With the economy constantly changing and new startups popping up, it's important to make sure you're doing everything in your power for success. One way is by making sure you have strong enterprise sales. This blog post will cover what that means and why it's so critical to any company that wants to stay ahead of the competition.
As a startup, revenue is what you need the most. The easier route would be to go for self-service sales that can carry your business from its infancy all the way up to its growth stage. But if your goal is to become a household name in the SaaS world, enterprise sales might really come in handy for you.
While it may not be an easy task at all, some of today's biggest tech companies started off with creating something they could sell directly to their clients or use them as beta testers thus were able to prove the viability of their products before venturing into it.
While it's still debatable what the actual answer to this question, What is Enterprise Sales Model, there are some common themes that occur throughout most SaaS companies who follow this go-to-market strategy. Here are a few examples:
Selling to colleagues of existing employees - If your startup is selling into the enterprise then you will typically only have direct contact with other employees within that particular company or perhaps, executives & decision-makers, in different departments but you won't be talking regularly with the end-users themselves.
Long Sales Cycles - It takes time to find just the right person within the organization so if you think in terms of months instead of weeks when projecting how long it will take before they become a customer.
High Volume, Low Ticket - Enterprise sales cycles often have a low average order value due to the number of licenses being purchased so you will probably not generate a significant amount of revenue from one particular sale (although it can be cumulative if they buy additional products as well).
Higher Close Rates - The good news is that close rates tend to be higher here because your prospective buyers are more committed, engaged, and educated about your product. However, this also increases the amount of time & resources you'll need to invest before actually generating revenue.
Partner Opportunities - When selling into other businesses there may be strategic opportunities to sell through resellers and distributors but make sure you know who these people are and how they fit into your overall go-to-market sales model.
This particular type of go-to-market sales model is best suited for businesses with a product that has a lower price point and does not require extensive support or ongoing training. In the old days before the internet, customers would have to fill out expensive order forms & provide account data as well as other information in order to complete an enterprise sale but those days are now gone thanks to technology.
Lead Generation - You can use ad campaigns on Google, Facebook, LinkedIn as well as retargeting campaigns through companies like Criteo to capture interest from prospective buyers who will self-qualify themselves by requesting more information about your product/service either by filling out a form online or calling you directly.
Product Website - Because pricing tends to be lower here this approach works well for products/services that can be purchased directly through your website. While there are certain restrictions you must consider when offering support (depending on the type of product you're selling) it's still possible to pull in revenue by having an up-selling & cross-selling strategy in place.
Shipping & Handling - Since it usually takes some time before you get paid, the benefits of using a transactional sales model is that you don't have to worry about collecting credit card information or worrying about potential chargebacks down the line from customers who may not pay their bills on time.
Transactional sales is a go-to-market sales model that typically works best for businesses selling software products and services that require the customer to pay up-front or purchase a license for access to begin using it. Even though there is no risk of losing money if they decide not to buy (or don't pay their bill) you still need to understand your end users' needs & give them an opportunity to try before they buy.
Lead Generation - This will be your primary source of generating new leads which can then be prequalified by sales reps who follow up with emails, phone calls, and requests for demos (either remote or face-to-face).
Product Website - Some examples include eCommerce, SaaS as well as content marketing websites where prospective buyers have many different ways in which they can learn more about your products (including contacting you for demos).
Lead Scoring - Some of the tools that can be used here include lead scoring and converting interested prospects into customers by pushing them through a sales pipeline.
Onboarding - The process by which you welcome newly acquired customers into your brand, turning them into loyal & profitable advocates for your company.
Enterprise sales as a model are advisable for every SaaS startup. If your company's focus includes selling to large businesses (defined as companies with at least 100 employees because large enterprises alone might mean 5000 or more employees) then becoming proficient at this sales of enterprise can make or break your business. The difference between success and failure could be the difference between having a profitable business or being beholden to investors.
Large deals win big bucks - Large deals ($1 million+) represent 22% of all deals but generate 76% of total revenue according to our friends over at PriceWaterhouseCoopers.
Fast sales cycle - Sales cycles in the enterprise world are much shorter, generally, 30-45 days from initial outreach to close. You can get revenue into your SaaS company that fast which allows for faster growth and a larger customer base to leverage future deals with. Enterprise customers also spend more money over time than consumers do.
Easier to scale - When your startup is ready to hire its first sales employee it is usually easier to hire a sales rep because of the aforementioned short sales cycle and higher average deal size. Recruiting a top-tier individual takes less time in the enterprise space as well because larger companies have a greater pool of candidates from which to choose due to their size and ability to offer competitive salaries.
