Last week I met a prospect, who was looking for a Cloud based ERP for his company. Within 10 minutes of our meeting, I started having a feeling that things are not going in the right direction. His questions were,
- Why you don’t have these features and how can I get this report myself? Why should I depend on you always?
- Why this spelling mistake on the screen? Why this amount is not aligned properly?
- Will your application take care of my business needs and the complexity?
His requirements were simple and he wanted to interface his in-house CAD design system to an ERP and push these data such that his team can work and do the planning etc. He was looking for a solution that could reduce work for his team.
We could have customised this interface, like we did to our other customers; because today many businesses want to customize the standard ERP features to meet their specific workflows and business needs.
Slowly the discussion started moving towards “how the company is making money and how many customers now?” “How many employees are there and how much is the cash burn” etc. (This prospect is an angel investor, so he was interested to know about my company background).
How to Identify Prospective Customers.
The moment I gave the numbers, I could see his anger and what followed was my 2 hours of “Shark tank” experience.
Couple of his questions were.
- “Your monthly cash burn is high. How many more days, you are going to survive, if you don’t have a clear plan of making money? If you are burning money from your pocket then it will stop soon”
- “How you are going to provide guarantee and safety to my data, in case your company is closed?”
- “Are you sure you are charging your customers right amount? It seems you are underselling your product features to get more customers”.
- “Your are not able to reach BEP because you are charging so less to your customer. May be they are not your customers and you should identify the right customer, who pays right amount for your service”.
Some of these questions were asked by few of our customers as we are a start-up and they have genuine concerns. But few questions on how much we charge customers, what’s our plan to make money and survive in the business etc. were never asked.
As I came out of the meeting, I started questioning myself on what’s happening and what went wrong as his questions were perfectly right. There were cases, where we left money on customer table as we were asking for lower price rather than command a premium even though customers were willing to pay.
One of his question was “why don’t you fire few of your employees as you don’t need so many people as you cash burning is high?” (A typical investor / VC question) Chances of this happening are very low in our company, as we avoid as much as possible recruiting a “B” category person. (read my article “7 things that (I believe) we did right at AcTouch.com)
So the problem was “I” and not charging right amount to our customers.
Recently few customers (few tech start-ups and new age business owners) were asking me same question multiple times “Are you sure you are charging only this much? Hope there are no more hidden costs like other software” “Nitya, you are charging too low”.
At that time, I didn’t understand importance of this question, but now I do. The price points were decided in 2013 and we never dared to change.
Now, I started changing the internal structure and with in 3 months, I will come to know the result of these changes.
I have changed post my meeting and change starts from Top.
PS: You know what happened with this prospect’s business order, which was worth US$ 5,000+, right? But what I learnt is more than Million Dollars and it was price less.