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Sales & Marketing
Bill Binch  |  August 3, 2022
Growing Up Enterprise Part 5: Sales and Customer Success

This is the fifth installment in our guide for tech companies thinking about moving up-market into the enterprise. In previous posts, we’ve covered how to make the decision to move into the enterprise; adapting your product to fit enterprises’ specific needs; shifting the roles of your marketing organization and sales development; and preparing your finance, HR and legal teams for your company’s new, enterprise push. In this installment, we’ll cover sales and its dynamic inter-relationship with customer success.

SALES

Recall at the beginning of this guide when I touched on hiring higher-paid, higher-skilled sellers? That’s one of the investments you’ll make when you initiate your enterprise move, and we’ll cover that in the talent section below.

But the real focus on enterprise sales is around methodology and value selling. Let’s start there.

Value Selling

Value selling, or “value engineering” as it’s often called, is a tough nut to crack. William “Skip” Miller wrote a book titled Selling Above and Below the Line that addresses the topic well. Most companies that start in the SMB market quickly sell product-focused tools designed to solve problems. You sell these to front-line users and first-level managers. But as you scale up (think $100K+ deals), you’ll need to go “above the line” and sell outcomes to VPs and C-level execs. Executives don’t buy tools; they buy business solutions with a business case behind them. Stated another way: To justify the purchase, the team buying the tool had to build a business case and ask for approval for the money.

This is the concept of value selling: being equipped to help your buyer create a business case that they use internally to justify your software price. These business cases tend to focus on a few classic themes: 1) how this software will increase revenues, 2) how it will reduce costs and/or 3) how it will reduce risk. This ROI work is all bundled up into a format that your buyer can use.

Think about it this way: No one knows the value your software can provide better than you! Quantifying this value is your role as a value seller.

Some companies even put their value calculators online (or a simple version of them), so a buyer can input the key variables and see a typical return they should expect. It’s a great buying signal if your buyers are filling this out, and your value selling person/team can follow up with a customized proposal.

While the above describes varsity-level value selling, the fact is value selling often starts inside your sales-engineering team. The role of a sales engineer (SE) is to take a technical product and link it to the business value it provides. As they sometimes generate your approach to value selling, the question becomes, just when do you formalize this as a role under the SE team, or carve it out as its own team? Value-selling experts are expensive, and a sales manager could be asked, why spend $200K on a value consultant instead of hiring another quota carrier? Be prepared to do your own value selling here! You’ll need to demonstrate why a non-quota carrier is going to drive more, higher-quality deals.

True enterprise-selling orgs invest in value selling, plain and simple. Consider what skills you have inside your SE team as the starting point, but stay aware that you’ll need dedicated, business-case creators is on your horizon.

Methodology

Next, you’ll want to invest in your sales methodology. Most young companies develop a pipeline/forecast methodology early in their lifecycles. This articulates how they advance pipeline stages, percentages and statuses through a deal cycle.

But a sales methodology is bigger than that. It’s a framework for how your sales team executes a sales cycle and takes your buyers through their journey. The sales methodology is how you think through targeting your customers, qualifying them, creating the value story, executing the actual demo/trial/POC portion and, finally, negotiating and closing the deal. Many methodologies expand past the close and also address the customer-servicing element too. The goal of a methodology is to help you drive consistency and ensure that sales cycles are executed similarly whether the AE is in Boston or San Francisco.

There are many available methodologies available on the market, and a simple search of “sales methodologies” will yield several training orgs. A very popular framework for SaaS software is the MEDDICC framework. MEDDICC was created by John McMahon at software company PTC back in the 90s, and one of the reasons for its popularity is its portability. Once an AE is trained on MEDDICC, she has a transferable skillset. The AE can move organizations and employ the same MEDDICC principles onto a new product/company/sale. MEDDICC-trained reps are highly sought after, and it’s common to see job descriptions seeking MEDDICC-trained AEs.

