In episode 3 of B2B SaaS Marketing Snacks, Mike and Stijn talk about the differences between SMB and Enterprise when “moving upmarket”. While the podcast takes a more senior perspective, I’d like to revisit the topic from the top to make sure marketing newcomers can follow along. So make sure to go give it a listen then come back here for more information!
With all that covered, let’s dive in!
Before answering why and how to move upmarket, you have to ask yourself if that’s truly what you want to do. Moving upmarket is the next stage in your growth, not just going after bigger accounts. The commitment and transition in metrics required are not to be taken lightly.
That said, let’s keep it simple.
Your first step is defining what moving upmarket means to you. To echo the podcast, that could mean customers who buy more, that have more employees, a higher revenue base, more locations, or starting to look at later stages on the technology adoption curve. Usually, the late majority tends to be made up of bigger, slower companies.
Moving upmarket is an arduous process that often takes several years. It’s an opportunity to confirm your PMF but it’s also the time to revisit your product features and roadmap.
Once you have an idea of “upmarket” looks like for you, it’s time to ask yourself if you really should. The answer can change based on product, market, team, timing, or any other host of factors.
The common pros of moving upmarket usually outweigh the cons, but that’s a case-by-case evaluation you must make yourself:
Which of these apply to you? Which points not listed here should you take into consideration?
If the answer to “should we move upmarket” is yes, could it turn into a no in the next year? If the answer is no, what would it take to change that to a yes?
Even if this is not a realistic conversation for you to be having at the moment, exploring the idea will give you a better understanding of your position, situation, and future.
Alright, that was a lot of conceptual talk but let’s get to the practical part. What are the steps?
You’ve gone through defining and evaluating the process. What comes next?
So far, your product has been working for SMB with a few seats or maybe just one. At the enterprise level, users might require new features, the use case might be different.
On top of that, bigger organizations bring with them a suite of security and compliance requirements. Some examples of product considerations include:
These all lead to the same conclusion: focus on the customer. This is where you start proper. Make sure you understand their use cases, hop on interviews, collect usage analytics, and understand the difference between SMB and enterprise both at the individual user level and the organization level.
Innovators and early adopters are comfortable dealing with bugs and slower customer support; they may never have brought to your attention a need for security or privacy features that are standard expectations at the enterprise level.
Bigger enterprises have more on the line every day. They can’t afford their thousands of users across several continents to all be impacted by one software malfunction. They can’t afford noncompliance lawsuits or security issues like getting hacked or improper access permissions. Your documentation should leave no questions about security.
Bigger accounts are worth more yes, but they also cost more. Not just in acquisition but also in retention. Natural churn rates are lower for bigger companies who value stability. But that can quickly prove untrue if your customer success capabilities don’t keep up.
There are only so many big enterprise accounts in your market. Once acquired, the value of your initial deal looks very small compared to the value of their repeated renewals and upsells.
A smooth onboarding process is a critical first impression that must be built upon with excellent customer service.
Once the product is customized and you have determined that your customer success team can sustain the needs of enterprise organizations, it’s time to actually acquire them.
Pricing is most likely your first concern. Your current pricing structure doesn’t account for multi-year or thousands-of-users deals. A core pricing concept is making sure your pricing grows with your client. That not only applies to new clients but also to current clients upon renewal. A 3-person team doesn’t cost the same as a 1,000-person team to service. The value provided is likewise not equivalent. The pricing should reflect that. It should also reflect the longer sales cycle, which if not handled properly could lead to a rocky transition as you could go two quarters to two years working a deal.
Your branding and positioning should reflect your new target audience as well. As mentioned in the podcast, a lot of work will go into re-developing your ICP and personas to make sure you’re getting through to them. That means new keywords and a renewed focus on bottom-of-the-funnel content. You’ll find enterprise buyers will care a lot more about proof of concept. Not only will they want to look at more whitepapers, case studies, benchmarks, etc., having enough content will allow you to nurture your prospects between the few touches during your year-long deal. This kind of collateral base is your ultimate sales support. It might be hard to get excited about high intent keywords due to their usual low volume and clicks/views, but your sales team will be able to tell you whether it’s helpful or not when they can lean on it during their conversations with the prospects.
If you haven’t had the need for a sales team so far, that’s about to change. Self-service is great, but enterprise customers expect to have someone to talk to, take them through a demo, and answer their questions. Developing and nurturing a relationship is what marketing, sales, and customer success work together to achieve.
To reiterate the points made in the podcast,
SaaS companies are faced with several growth options. Moving upmarket is a decision that requires buy-in at every level of the company. If a full sales team or customizing your product for enterprise aren’t within your capabilities just yet, moving upmarket may not be for you. If you can handle the longer sales cycles, the multiple stakeholders in the buying journey, the required shift in content, pricing, and overall marketing and you’re confident in your customer success team, good luck on your journey to higher ACVs and LTVs, ARPUs, and lower churn rates.
Note: This series will serve as a companion reading for B2B SaaS Marketing Snacks, which are bite-sized intros to some of your most pressing B2B SaaS Marketing questions.