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Thinking about adding enterprise sales as a new motion?
Everyone wants that too, but there are some pitfalls - thankfully we discuss them in this episode.
We cover when it makes sense, what you'll need in place and what will change (RFPs ring a bell?)
Creators and Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Raul Porojan, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:41] Mikkel: Now we're gonna talk about something way more. Cool. Actually it's um, adding a new motion. We've written on LinkedIn or not. I shouldn't say we you've written a bit on LinkedIn about all these motions, PLG, going down market, going up market there's there's so many things you can do today.
[00:01:03] We want to talk a bit about moving upmarket. Mm-hmm specifically, how do you go about enterprise sales? Yep. In a B2B SAS, first off everyone dreams of moving up market mm-hmm it's more revenue. And it's just on one customer. Why should a company or BB SAS go upmarket?
[00:01:25] Toni: Yeah, I think before we go into that shortly, so motion, what does motion mean?
[00:01:32] This is just, you know, a process or revenue stream or , all, all kinds of different, ways to define it. Usually it's connected to a segment. So you say it's the mid-market motion or it's PLG is the motions of product that growth or on that case enterprise. Yeah. And, why, why is everyone trying to go upmarket?
[00:01:57] The reason is as you scale , you wanna continue maintaining that scale and that means you need to keep adding more customers, which is difficult as it is. the, the other way to on top of that, then keep, growing is by basically increasing your average contract value, uh, year over year, over year.
[00:02:22] And you wanna do that both with your existing customers, uh, upsell retention, uh, net dollar retention and so forth. And you wanna do that also with, you know, new customers coming throughout the pipeline. And the cool thing about enterprise is. You have bigger ticket sizes. Great. the other thing is they tend to churn less.
[00:02:48] They don't leave you, right? So if you are a, B2B size and maybe you're struggling with either churn or a dollar retention or a net net revenue retention. Then the desire to go up market might even come from, from that angle as well. Right. Better, better retention. and really taking those two things in combination , in an Excel spreadsheet usually is a great idea.
[00:03:12] And then you add. CEO ambition or sales leader, ambition that really wanna go for, you know, the, the elephants, the whales, and the big logos and the fortune. And, you know, the, the first six digit deal, the first seven digit deal and so forth, right. You're kind of, you add those things to it. And suddenly everyone wants to go up market, which, which they're doing.
[00:03:36] And by the way, not in all cases, is that a good. Yeah. So really being thoughtful about that is, is also pretty key.
[00:03:44] Mikkel: So let's say you, you as a business really want to go up market, then is that. Something any business can do mm-hmm , because there's, there's gonna be so many differences. Some are gonna have one P some are gonna have another type of product.
[00:04:01] Are there some criteria before even having that conversation, you need to kind of look out for mm-hmm before deciding, okay. We're gonna go up market. Yes.
[00:04:11] Toni: I think it's very comparable to something like product market fit. That's really what this is about. You might have reached product market fit in a different segment, throughout a different channel for a different sales price and so forth.
[00:04:32] Again, there's like a framework, you know, rounded Brian I think kind of it's. I dunno, it's not, it's not his five, four forces. It's something else. But, uh, he's been talking about that a little bit, but there there's kind of, you know, all of these things need to fit. Yeah. Right. and finding that fit pretty difficult product market, you know, it's called product market fit.
[00:04:51] And if you wanna start selling to a different segment, that framework that we, that you used and that made you successful, uh, you can pretty much throw this out the window in many cases. So why is that? Number one, your enterprise buyers will wanna have a different product. And you know, maybe the problem that they're solving it works for SMB.
[00:05:16] It works for mid-market. It works for enterprise. But suddenly now you have, probably lots more users maybe. Yeah. Suddenly you have then requirements to manage, uh, those users and the governance. On top of that, suddenly you will have much more reporting requests and how that works. You will have more, uh, audit trail requests.
