The Power Of Reverse Thinking: A real sales booster for early stage startups

Reverse RFP in action

Nothing is as difficult as securing your first big deal as an early stage startup. Last week, I talked to a founder of one of our B2B SAAS portfolio companies and we discussed a challenge I see many founders struggling with, which is to close a real inflection point contract in the beginning of their journey. It’s a tough job as a founder to sell your product to very large corporations mainly when it affects their core operations, but it’s not impossible. It’s only a matter of figuring out how these people think and operate, and adjusting your sales strategy to that.

In my early days as co-founder & CEO of Xpenditure (now Rydoo), we used a simple but powerful method that we still propose during sessions with Pitchdrive portfolio companies, we called it the Reverse RFP (Request for Proposal).

As an expense management startup, it was very important to have a ‘big 4 four player’ in our customer base as quickly as possible. We approached all of them and showed the power of digitizing their expense management expense processes. Within 6 months, we agreed on a deal with Deloitte BE using the Reverse RFP technique and implemented our solution with success. We hyper focussed on an extraordinary customer experience and started to prepare grounds for land and expand within other countries. In the few years that followed, we closed all the other big 4’s + Mckinsey global.

Reverse RFP explained

The idea behind reverse RFP is to maximize the value of the partnership for the small startup. It involves approaching numerous organizations in the same market/geo and offering a limited in time/exclusive partnership to the one that has the best offering for your startup. By approaching multiple organizations, the organizations will have to compete for the strategic partnership enabling  small startups to ensure that they are getting the best possible deal (and this is not price). This tactic gives the startup more bargaining power and creates a sort of fomo, as the organizations know they are competing against each other.

Reverse RFP is one of the best sales strategies I’ve encountered for early stage B2B startups. Here’s how to put this strategy into practice:

STEP 1 - Define the target market and right stakeholders

• You approach about 5 of the market leaders in a certain well defined geo/market and set up meetings with the right people explaining what your solution can contribute to their business.
• When you are in these meetings, mention clearly that you are talking to all of them and will select one to partner up exclusively at launch.
• Do your homework very well! Come to the meeting highly prepared and try to understand their pain points, processes but also the market well.

→ This creates momentum for your startup and gives the corporate customer the benefit to receive new insights, show innovation for marketing & PR purposes and, above all, gain time and money thanks to your solution.

STEP 2 - Prepare a a special limited offering

• Agree in clear written your limitations of this (semi) exclusive “launch” partnership
• This includes time (max. 1y), Geo (usually country level), and mentioning of their direct competitors (by name)
• It only works when you bring clear value to the corporate. You get the strongest effects when your solution counters immediate innovation threats they can’t easily solve themselves internally e.g. Competitive offerings, issues with losing customers, need for direct cost savings, the need to pimp their innovation image
• Use the exclusivity and potential discount of your offer to turn your first big clients into ambassadors, and include this very clearly in your proposal. They can grow together with you, and in return you can use their name and testimonials to accelerate your sales.

STEP 3 - Keep assessing and challenging your potential partner

• Keep continuously assessing and challenging your potential partner on their appetite to innovate and to grow with you as a startup. 
• Speed of their decision making process is the key to success, so make sure to talk to the right decision makers as soon as possible and use the exclusive offer to enforce a written deadline. Keep on mentioning this during the sales process to your main contacts there.
• Don’t be afraid to approach top C-level, Directors & VP’s - you bring flexibility, new ideas and new growth for them.

STEP 4 - Create a plan to copy this framework in different well defined markets

• Define the next market, and repeat the process. It should get easier every time because you’re attaching big names to your startup by closing the deals.

The advantages

I distilled 5 clear advantages for the startup when applying Reverse RFP:

• You showcase immediately knowledge & innovation power
• You approach your customers as experts (less “salesy”)
• You gain a lot of sales lead time versus your competitors (proactive approach)
• You create and own the sales momentum (critical event)
• You are on the radar of big corporate target customers (even if they don’t participate from the beginning)

It’s important to understand that this tactic works best in the first 2 years of your startup life, and can give you a massive head start that you will benefit from for the rest of your startup journey. Best of luck!

Boris