How To Treat Your Largest Customer. TL;DR: With Honesty, Insane Commitment and Transparency.

Recently for the SaaStr Annual, we were “the largest customer” for 3 vendors. All 3 “lied” to us … er, if not exactly lied, then substantially and materially over-represented their capabilities and experiences:
  • One vendor was a friend of a departed contractor.  This is a pretty common way deals are done, even today.  The champion’s favorite vendor.  They misled us in terms of scale and capabilities.
  • One vendor was a well-established software vendor, but misrepresented their experience at scale.  Yes, they had larger logos than us and had nominally worked on larger events.  Hundreds of them.  But they hadn’t managed 100% of an event at our scale.  That they overstated.  We were larger in utilization than their current “largest” customer (who was a much bigger company and slightly bigger event).
  • One vendor was a “gap filler” for another vendor that couldn’t meet all our requirements.  They misrepresented many things, and were brought into the deal by the second vendor.
The net result?  We aren’t going to renew with Vendors #1 and #3.  We are going to renew with Vendor #2, even with their limitations, because we hope they will grow into meeting our needs.  But crucially — we would not “recommend them to a friend”.  Put different, two of the vendors that misrepresented their capabilities we aren’t renewing.  The third we are, but because they overstated what they could do, it will be at least another full year until we would be willing to be a case study or a positive reference. And yet … maybe the sales rep is happy in all 3 days.  He or she probably got paid her full commission. This is all too common in SaaS.  Sales incentives, and customers with limited experience in new categories and with new vendors, creates the opportunity to way oversell here. What’s the answer?  Just a few learnings over the years, re-learned this year:
  • Churn-and-burn deals aren’t worth it.  So even if you can misrepresent your capabilities to close a large customer, it’s not worth it in the end.  Recurring revenue that doesn’t recur is revenue that never really happened, but that taxed your entire team.
  • Prospects and customers may be OK being your largest customer — if they get the benefits back.  What we wanted was solutions that could scale in real-time across 20,000+ attendees, and we understood no perfect solution existed.  We were OK with that as long as we got the deliverables we needed in time.  Don’t let your sales team, or your CS team, promise functionality that doesn’t really work.  Do let them commit to releases and functionality coming and planned, with clear and honest deliverables, if they are part of the contract.
  • Transparency is especially critical with your largest customer.  We didn’t get them all, and the vendors were not transparent.  Had they been transparent, we might have renewed and/or recommended.  Instead, we heard a lot of half-truths.
  • If your customer finds the gap, don’t pretend otherwise.  Nothing undermines confidence more that having to discover an issue a vendor doesn’t even know exists.  If your largest customer points out parts of your deliverables that don’t work, just acknowledge and agree to it, and come up with a remediation plan.
  • Apologize.  When your software doesn’t do what it is supposed to do, apologize immediately.  This is the only way to rebuild trust.  This is what Vendor #2 did (the only one we are keeping).  There is no upside to pretending otherwise.
  • You are responsible for all the other vendors you bring in.  If you bring in another vendor to fill gaps, that’s fine.  But with the largest customer especially, you are still 100% responsible for them.  You’re providing a solution, not a widget or a tool.
  • Make sure customer success signs off on whatever sales commits to with your largest customers.  Make sure you have a clear process here.  In all 3 cases above, the sales rep misrepresented the capabilities.
  • Most importantly — a remediation plan almost always works.  This is key.  So don’t hide from one.  Role one out ASAP, in fact.  Your largest customer doesn’t expect perfection.  They do expect issues to be resolved honestly, promptly and to a high degree of excellence.  So when issues come up, don’t just be honest, apologize, and acknowledge them.  And don’t just make vague promises to fix the issue.  Come up proactively with a timeline for a remidation plan, review it weekly at least by email, and meet it.  If you do, you’ll likely keep your largest customer.
  • Your largest customer is the future.  Your largest customer won’t be your largest customer forever.  They’ll teach you how to get even larger customers.  But only if you treat them well.  So triple invest in customer #1.  Their needs, their gaps, their issues, their wants will be your roadmap to close a deal 2x, 3x, and even someday 10x larger.
Your largest customer can be a gift from the heavens.  Treat them right, and they will be an endless source of referrals, renewals, and testimonials.   Your largest customer may end up being worth 20x-100x their initial deal size. But you have to treat them like royalty. https://www.saastr.com/secrets-closing-first-6-figure-deal-video-transcript/
Published on February 24, 2019

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