[00:05:34] You will have more information, security requests. You will have all kinds of stuff that, you know, piles on top where an enterprise simply is like, Hey, you know, this is. , you know, we can't live without that. I'm sorry. You know, you need to build all of these things. Otherwise I can't use it. And before you try and sell to enterprises, you should, you should try and figure out, you know, what those things are and where they are in your product roadmap.
[00:05:57] , just, just building a commercial function that is trying to push something. That's not a fit product market fit, for that segment that will usually end up being pretty, pretty expensive, actually. And then the other thing is. The the way the buying process works for an enterprise might be fundamentally different from how it worked for your Midmark or SMB company.
[00:06:19] And you need to figure out how you, how you're gonna, you know, deal with that. , sure. There might even be other competitors sitting there suddenly, suddenly the way you still need to be completely different. And, and maybe there's just no, no opening, right? You need to kind of figure out, you know, what is our way.
[00:06:35] Besides just ambition. Mm. I think that's, that's pretty, that's pretty important to keep in mind. Right. So really, uh, both does my product fit, but also does the way I try and, you know, sell and deliver my product. Does that actually fit? Yeah. Uh, , for that segment.
[00:06:50] Mikkel: Yeah, totally. I mean, so from, from the marketing perspective, I can say there's, there's even a difference to a degree there because you do need to convey.
[00:07:00] the solution mm-hmm right. And it's a different solution for that segment. If you're moving up market compared to midmarket, it's not that you need to change how you communicate, because at the end of the day in an enterprise, it's human beings, mm-hmm right. So you don't need to change the language or the word wording or the design, but there are other elements you need to start highlighting for that
[00:07:20] Toni: audience.
[00:07:20] Yes. A hundred percent. So kind of moving into almost the how, right? How do you, let's just say you. You know, you had a couple of interviews with potential enterprise buyers. Yeah. and interviews here, it's really not sales conversations, but almost like product manager interviews and trying to figure out what they need, what they don't need and so forth.
[00:07:40] Maybe you feel well equipped. Maybe staff is already happening in your roadmap. Uh, maybe you have that ISO certificate already. Kind of all of, all of these things, maybe you'll, you know, check, check, check, check, check. Uh, so how then. You go about selling to these bigger guys, you know, what, what do you need to change?
[00:07:58] What do you need to change in your go to market? and number one really important piece here. Don't change the stuff that's already working for the SMB in the midmarket. Uh, you know, you, you need to think about it in a way where you almost create a other team in your, in your go to market motion, which will be, which will be difficult.
[00:08:20] I think it will be challeng. and, um, you know, thinking throughout the full funnel, on the marketing side, number one, some of your messaging probably might need to be tweaked or change. That is difficult. So how do you, how do you keep it important and relevant also for the SMBs midmarket? How do you not alienate these other guys?
[00:08:38] Difficult question? Uh, a little bit more easier potentially is, You know, you probably want to talk to some of those, analysts, Gartner, Forester, you know, what have you to get into their wave and quadrant and, and, and whatever they have. Us, early stage folks. We make a lot of fun of, of analyst relations, but it's a thing.
[00:09:00] Yeah, it totally is still a thing. , especially in those enterprises, people buy those reports, read them and really the way they're reading this is, you know, if it, if it goes wrong, I can't get fired for this. because if, if Forster said these guys are in the top three, then you know, they must be reliable.
[00:09:19] Right. So that, that's a thing that you, as a marketing, uh, department probably need to think about mm-hmm , it's not just G2 and, you know, you know, gets 'em over Cabera you know, it's no, no, no. It's, it's, it's a different game. Right. And. and by the way, if you have gone through one of those, analyst kind of review sessions, it's, very different.
[00:09:37] You probably wanna have a consultant hire just, just to kind of help you through that next step is okay. Cool. Uh, some of that is maybe, you know, and maybe you want to add all of that stuff of going to conferences and so forth and yada, yada, but let's just say you kind of add the point now where you are on the map for enterprise customers.