Jumping into a methodology can be as simple as reading a book, for example The Challenger Sale by Matthew Dixon and Brent Adamson, or it can get as involved as hiring an outside firm to align your messaging, selling cycle, metrics, value selling and pipeline process. The main takeaway: The more your business grows into the enterprise, the more critical a sales methodology becomes.

When should you invest in a methodology? This is a much-argued topic, as most sales leaders would say you need a methodology immediately. This is hard to argue against, but there are a few schools of thought. For your first six to eight reps, the reality is that the methodology will be whatever the sales leader has been trained on. So if the leader hasn’t been trained before, there really is no methodology. In this case, getting some formal training is valuable.

Sales leaders who have been trained are usually very hands-on. This means they are super-repping a lot of deals, so bringing in a formal methodology may not be necessary.

In my experience, it’s been beneficial to bring in professional sales-training orgs when a team reaches 50 people. To be clear, 50 people includes all SDRs, AEs, sales engineers (SEs), customer success managers (CSMs) and marketing pros. Anyone with customer-facing roles should be trained, and I found a lot of value when I achieved this level of scale.

Sales Training

Aside from your methodology, you need to consider your sales training for enterprise sellers. Don’t expect sales training to be one-size-fits-all. Enterprise has some different needs.

The company messaging and value props are likely to be universal, but your needs around demos, proofs of concept (POCs), services and pricing/value selling likely require some adjustment for the enterprise. Let’s quickly break these down.

Demos. Will your AEs perform enterprise demos, or will it be done by an SE? Most enterprise AEs get paired with an SE team on demos for a few reasons. The AE skillset is much more about managing the opportunity than the technology. Plus involving an SE in the sale automatically implies an enterprise-grade product. Lastly, a good team lets the AE align with the business players, while the SE can align with the technical players.

POCs/Trials. Another concept to consider is how you prove your technology. Will you offer trials (these tend to be lightweight technical evals of your product) or will you deliver POCs (which tend to be more exhaustive trials where you prove use cases)? Both of these models lengthen the sales cycle, so thinking through how you “box these up” is critical. Each model should aim for a specific outcome. Trials are great at proving technical features; POCs can deliver some tangible value. Be thoughtful here, though, because both of these models require resources to deliver.

Services. Most enterprise products are sold in conjunction with some kind of professional service (implementation and on-boarding, technical support and education are common). If you price your services inside your product fees, i.e. onboarding is included free, it can make your offering look small or not applicable to the enterprise. This means you need to think about the handoff from sales to customer success and about rightsizing your services to the enterprise customer.

Sales Engineering (Solution Engineering, Solution Consultants)

Most enterprise SaaS products are complex enough that SEs play a key role in shaping the sales cycle. SEs are the ninjas of the enterprise-selling space, so a couple of quick, confirmatory comments here.

The SE role tends to focus on two key areas: 1) building the linkage between your technical product and the buyer’s business needs and 2) quantifying the value of this linkage. We discussed the value-selling concept a few pages back. As mentioned in that section, this usually originates within your SE org. Think about looking for a value-selling orientation in your SE profile—former SEs who have worked in orgs with a value component to their sale.

Building the linkage can take many shapes. Performing RFP work, qualifying the customer, demos/trials/proofs-of-concept and helping design how your product rollout will happen across an org—these are all common tasks of the SE.

As you move more deeply into the enterprise, focus on what the role of the SEs will be at your org. Ask yourself:

  • Is this a technical role (demos and RFPs)?
  • Is this a business role (business cases, mapping the rollout of the product across orgs)?
  • Is this a supporting role (running the trial experience)?

This framework may help how you think about structuring and designing comp for your SE organization.

Segmentation

A big sales topic for moving to the enterprise is segmentation and determining who will be considered an enterprise customer.

There is no fixed definition for an enterprise company. Earlier-stage companies tend to use employee count to determine this and to create tiers and classes of customers. This makes sense, as employee counts tend to be easier to obtain than revenue or budgets. You can use LinkedIn as an easy place to start; data-information providers like Zoominfo or Seamless.ai can provide even better quality. The other most-common metric, employed by more mature companies, is focusing on the revenue of the buyer.

