Want to grow quicker? Sell bigger deals!
When you decide to pursue the enterprise with your SaaS product, the complexity increases.
The focus for smaller software deals is really on whether the “features” of your product solve an immediate problem. And you are dealing with one or two key decision makers to get the deal across the line. So if you’re good, you can close these kind of deals in as little as 10 days.
When you start going upstream – and I’ll talk about why you would want to go upstream in a moment – it basically means that you start looking at closing larger enterprise deals so that your average order size increases.
Enterprise level SaaS accounts have additional complexities; such as multiple stakeholders with competing strategic priorities, cumbersome approval processes, increased integration requirement, stringent legal policies, and a strong appetite for customisation requests.
Why should you take your SaaS product upstream?
Given these added complexities, what makes it so attractive to sell to these enterprise accounts and take your product upstream?
The reality of getting consistent sales growth is that the more you grow, the bigger your numbers are, and the harder it is to maintain that growth rate. Growing 20% on top of 100 grand, only means getting an extra 20 grand in revenue. But growing 20% on a million dollars, or 100 million dollars, is something much more significant to wrangle.
You start to find that the volume of smaller accounts you need to secure in order to hit these growth targets gets exponentially more difficult. Then there is the compounding impact of your renewal business adding to your base, means that your new growth targets are harder to achieve.
Of course there are alternatives to going upstream… You can look at adjacent markets, new products, or taking your current product internationally. But the more common option is to start identifying larger companies who have BIGGER problems to solve, where you can increase your deal size without adding too many additional team members.
The challenges of going upstream
Going upstream requires not just a new skill set bu an organizational mindset. To be able to move from a very transactional sale, to something that requires more relational skills. You need to now understand, and appeal to, the differing perspectives of the multiple stakeholders, which unearths challenges that can derail the growth goals of a business.
To be successful when going upstream, you need a cultural change in your business. Because it’s not just reliant on your account executive or your salesperson who’s leading the charge anymore. You need multiple people within the organization, such as the sales engineers, general counsel, or even your executive team, to be involved in these sales to ensure that you’re covering all the different layers of complexity.
To be successful when going upstream, you need a cultural change in your business.
There are 8 common challenges I see when SaaS businesses first attempt to go upstream:
Challenge #1: Increased sales cycle – with larger $$’s being at spent it generally means more stakeholders in your client account who are going to take more time to make a purchase decision, which could be anywhere from 3 to 12 months.
Challenge #2: Selling to the enterprise is a team sport – it’s not just the account executive as the single point of contact. You need to involve the leadership team, legal counsel, IT department, investors, and any other stakeholders who can help the customer through their buying journey.
Challenge #3: IT due diligence is more complex and costly – data protection and security is a major priority for most enterprises.
Challenge #4: Legal requirements become more complex – the cookie cutter terms of service you use with SMBs aren’t appropriate anymore, because each deal can make or break the business. You need to be flexible.
Challenge #5: Trust in the company is required and is hard to accrue – enterprise companies often like to commit to software projects for over 12 months, and to be doing that with what is perceived as a little whippersnapper upstart SaaS business, can be a bit of a challenge for a lot of these large corporates. They are looking for trust in the brand, and trust in the person. The two best ways to gain this trust is to be 100% transparent with your financial stability, or provide social proof and case studies from other enterprise clients.
Challenge #6: Onboarding is scaled exponentially – there is a huge element of change management required in enterprise sales that doesn’t happen in the SMB space. You need to educate and engage all the users within the business so that they see value in using your technology as soon as possible.
Challenge #7: The need to provide services increases – it’s not only the complexity of the purchase decision which increases, but also the complexity of implementation. It means you’re managing more people, more data and inevitably integrating with adjacent technologies.
Challenge #8: Support needs a “follow the sun” mentality – this basically means that support needs to be available 24/7. Larger organizations have people located all over the world and you need to be able to support their needs if and when they arise, probably at a higher level than you are used to in the SMB space.
How these challenges could affect your ability to go upstream…
The increase in the sales cycle is an exact outcome of having to include multiple stakeholders in the deal from the customer side. You need to influence multiple layers of authority to be able to get approval to move forward.
Sometimes companies you deal with have a very, very strict procurement process that you need to align yourself with, which is generally going to be a lot longer and cumbersome compared to what you’re doing on an average SMB transaction.
