Charter Customers Can Become Long-Term Business Partners

As someone who prides himself in being a salesman, I am not used to rejecting an order, particularly when it is a very large order -“ but that’s precisely what I did a few years ago when I was launching a new life sciences company. The client was a major international drug discovery company and on my first visit to their offices to make an initial presentation, they offered me a six-figure contract.

Although it hurt me to do so I declined to accept the order and I asked them if I could start with an order with one less zero in the contract.
It was the best thing I ever did. I knew the start-up company that I was running was not ready to deliver such a large contract and I did not want to ruin the relationship early on. Although the executives of the multi-national were slightly surprised, they agreed to a trial order of $20,000 instead of $200,000.

It was then that I began to adopt the concept of charter customers. The challenge with any new business is to know when you are ready to go out and begin dealing with customers, particularly if your client base is large and well established. Your first product or service is rarely perfect, but few can or should afford themselves the luxury of getting their offering as good as it can be. If Microsoft waited until their software was faultless they would still be working out of a garage.

So I have found it makes sense to identify six to 10 potential customers and work with them as partners. If you are upfront with them and let them know that you are seeking feedback and in return will give them some long term benefit -“ like a break on price or super fast service -“ you will be surprised how cooperative they can be.

I remember one of my charter customers -“ another multi-national -“ returning an order five times. Each time they detailed the problems; first it was the packing, then the documentation, then the product was not exactly what they had requested, and so on. Each time I sent the replacement order without charge. Eventually, they called to say that we had finally fulfilled their order and they wanted to let us know that we had passed their test and they would now be using us as their suppliers of choice and would place a six-figure annual contract immediately.

I couldn’t quite figure out the reason for the sudden turnaround after a less-than-stellar performance on our part. However the Director of Research and Development made it all clear. “We were testing you just as you were testing us. We gave you an order that none of our existing suppliers had been able to fill. We didn’t expect you to fill it either. The fact that you kept trying and eventually met our needs tells us that we are now ready for a long-term relationship.”

The big lesson that I have learned over the years is that in the early stages of a new company, customers do tend to test out your ability to deliver and, sometimes, they may give you impossible tasks. It’s important to recognize such challenges. However, if you take the approach of identifying a group of charter customers and work with them over a period of six months to a year to refine your offering and your relationship with each client, you can set the scene for dramatic expansion of your customer base.

Randal Charlton is executive director of TechTown in Detroit. He can be reached at [email protected].