Silos-in-the-Enterprise: Good. But Not All They Are Cracked Up to Be.
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Just a few years ago, as the next generation of SaaS companies were beginning to scale, the idea of building a Big or Biggish SaaS Company using Silos-in-the-Enterprise was all the rage.?For many, it still is.?But there are a lot of flaws to this thinking it’s worth taking a look at.
First, just to get on the same page … a Silo-in-the-Enterprise is a small or smallish group in a BigCo that adopts your product.?Sometimes rogue, outside of procurement or financing using their corporate credit card.?More often these days, officially, but just for one team.?A group at PayPal decides to start using your CRM tool.??Part of Google’s HR team starts using your project management tool.?Etc.
I loved all my customers, like children.?And sometimes I loved the Great Logo accounts even most of all, especially in the early and middle days.?And Silos can get you logo accounts, which do matter.?At least until you have enough of them.
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But here’s the “problem” with that group at Google using your SaaS service:
Now … having said this … at EchoSign / Adobe Sign, we grew?many?of our Silos into large, six-figure accounts over time, especially as we scaled from $1m to $20m in ARR.?Our first $1m TCV deal was all land-and-expand from a silo.?But then, as we got bigger, and the space grew bigger … more and more of those deals became much larger deals adopted at a higher level, on Day 1.?As the space matured, and the brands matured, Big Companies were comfortable picking a trusted vendor up front for all their users.?And the silo deals became less important to the overall pie.
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Taken to its logical extreme, I know several VP Sales in post-Scale SaaS companies that Do Not Allow silo-in-the-enterprise sales.??No commission at all on them.?The idea is they want to force the sales reps and team to go straight to the highest level of the org, and buy 1,000 seats to start … not 20.?Because it’s 50x the revenue, for not that much more work, with?less?competitive risk and churn.
We didn’t do that.?And I wouldn’t do that, myself.?But I do see the theoretical logic in many cases.?At Salesforce today, for example, my guess is today, if a deal isn’t worth at least $10-$20 million … it no longer counts as a big deal.?It just has to be true, when they are growing from $5b in ARR to $10b in ARR now.
So what’s my point here??Am I saying when you are getting your SaaS company off the ground, you should turn down IBM when someone wants to buy 20 seats??Of course not.?They’re a customer.?A great customer.?You should celebrate that, and make them a big success.
But maybe just understand, your path to $20m and then $40m and then $100m ARR and beyond may not?really?be built on all those silos.??Even Slack today has grown from a self-service, silo’d app that exploded … into one spending a huge amount of its time on traditional, six-figure+, enterprise-sales deals.
Whatever you do, don’t assume a small deal at a big company will magically blossom into larger, pan-enterprise deals without a lot of?work.??If nothing else, fly there.?Nurture them.?Figure out how you can really grow the account, proactively, aggressively into a much larger deal.
Because I’m skeptical that on their own, these Silos will connect themselves very often.?After all, they’re Silos.
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VP of Sales at GigaOm
2 年The point is to have realistic expectations with this strategy. Sometimes it works, sometimes not. Regardless, still takes work - don't rest on that one deal. I was able to turn a $30K deal into a $2M with a Silo'ed approach. However, the second sales cycle was completely separate. In the end I had 2 major competitive differentiators that won the deal: 1. The internal Reference - which was appreciated by my buyer (along with the external references) 2. An MSA and procurement relationship already in place. This allowed them to get a jump on implementation and thus meet their own internal goals.
Award-Winning CEO & Founder @ Dusk Mobile | Field Service Management Reimagined | Advisory and Investment
2 年Great post Jason and the other one I would add is politics/motives at BigCo, affecting any land and expand of significance. The shadows that you may not see but know they are there. Top down is the way to go, however proving out capability in a silo can de-risk signing SmallCo by the CIO.
Strategic Sales @Ping Identity | Mentor & Coach | AAICD
2 年In my opinion this depends on the product (solution). I have had great success and also great struggle with ‘land and expand’ strategy in the Enterprise segment. There are solutions that solve a problem and easily become ‘visible’ for the rest of the company, helping to grow organically, and there are solutions that remain ‘silent’ and the upsell is just as hard and complex as the initial land deal. It is long, costly and needs to get through the same justification/procurement steps etc. In the latter scenario it might be more advisable to invest 2-3 months more at the beginning to expand the land deal to an enterprise wide agreement or design a EULA that’s tempting to scale up fast.
VP of Marketing | 20 under 40 | Executive of the Year | Georgia Tech Executive MBA Candidate
2 年Am I understanding this right - land and expand doesn’t really work in Enterprise? You can land, may expand a little over time, but generally not going to get the whole co.?
I fix broken Customer Success and Implementation teams | Retained over $1.8B of ARR | 2023 Pavilion 50 CCOs to watch | Top 25 CS Strategist | Data-driven Results
2 年put the logo on the slide. Make them happy and upsell