[00:09:56] What's gonna happen next is, they're not just gonna inbound and, and jump on a demo. It, it totally might happen, but really in reality, what's probably gonna happen is they're gonna send you a, a request for proposal, an RF, RFP. There's a few of those request for quote, RFQ request for information RFI.
[00:10:17] I don't have a clue how they differentiate by the way. There's someone that. Probably explain what the difference is, but at the end of the day, it's usually a really long, uh, Excel spreadsheet with questions and long story short, you're not allowed to say no, you know, long story short, that's really what it is.
[00:10:35] , and obviously, you know, sometimes you probably will need to say no, and then you need to kind of just figure out how you kind of go about it. And I think the key insight here is if, and this is true for many, surprisingly many, many enterprise. If you weren't part of formulating that RFP with that enterprise, you're probably not gonna get chosen.
[00:10:58] Usually they built this together with, you know, the chosen part already then, corporate rules. Yeah. You know, make them do this RFP and you know, then they end up doing this RFP. And then, you know, when they end up the scores, like see there, this one vendor that, you know, help them to create it comes out on top.
[00:11:16] , So let's just say you get post , the, uh, RFP, process and you get actually invited, you know, show Corona changed a bunch of things, but they do expect you to show up. Yeah. , they do expect you to show up, and they do expect you to have a deck with their logo on it. , and , it needs to be tailored and so forth.
[00:11:33] And, um, you know, that will require you to jump on jet. Which is , probably lesser. So the issue, but it also requires the sales reps to, be just a bit more mature, honestly. Right. Kind of sending a, 20 something to, IBM or axon or, you know, what, what have you, it just, it just probably will not fully work out for you in your favor.
[00:11:57] But it also means that suddenly the, uh, the sales organization needs a completely different set of. Support happening around them, creating those decks, getting, getting to their place and so forth. It suddenly is a completely different engine and machine you're building there. And then, you know, going, going throughout the next step, you're kind of just because I mentioned engine thinking not only about the inbound route, but also about the outbound route.
[00:12:23] Let's just say you have an enterprise SDR and it should be an enterprise SDR really thinking about it here now. In the midmarket and maybe it work great for you. It's 10, 12 opportunities a month and you know, a massive book of business and, calling a bunch of people that, that strategy won't work for enterprise.
[00:12:44] , So reason, number one, your book of business, just isn't infinite. It's fairly finite. Yeah. If you're talking to, you know, plus 5k plus 10 K , companies, the next thing is most of those massive organizations they're, not just in one location, they're probably, I'm not sure if they're global, but they're definitely international, which then also means you probably have multiple points of entry.
[00:13:07] , which means. You call someone up in Germany and they say, no, it doesn't mean that you throw away the account. It means you call up Austria or you call up the us or the UK and so forth. And then the next step, you know, once it's working out with your sales rep, you as an SDR, shouldn't actually even stop working that account.
[00:13:25] You should, you know, it's usually one entry point will not have enough momentum in the organization to. To, push a whole deal through, you know, usually those folks wanna make sure again that they, that they can trust you, but also that they don't get fired. So they don't wanna be the only one in the end, saying that you are great.
[00:13:45] Um, but they also maybe don't even know how to sell this internally. So if, if you help them and add more champions to the table throughout different offices and locations, and all of them are suddenly building the case for you, you're gonna make it much, much easier, right? Yeah.
[00:14:01] Mikkel: so I think we've, we've had two steps so far, right?
[00:14:05] It's it's really a different team. Mm-hmm taking care of this, uh, this motion, right. Moving up market. And then it's not just gonna be inbound as the second. Right. Mm-hmm and you said something really interesting, which is if you're receiving the RFP, you're probably not gonna win it. Mm-hmm you need to be part of creating it.
[00:14:23] Yeah. Right. How do you get chosen? Like, let let's maybe talk about that for a second. You know, it's gonna dictate all the steps to follow. If you can't nail that part, then you know, how do you see that? See that? How do we ensure that if, if we wanna move up market that, you know, we are being asked, Hey, should, should we do an RFP mm-hmm right.
