Should You Sell To Enterprise Customers?
July 19, 2016
Money. The more the better, right?
Customers. The bigger the better… right?
When you’re a bootstrapped start-up, you quickly realize that neither of those assumptions are correct. Of course you want more income. You’re trying to keep the lights on, after all. And of course you want customers who are going to be stable, loyal and paying enough to be worth your investment of time and resources.
But an interesting conversation begins here, as the dilemma of whether or not to sell to enterprise customers arises. Could a high-paying, prominent customer’s demands lead you make decisions you’d have otherwise avoided in order keep them happy? Maybe.
Should you have a hard and fast rule that you avoid enterprise customers? Some would say so, but I’d argue absolutely not. These customers can be good for your business, in moderation. It’s all in how you handle your sales process and your client relationships. It’s in how you decide to serve the enterprise customer, and who at the enterprise you serve.
The Argument Against the Enterprise Customer
Jason Fried made a great case for why a handful of high-paying customers can spell disaster on a small company in its early days. From “Don’t let anyone overpay you:”
We’d much rather have hundreds of thousands of companies paying us a small monthly payment than a few huge accounts covering that same amount. A diverse customer base helps insulate you; a few large accounts can leave you vulnerable to their whims.
He’s right on a number of points. True enterprise sales can be highly distracting to a team that is still trying to define its own products and place in the market.
It’s no small feat to land and keep that enterprise customer.
- The networking alone can require fancy suits, steak dinners, travel and extensive negotiations.
- Once the paperwork is signed, extensive software customizations, custom implementations, custom training, solution architecture and more may be required - all taking time and resources from the development you intended to focus on for your larger customer base.
- Large companies—brand names you want to say you work with in your marketing and sales initiatives—can be tempting to bend over backwards for to keep happy, leading to extra client relations time spent managing the account.
And once you’ve spent all that time on the one or two big enterprise names you land, you risk finding yourself in the position of having these two companies dominate the majority of your revenue. What if one client decided to walk?
It’d be a bad day. Probably a horrible one that taxes your small group of employees tremendously.
And that’s why certain protections have to be made when you engage with such a powerful client.
Don’t Abandon the Enterprise
As a small bootstrapped company, you can sell to enterprises without these negatives, if you structure your mindset and your offering correctly.
Selling only to customers paying you $25, $50 or $75 per month can be extremely hard, especially as you’re building your business. You need an incredible volume of customers to be sustainable at those rates. Meanwhile, having a few higher revenue customers can give you more flexibility in these early growth stages.
So, how do you embrace the enterprise? Selectively! Find a few special cases that not only provide you with profit, but that also allow you to scale for them with limited hurdles and customizations. Find the enterprise cases whose needs and intentions best match where you’re already headed. By doing so, you can sell very profitable, large contracts without most of the extra work and expense required with typical enterprise customers.
You can work with the big customer, without losing sight of the big picture.
Truthfully, your enterprise work is best done if you start... small.
Define Your Target Enterprise Customer
“We want the enterprise customer.”
Correction. We want the customer at the enterprise.
When we say enterprise, we’re not talking about solutions that’ll cover the entire Fortune 500 company. Only in the rarest of cases will you be able to make those sales (and if you do, enjoy spending all of your attention on Company X’s Version Of Your Product, instead of developing Your Product).
We’re too small to manage the processes required to sell and manage the bit of software used by every employee in a 40,000-person company. In our earliest stages, with our 2, 4 or 8 employees, most of us are too small to provide such a substantial bit of software that’s at the core of that company’s functions, on top of all of our other customers’ needs.
But we can get our fill of the enterprise, by nibbling at the edges.
At HelpSpot, we look at departments, groups or slices of functionality at large companies, and identify which sectors we can immediately impact.
We ask: What tasks can we assist with through smarter software solutions? How can we partner with them to make key processes within their part of the enterprise more efficient?
We then connect with a key decision maker within that space of the enterprise, and introduce our solution to them.
It’s not always an easy sell. That enterprise employee may not have immediate clearance to purchase your services, but you will have a much easier time implementing your service for 10 people, or even 40 people, than the 40,000 company-wide.
And that’s okay, because providing your service to 10 People Who Work At An Enterprise does not have to be dramatically different than providing your service to 10 People Working At Your Small Business Customer.”
Make Your Mark On The Enterprise
At HelpSpot, we’ve provided tickets management for individual retail location managers across a 500+ location customer, one by one. We’ve also worked with IT groups within enterprises, and directly supported internal maintenance groups. We’ve provided ecommerce support for a large record label where e-commerce was an important yet secondary revenue stream.
We work with groups within enterprise companies, without incurring the massive headaches and demands that come with the typical enterprise contracts. We provide value to them, while they also provide tremendous benefits to us.
By dipping our toes in the enterprise water, we learn quite a bit about our processes and our products. We learn whether we can sink or swim serving the big brands. We get stronger. We begin building better products, buoyed by the financial support of customers who can afford our top offerings. All the while, they offer us a bit of a flotation device to get us through our worst growing pains.
Enterprise customers don’t have to be the heroes or the enemies of bootstrapped companies. They can simply be customers that help drive your business forward, right along with all of the other companies you strive to work with day after day.