What Looks and Feels Like a Sale But is Not a Sale?

A deal with a distributor that’s disguised as a customer. The newest addition to the top 10 reasons startups fail.

It can be a mistake to believe that the company paying your invoices is the customer when they are not the end user.

I’ve seen this mistake take down some quality startups. It catches them off guard because writing invoices feels like traction. It feels like you’re getting somewhere. It feels like you’ve nailed the customer.

But organisations that are providing your product to their members or employees, or offering it to their customers as an option, are distributors not customers, even if they are providing it to end users for free.

It doesn’t matter how excited they get about your product, they are as much in the dark about whether end users will love it as you are — with much less motivation to get it right because if it doesn’t work, they’ll just stop buying it from you. The more appropriate way to think about deals like this is as channels to market or an extension of your marketing team.

Put simply there is no way to pass-on, short-cut, ignore or avoid doing the detailed work of figuring out how to get users onboarded, or much more importantly, hooked on your product.

Here’s some everyday examples to help clarify:

• Your employer is determined to improve internal capability and subscribes to a project management tool, but nobody likes and it never gets used.
• You buy a new TV and the retailer that’s obsessed with increasing profit per sale offers you an option to take out an additional warranty, but you are not interested and decline.
• Your local store is changing over to a more sustainable range and tries to sell you an alternative to your usual product, but it only has a shelf life of 3 days not 10 so you don’t buy it.

In all of these cases the ‘customer’ had strong motivation to sign a deal with you but it didn’t lead to user uptake because the product offer wasn’t right.

Whenever you come across an opportunity like this take it, but negotiate end user testing into the deal. You need to collect the information that will enable you to manufacture desire, which means spending as much time as possible with the real customer — the end user. If you get it right everyone wins.