[00:14:41] Um,
[00:14:42] Toni: I think you need to be seen as, the trusted party. , and you need to get in contact with that person. That's gonna end up writing this RFP, you know, over time. And sometimes they have a. Vendor already. And then that's a change process and you need to know who is gonna end up making that decision, which then will also help you to figure out who's gonna end up writing that RFP.
[00:15:06] , or if you're like, you know, if you're basically creating software that is new as a category, You will still need to figure out and, and some people call it who's the CEO of that problem. Yeah. And you will need to find that person and you will need to build a relationship with that person. And that person needs to get to the point of like, actually we need this now.
[00:15:25] And then they go internally and okay, how do we buy software for this? And I say, ah, we need to write this RFP. And they come back to you and are like, Hey, you know, I need to do all of those 20 steps here. It's pretty painful. , and one of them is an RFP. Can you help me with that? Mm, right. That is, that is kind of usually the process.
[00:15:42] And, and probably now that I say it, you know, officially on tap, there's probably some bribery, something kind of, you know, you shouldn't be, you should totally not be doing this by the way. But reality is a lot of. People that just simply wanna buy a piece of software in those big corporate organizations.
[00:15:58] They see it almost as a chore. And then they kind of need to go through this process and if they can get help from you. Great. Yeah.
[00:16:05] Mikkel: It makes that job a whole lot
[00:16:06] Toni: easier. Right. Yeah. And, and part of that process, by the way, and this is where you get caught. If you're not, if you're not helping out.
[00:16:13] Yeah. Uh, it says, Hey, you need to receive offers from at least three, competitive vendors. Yeah. Um, and usually. You know, if you're not talking to them, you are, you're just one of the other two. Yeah. That's, you know, spitting in. , but it's not really being part of the, of the consideration. Yeah.
[00:16:30] Yeah.
[00:16:31] Mikkel: And I mean, the, the whole being a trusted party in itself is a huge topic. We're not gonna be able to dive. Yeah. Dive deep into that one. Right. I think you, you dropped some of the nuggets already around Hayes analyst relations is actually meeting in person. Right. Mm-hmm um, okay. So let's say you're at the point where then you get chosen, uh, right.
[00:16:49] And get a, get a, you. Get to be in part of that process. What, what is the next step from, from there?
[00:16:56] Toni: I mean, I'm, I'm, you know, I'm not sure if I can kind of talk deeply about the sales process and stuff. No, but, but generally speaking, and this is also, you know, one of the watch outs here, this process of selling to an enterprise will probably take 9, 12, 15 months.
[00:17:13] Yeah. Something like that. Yeah, you need to be aware of that. That needs to be part of the Excel spreadsheet that, uh, sure. You do the analyst report and then you have, inbounds tomorrow, maybe. Yes. But those still won't close the day after. It will take a pretty long time and, and, um, it will be much, much longer than whatever you're doing in the midmarket and S like for sure.
[00:17:33] Right. But I think then the other pieces, you know, Hey, you signed someone high five, number one. Those, those signatures usually come pretty costly because, um, they will probably squeeze in some kind of a product request in there. Mm. And because it's a nice logo and because there's a lot of money, completely irrational, obviously I've been there myself and I still said yes.
[00:17:56] , they will ask for some additional pieces of product to be built and use an organization. Just need to figure out if you want to do that. If you come out of the SMB and midmarket, You probably, uh, haven't dealt with something like that before. Mm. So that, that will be hurtful and probably your product.
[00:18:13] Organization's gonna be all upset and everything. , so I think this is, this is kind of a definite watch out. , and, and usually in a customer life cycle, having that expectation going in. , is usually also a really great way to start the relationship of really, really shitty. Mm. Uh, because obviously product is not gonna deliver on time.
[00:18:32] Obviously the custom will change his or her mind five times in between. Yeah. , and you know, will one have something very different from what was kind of written down and in the end, that basically means, you know, basically you're behind in the expectation management at that point. Yeah. Right.
