“Some times ya gotta go left to go right” – Doc Hudson to Lightning McQueen in the movie Cars
This is the sixth 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; preparing your finance, HR and legal teams for your company’s new, enterprise push; and, most recently, sales and its dynamic inter-relationship with customer success.
This post summarizes the most important points from the last five sections of the guide and offers some final words of wisdom.
Now, we’ve reached the counter-intuitive part of this guide. Like the paradoxical quote from the movie Cars, where Doc teaches Lightning that once you turn into the corner, you need to turn the opposite way to get out of the corner, I’ll make a big, bold statement: To grow up enterprise successfully, you need to perfect your down-market motion. Therein lies the paradox.
Timing & the Trigger
A common question I hear from early-stage software companies is, “When do I go to the enterprise?” There is no 100% right answer, but there is an answer that’s mostly right: when you’ve achieved predictability in your velocity motion.
For any company that started life selling to small- and mid-market accounts, mastering the high-velocity motion gives you headspace to attack the enterprise. It’s extremely difficult to invest in both the velocity model AND your enterprise model at the same time, so consider this my endorsement for getting the velocity business on auto-pilot.
And this applies to product, marketing and CS as much as it does to sales.
Growing up enterprise is a shift in your priorities. No one works from 8am to noon on SMB plans and then pivots to enterprise in the afternoon. Moving to the enterprise takes 100% of the time of a 100% staffed team (thoughts of Ron Burgundy are jumping to mind here J). Don’t confuse moving to the enterprise with opportunistically closing some enterprise accounts. Going enterprise is an intentional and deliberate move. If you have your SMB team (marketing, sales, CS) 100% focused on selling to SMBs and you ask that team to go to the enterprise, they won’t magically have 200% time just because you asked them for it.
If SMB sales are your bread and butter, you don’t want to disrupt that pattern. You want to perfect it and make it predictable.
Here are some tactical points to consider:
The trigger. Can you enter the first couple of days of a new month and predict accurately what revenue you’ll close that month based on your pipeline and traditional conversion rates? If you can, you have the green light to move ahead. This is a good trigger to gauge your readiness to go enterprise. If you’re still relying on a wing and a prayer to get the month closed, then consider pausing your move to enterprise.
Over-rotating. Some companies over-invest into their velocity motion before moving to the enterprise. (Notice I didn’t say “invest in the SMB motion” but instead “velocity”. It’s because the velocity motion is sometimes the first stage of landing a big customer.) Many companies are adding new ways for their customers to engage with them, like product tours and product-led growth (PLG) or self-service motions. If your company was created as a classic sales-led motion, tune into some of the plays that PLG-first companies are deploying. Not every tactic will apply to you but there may be some learnings to take away. This post summarizes some good ideas.
TEN KEY TAKEAWAYS
- Going enterprise is a team sport. (Read: The whole company goes enterprise, or nobody can).
- Innovation is the key to unlocking value in the enterprise. Security features are not innovations; they’re a requirement.
- Your roadmap should tell a story, and that story should demonstrate intentional focus on enterprise needs.
- Marketing will shift from an acquisition-marketing focus to a focus on acquisition + developing cross-marketing chops.
- Value selling and a rigorous sales methodology are critical to selling “above the line”.
- Aligning the marketing and customer-success org segments to sales creates symmetry and positive sharing.
- If your CS team can become more efficient with your transactional customers, it creates headspace to apply to your enterprise ones.
- Data-quality and system problems can become issues if your finance and sales ops/systems teams don’t visualize the future and translate them into metrics.
- Are there product-led processes you can steal and apply to your sales-led process? If you can, you’re putting your transactional business on rails which creates runway for your enterprise teams.
- Growing up enterprise has real associated costs. Expensive people in new roles, lower ratios and other investments will temporarily create havoc with your CAC (customer acquisition cost) and LTV (long-term value) metrics. Enterprise customers tend to improve LTV, as they drive better NRR, but the initial enhanced-cost structure will submarine your CAC metrics.
IN CONCLUSION…THE GUIDE TO ENTERPRISE
I started writing this piece and initially called it “the definitive guide to going enterprise.” It quickly became apparent that no such definitiveness exists. When something is truly definitive, you write a lot of statements preceded with “always” and “never”. I didn’t find myself doing that in this guide.
To gain perspectives, I spoke with many sales leaders, marketing managers and CEOs who had been through this evolution. All shared ideas, scars and thoughts, many of which found their way into this piece. But no one person already had the one-size-fits-all playbook on this topic, so I decided to call this Growing Up Enterprise, a collection of ideas and experiences synthesizing major themes of this progression.
That’s the juice I live for—trying to learn from my history but also adapt to new ideas. As I stated at the beginning, this guide is lengthy, but it focuses on only the most relevant portions of the enterprise-selling journey. My goal is to provoke discussion with this guide, and no matter where you are on the enterprise journey, share some ideas. I hope we’ve achieved that and have helped you think about, and improve, your own company’s path to the enterprise.
The information contained herein is based solely on the opinions of Bill Binch and nothing should be construed as investment advice. This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity.
This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and is for educational purposes. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build their businesses and not recommendations or endorsements of any particular business.