How do you prioritize your B2B marketing initiatives? First, do a gut check – what's the status of your current marketing function? Then, ask how to...
BSMS 3: What changes from SMB to Enterprise? How do you move upmarket?
How do I move my software product upmarket? You need to understand the differences between your current customer base and the one you want to have.
This episode answers the question "How do I move my software product upmarket?" Before you can make that shift, you need to understand the differences between your current customer base and the one you want to have.
Welcome to episode three of B2B SaaS Marketing Snacks presented by Kalungi. Today we're talking about moving upmarket. So for companies that have traditionally found a lot of success selling into the SMB space, what are the things that you have to consider if you are thinking about selling into more of an enterprise client base?
Now, and I'll be frank, this is something that I've not done in my career, but Stijn has, so I'm going to ask him as well. But we do have clients at both ends of the spectrum. So we have clients that sell into enterprise and we have clients that sell into SMB, and maybe have some trickle over into enterprise.
The thing that I've noticed is that there are some fundamental differences with the structure of the team and the priorities that they focus on. So, from the enterprise side, I've noticed that account executives need to have some experience with enterprise sales, because the sales cycles tend to be much longer, much more complex. There are different personas at different levels of the sales process, and they often have to play an account manager role after the sale is made.
From a product standpoint, often enterprise customers have different requirements from the product, whether it be security or different add-ons that are specialized to them, especially if the product is really complex and needs a lot of configuration for different clients. So that's something also to take into account.
And then from a customer success side, I've seen enterprise customers tend to require or ask more of customer success, whether that's a dedicated customer success manager, or 24 hour support.
And so those things tend to be the key differences between SMBs and enterprise that I've noticed. So if I were to get asked the question right now, "How would you move upmarket from where you currently are, you know, sell into more enterprise type clients?" I would ask, "Are you ready for that change? Do you understand the differences that enterprise customers are looking for versus your SMB customers? And do you have the right people on the team to help facilitate that?"
"Do you have a sales team that has experience with enterprise sales cycles and the complexities that go along with that? Do you have the right customer success team in place. Are the things on the product roadmap or is the product ready right now to make enterprise customers happy?"
But Stijn, I wanted to ask you this question because you actually do have experience doing this. So I'll pose it to you. What are the things that you have to think about when you're considering moving your product upmarket and selling into a different core customer group than where you currently are right now?
Yeah Mike, I think moving upmarket can mean so many different things. It could mean I want to increase the average sales price of my service or product, and I want to increase the deal size, basically, or I want to sell to bigger companies. And then you have to define how you measure size. Is it customers who buy more, customers who have more employees, customers who have a larger revenue base, customers who have more locations?
So that for me would be the first variable. How do you define upmarket?
Upmarket could also mean closer to their segmentation topic that I think we are covering on our podcast, is that you go from the early adopters to sort of late adopters, late majority, which means customers that are a little more sophisticated and maybe have higher demands, or are more demanding to the quality of your service, or the maturity of your service, or your credibility as a provider.
All those things could be, I think, moving upmarket.
But let's keep it simple. Let's say you want to move to a market segment that consists of companies that are bigger from, for example, an employee count perspective. You want to go from, maybe, your typical customer is a couple of thousand employees, and you'd like to move into what's often called the enterprise which means companies of maybe 100,000 employees or more.
What I think is really important there is that you understand the type of personas that make up the buyer's journey, because that will change. The larger the organization that you sell into, the more complex the buyer's journey often gets, there will be more people involved. So at Kalungi, I think we're very experienced in sort of dissecting the different actors in a B2B buyer's journey for a technology solution.
So we came up with this model where we peel the personas along the funnel. We call this the sort of P1, P2, P3 model, where there is a different set of personas in, say, the awareness stage of the funnel, where we try to answer the question, "Why should a prospect change? Why should they be even interested in looking at a solution? Why do they acknowledge a need?"
Personas that are relevant there, who basically indicate, "Hey, we should look into this type of solution. We have this type of pain point" in the awareness stage of the funnel.
They are very different from the personas that is called the middle part of the funnel, or the consideration stage of the funnel, where you have people who need to be able to answer the question, "Why should I think about you as a service provider?" They're considering solutions because they've acknowledged they have a need, and now they have to answer the question, "Why are you one of the service providers they should consider?"
These could be very different personas, different individuals, when you're selling into an enterprise. Wherever you're selling to a small business, they often are the same people.
And then there's the third phase of the funnel, the closing or the conversion phase where you have to answer the question, "Why should a prospect give you the order now?" If they've answered the question, they have needs, why change? And they have answered the question why where you are viable option. They still allow me to answer the question, "Why now? Why not postpone this for a year?"
And we found at Kalungi that this B2B buyer's journey, when you sell into larger clients, let's say, this is what you define by going upmarket, that this decision-maker journey, it's more complex. So whether it's doing account-based marketing to do outbound to the different personas, or whether it's making sure you have the right content for the right personas at the right stages of the journey, or whether it's having the right nurture campaigns. All those things change if you move from SMB enterprise, and you have to consider multiple actors in that journey.
The only thing that makes a B2B journey different from a B2C buyer's journey is that you're dealing with people who are spending someone else's money, they're not making this decision from their own wallet's perspective which then often means there are multiple people involved. And in an enterprise setting, the number of people still will be bigger than in the small business setting. That is the biggest difference.
And then of course, enterprises have different needs. There may be different security needs or requirements, different IT standards. There might be different things needed because now there might be a procurement department that gets involved.
But all that will basically be addressed by thinking about the different types of personas you need to address, where maybe when you were selling into SMB, you would just focus on one decision maker.
So that's a big difference. So Kalungi has some sort of methods to do that. And our approach sort of often can help you move upmarket.
There's a more fundamental thing, of course, that you will need to do, and we can help you with that, is to really calibrate your ICP, your Ideal Customer Profile. And when you go upmarket, because you will have to think about different aspects when customers are bigger and they have different types of, maybe departments and functions.
The way you think of an Ideal Customer Profile also changes. There are basically more attributes to think about when you define that ICP. Just like the personas are getting more sophisticated.
And then finally, and this is not so much a marketing specific challenge, it's more marketing and sales together, the larger the customer and the more people involved in the journey, also, the longer this journey will take. So if you think about that return on marketing investment, the months to recover your customer acquisition costs, all these core metrics for a healthy SaaS business, they will be a little different for enterprise. Their months to recover CAC (customer acquisition cost) will be longer because the CAC is bigger.
On the other hand, the MRR, the Monthly Recurring Revenue, if the deal size goes up, it might also be big enough to compensate for that. Enterprise customers moving up might typically have lower churn levels than small business and mid-size businesses, so that's also sort of a healthy metric for SaaS businesses. Of course, that might offset some of the higher customer acquisition cost.
So, yeah. That's how I would think about that, Mike. And of course, the devil is in the details there. So, start with the question what this movement upmarket really means for your product, for your industry. And then think about what's the best for the buyer's journey, the type of content you need, the type of campaigns you need to run, et cetera.