The traditional approach to selling software to the Enterprise market has been to start with SMB customers and incrementally grow until you’re ready to work with Fortune 500 companies. But there’s a new approach to Enterprise sales that’s garnering a lot of attention- leveraging end user enthusiasm to get a foot in the door. Software companies that want to leverage a bottoms-up sales strategy need to pair Customer Success with Enterprise sales in order to ensure they deliver value to these end users.
An incremental approach from SMB to Enterprise
There are compelling reasons for a startup to move up-market from SMB to Enterprise customers. As you might expect, the most compelling reason is additional revenue. SMBs customers usually have lower Average Contract Values (ACV) and higher churn rates, which depress a startup’s Customer Lifetime Value (LTV). Startups are lured up-market by bigger paychecks and more stability. They build out a team of outside Account Executives who work for months (or even years) to close a new Enterprise deal and aim to maximize potential revenue from the customer at the onset. Customers who go through a traditional Enterprise sales process are often transitioned over to an Account Manager versus a Customer Success Manager post-sales. While the Account Manager will work towards delivering value to their customer, the structure of the agreement presents certain challenges. Because the customer is almost assuredly locked into a multi-year contract, Account Managers don’t have to be as concerned about delivering value from day 1. The product launch and implementation process can be drawn out over a few months, and the drive towards strong user adoption comes in the months leading up to renewal discussions. The software company’s goal is for the customer to see enough value to renew their contract for the next few years.
A bottoms-up approach
Startups who want to enter the Enterprise market more rapidly might instead employ a bottoms-up sales approach. Their aim is to bypass the gradual move up-market and to avoid the Enterprise sales process by selling directly to individual users and teams. They leverage strong product adoption and enthusiasm within a team to get a foot in the door with Enterprise companies that would have been too difficult to penetrate outside of the process outlined above.
Selling through a bottoms-up model has a few benefits. First, startups can capture revenue from even limited roll-outs within Enterprise companies. Even Fortune 500 are shifting towards allowing individual users and teams to make purchasing decisions, which means that neglecting to market to this new type of customer could be a major missed revenue opportunity. Bottoms-up purchasing can represent anywhere from 36 – 72% of a department’s total spend.
Second, there’s an opportunity to expand into other teams or departments within the company. Enterprise companies have started to respond to overwhelming demand from their employees to license products they already use and love. Startups with value-based pricing will be handsomely rewarded for delivering value through upsells and expansion. Atlasssian is an example of startup that has been able to see massive growth by employing a this type of bottoms-up sales approach.
“Users love the bottom-up freemium method of using software first and then paying for it only if it delivers value. The model forces software companies to build great products, as they will only get paid (and ultimately get the renewal) if the product provides real value” – VentureBeat
Bottoms-up doesn’t work without Customer Success
Bottoms-up sales necessitates startups be able to deliver value to end users. This is difficult to do without a dedicated Customer Success team. Customer Success is focused on understanding the customer’s goal and objectives in order to deliver value. Without a dedicated team optimizing everything from user onboarding and engagement, to feature prioritization and churn feedback, startups are not likely to see the kind of adoption and enthusiasm they need for a bottoms-up model to work. With a bottoms-up sales strategy it’s pivotal to pair Customer Success with Enterprise sales.