[00:18:46] And while the. Uh, marketing organization need to be different. The outbound organization need to be different. The sales organization need to be different. Also the customer success organization needs to be different. Yeah. Um, You know, you're not dealing with, you know, one decision maker and five users anymore.
[00:19:02] Suddenly you're basically dealing with a decision maker that has nothing to do with your product whatsoever. , and you basically are, uh, needing to roll out to hundreds of different peoples in different time zones in different countries. And really you as a customer success organization need to, you know, level level match on, on the titles and so forth.
[00:19:21] But also you almost need the CS person, you know, running the deal. Basically ends up becoming a project manager. Yeah. More than a, individual contributor, uh, in that sense, because it's really, you need to activate, all the different people that need to be part of that process and need to, orchestrated and need to kind of check in, uh, with, with the other side and make sure all of this is working out.
[00:19:44] And that is simply a completely different skill set from the, you know, in many cases yeah. Point and click onboarding. And Hey, how do you feel about. Approach of, of CS organizations in the SMB and midmarket and, um, So, I mean, that is, you know, now we're at the end of that commercial story here, but, you know, just, just saying out loud, it's, it's a lot of different things that yeah.
[00:20:06] That need to be different for you to be successful in that, in that, uh, segment.
[00:20:10] Mikkel: Yeah. I think this is, this is one of those where it's not just. A sales thing that they do for themselves. It's a strategic decision. Mm-hmm on a company level that impacts the entire org. You can't just fit them in, you know, you can't fit an enterprise business into the business process you have today.
[00:20:25] Yes. It's not gonna work out. And in the same turn, you're gonna have departments such as product and marketing. That has a really big stake in actually making it succeed because they need to be able to dedicate resources, to build account based marketing, to service, with pitches, to help with RFPs, to build out additional features for, you know, whether security or audit trails or specific requests they have.
[00:20:48] Toni: Right. And how do you do that without cannibalizing the stuff that's going well on your business. Right, exactly. Right. And again,. It's um, You can, you know, behind closed doors, you can say like, well, those are just some, some resources that now they're doing something different. And, and I think that's true to a certain degree.
[00:21:06] Uh, you can just build another part of the organization that is now enterprise sales or enterprise marketing or whatever, where, where I think is extremely challenging. Those on the, you know, just say on the. You know, how do you on the website, uh, use messaging that really, really works for you. , but it's, inclusive for all the different segments and, you know, do you want to have pricing on the website or do you, do you not, do you have a free trial?
[00:21:35] Do you not? Yeah. I'm retrial. Yeah. Do you not? Yep. I mean, all of these, all of these things, you know, you can maybe figure out your way around, on, on the inside of the business. And even there it's really difficult by the way, but figuring this out on the outside of the business, uh, meaning kind of the website and everything, that's, you know, prospect facing.
[00:21:52] Yeah. Really difficult. Really difficult.
[00:21:55] Mikkel: Yeah. And that's, we've talked about it, internally message market fit. Right. And that's gonna change when you add a different segment. Doesn't actually matter whether it's enterprise, you could go for agencies or E even a different market, like a country. Right.
[00:22:08] Mm-hmm the, the thing. Fundamentally, there might be the same issue they're dealing with, but it's gonna be at a different scale. Mm-hmm when we're talking enterprise or maybe an issue SMBs have is just not prevailing in an enterprise environment because they have more resources. So maybe there's people taking care of whatever issue it is.
[00:22:27] ? Yeah. And, and, and that's where, actually spending time getting to understand that segment. , and then conducting proper message. Testing is key. This is not just an exercise of doing, oh, now we have another industry page on our website and then problem solved. That's not actually gonna cut it,
[00:22:44] Toni: no one, how other people are doing it.
[00:22:46] And then, you know, usually the big names are being mentioned, like, Salesforce, uh, slack, you know, JIRA all of these guys, and really what they are doing is. if you consider Salesforce for example, which is usually the worst, example to pick in all cases, but let's just say Salesforce for a second.
