For software startups, it is common to initially focus on smaller customers. The sales cycles are much shorter and there will likely to be more interest in taking a risk.
Yet this does not mean startups should avoid enterprises (these are companies usually with more than 1,000 employees). “Startups are critical for enterprises as they undergo digital transformation, modernize their businesses and enable a different kind of work coming out of the pandemic,”said Shruti Tournatory, who is the Head of Business Development at Sapphire Ventures. “Sapphire Ventures recently released the CIO Innovation Index, which shows that while startups account for 10% of the IT budget today, that number is expected to grow 50% in the next 12 months, proving that CIOs are increasingly adopting emerging technologies to run their businesses. In particular, enterprises are turning to startups for their AI and machine learning needs, and next-gen data management cybersecurity.”
Keep in mind that the sales motion for large enterprises can be jarring for founders. There will be a need to talk to various departments and levels within an organization. And yes, there will be considerable inertia. A deal can easily take a year to get done.
Given this, what are some strategies to take? How can you improve your odds of success?
Well, let’s take a look at the following:
Creative Marketing: Cold emails often fail. Of course, it is much better to have a “warm” introduction. But this may be tough, especially for young founders who do not have extensive networks.
Then what to do? Well, you can try creative marketing to get the attention of enterprises “If your buyer wants to learn how startups approach a specific problem, you can create workshops featuring startup leaders that enterprise buyers will benefit from,” said Sandhya Hegde, who is a Partner at Unusual Ventures. “If they are looking to teach at-scale best practices, you could start a podcast and offer them a platform to do so. Great marketing is all about supporting your customers’ aspirations.”
Trusted Relationship: In the early meetings, you do not want to sell your solutions. Instead, the goal should be to learn about the company’s business and needs.
“Remember, you’re selling more than just a product or service,” said Keith Richey, who is the Senior Director of Global Marketing at LinkedIn. “You’re also building a trusted and long-term relationship. So ask questions. What does the industry look like? What is success for the buyer? Also, before you have a meeting, come equipped with perspective and insight. Share content specific to the buyer’s industry to bring credibility and add value to the selling process. A recent study by LinkedIn found that trust ranks among the top qualities buyers are looking for when engaging with sellers. However, only 40% of buyers describe the sales profession as ‘trustworthy.’ Be an advocate for your buyer and ensure that they feel supported throughout the whole buying process.”
Identify the Pain Points: This is the best way to break through the resistance.
“When selling to larger companies you must come to every conversation with a point of view about their business,” said Doug Landis, who is a Growth Partner at Emergence Capital. “You have to know what they are focused on: growth, mitigating risk or cutting costs. These strategic initiatives for the business will trickle down to every department across the organization. When you know what their strategic initiatives are then it’s easier to map/align your solution.”
Concise Messaging: Get away from talking about the jargon and complex technology. Craft a message that stands out.
“I used to be a journalist, so at Delphix we coach our sales teams to hone the ‘business pain headline’—the compelling, concise reason why a customer needs our software,” said Jedidiah Yueh, who is the founder and CEO of Delphix. “It has to be concise, because your champions have to be able to remember and repeat it when they’re fighting internally for budget.”
Freemium Model: This can be an effective way to get interest from an enterprise customer. It’s about a try-before-you buy approach, which has minimal risk.
“The freemium model works particularly well when the solution is easy to adopt and use even by smaller groups inside a large enterprise,” said Andy Stinnes, who is a Venture Partner at Cloud Apps Capital Partners. “You attract free subscription users in the short term, and then convert some of these customers to a paid tier at a much lower acquisition cost, even when including the ongoing cost of the large free user base. When you have enough adopters, you look for prospects with enough individual free users and bundle add-on features into an enterprise edition that you can sell to the company.”
Special Requirements: Enterprises often want high scalability and configurability. After all, they are looking for something that can move the needle.
“Every enterprise has a different, complex culture and organizational structure— meaning there is no one-size-fits-all approach to developing a product that will be universally functional without the need for modification,” said Chris Babel, who is the CEO of TrustArc. “Building adaptable solutions can be tailored to address the needs of multiple organizations, regardless of those unique differences. This will allow for startups to continuously update offerings without starting from scratch as they continue to build a larger customer base.”
Best-In-Class Sales Stack: Invest in the tools your sales people need to succeed, such as for sales engagement, conversational marketing and account-based platforms. “This will allow you to demonstrate your modern approach, and paint the vision for a digital transformation that your enterprise buyer craves,” said Kraig Swensrud, who is the cofounder and CEO at Qualified.
Tom (@ttaulli) is an advisor/board member to startups and the author of Artificial Intelligence Basics: A Non-Technical Introduction, The Robotic Process Automation Handbook: A Guide to Implementing RPA Systems and Implementing AI Systems: Transform Your Business in 6 Steps. He also has developed various online courses, such as for the COBOL and Python programming languages.