Making those large customer relationships stronger and last longer
Continuing from our last topic, now that you have pounded through the door of a juicy, promising customer, let’s discuss some techniques to farm this new patch of land that you have discovered.
Firstly, lets understand the demand side DNA of typical large companies. Most companies have what they call a “procurement office”, also referred to as the program management or a resourcing office. These departments have 3 high-level goals, typically aligned with those of the company’s CFO –
- Overall Spend Management: Ensure that the overall outsourcing spend (typically offshore and onshore though they can be separate as well) is headed in the right direction, i.e. the company is doing the right amount of outsourcing and the cost per unit is going down.
- Quality: Ensure that the vendors are delivering an acceptable quality of service – typically measure by surveying the line managers in business units or departments.
- De-risking: Ensure that they stick to the right side of the law. Since these are usually large public companies, there is increasing scrutiny on the vendors that you use as well. Case in point is the recent Apple-Foxconn coverage.
There might be other goals, but these are typical. Add to this the personal goal that all human beings carry of reducing their own personal workload. All these point in the direction of having to deal with fewer vendors, which enables the procurement office to have far more control on their goals and also a higher leverage.
On the other side of the equation are the actual “customers”, i.e. business units (BUs)/departments that have their requirements and are using vendors to deliver on the same.
In a typical setting, BU heads (or even mid-level managers) can outsource small projects to vendors without much scrutiny. Small may mean say, single projects of up to $100K or so. These numbers obviously vary from company to company. As a vendor, you may sometimes not even need to be on the Qualified Vendor List to do these small projects. BU heads can typically go much further as well but then at that point they would get the procurement office in and go through the approval process. Once you are on the approved list with a master agreement, BUs can use your services as much as they like using simpler documents like Statement of Works. (SoWs). Over a period of time, they would “budget” you in year after year. This is where you want to end up.
Given this structure, the easier way in is clearly through the business units. If you can catch a business unit at a time when they have urgent problems (product getting delayed, unhappiness with existing vendor/relationship, need of some unique expertise), they are prone to giving you a shot. Typically this is where you would get in, with someone in the BU playing your key sponsor. From here on, the steps are simply executional:
- Keep your sponsor happy. Ensure that you manage their expectations – deliver good quality and make them reference-able. This is a hygiene factor implying that while its necessary, it alone isn’t sufficient to make such relationships grow.
- Start hanging onsite: Big company managers have lots of things to do and lots of pressures that you would not come to know of over phone or email from your offshore location. You’ve got to visit them often – if you can manage to live locally and have a periodic meeting, that’s ideal.
- Prospect for other projects within the BU: As your work grows, at some point you would naturally be sent to procurement office to be on the approved vendor list. This is the right way to approach the procurement office, i.e. being referred by a BU who is already working with you. This is where you might have to tick some boxes like security, process etc. However, in my experience I have never seen them to be roadblocks as long you have a plausible plan.
- Relentlessly walk the corridors: This job may warrant a full time “Account Manager”. The main job of this person is to walk the corridors. Ensure that this person does not have a comfortable office of their own – he/she should be literally walking the corridors, bumping into managers and prospecting for business.
That’s it! You keep doing this for a couple of years and you would certainly make a place on the budgets of such large customers. From start to finish, in 3 years you might often have a substantial relationship that keeps spouting like the eternal fountain. You can recover all investments you may have made within the 1st year of such a relationship.
Repeat this process a few times (in parallel) with 7-8 customers and you have a valuable business. Revenue from small customers can always act as cherries on your cake.
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Rajul Garg
Rajul is Director, Sunstone Business School, board members of several companies and an angel investor with interests in technology and healthcare. He is co-founder of GlobalLogic, a global leader in R&D outsourcing with offices in 8 countries and over 6,000 employees. He built the operation ground up in India and later helped GlobalLogic expand exponentially through global acquisitions. Earlier, he was also a founder of Pine Labs, a leader in point of sales transactions in India. Rajul brings in his passion and experience in entrepreneurship and business building to the curriculum of Sunstone PGPM. Rajul is a Computer Science Graduate from IIT Delhi.
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Excellent post Rajul. Have not come across a more simpler yet accurate way to go about it .