[00:23:08] They started out in the SMB, they went SMB vendor. Yeah. Starting out, uh, very classic thing in the CRM market, by the way, it's all the new entrants come in the SMB and then they grow up and, and try and kick out Oracle and SAP and so forth. , and really Salesforce. Again, started as SMB and then grew up to midmarket and now enterprise, right?
[00:23:28] What happened? They basically, you know, stopped having all three motions, if you will, or all three segments, they're really only enterprise. And that probably has to do with, sure. You know, the unit economics may maybe better answer forth, but maybe that messaging, that, that worked in the early days for the different segments, maybe that.
[00:23:49] it doesn't work out anymore. So they even had even a sales force probably had to choose what are we gonna gun for here? Yeah. And they decided to go for, I would say, highly sophisticated and or enterprise use cases primarily. And they're leaving the whole flank, you know, happily, so open to HubSpot that is grown up now by the way, and is a real contender to Salesforce, pipe drive and, and all the other 20,000 other C.
[00:24:17] , but they basically decided to go up market, which again is the right thing. But while doing it, stopped going after the other ones. Mm. And I believe it's probably because of, the difficulty to align that messaging upwards. Yeah.
[00:24:31] Mikkel: Yeah. It's a, a classic thing, right. You can't be a solution for everyone.
[00:24:36] You have, you kind of have to choose. And just from, from, I think even from a sales perspective, that's gonna be hard, right. If you. One moment dealing with customer X in this segment and another, and, and there's just such wild differences, which is why it makes sense to obviously have a different team.
[00:24:52] Yeah. And it's gonna be the same in marketing it models down your messaging and what you're trying to say and how you're selling it. Mm-hmm the other thing you kind of talked about is, uh, probably the last thing is expectation of, of time, right? You said, yeah, this is gonna take a bit of time.
[00:25:07] , and, and it is a strategic thing. Mm-hmm, uh, that the whole company need to be on board with. How do you go about this as a business? There's a, a, a CEO needs to drive it forward, or what is where, who puts like a stick in the ground here? Yeah.
[00:25:24] Toni: I think it's, um, I'm not sure if it's a CEO thing, but it's definitely a top management thing.
[00:25:31] And , a couple of people will come up with that. So that idea is not a oh wow. Great idea. It's not, this is like a lot of, a lot of people will come up with that idea. , I think, you know, if anything, what I've seen is that. great idea. And then let's execute. And then all of that other stuff fails because of, you know, some of the things I just mentioned, and by the way, some of that, I lived through myself, right?
[00:25:53] So this is, this is not only, uh, you know, talking to rev op and so forth. No, no, no. This is, you know, I've, I've, I've screwed this up myself pretty nicely. , and the, um, the, the other thing here is, having at least a bit of an understanding of how long this thing is gonna take. Yeah. folks from winning by the design, kind of the, the, the Jacko guy, they they're, they're talking about any, any new motion that you want to implement.
[00:26:22] Any of them, PLG, SMB, midmarket, whatever, expect nine to 12 months until this is working properly. Mm. and in terms of enterprise, that's probably on the low end. Yeah. You, it's probably gonna take you 12 to 18 months to really kind of get this going. Why does it take so long? Well, couple of pieces and product to be billed.
[00:26:45] Those usually take some time. Yeah. Some of those certificates we talked about, they take some time hiring those sales reps and then their ramp up. So an enterprise ramp up is kind of an annual it's a year thing. Right. , and then lastly, you know, even if everything is going, even if you have a nice inbound flow of those, uh, of those large enterprise tiers, and let's just say from day one, you figured out how to sell to them and, you know, multi-threading and all of, you know, ABM, all, all of that fancy buzzword stuff, you figured all of it out from day one.
[00:27:18] It will still take those enterprises nine to 12 months to make a decision and go for you. So, you know, if you add all of that stuff together, Uh, you know, 12 to 18 months for this new motion is almost, almost like too good to be