The majority of enterprise accounts go through a trial, and they make the purchase at the end of that. The complexity comes when you’re starting to look at larger “pilots” across multiple layers of the organization. You need to engage with the stakeholders within their procurement teams, make sure that there’s no IT issues, and cross off any legal challenges that they might have in dealing with a smaller stage SaaS business, before you officially close the deal.
Having to adapt to the sales cycle of a big enterprise means that there is a huge delay in the sales feedback loop. One of the benefits of a short sales cycle in the SMB world, is that you learn from your failures very quickly and can still make the required changes to meet your quarterly targets.
Having to adapt to the sales cycle of a big enterprise means that there is a huge delay in the sales feedback loop.
With enterprise sales and taking your product upstream, the sales cycle could be 3 to 12 months long. If a deal falls over towards the end of that cycle it becomes a HUGE challenge for you to recover and hit your targets for the year. More importantly it also limits the vital feedback you require to measure and improve your sales process.
For example, you may have the account executive, leadership team and legal counsel on board, but then IT might have an issue with data sovereignty… and the whole deal can fall over because of it. If you’re able to understand what the potential challenges are upfront, you can more deliberately engage these stakeholders concurrently and tick any boxes that need ticking early in the customer’s buying cycle.
Equipping yourself to sell larger deals
Despite all these challenges, if you are looking to consistently meet your growth targets every year, then going upstream is the logical next step for a SaaS business.
So how do you prepare yourself for that journey?
There are 8 principles for effectively preparing your SaaS business to sell upstream:
Principle #1: Define your targets
It’s great to have an aspiration to want to win bigger deals and take your product upstream, but you need some direction.
You can look at the Fortune 2000 and go, “great they’re all our potential clients”. But the reality is that they’re not all going to be a good fit. So you need to be super selective and targeted with where you apply your effort in order to give yourself the maximum chance of success.
One way to do that is to identify the bright spots within your current customer base, where your software already exists within these larger accounts.
Let’s say someone in a particular division has bought your software to use with their team. That gives you an indication that there is potential to expand the use within that company.
So the first step in defining your target companies is to look at your current customer base to see where you have had success dealing with larger brands in the past. Then, start targeting companies that have similar characteristics, OR, find additional ways to expand within the current companies.
Principle #2: Map out the buying process
A big part of making sure there are no hurdles in your way during the sales cycle is to map out the buying process from the beginning. Start speaking to these companies and try to discover how they have made purchases in the past. Ask them to explain the process.
Try to discover how they have made purchases in the past. Ask them to explain the process.
If you keep asking questions, you’ll begin to understand exactly how they have made similar purchase decisions previously, and from there you can begin mapping out what it may look like for you.
You are trying to figure out what the common hazards are that pop up during the buying process, the added layers of complexity. That way you can prepare to deal with them earlier in the sales cycle.
Principle #3: Use content at every stage of the sales process
When you are selling just to the user, the type of content is fairly simple as you are only thinking about solving a problem for one, maybe two personas.
Once you map out the enterprise buying process, you realise that you need to be armed with relevant content for legal, IT, the executive team… and anyone else that has a stake in the buying process. They’re all going to require different information to be able to move through that process, and they’re going to consume that content in a different way.
To be fully prepared to go upstream you need to run a content audit of your buying process, and intimately know what every stakeholder needs at every stage of the process. You will need to capture all of this important documentation in a proposal which is able to facilitate the group buying process.
To be fully prepared to go upstream you need to run a content audit of your buying process, and intimately know what every stakeholder needs at every stage of the process.
This documentation gets you up to the point of selection. But then once you win their business, your job is not done yet. You’ve got to onboard these customers and help them see value in the tool quickly, and to do that, it takes content.
This includes content such as training and how-to guides to teach their internal users how to get the most out of your technology. Plus they will most likely need a project plan, and a high-level overview of everyones roles and responsibilities throughout the onboarding process.
This sets a clear expectation and removes any ambiguity, giving key stakeholders comfort that you can execute, and the best chance of engaging end users across the organization.
Read more about why content is important for the modern seller here.
Principle #4: Create multiple threads within the account
According to Harvard Business Review research, an average of 5.4 people have to formally sign off on a B2B purchase to get it across the line.
So when you look at the initial “bright spot” employee within the account and you are trying to engage them, it’s great, they love you and are willing to go into battle for you. They want to be your internal champion as you progress within the organization.
The challenge with this approach is that the manager you are dealing with may not be politically aligned with the rest of the company. They may not be able to get deals through.
What if they move on in three months and you’re left without a champion?
