It can be very tempting for B2B startups to pursue large customers. Being able to say a large company is your customer means credibility, no doubt about it. But that very large customer can also be very demanding. Moreover, if it represents too large a share of your revenue stream, it can mean disaster if anything happens to the relationship. If maintaining that relationship means spending significantly more time per dollar generated, and that happens occasionally, you may wonder if the relationship is worth it.
In reality, we value customers in two ways — strategic value and profit value. A big customer that is less profitable for you may still be beneficial strategically. It can give you a headstart in growing your business and help you win against your competition. On the downside, big corporations are slow moving and often pay later than smaller customers. And they can act like the 800-pound gorilla they are and demand services you don’t normally provide.
The owner of a conferencing services business (who will be featured in a chapter in my upcoming book) has intentionally avoided very large customers. He says, “One reason we´ve been successful is that we´ve stayed small scale. We don´t go out seeking huge corporations as clients. We can make a very nice living with SMB and medium clients, and frankly we get nervous when we have one client that hugely overshadows the others.”
On the other hand, I know this man because we worked for the same company some years back, and that company became hugely successfully precisely on the basis of targeting very large corporations. So as Jeff Cornwall said in a post, “…think through very carefully any decision to get into a business relationship with a large corporation. Run it through your business plan to make sure you understand the financial, operational, and cultural implications for your business. And remember to be careful of what you pray for. You may just get it.”