3 Myths Causing You to Sell SMB Deals to “Enterprise” Customers
DNX organizes expert-hosted workshops for our portfolio companies on a regular basis. The topics vary from Series A fundraising experiences to how to build and scale an SDR organization, among others. We recently hosted serial early-stage Enterprise Sales expert, Rob Balena, who after years of repeatedly building startup sales success now helps others do the same. We asked if he would like to share some of his wisdom in a guest blog, and he happily agreed — enjoy his words of golden insight!
Does this sound familiar to you:
“Our model is ‘Land and Expand,’ but we struggle with the ‘Expand’ part.”
“Our Enterprise customers aren’t using our product to its full potential, and churn is high.”
“Why is my commercial team closing larger deals than my strategic team?!”
I regularly hear these comments from clients expressing frustration with the average deal size of their largest customers. Startups often chase the revenue and prestige of big logos only to find expensive challenges and disappointing returns. The stakes are high: get Enterprise Sales right, and you’re on your way to unicorn status. Get it wrong, and it could sink you.
This is a real problem for your business
Going after enterprise deals requires top-tier salespeople who expect to earn large commissions working on significant, transformational deals. If your average deal size indicates that either of these expectations is unlikely, these sellers will be an expensive waste (if you can recruit them at all).
Landing Fortune 500 logos at SMB revenue numbers can prove to be a similar drain. Small deals with a single team is not the same as a massive conglomerate trusting you enterprise-wide. Tiny deals with big logos are more likely to distract you, become shelf-ware, or simply churn. In growth mode, distractions + failed deployments + churn = death.
3 Myths
This risky pattern of selling SMB deals to Enterprise customers is largely driven by 3 Myths about Enterprise Selling:
Myth 1: Enterprise Selling is an Account Size
B2B sales organizations commonly segment their teams, territories, and accounts, and the driving metric of this segmentation is typically account size determined by revenue. Example:
On the surface, this makes sense: larger accounts have different needs, purchase differently, and have larger budgets. Trouble arises, however, when we believe that every deal, regardless of other variables, is “Enterprise” simply because it was sold to a large customer. Landing the logo takes the focus away from driving true transformation.
We need a definition of Enterprise Sales that’s broader than just the Account Size.
Myth 2: Enterprise Selling is a Deal Size
Some organizations classify Enterprise Selling as a deal size. If a deal reaches a certain dollar threshold, it must be an “Enterprise” deal, right? Example:
This narrow definition works against us when our product demands complex evaluations regardless of deal size. When I sold for Gazzang, our encryption product required multiple C-level approvals because it secured customer data, not because it was expensive.
It works in the other direction as well. Consumption metrics can drive huge dollar numbers without impacting the complexity of the deal at all. Consumption does not always equal value, and these deals have a nasty tendency of evaporating when management, tech, and priorities change. Use deal size to define Enterprise sales, and you will find yourself with overwhelmed rookies managing complex sales cycles or over-priced order-takers leeching your revenue.
We need a definition of Enterprise Sales that’s deeper than just the deal size.
Myth 3: Enterprise Selling is a Product Type
Many SaaS companies offer different product types marketed to different customer segments with “Enterprise Features” exclusive to a subscription level. Example:
Tailoring a product to a particular buyer shows excellence in product management, but it’s a problem when we confuse the word “Enterprise” describing product features with the craft of Enterprise selling. “Enterprise” as a descriptor of product features does not describe how the customer consumes it, nor does it consider its impact on the customer’s organization.
We need a definition of Enterprise Sales that’s more comprehensive than just the Product Type.
A Clear-Sighted Enterprise Definition
Here’s how I define Enterprise Sales for my clients:
Enterprise Sales happens when: 1) the decision to purchase requires consensus across multiple decision orgs (reporting structures); and 2) if implemented successfully, the purchase will prove transformative to the customer’s business.
If your deal does not require broad consensus across the customer organization, or, when implemented, the outcomes will not be transformative to the customer’s business, then you haven’t really done Enterprise Selling — no matter how large the customer is, how much they paid, or which product they bought.
Your sellers must achieve consensus and transformation if you really want to do Enterprise Selling. They must cast a vision for their customers: a vision that is larger than a single team, riskier than what one person is willing to take on alone, and bigger and more potentially rewarding than what the customer has in mind for themselves. That’s Enterprise Sales, and that is what is required for massive transformational deals with today’s largest companies. Enterprise Sales is not always better than transactional, velocity, or SMB sales, but it is very different, and understanding the difference is critical to the success of your business.
Rob Balena loves the art and science of Enterprise Sales. After a run of successes selling to strategic customers for both startups and large SaaS vendors, he started Differential Selling to help individuals, teams, and startups sell more effectively to large enterprises. He lives in Austin, TX with his wife and four children.
