“Professionally friendly” – a trend I am noticing in Indian startup entrepreneurs

I used to think this was a great tactic followed only by young women (read: single, good looking, and smart) in India, but Indian entrepreneurs are now catching on to this new form of relationship. So my fellow entrepreneurs, if you want to be successful selling in India, talk to your good looking women classmates from college and learn how to be “professionally friendly”.

Professionally friendly” to me is a business relationship with a person who you want to do business with, but realize that you might have to build trust with to get it done. If you get too friendly they will take advantage of the relationship (like friends do, but you like your friends not business¬†acquaintances) and if you are¬†too professional, they will negotiate very hard and likely delay your deal.

Let me tell you a story first:

I have a good “friend” who’s an entrepreneur. He sells end-to-end software and solutions (his words) to hotels, restaurants and spas to manage their bookings and inventory. His company has been around for nearly 2 years with some decent traction (over 100+ customers). He’s built his business mostly through word-of-mouth.

Initially he found that most of his customers were taking too long to evaluate his product (30 day trials went to 90 or 120 days) and were negotiating very hard to reduce his already thin margins. He realized that his 2 initial customers were friend who were more than willing to pay fair price.

So he changed his sales process: Step 1) Cold call and get appointment. Step 2) Initial meeting and demo. Step 3) Invite prospect to Bangalore Club for a lunch / tennis, etc. – essentially grease the skids.

He found that it reduced sales cycle’s dramatically but obviously all that eating at Bangalore club did a number on his waistline (actually it made a dent in his wallet, but he raised his prices to cover the cost of the meal obviously). Second, this lunch thing clearly did not scale.

So he tried selling 2.0 – now he’ invite 3-4 people together for a double’s tennis match or a group networking lunch and figured they’d meet each other and talk. Worked better in terms of scaling up.

Meanwhile, his first few customers became good friends. Two of them were late on payments and asked for a 3-4 month extension (we are good friends, so please help) since they were “having to fight fires” or were renovating their spa or had some issues at their Chinese restaurant. The 3 month non-payment turned into 6, 2 free licenses turned into 5 and outstanding receivables were slowly approaching 72 days.

He’s found it very difficult to confront “friends” for overdue payments. They invite his family for lunch during weekend (Had their wives call my friend’s wife and told her about the new “diet” version of American chopsuey, which she had to try at the restaurant).

Bottom line – his “lets be friends first and then business partners” is not exactly going on track.

So how can you maintain a “professionally friendly” relationship? <Please> first stop laughing, since I did that for close to 50 seconds, when he told me this story.

I had 3 suggestions for him and I’d love your feedback:

1. Go prepaid – payments need to be made upfront for usage of software, services.

2. Separate selling function from payment collection so you can always say – “I am the nice guy but my finance person asked me to switch off the service till payments were received”.

3. Ensure business contacts are not involved with family – removes the “emotional atyachar” factor.

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2 thoughts on ““Professionally friendly” – a trend I am noticing in Indian startup entrepreneurs

  1. sanban14

    Good one! Agree with all 3 suggestions. Most so for #2. The Sales Champion needs to be on the side of the Customer, and the Collection, Support, Legal Agreement guys can be of a different camp (most often imaginary, for a startup :) ).

    In case of Subscription Business, I find it useful to do the personal relationship building in the Post-Sales period when it is least expected. This helps two ways 1) Gets you the First Subscription Renewal, which could be more difficult than the initial sale. 2) Continuous word of mouth.

    Reply

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