In business development or sales, the biggest fish in your prospect pond are often what I like to call “arms dealers.” Arms dealers provide a related product or service to a group of fragmented targets. By selling to or partnering with an arms dealer, you can reach this group of targets in one fell swoop versus approaching individually. Hence, it’s typically far more efficient doing business with an arms dealer.
An Example of Partnering with an Arms Dealer:
Say my company provides a commenting platform for professional bloggers. One approach is to go to every major blogger on a popular platform and try to convince them why they should utilize my solution. This would require many instances of repetitive labor. Alternatively, I can try to convince the popular platform that they should integrate my solution as the default the commenting system. If I’m able to get this deal done, I receive distribution to their entire network foregoing the repetitive labor.
The partnership with the platform is most likely more complex than partnering with each blogger individually. However, odds are I’d spend much less time to achieve the same return if I’m able to get the deal done with the platform.
It’s also important to consider the labor implications after the deal is done. I like to think of my time allocation in two distinctive stages through the life-cycle of a deal: taking territory and occupying it. Taking territory is all the labor that goes into getting a deal done. Occupying territory is maintaining that partnership/relationship once the deal is done. Both require time and effort. If do a deal with every single blogger on the platform, I will be tasked with keeping a lot of different entities happy. In contrast, if I do the deal with the platform, I only need to focus on keeping one entity happy. Typically this is much easier and requires less time.
The bottom line: if you identify a scenario where there is potential to do a deal with an arms dealer, it’s usually in your best interest to approach them first. Obviously this is case specific, but more often than not it’s true.
Arms dealers can be bigger than the fragmented entities they service. More people means decision makers can be harder to get to. It means you need to get buy in from more people. RED TAPE! It can be particularly challenging because they’re tasked with maintaining the interests of everyone who relies on them for that product or service and perceptions amongst customers are not always uniform. Even the data collection and coordination necessary for them determine if this is the case can be challenge in itself.
What does this mean for the startup trying to a business development deal with an arms dealer? It’s tough.
When You Can’t Get A Deal Done With the Arms Dealer:
Fortunately, there is often more than one road that can get you to your final destination. When going directly to the arms dealer doesn’t work, you can revert to the bottom up approach we alluded to earlier: going after the fragmented entities the arms dealer serves individually.
But they have no resources!? But that’s going to take so much time!? But they all want different things!? But, but….
When trying to get a deal done, we seek internal champions. To an arms dealer, no champion is more important to an arms dealer than the people that are paying them for a product or service. They’re the lifeblood of their business. Thus, if you’re able to convince even just a few clients that they need your offering or to lobby for it, that could be your ticket to that mega partnership. If nothing else, you can rest assured you’re on their radar.
At a high level, it’s always best to start by going after top-down partnerships. But sometimes it requires going bottom-up to eventually make that top-down partnership happen.