Scaling Your Company For A Growing Customer Base
I Learned At The Internet Boom
Don't be afraid to give the first one away to the
right customer. The right customer can give you the
endorsements you need.
Don't give the second one away. At some point you
have to show that your product or service has value.
Set clear objectives for yourself, your customers,
and your employees.
Keep in touch. CEOs should speak to and know their
Make sure all employees knows that the customer is
Focus your efforts so that everyone in your
organization is on the sales team.
Listen carefully and offer solutions to your
Be willing to change to move your product from
“nice to have” to “must have.”
Always under-promise and over-deliver.
Be mindful of the clock. If something isn’t
working, move to the next thing because you've got
to generate revenue.
Chase, MD) -- July 24, 2002) “To
scale a business from zero to $30 million is one
challenge,” explained Deepak
Hathiramani, President and CEO of Vistronix,
“And to scale it from $30 million to $100 million is a
different challenge. If you don't adjust the management
team or the strategy to go from $30 million to 100
million, you just won’t get there.”
Hathiramani spoke at this morning’s Netpreneur Coffee &
DoughNets, joined by a panel of sales and
marketing pros to discuss, “A
Question Of Scale: Growing (Into) Your Customer Base.”
It was an exploration of how early-stage companies mature,
and how entrepreneurs must identify and anticipate their
changing customer acquisition strategies along the way.
Joining Hathiramani on the panel
were Rob Masri, Vice President of Corporate Development at
Marsan, Executive Vice President of Sales &
Marketing at ServiceBench;
Arnone, President of Arnone & Associates; and
Becker, Managing Partner of Sterling
up the session was veteran entrepreneur Mario Morino,
founder of the Morino
Institute, who summed it all up this way: “Sales is logistics. There's a
series of mechanics that gets the product or service into
the buyer's hands. The most important question is, who is
the buyer, specifically?”
That’s one of the things that changes over
time. Becker opened the discussion by providing an
overview of the two earliest phases of a startup,
characterized in terms of the kinds of customers they want
at each, how they get them, and how the organization
adapts. One of the key differences between what he called
the “Genesis” and “First Growth Spurt” stages, is
that, in the beginning, what an entrepreneur needs is
“Typically, these first
customers are like your partners in the business,” said
Becker. “They provide design input and other important
are hard customers to get, but worth their weight in gold.
You may have to discount, offer warrants, or provide other
incentives to make it relatively risk free and worth their
These are the customers who provide your initial revenue, but what makes
them even more important is when they agree to act as
references as you move into the growth stages. Their
willingness to endorse your solution may be your only
proof of credibility for the broader marketplace. They can
be a source of recommendations, referrals, press stories,
and may even help you sell to others.
Marsan suggested, “The best advice I can give you is to make
sure that you're taking care of them. To get those
accounts initially, you probably didn't make a lot of
money on them. You probably had to give some things away.
They took a big risk to come with you.
In return for that, though, they'll give you a lot.
You need to continue to cultivate that relationship.”
Still, you have to be careful not to give
away too much or to focus so intently on these first few
that you sacrifice the broader market. For example, Becker
told of how he was compelled to sell the very first
company he founded because they had given up so much
direct and indirect control of their product. The customer
had become so dependent on it that they wanted to own the
technology, and Becker, though well compensated, had no
choice but to agree.
It’s during that “First Growth” stage
that companies usually begin building their sales and
distribution organizations, and, according to Marsan,
dealing with issues such as what channels to use, the
necessary skills sets for salespeople, compensation plans,
aligning the sales force, validating the ROI model, and so
Of course, all of this has to be tied to
market strategy and business model, which will often
change wildly, especially in the technology world.
Masri’s company, Multicity, a maker of Web-based
communications software, may be the poster child for that.
He explained the company’s gyrations from its founding
in the early days of the Internet boom—when banner ads
seemed a legitimate revenue source—through the
advertising crash, a focus on relationship sell, and,
ultimately, to their current strategy of using a direct
sales force to market software in particular verticals.
It ties into one of the key rules, according to Arnone—you
need a compelling product or service, but it has to be
compelling to your customers, not just to you and your
Arnone’s long career in the IT industry included stints
with Oracle and Sybase during the times when they were
expanding from their first growth stages to become
billion-dollar corporations. Among his other rules: know
your addressable market and know it cold; employ strong
marketing, including a crisp value proposition; and sell business
solutions to business people, don’t try to sell them
Arnone’s first and most important rule, however, is to
“recruit the best team.” At Oracle and other top-notch
companies he’s been associated with, “Priority one was revenue,”
he said, “and priority 1A was recruiting. It was
building a high performance business unit, a high
performance organization, and a high performance company.
We had plenty of other things to do, but there wasn't much
time to get beyond revenue and recruiting.”
At Oracle, in fact, there was a
corporate policy to periodically rank the employees within
teams and dismiss the bottom 10% of producers in each.
While the concept may have been taken to an extreme there,
recruiting the right team is a priority shared
by Hathiramani as well, who stressed that as the company grows, you
have to have the right management team at the right time.
You constantly have to ask yourself, “What inherent skills do we
have in the company that are going to enable us to scale
the business to the next level?”
For Morino, having the right people in place is essential
for another reason. Sales, he said, is about the whole
business, not just the direct sales organization, and CEOs
must create a sales culture in which, “Every developer is there to
support the salesperson, and every salesperson is there to
support the developers. Selling is not a point in time. If
you're looking long term, it's a team that sells. If you
don't service that client, then when you go back for
repeat business, you've got a problem.”
Morino agrees that you should
hire the best people, but that can be problematic for
young, early-stage entrepreneurs. After all, do you really
know what the best is at a given point in time? “You've
got to talk to people who've been where you're going,”
he advised. “If you're hiring in sales, get a
salesperson who has been out there, not somebody who sold
the same thing you just sold today. If you don’t, you're
not going to grow, and you're not going to able to scale
when you get to that next point. Think higher up all of
2002, Morino Institute. All rights reserved.