There’s some weird stuff happening within corporate IT buying. It can be a mixed bag for enterprise software startups. Here’s what I’m seeing.
-IT shopping and buying is no longer the exclusive province of IT. Domain-specific buyers are emerging, and they’re not afraid to write a check for software that solves a problem for them. They move forward with and without the participation of IT. So, writ large, the addressable market for software within enterprise has multiplied. This is great news for everyone.
-Free and free trials are great, but you still need a sales effort. Self-adoption + payment is of course the jackpot for SaaS. But even lightweight products that can be deployed with no-touch need to be “sold.” By this, I mean someone needs to get the user on the phone and work to lever a single happy user into a widespread deployment. Bottoms-up adoption is ideal; more often, though, someone needs to push and make your product a priority for a wider team. Great products are easier to sell than shitty ones, but they don’t just sell themselves. If you doubt this, then have a look at Salesforce’s sales headcount.
-For many businesses, the effort to sell 10 seats is the same as selling 1000. This is where companies offering easy-to-adopt software sold in increments can run into trouble. XYZ Inc. with $10B in revenue wants to buy your product. But they only want 10 seats—now. Though they quietly suggest that if these 10 users are happy then the whole company might deploy the product.. The time and energy required to sell the 10 seats is substantial. Big companies don’t buy software casually, so expect an IT audit and lengthy procurement process. Therefore, very often these 10 seats are money losers as you try to buy optionality for a larger deployment (which may or may not happen). One way to mitigate against this is by charging an implementation fee or similar pro-serv charge to cover the cost of the sale. But this isn’t always feasible, so in order to not get hosed, you need to make sure your client is a good fit for the product. We’ve all done deals where we suspect our product is an awkward fit for a client, and the client doesn’t know it yet. I strongly suggest walking away from these deals as everyone will be unhappy in the end. Sometimes clients are a good fit, but you’re unsure if they’ll be able to deploy successfully. In this case you need to accommodate for this by training the living daylights out of their team. A closed deal is the beginning of the journey. Training and support are critical to engendering a virtuous cycle of adoption, retention, and referrals. In the offline world, it’s called taking care of your clients.
-Enterprise buyers have an inherent bias against “startups.” No corporate exec wants to rollout software only to have the vendor go out of business 2 months later. So be prepared to answer questions about the solvency of your business and offer references. More than this, though, is considering your corporate and personal brand relative to this audience. While you may find the while “startup” shtick exciting and romantic and you may consider sneakers and hoodie to be acceptable business attire, I can assure you that corporate execs at a big manufacturing company in Michigan find none of this very confidence inspiring. If you’re going to sell to grown ups at grown up prices, then you’d better look and act like a grown up.