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Summary:

Enterprise consumerization is growing through BYOD, but many startups don’t understand how to sell into this market. GoInstant’s CEO Jevon MacDonald looks at the key questions startup founders must ask of themselves in order to break in.

star trek enterprise_Rojer

As the fervor around consumer startups fades, more and more startups are tackling large enterprise markets. Enterprise consumerization is growing through BYOD, and software startups are sneaking in through bottom-up techniques, acquiring a few users or a small department and then spreading virally throughout organizations.  And yet, too many startups don’t understand how to sell into the enterprise.

As a founder of multiple software startups, I’ve seen this time and again. Taking your software startup from inception to profitability while selling into an enterprise market demands a different approach. Enterprises are often slow moving, process-oriented, hierarchical beasts. As I addressed in yesterday’s post, startups must understand their enterprise customers’ unique characteristics and needs in order to gain a foothold.

This doesn’t mean assessing the overall market size and talking in the abstract about faceless corporations. It’s about understanding the intricate and complicated components of your target customer and requires much more thought and effort than simply building a product, putting up a website and hoping people show up at your door. In this post, we’ll look at the key questions startup founders must ask of themselves and the enterprise market.

Know yourself and your market

1. How are you perceived in the market?

Most companies are risk averse when it comes to dealing with and buying from enterprise software startups. If you’ve ever sold into an enterprise, chances are you’ve been asked about your funding and financial viability. Or buyers are worried that they won’t get the handholding they deserve, because you don’t have the staff to support them. They don’t care about your other customers, except in terms of how financially stable that makes you, and who they are (if marquee customers are already using your product, that serves as a form of “social proof.”)

Think of this issue in terms of innovation versus status quo. You don’t want to pretend you’re running a big, old school company, but you also don’t want to look like one half of a two-person startup in a garage. Some ways to do this?

  • Offer a 1-800 number for customers to call (Grasshopper and other similar services will do the trick.)
  • Use press releases to market in a more traditional way
  • Build thought leadership through a corporate blog and guest blog writing on other sites
  • Publicize news about your company that indicates stability such as the addition of a quality advisory board, raising capital, acquiring customers, etc.
  • Get customer case studies as soon as possible

You want to present yourself in a manner that will simultaneously let enterprise customers know that you mean business (and have the wherewithal and sophistication to service them) and at the same time have the innovative technology and scrappiness of a startup.

2. What are your distribution channels?

You should never outsource responsibility for sales until you absolutely understand how your sales work, whom you’re selling to, pricing, sales cycle, etc. Once you’ve gone through the sales process a bunch of times, and you’ve nailed down a fairly repeatable process, you can start outsourcing the responsibility. Until then, spend all of your time in sales learning as much as you can directly from your customers, and keep those one-to-one relationships close. After you’ve developed a sales process that works, then you scale.

A good option for scaling is through distribution channels. Distribution channels give small enterprise startups much more reach into the market. There may be partners with pre-existing customer relationships that you can leverage. Often these partners won’t have your technical sophistication or innovation capabilities, but they will have a larger sales force and greater market access.

3. What are the key market buying cycles?

Companies plan their budgets well in advance for future purchases. They set year-long strategic goals that impact what they look to buy and how much they’re willing to spend. You want to be top-of-mind during these market-planning phases. There will always be discretionary spending and freedom to experiment with new technologies, but don’t miss out on injecting yourself into these key budget cycles.

September to December is usually a good time for enterprise software companies to make a lot of sales. Departments have unused budget and they’re trying to move fast. Summers are often pretty quiet, and so you need to be making a lot of noise in the spring to carry you through the summer into a great buying period in the fall. However, because patterns vary, you must determine your own customers’ purchasing cycles as quickly as possible.

4. What are the nitty-gritty pitfalls?

This is a catchall bucket for me when it comes to knowing your market. If you’ve done your homework and answered all of the questions outlined in this and my previous blog, you probably have already identified the sneaky little details — such as adequate customer support, training and understanding customer buying patterns — that can trip up the sales process. Knowing these allows you to tackle them in advance and adjust your strategy. It also allows you to change how you sell your product into the market. Maybe you have to go up the food chain to someone with more buying power, maybe you have to change your pricing structure. The more you know about yourself and your market — including the types of companies you’re going after, the departments and the individuals in those departments and companies — the better prepared you’ll be to build faster traction.

With more than a decade of experience managing and building software startups, Jevon MacDonald is an authority on co-browsing Web technologies. His company, GoInstant, delivers a patent-pending technology that provides “shared” Web-browsing capabilities.

Image courtesy of Flickr user Rojer.

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  1. Nice insight on selling software to enterprise customers. I found ’Market buying cycle’ to be particularly useful. However, I would some advice on customer research. It was mentioned in the article that we must understand the companies’ buying habits. I might sound naive , but I would appreciate details on how we can understand a company’s buying procedure. Would companies provide such information in their websites or are there any industry standard sale process followed by most of them? Or do we have to gather the information from the company’s executives? If yes, would they be willing to reveal such information? Would appreciate a reply. Thanks in advance

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