Determining your enterprise tier can be challenging. Start this process by reverse-analyzing your deals. Look at the velocity—the length of the sales cycles necessary to close them. As previously noted, many enterprise companies have legal, infosec and procurement teams and phases, which extend sales cycles. After analyzing your sales cycles, you may find patterns. For instance, in companies with more than 1000 employees, the sales cycles all took 30% longer than average. These could be your first cut of an enterprise tier.

You can also look at your deals each year in a scatter-plot diagram. For example, if your small-business segment is defined as 0-100 employees, mid-market as 101-1000 employees, and enterprise as 1000+, look at the deals at customers with 75-125 employees. Then examine the deals involving customers with between 800-1200 employees. I’d look for their annual contract value (ACV) and average sales cycle. If you start to see that your deals at 1100 employees look a lot more like mid-market deals, you can adjust your definitions accordingly. And you always want to be moving up—this is adding efficiency to your business. If you can have a less costly AE selling the same deal that a more costly AE did the year prior, then you’re being more efficient.

Regardless of stage, I’ve found segmenting based on employee count is usually the best option for determining who’s an enterprise customer. It’s the most readily available metric and easy to determine.

Sales Org Structure

There is no single roadmap on how to build your enterprise sales org, but it’s likely this will change as you pivot to the enterprise. Examine your ratios of supporting staff to the enterprise crew for the biggest impact.

After you’ve fine-tuned your segmentation, it’s likely you’ll plan tighter ratios of enterprise AEs to SDRs, SEs, sales managers, value sellers, sales operations, sales training and, of course, marketing and post-sales teams. If there is one area to emphasize, it’s this: Invest in the sales-management function early. Young companies often get this part wrong by either 1) tasking a single sales manager with both transactional and enterprise deals, or 2) failing to build a ratio of managers to AEs that’s low enough. In the first case, it’s really, really hard for that sales manager to shift context from deals on a weekly or monthly cycle to thinking about a longer, multi-month cycle. Inevitably, the sales manager starts applying closing pressure to the enterprise cycles before they’re done evaluating, thereby reducing the actualized value of what should be a bigger sale. As for the second mistake, most companies don’t plan for low-enough, manager/AE ratios. Finance plays a hand in this, looking for greater efficiency—but too often this is a short-sighted approach.

Make no bones about it: Going full-enterprise is expensive. Sure, this approach clearly drives bigger deals and is normally your highest-performing, net revenue-retention (NRR) segment. But it also requires commitment to feel out the business, which ultimately drives up costs.

But my advice is that when you commit to growing up enterprise, commit all the way. A venture capitalist on my board, who’s seen many companies execute this playbook, once told me: “The enterprise business is choppy up until the company hits $100M in annual recurring revenue (ARR). It’s lumpy with limited predictability, because the motion is so new and the whole org needs to re-orient itself around it.” That’s a solid observation and I agree—it’s hard to build a consistent business early, because when you start, you won’t have ideal ratios. You’ll be learning what your specific business needs are and what works and fits inside your org on ratios.

Use that evolving guidance to help you fine-tune your formula. It’s okay to learn along the way.

CUSTOMER SERVICE

CS is a widely defined organization. It can include your customer-success reps who manage the customer health and focus on retention. It can encompass renewals reps. It can include account managers. It often includes implementation and professional services. Education, which is different than services, often falls under CS. And technical support is frequently in there, too.

We mentioned this a few pages back but it’s worth reiterating: You need to think about segmenting your CS teams to align with your marketing and sales teams.

In the early days of your company, it doesn’t matter if a customer spends five dollars or five million dollars—you treat them all the same. You should be entirely focused on helping all customers become wildly successful and turning them into vocal advocates.

