Big Companies as Customers: Pros and Cons

Large companies can be attractive targets in a startup’s customer acquisition plan. Partnership deals can allow small companies to benefit from the sales machine at big companies (at a cost, of course). They often have tons of salespeople and existing customer relationships that are hard to replicate. Landing a big company as a customer can be equally as helpful. They may sign a deal that brings with it revenue that’s significant for a startup. And using their logo can help you close other deals.

Today I spoke with a founder who had a large company as a customer, to the tune of millions in annual revenue. Then one day the middle managers at the larger company decided to end the relationship. Overnight the revenue evaporated. The founder was scrappy and able to make things work in the end, but the situation was stressful, to say the least.

Targeting large companies isn’t a bad strategy for startups. It has tons of upside. If things go really well, a large company can account for a material amount of revenue. Founders should be aware that if that happens, a single relationship can make or break the company.

If founders pursue big companies as customers or channel partners, they should keep a close eye on what percentage of revenue originates from a single relationship—and continue seeking other customers, of course, to mitigate risk.