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How to market to startups (hint: It's not a one-night stand)

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Launching a company isn't easy, or everyone would do it. As marketers, how can we pay more attention to the needs of early stage companies in order to receive increasing benefits in the future? I recently had the opportunity to spend some time with Jack Kennamer, president-CEO at LOC Enterprises. LOC is turning loyalty programs into a one-stop portal. It's a winning combination. We discussed what it took to get LOC off the ground and how marketers can do a better job when targeting early stage companies.

What was your biggest concern as a startup?

Kennamer: When you're a startup it's all about protecting your nest egg—you become conflicted between spending money or not spending money and doing things on the cheap or doing it right the first time. We took the philosophy that we would do it right from the beginning. We wanted to go to our customers with a complete, solid solution. But we didn't need to do everything for ourselves.

How did this affect your decisions when it came to choosing vendors?

Kennamer: Every company wants partnerships with vendors and services companies that ensure that things are done right. But this is even more critical for startup companies. When you enter into a partnership you anticipate that it will be a long-term relationship. You ask yourself questions like, “Can you truly build a relationship? Will the vendor invest in your business?” You want to feel like you are in it together. I want to become a very important customer over time. And my payback to those who invest in me today is that later, as the company grows, I will do more business with them. We are in the business of loyalty and this is how you build loyalty in b-to-b relationships. I want to be important to you. I want you to ultimately make money on me.

What marketing and sales approaches did you hear as a startup that really turned you off?

Kennamer: Companies that came to us selling something they didn't have, or telling us about what they were going to do before they were ready. Some companies were just too interested in trying to ring the register. It was “hearing versus listening,” and you can always tell who is really listening.

What do startups want to hear from marketers?

Kennamer: Word of mouth is critical. It's more important for me to know your capabilities and the level of interest you have in me. Do you have a willingness to brainstorm solutions with us? Can you help us identify the holes in our logic? Can you help us keep costs down so we can be competitive? For startups, it's often more about intuition. Is this real or not on both sides? Before I can do business with you I need to get to know you. I want to be a long-term player. I'm looking for management teams that are very responsive.

What can established companies learn from working with startups?
Kennamer: Startups can be unique animals. They are going to grow and change—you can't be a startup forever, and in fact your entire goal is to not be a startup any longer than necessary. Mature companies should remain agile and entrepreneurial and take risks. As an established business you should be more willing to take the risk and invest with startups. Don't say, “Come back when you grow up.” Instead, care and nurture startups for what they will become in the future.

Any closing thoughts for entrepreneurs looking to launch their own startups?

Kennamer: If you have the fire and you are willing to work your ass off, go for it. If you are successful there isn't a better feeling in the world.

Lisa Dreher is VP-marketing and business development with Logicalis Inc. (www.logicalis.com). She can be reached at lisa.dreher@us.logicalis.com, or via Twitter at @LisaDreher.

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