encourage sampling. Stephen Paliska, CEO of PPS Parking Inc., in Irvine, Calif., says that in its start-up years, his company would accept seven-day contracts with hotels that wanted to try his valet-parking service. He viewed the weeklong jobs as tryouts and says all of them led to one-year or two-year contracts. Miller of MTS-Group is also a fervent believer in product sampling and lets prospects sample his rÉsumÉ database because of what the test reveals, good or bad. "We don't want a customer we can't service," he says.
Let technology be the great equalizer. In cyberspace no one can see how small you are--and a targeted marketing campaign can succeed without a big budget. Image Soup Inc., a $2-million multimedia-services company in St. Louis, generates 40% of its qualified sales leads by broadcasting a monthly newsletter by E-mail or fax to 250 customer contacts and to another 2,500 prospects who've attended an Image Soup seminar.
Bring big partners to the sales table. It's not enough to simply align yourself with big-name companies: you've got to know when to bring your strategic partners to sales presentations. That's something Mike Klein, president of Steeplechase Software Inc., a five-year-old software developer in Ann Arbor, Mich., has learned over and over. He won a major order from a Chrysler plant in 1996, but he gives a lot of the credit for the sale to two big-company partners he brought to sales meetings with Chrysler. "We needed the partners there to pull this off," Klein says. His 75-employee company has licensing or marketing agreements with four major partners and brings in additional partners as needed.
Hire (or rent) big-name talent. Other companies look older and wiser by bringing in an outside expert to work on a project and attend all related sales meetings. Beth Armknecht, owner of the $4-million information-systems consulting firm MA&A Group, in Atlanta, went one step further and hired someone full-time from a prominent consulting firm to add depth to her sales team. "There are a lot of these people who are sick of traveling and are willing to take a decrease in pay not to travel," she observes.
Quell customers' fears about your ability to make payroll. When Mike Klein raised $5.7 million in outside funding, last year, he publicized that news to his customers. And in the marketing material for Colle & McVoy, a Minneapolis marketing-communications company, you'll find the agency's credit rating with Dun & Bradstreet and an invitation to prospective customers to call the agency's auditor or banker--names and numbers for both are supplied. "We say, 'Don't take our word for it--talk to the people who give us a line of credit every year,' " says executive vice-president Jim Heinz. That practice began more than 30 years ago and continues even though Colle has now grown to more than $130 million in billings.
Add a personal touch. Sometimes you can turn your company's small size into an advantage. Elayne Morris, president of Friends Assisting Seniors & Families, a $3.2-million Inc. 500 company in West Palm Beach, Fla., knows that well. Morris spends up to an hour on the phone with prospective customers--who are often baby boomers who need help caring for their aging parents. She and her husband, Andrew, often follow up the sales process with a house call. Customers also receive Morris's card, or her husband's, along with the invitation to call off-hours.
Accept the crumbs from the table. Plenty of companies appreciate suppliers that are happy to take on a so-called small project. A salesperson for a large corporation might have a quota larger than your entire yearly sales projection. "They might have a minimum amount they want to go after and will try to expand the project--that's allowed us to win deals," says Armknecht of MA&A Group. "We're able to sell the customer on the project and not more."
Emphasize your entrepreneurial energy. In 1994, Thompson Doyle & Co. was a four-year-old, $1-million real-estate-brokerage firm in Boston competing for a long-term contract against rivals 25 times its size. "We were up against every other brokerage in the city," recalls cofounder Cathy Thompson. "We counteracted being small with the message, 'You'll be a big fish in a small sea.' " Thompson says she and her partner used all the traditional sales tactics, but they ultimately won the contract by proving they had the most to gain--and thus would make the customer's project a top priority. Since then Thompson Doyle's sales have more than doubled.
Richard Maradik has often found honesty to be the most disarming sales technique. When his first prospects would ask to see his place of business, he'd answer, "You're more than welcome to come to my little warehouse. I'll buy you a McDonald's burger." Several buyers took him up on the invite (if not the burger) and commended his thriftiness. "Big companies are striving to get that entrepreneurial spirit back," he says. "I say, 'Here's why you should take a flier on us: we'll be the absolute epitome of a small-business unit.' "
Susan Greco is an articles editor at Inc.
Resource: Feeling Invisible? Here's Help
So you don't have a recognizable brand, and your company name isn't a household word. What else do you have to market? Plenty, as Harry Beckwith spells out in Selling the Invisible: A Field Guide to Modern Marketing (Warner Books, 800-759-0190, 1997, $15). Much of the book--a quick 252-page read--discusses how marketers can make the intangible tangible, through methods such as skillful positioning, consistent advertising, and careful communication. Beckwith, a longtime ad exec, dispenses advice and anecdotes in one- or two-page lessons.
In a lesson called "Monogram Your Shirt, Not Your Company," he reminds entrepreneurs not to squander an important marketing opportunity by choosing a bland acronym for a name. Beckwith also deftly sums up key points from such classic business tomes as Positioning in just a few pages.
Chris Kiersch, cofounder of Image Soup, a $2-million multimedia-services company in St. Louis, says he's taken Beckwith's message to heart. "I found the book very inspiring. Most of the time, 'too small' is not the real objection," he says. A would-be customer "may be more concerned with my suppliers and their viability," he notes. Or how your receptionist answers the phone, for that matter, says Beckwith. The author is particularly attuned to the marketing challenges service companies face, but much of his advice applies to manufacturers as well.