Covid is Re-defining and Democratizing SaaS enterprise sales for startups

Enterprise selling is an expensive affair. It requires high-quality sales teams who connect the dots across a wide range of functions within an organization. They have to be apart from your championing team. It would also involve legal, procurement, finance, data security, compliances, IT and allied teams. It requires extensive navigation of organization politics to arrive at key decision-makers and champions while maintaining parallel threads across teams. With average sales cycles from 6-9 months for large enterprise customers, a huge amount of T&E would be spent in meeting one key influential team or group at a time and arriving at convergence.

The definitions of SMB, Mid Market and Enterprise selling vary widely across companies. Some define it by several employees in the organization. Some by licenses sold, annual revenue of customers, average contract value or other metrics. By employee metrics, typically SMB would be less than 100 employees; mid-market from 100-999 and enterprise would be 1000 customers and above (Gartner). By annual revenue, SMB customers would typically be in the range of less than $50mn; the mid-market would be less than $500m-$1bn and enterprises would be $1bn and above.

The growth cycle

Traditionally, most startups begin at the bottom of the food chain try to win early SMB customers. They get product maturity and fitment correct before moving on to enterprises. SMB customers are large in number, low in ACV and a combination of an outbound digital marketing led strategy; plus an inbound inside sales team is a classic GTM strategy. Enterprise sales early on are risky, expensive, an all or nothing bet with clunky revenue profiles. Further, it is difficult for startups to spend early on expensive enterprise sales teams with this risk profile of the revenue.

Changing definitions in 2020

Covid however is dramatically redefining how enterprise sales are being conducted. We find customers can get large numbers of cross-functional personas on one zoom call and present a demo to a wider audience faster. Increasingly, it is getting easier to get CXOs on demo calls and present to a wide audience - often 20 members or more across teams. It does not require expensive T&E spends and founders can present the demos to customers and handle a wide range of questions across the audience. In a sense, it has now created a level playing field between the large companies in the space and smaller startups. This is because all procurement teams look for vendor alternatives as a matter of process.

Increasingly, given the lack of contact and challenges to building long interpersonal relationships over a face to face meeting, enterprise selling is also shifting from a relationship based sale to RoI based sales. Sales are more driven by hard factors of product fitment, feature listing, customisation and pricing over all other soft factors. Again, in this world, startups could play the game better with better product fitment, agility and pricing and win some deals from the bigger daddies in the space with lower spends.

At Salesken, we believe early-stage startups can now increasingly move away from SMB customers. They can attempt winning mid-market or enterprise customers; the factors of the world have aligned in favour now ever more than before.