Shhhhh… Don’t tell anyone…
July 12, 2011 1 Comment
One of the best tools for attracting new customers is a reference from an existing one, but what if the fact you are working together is confidential? Entrepreneurs are often people who find “It’s easier to ask for forgiveness than it is to get permission” but this approach can be disasterous when it comes to revealing the identity of customers…
In startups making business to business sales, landing our first customers is something I want to shout from the rooftops about. However, most large companies will put in place a non-disclosure agreement that covers the very fact we are working together!
Why do my customers want confidentiality?
- Big companies often don’t want to be associated with “risky” startups.
- Initial purchases are often really extended evaluations. They don’t know if my product actually works, and don’t want to be used as a reference until they are confident that it does.
- If a company feels it has spotted a source of competitive advantage, it may not want others to know about it
- There is no real down side to confidentiality from their perspective.
Can’t I just tell people anyway?
Having big companies as customers (or indeed any customers!) is a huge step forward for most startups, and can be hugely important in adding to credibility when pitching for further customers or for investment. There is a big temptation to assume that if I can use the names of my customers they will never find out, and even if they did they wouldn’t actually bother with legal action.
Here are three key reasons why this is a terrible idea:
- If I violate the confidentiality of my current customers, what does that say to prospective customers about my integrity?
- Most industries are relatively small communities, and people talk. The chances of my indiscretion spreading actually pretty high.
- I will probably be breaching contracts with my customers. Even if they don’t sue, they may be able to tear up my contract. At the very least my relationship will be seriously compromised.
Quite aside from negative consequences, I think it feels a lot better to run a enterprise with integrity than to cheat – and I want the other people in the enterprise to feel that way too!
So what CAN I say?
Rather than focussing on what I can’t say, it’s good to try and think of things I can. For example, for Contemplate can say “we are working with two of the global top ten investment banks”. This describes our customers and gives a clear picture of their credibility without identifying them individually. Similarly for some time ATEEDA has been saying “we are working with one of the major global integrated device manufacturers”. This is not as convincing as naming names, but it is a lot better than nothing.
Asking for more…
Early on, it is worthwhile asking your customers for things they are more likely to agree to than full disclosure:
- Are they prepared to work on an anonymous case study that gains credibility from their expertise if not their name?
- Can you quote them anonymously (e.g. using just a job title)?
- Will they take a confidential telephone call from one or two prospective customers and talk about their experiences of your product?
- Can they introduce you to other potential customers in their network?
Good things come to those who wait…
Usually permission for publicity will be forthcoming once an initial engagement has proved successful. ATEEDA has recently been able to put out a press release on this basis – quite some time after the project first started.
It is important to prepare for this point in advance, agreeing what will be published and getting wording approved in advance to minimise delays once the green light is given. This can also involve working to find what sort of publicity your customer would like. Do they want to be seen as leading the way in new technology? Would they like to be seen to be supporting local companies or startups? If your product “fixes” something they are doing “wrong” at the moment, how do they avoid embarassment at admitting to being “wrong” before?
In some industries however, nearly all supplier relationships are confidential. Investment banks are typically very secretive (with some exceptions) so Contemplate may never be able to say who its customers are.
So my advice is preserve your integrity and don’t spill the beans. Try to work with customers to find things they are comfortable doing to support your sales campaign, and make sure you have everything ready for when you can release their name to avoid further delays.