Continuing with the Asymmetric Deal Making theme... How do you get noticed? How do you establish that first contact? Obviously, you need to find the right person inside the target company (BTW, reaching out to multiple people is often a better strategy). Conferences, trade shows, linkedin, JigSaw are all great tools for that
But even if someone on Linkedin agrees to introduce you, chances are you are going to need to write an intro letter.
Every day I get emails from someone trying to partner with RingCentral or to sell something to us. And in spite of everything that has been written on the subject, they are uniformly awful. They are however absolutely necessary and very important.
So what does a good opening salvo look like? First and foremost it needs to be concise and very clear.
Nobody got time to read pages of text or to ponder about what is it that you really want. I would say no more than 200 words.
I like letters that make a good use of the Aristotelian methods of Pathos (Emotion), Ethos (Credibility – literal from Greek: familiar place or frame of reference) and Logos (Logic)
Here’s an effective blueprint:
· Intro: Let the person know where how you found them (e.g. I saw you at a conference and I liked your comments on methods of viral distribution or We share John Doe as a connection on Linkedin). Use every opportunity to make the letter feel personal (Pathos).
The following 2 sections can be flipped depending on context:
· Who are we: This will largely depend on how familiar your addressee is with your company. Two approaches that work well here are identity - based (RingCentral is the dominant cloud phone system for SMBs) or need – based (RC allows companies with mobile employees to save money and project a professional image). If you use words like dominant, rapidly growing, leading etc, use another sentence or two to back it up with. You have to be credible (Ethos).
· Opportunity: This is an answer to the question “So what’s in it for me?” I think some of the worst offenses are made in this section. Many writers simply omit it (e.g. We just told you how great we are, so you should be able to figure out why you should partner with us). Others make it way too generic and do not put themselves in the other person’s shoes (e.g. We can save you up to 75% or we can help you penetrate a $10B market. Any claims you make should be specific, personalized to your addressee and backed up by facts. Justified claims will give it logic (Logos), while personalization gives emotion (Pathos).
Finally (and very importantly)….
· What do we want: This is the call to action. This is an answer to the question “So what do you want me to do about it?” Many letters omit it, as if it were implied (e.g. By partnering with us, your company will save 20% on XYZ. Best regards.) . Others ask for unrealistic actions (e.g. Invest in us today). Keep in mind what the actual desired outcome is. It is rarely something big. It’s usually a meeting or a phone call or something along those lines. So ask for it and give your respondent a couple of options to choose from.
Here’s an example of one of the letters I use.
I found you on Linkedin. We are connected through Johe Doe. I'm reaching out because RingCentral is very interested in a partnership with ABC.
RingCentral is a Cloud PBX / Business Phone System focused on mobile users. We are the dominant player in North America (with over 250,000 businesses) and have also expanded into UK.
SMEs with 1-50 employees is the least served market segment. Because of that, it offers some of the best potential for growth. What makes RC unique is that we cracked the code on what to sell into that space and how to make it profitable. In the UK, 13.8M (59% of total employment) is in this segment. So with X% marketshare, UK alone is a roughly £YB opportunity for ABC (at £Z per user per month – which is our average). In the last year, we have proven this model with ATT in the US and Rogers in Canada (we also dramatically reduce their churn).
We would love to explore a partnership opportunity with ABC. And even if there’s no immediate opportunity to partner, it’s still worthwhile to see our solution and to talk. Please let me know whether we could set up a brief phone call. Wednesday morning and Thursday afternoon both look good
(This is actually 214 words – but consistency is overratedJ).
This letter can be further improved by making it even more personal (for example, ABC is the ideal partner for RC in the UK because you are the most powerful SMB brand).
Just a few more quick tips:
· Short, clear sentences
· No link (you do not want to have your addressee navigate away from your letter). If you need to send links, just ask in your intro letter “would you like me to send you a link to our…”
· No canned language. Make it conversational. No one like a form letter.
