What Your Startup Should Consider Before Moving Up Market To Enterprise Sales
Previously published on the Fireflies Blog.
Enterprise sales or elephant hunting as some call it is a completely different ball game. If you’re a Saas startup like we are at Fireflies and have aspirations of dressing up in suits and closing 7 figure deals, let’s get down to the truth.
Enterprise sales is really not that glamorous
Enterprise Sales is by no means any easier than selling to SMBs. In fact, it requires a ton of patience because there is no such thing as selling directly to one person. You are selling through a champion inside the organization to multiple stake holders. Any one person touching that deal could choose to stop it.
You might have heard stories about wining and dining the customer or taking a plane out to meet a potential client on site. All that sounds good, but the majority of your time is spent waiting, building consensus, moving the right pieces, and putting the ball in the customer’s court to make the right decision.
It’s all about building relationships
Enterprise sales means working 6 to 8 months on deals and potentially having things fall through at the last minute. It’s not transactional where someone swipes there credit card and starts using your product the very next day. I’ve learned that you aren’t really selling anything to anyone when it comes to enterprise sales.
You are guiding, consulting, and providing the information needed for the folks to make the right decision. Pushy people don’t do well in enterprise sales. Learn to build rapport and provide value.
I might think I’m selling into a Fortune 500 org but I’m actually connecting with the 4 to 5 individuals that will be making the decision on behalf of the entire org.
Did your champion leave the company?
This is a really unfortunate circumstance. We’ve had this happen to us where we’ve jumped through so many loops and hurdles and built such a great relationship with the champion only to find out that our champion had left the company in the final stages of the deal, destroying our momentum and putting us lower down the prospect company’s priority list.”
Especially in Silicon Valley, where people are moving around between companies quite frequently. Make sure you are getting buy-in from all the folks on the deal. This goes back to the concept of building relationships wide and deep.
Do you know if your product needs to be changed?
Rarely will you have a product out of the gate that can serve the needs of enterprise customers. Think about security, infrastructure, user authentication, reporting, audit logs, and so much more you had no idea would be needed in order to deploy.
Is this really the place where you can get your engineering team to fully commit to for the next 18 months?
How do you plan on deploying you solution?
Speaking of deployments, does the company need a custom implementation? Do you need to personally go on-site or spend 2–3 months migrating them from legacy platforms? How are you charging for deployments. More often than not you will have a relatively simple deployment method that does not require a lot of man hours?
Other times, you might need forward deployed engineers, like how Palantir does it, where these people need to travel onsite every couple months to help customers. You will have to work closely with their IT team to ensure you can get that deployment running in a timely manner.
Do we do one-offs?
You’re almost always going to get custom requests. Startups are usually eager to accept one-off requests from customers, just to close the deal. These are expensive and often the work is completely thrown away for future deals. If it’s you’re first deal, you should identify if these requests are reasonable. Would other organizations ask for the same thing? That’s why I’ve found it most effective to engage multiple enterprise customers simultaneously to fully vet product scope.
How are you investing in SLAs and Support?
Maybe you’re core product does not have a lot of changes required, but you’re definitely going to need to provide a premium experience when it comes to SLAs and support. How many dedicated resources do you plan to have available?
You need to be baking all this back into your engagement costs. If your servers go down, how quickly are you going to resolve up time issues. Are you guaranteeing these in your contracts?
Get Ready To Have Fun With Procurement Deciding on Budgets & Discounts
Great, now you’ve gotten buy in from your customer, have a plan of action, and can move onto the final stages of the buying process. When it comes to budgets and discounting you’re going to be handed off to procurement. You might have to negotiate some sort of volume discounting.
If you’re one of the more unfortunate folks, you’ll have Procurement go after you hard and dissect your product, question your value proposition, and compare you to other vendors.
The best way to counter this is having defined the ROI or Value provided by your product. The earlier you can make this connection, the better. That way it leaves less room for haggling. You can confidently say, with the implementation of our solution we are expecting to increase revenue by 5% or decrease customer churn by 2% or save your sales reps 10 hours every month.
Get some sort of quantifiable value metric that correlates to money saved or earned for the org.
Approaching Red Lining with Legal
Hopefully you will get the standard terms, but ever so often the customer might want to run with their own custom vendor terms. The customer’s legal team may go line by line through your contract and circle things where they don’t quite agree with the phrasing. Legal review is meticulous, but if you are able to weather the storm for 2–3 customers, you’ll know what to anticipate for future deals.
I personally believe a deal can get completely derailed or just get stuck during the procurement and legal process. One of the best questions to ask during the start of the sales conversation is seeing who are the stake holders and what steps need to take place before the product is rolled out.
Why Go Enterprise?
From everything I’ve described, doing enterprise deals seems far from glamorous. It’s a grind to say the least. Many organizations opt not to go that route and become market leaders in the SMB and Mid-Market segments.
Mailchimp has generated massive success selling to SMBs and running those freemium plans to perfection. Hubspot has found a strong fanbase selling to SMBs and Mid Market companies.
There are several reasons a company might be attracted to enterprise.
1.Your product is only suited for large organizations
Some solutions and services only generate real value at scale. That means your target customer have to be enterprises. For example, Palantir works with the government for it’s suite of products. A 10 person startup would not be a good fit in their case.
2. Desire to focus on a few customers and do really well for them
Your team might be better suited to working on larger deals than thinking about freemium, free trials, and all the tactical decisions needed to support a volume of SMB customers.
3.Focus on retention and long-term contracts
Selling to SMBs means churn will be higher. Small companies naturally go out of business more often, and they also have smaller budgets. Selling to SMBs means you need to accept these liabilities. For enterprises, if they truly find value in your service, it’s more likely to stick and you have an opportunity to work on multi-year contracts.
4.Your org’s go-to market structure is sales intensive
If your approach is to run with a sales team instead of doing self-serve, cost of acquisition will naturally be higher. Hence, selling to enterprises makes the most sense to ensure your economic model works out. Again, this is not binary. There are some companies that have a self-serve component and a enterprise sales team on top of that. Getting multiple pieces right is definitely more challenging, but we’ve seen that with plenty of unicorns. Not to mention, some companies can still sell to SMBs with a light touch sales team processes deals in high volume.
Conclusion:
You don’t wake up one day and just do enterprise. There are a lot of key pieces to consider from your economic model to balancing the pros and cons of shifting your team’s focus. Enterprise sales cycles are long. They require patience. It’s relationship based. Make sure your team, product, and leadership is equipped to handle the complexities that come with it.
Like with any soft of deal, it’ll fall back to creating a good process that you can repeat over and over again. If you can make selling to enterprises be part of your company’s DNA, the benefits of that are a pretty strong defensible moat and large deal sizes.
Krish is a Co-Founder @ Fireflies.ai
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