Higher Lifetime Value - Enterprise customers are more likely to spend more money over time with your business because of the nature of their long-term contracts, multiple-year deals, and willingness to pay for more services as they grow. This means you can increase your ARPU (average revenue per user) over time once a customer signs on with your SaaS offering. You may need to build out some or all of these components yourself but it's easier than starting from scratch if you plan early enough.
Creating a sales division within your company sounds great in theory. But what is involved in doing so? And how can you ensure success?
Build a separate brand - Enterprise customers need to see the value in your business but might be concerned about making commitments if they are unfamiliar with your company. By creating a new brand just for these customers you immediately create a trust that they typically require from the companies they work with. This allows you to position your startup as an expert in its field and not just another little SaaS company with unreliable service and no track record.
Don't ignore the middle market - Yes, most of my experience has been within large enterprises but I have also closed deals in the midmarket space through strategic partnerships and it can be done without sacrificing your brand or credibility. I would suggest innovating on the go-to-market model to include account managers, professional services, and free trials for this sector in addition to enterprise-targeted marketing materials, sales training, and branding.
Prototype - Most large companies have multiple divisions that are interested in your product but they aren't all at one stage of buying. This means you'll need different levels of engagement with the same prospect so build a prototype that allows all parties involved in the decision process to interact with your solution early on even if you haven't gone into full discovery yet. Depending on how far along their company is in its journey toward digital transformation will determine where they are when making the purchase decision so having something light allows you to engage them earlier.
Partnership - I would argue that partnering with larger companies has become more important than ever before because of their desire to work with multiple vendors rather than just one. This means that the sales process is much longer and requires a lot more handholding, customization, and oversight. The analogy I like to use for this is playing in the big leagues vs. the minor leagues. If your startup wants to play in the majors then expect some growing pains but it's worth it!
Be prepared for failure - You may have heard about how most SaaS startups fail so being able to fail quickly is what allows you to learn from your experiences and try again until you get it right. That means account management, professional services, finance, and other internal teams need to be in alignment in order for you to remain in the game.
Don't fall into this sales division trap - The worst thing that can happen is when your startup falls into the pattern of doing things because they have always been done this way instead of questioning why you are following this particular go-to-market model. For example, many SaaS companies sell their software on a subscription basis because it has become the industry standard but you should consider whether or not this makes sense for your product or if it would be better to sell on a one-time basis upfront with periodic renewals. Or maybe offering free trials makes more sense than having paid tiers? There are no right answers here but it's worth considering.
Simplicity - Enterprise customers want simple solutions that are easy to purchase, implement and use so try to keep the pitch as straightforward as possible even though there might be a lot of bells and whistles available. The easier you can make this for your potential buyers the more likely they will engage with your product because they won't have to wait on you or anyone else to build out custom features.
Educate - You'll need content marketing assets at every stage of the buying process; from awareness, education, comparison charts/trends, case studies (both customer and partner), upsell materials (such as cross-sell & win back) among other things depending on what specific type of go-to-market sales model you adopt. This means you should continue to educate your customers no matter what stage of the sale they are in by offering white papers, eBooks, webinars, and other types of content that will help them make better business decisions.
Build an internal team - It's not cost-effective to outsource all of this to a third party so mobilize your staff into becoming thought leaders within your company or buy something off the shelf if it makes sense for your product. Don't forget to include engineers & designers who can be involved early on with prototypes which will allow other teams to get their input before making large financial commitments.
Enterprise selling is not consumer marketing - You may have seen companies using Facebook ads, sponsored posts on LinkedIn, Google AdWords, retargeting campaigns with companies like Criteo, etc. as a way to generate leads and it's typically done by those who don't understand the true value of enterprise selling. It's easy to be tempted by all of these shiny new objects because there are now tools that make them accessible for anyone but you should consider whether or not it makes sense for your product to follow this particular go-to-market sales model.
The right go-to-market sales model for your SaaS startup is to learn about enterprise sales. When launching a new business, especially one that offers leading technology products and/or services it's important to establish yourself not only as an innovative leader but also a profitable & sustainable business.
So which model is best suited for your business? While there may be some debate about this (depending on what industry you operate in) generally speaking I like to recommend either transactional or self-service sales models because they provide multiple benefits such as faster revenue growth & greater profit margins. They both work well regardless of whether you're selling B2C or B2B because it helps make the buying process easier for all parties involved.