You are a small fry (SF). You are pitching a deal to a company with $1B in annual revenues (BigCo). The size of the deal is .5% ($5M) – barely more than a rounding error on their quarterly report. How do you get noticed and how do you win? One of the first things you’ll need to do is find a Champion.
Most have heard terms like Champion, Decision Maker and Influencer, but what is a Champion? A champion is an influential person who actively supports and promotes a particular person, project, or idea. 2 key terms here are “influential” and “actively promotes”. It happens frequently that once someone from the BigCo expresses enthusiastic support, the SF team assumes that things are moving along and everything is going to be fine. But that’s not necessarily the case. You have to make sure that this person (let’s call her Jane) has actual power and clout. This is often hard to do because the title doesn’t always correspond with influence. I’ve seen product managers with more clout than VPs. So ask other people at BigCo what they think. You’ll be surprised how candid some of the answers will be.
You also have to make sure that Jane is indeed an active promoter. Is she giving feedback only to you or is she actively evangelizing her colleagues? Again, ask around. See how many people learned about your company from her. One of the best signals that you are on the right track is when you get a call from someone at the BigCo who says – I heard about you from Jane and decided to reach out and learn more.
· In order to be able to do this kind of validation, it is essential to have as many points of contact to the BigCo as possible. Do not allow one person (however well meaning) to block you from the rest of the company. Don’t make it adversarial and don’t make it a big deal – but always look for alternative contacts.
· Another reason to have many points of contact is because the “true” Champion may not emerge immediately or may not end up being who you think. You have to be able to go back to the well.
· Be careful of “phishing”. Sometimes a BigCo may be looking at another partner or an internal project and simply using you for information.
And now the key… Short of altruistic, sincere enthusiasm for your product, why would an influential person risk her clout by taking an active role in promoting an untested SF? Two most common answers are money and strategic alignment (I will talk about the latter in a different post)
Wait a minute, you might say, isn’t the size of the deal just a rounding error? It is…and it isn’t. BigCo projects its earnings with great accuracy. Deviations of a few cents can have a massive impact on the share price. So now imagine that Jane runs a business unit (BU) with $100M of revenue. That’s 10% of the company’s revenue - Jane is a big cheese. Since the company is required to project earnings accurately, it also requires its BU leaders to project revenues accurately. To achieve this, Jane’s compensation plan is not linear. It has accelerators and penalties. I’ve seen accelerators of up to 12X. That means that your $5M (5%) deal can be worth as much as 60% of her bonus or tens of $K to Jane personally. All of a sudden, your little $5M deal just doesn’t seem so small anymore.
· Establish as many connections as possible
· Look for evangelists with power AND vested interest
· Are they under plan? Over plan? Try to understand their motivators / pain points.
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I use the term Asymmetric Deals to describe agreements between grossly unequal entities. Inequality is often caused by differences in size and resources, but may also include such factors as technological advantages / legacy contains, pace of growth, lack (or presence) of particular expertise, strategic direction and many others.
By now you’ve gone through months of presentation, demos and proposals. If you are at the negotiating table, something you did or showed caught your Partner’s attention. How well do you know what it is? Often the reason your Company is chosen is not what you pitched as your core added value.
Example. Years ago I worked for a company which developed a highly optimized audio compression algorithm. We pitched our technology to a large mobile company to enable their mobile music service. Our main value-add was that our files were much smaller than the industry standard and saved a lot of bandwidth. Much later we found out that the reason we got chosen wasn’t so much because of the file size, but because the company also had a video streaming service on their road map and our audio CODEC and their video CODEC complied with the same standard. Had we known this, we would have received better terms.
You wouldn’t be at the negotiating table if you didn’t have something special, but it is important to understand what that is from the Partner’s point of view.
Key take away – make a list of all of your strengths and weaknesses vs your perspective partner. You may not be in as much of a real disadvantage as you think. Dive deep and really understand your Partner’s motives.