As your org matures, this approach needs to evolve. A customer spending $15K just can’t get the same level of customer service that your $250,000/year customer is receiving. Time to think about how you design your CS org.

Most CS orgs eventually split so that one team focuses on enterprise accounts—and then the rest of the org focuses on everything else. Or, you can get more sophisticated and align CS exactly how your sales team is structured. The point is the entitlements for an enterprise customer are higher, the mode of touch is more personalized, and the frequency of contact is higher. Enterprise is where you drive your best NRR, so concepts like quarterly business reviews (QBRs), onsite or on Zoom, are common. You’ll be expected to deliver scorecards or usage reports frequently. You’ll assign small ratios of CSMs to accounts in this enterprise tier. You’ll also offer this customer special events.

Contrast these buyers to your lower-dollar, higher-velocity customers. You need to build a model with these customers through which they can self-service. And the ideal team for this tier tends to be very process-oriented and systematized. This is where an LMS (learning management system) is helpful and where tools like chat and email come increasingly into play. Instead of dedicated or named CSMs, you are likely to have groups of CS reps handle the large group of small customers. The one-to-many approach makes more sense here.

Most SMB companies have their CS groups loosely divided into implementers, customer-health reps and renewal reps. This split is perfectly fine. But as you grow, so should your role definitions. For most enterprise-software companies, the role of implementing is a job in itself. Using an American baseball analogy, having one person handling on-boarding, health and renewals is equivalent to a single player covering left, center and right fields. As your org grows in sophistication, each of these roles starts to become more defined. And that means each becomes its own, full-featured role.

Lastly, there’s debate on whether to build CS teams around the number of accounts or the dollars under management. I’ve seen both models work and make sense, so in planning your ratios, do some research and devise the path best for you.

Implementation/on-boarding/professional services

First things first: Most enterprise-software products don’t “include” the on-boarding or implementation in the cost of the software. Why? Because it often makes your product and company look small and distinctly not enterprise-ready. There’s a reason these sales cycles take six-plus months to get closed: Part of that time is spent ensuring your buyer will be successful in rolling out your software. Implementation, by definition, will not be cookie-cutter.

This means you need to think about how your org grows to develop an enterprise focus.

Tech Support

The great thing about tech support as you grow up enterprise is that your profile really doesn’t evolve much, but the function expands. Start by thinking about the location of tech-support personnel so you can expand your hourly coverage. Most tech-support teams start with providing service between 9-5pm in the HQ location. Eventually they expand to 12-hour coverage five days a week. As you move more and more into the enterprise, you’ll need to think about around-the-clock coverage (as noted above, enterprise loosely equals global coverage too). So start thinking about how you’ll reach 18-hour, and ultimately 24-hour coverage. Following time zones, you’ll want to plan how you handle weekend coverage and especially priority-one tickets initiated during off-hours. Part of this learning cycle is creating processes that are durable.

As you sell more to enterprises, the more tech support they’ll need. Many companies start selling semi-dedicated tech support reps, called Technical Account Managers. A TAM’s services normally get sold so the buyer has a single contact inside their account, which helps maintain continuity and awareness of the rollout.

Education

There is a difference between implementing and educating. Implementing is doingthe vendor comes in and turns the dials for the customer. Education is teaching the buyer how to do it themselves. This comes later in the enterprise evolution: You first start with building your implementation team. As buyer demand catches up, customers usually start asking for education as well.

When you first roll out your product, you’re delivering but also training. But as you expand, think about the idea of classrooms full of customer-users. This education piece tends to get built into your enterprise motion later—but it’s worth keeping on the radar early.

We’ve officially completed the functional sections of this guide! The last and final post in this series will address the timing of launching an enterprise business and key takeaways from the previous sections.

Battery Ventures provides investment advisory services solely to privately offered funds. Battery Ventures neither solicits nor makes its services available to the public or other advisory clients. For more information about Battery Ventures’ potential financing capabilities for prospective portfolio companies, please refer to our website.

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Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.

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