It’s really important to get an understanding of who is going to be your influencers and decision-makers across the organization, and start to engage them as early as possible. Then they can help you understand the true opportunity within the account and progress the deal forward.
Creating multiple threads within an account is about not putting all of your eggs in one basket, but it’s also about ensuring that you’ve got cross-functional organizational support that’s going to progress you through the customers buying process.
Principle #5: Involve everyone from the start
You need to engage multiple stakeholders in the buying process from the very beginning. It’s something I’ve mentioned a few times, but it’s because it is really important to shorten your feedback loop and increase deal velocity.
These stakeholders can go from the user, managers, IT, legal, executive team, and shareholders. If you just have one account executive trying to engage all of these people it’s going to be extremely challenging. I mean, why would a CEO want to pick up the phone with an account executive who’s looking to be dealing with 2% of their organization?
When you start to bring these different people into the conversation, you get your executive team to call their executive team, your legal counsel to call their legal counsel and your CTO on the phone with their technology services. This approach not only provides a different voice, but it adds credibility that you’re an organization who’s going to be able to service them.
Principle #6: Show leadership in the account
While you are building a broad base of support for your solution across the business, you need to be asking these stakeholders to work on your behalf. This is an incredibly difficult thing to do. These are people that don’t know you, have no allegiance to your company, and who you have zero control over.
In order to do this you need to inspire these people to take action, and empower them with the things they need to do it. Remember that people will make an emotional decision first and rationalize that with data later.
People will make an emotional decision first and rationalize that with data later.
You need to focus on the individual, their role and challenges, and lead them towards a solution. This requires effective leadership skills.
Leadership is something that people often think of from an internal management perspective, where your teams are paid to work with you. But it’s more difficult to implement and critical for the success of your sale when you are trying to influence external stakeholders as well.
Principle #7: Hire experienced people
Selling upstream is certainly a different skillset than selling into SMBs. It’s a different type of conversation that you need to have in order to succeed, across multiple layers within the organization.
It requires a certain level of business acumen to be able to get on the phone and understand what the general counsel wants, what the IT team requires, and why this is important for the managers. This takes significant mental agility, which is why you’ve got to hire the right people who have the skillset to deliver on these needs.
These specialized skills aren’t just required by the salesperson, but also the sales engineer. In the SMB space, you’ve generally got someone who’s equipped at doing fantastic, problem-based product demonstrations. But in the enterprise scenario the situation changes. You need to make integrations with adjacent technologies, juggle competing needs across the organization and customize conversations to the particular stakeholders. So you’re looking for a genuine sales engineer who understands the complexities of an enterprise IT environment.
When you’re looking at hiring salespeople, one of the traps that a lot of startups fall into is that they look to hire an experienced rep who has got a big Rolodex of contacts, and is going to come and open a lot of doors into a lot of businesses.
The huge challenge with that way of thinking is that these individuals aren’t used to selling in a small little upstart brand that doesn’t have the credibility of a large Salesforce, Microsoft or a Cisco. So the contacts they actually have in their Rolodex aren’t interested in them.
That means you really need to be more targeted and specific about the skillset you want to hire, and look for business acumen, or the ability to have those multi-layer conversations within the organization.
Principle #8: Shorten the feedback loop
Once you’ve mapped out the buying process, you can then understand the gates that you need to get through in order to progress this deal through the levels of the business.
When I’m talking about gates, I’m referring to the success milestones that are naturally in the customers buying process to help ensure you are still on track.
The first gate may be progressing from the user or manager, to the IT team and beginning to understand their needs. Then from there, the next gate may be to get in front of the executive team or the legal counsel. Each gate gives you an opportunity to learn and iterate your sales process.
Every time you get more information from within the organization and progress to the next stage in the buying process, you’re going through your own feedback loop so that the process evolves and it improves on the fly.
Over time you will get better at shortening that feedback loop and taking action on the important information you get exposed to.
Do you think you’re ready to take your SaaS product upstream?
It’s a complicated question, with lots of moving parts. The deals are definitely bigger, but with that extra revenue comes a significantly longer sales cycle, higher risk, and a complex decision-making process.
At some point, if you want your business to keep scaling, you will need to consider enterprise sales. And when you do, make sure you go into it with your eyes open and are adequately prepared.
Know your target companies better than they know themselves. Map out their buying process and use content to influence the key stakeholders at every step along the way.
Above all else be prepared to take the lead, back your team and continue to improve your sales process over time.