The #1 Thing Startups Need to Sell to Enterprise Customers
In 2010, a company called TigerText introduced a revolutionary new service.
They wanted to help healthcare providers step into the modern age with a secure, mobile messaging platform capable of keeping staff, patients, and other stakeholders in the loop. It seems like an obvious and clear win for everyone involved. Time is one of the most important factors in providing effective healthcare.
But it didn’t work.
TigerText struggled to get traction. They pitched and pitched and pitched.
But no one was buying.
Why?
Because everyone in healthcare was still using pagers. Pagers.
Yes, in the year 2010, the healthcare system was run predominantly on the messaging technology first patented in 1949.
In order to get traction — and make some sales — TigerText had to take a step back. They had to forget about the newest, fastest, and most secure technology. Instead, they had to focus on what hospitals and clinics were already using. And they had to build a product that would provide the value of their platform without the need to switch to updated hardware.
Needless to say, this was probably frustrating.
But it’s the reality for many startups trying to enter into the enterprise market. We’ve all heard horror stories about the reluctance of corporate firms to adopt new solutions or even take a step forward at all.
Despite these setbacks, many startups succeed at selling to the enterprise. In the case of TigerText (now TigerConnect), it took them several years, but they made inroads, grew their business, and is now one of the largest players in clinical communication technology.
How did they do it?
The first thing to know is that the process of selling to enterprise customers is generally backward from what we expect to see in the world of startups.
When it comes to building a startup, the first, critical step is achieving product-market fit.
In other words, startups want to build a product that is tightly connected to a specific need in an existing market. The idea here is that if you introduce a solution and put it in front of the right people, they’ll jump at the opportunity to buy.
But, enterprise customers almost never buy new things off the shelf.
This is because they need and expect whatever product they are buying to be custom-fit to work within whatever systems they are already using. The cost of them changing their existing structure or process to accommodate a single new product is generally a non-starter.
So what does this mean for startups?
Rather than focusing on product-market fit, startups looking to land enterprise customers will want to work backward — starting with the specific customer and understanding their very unique needs and how your product can be built or adapted to meet their needs. In the enterprise this typically means multiple “customers” at once — the user, buyer, advocates, etc.
Let’s call that product-money fit.
Catching Elephants
The appeal of enterprise clients is not surprising. Signing even one or two customers can make an entire business — and it only takes a few hundred to build a $1 billion unicorn company.
In a post on building a $100MM business, investor Christoph Janz introduced 5 specific paths to this level of revenue.
At the tip-top is the enterprise sales strategy. It involves selling to just 1,000 total customers, each one representing $100,000 ARPA. This, of course, is radically different from the path that many startups pursue — searching for 10,000 or 100,000 customers that are worth $1,000–10,000 per year.
Although enterprise sales requires a lower volume of actual sales, it should not be surprising to learn that each sale is orders of magnitude more difficult to close. Enterprise deals have notoriously long sales cycles, with negotiations taking months or years and having to pass through multiple layers of bureaucracy.
But that isn’t even a factor unless you’re able to get a foot in the door in the first place.
When it comes to large-scale deals, the entire process starts with the enterprise. The sales process begins gaining access and knowledge about a specific firm and their unique circumstances and needs.
In other words: It’s all about relationships.
The prerequisite to winning at enterprise sales is simple. Meet corporate decision makers.
Once you have a foot in the door, then it’s about developing a framework for understanding their specific needs and how (or if) your product can be used, modified, or built to meet them.
Achieving Product-Money Fit
The reason that most startups fail to land enterprise customers is simple. They don’t have this concept of product-money fit.
Yes, they have a product. It may even be a great product. And it likely fills some need in the market — maybe even solves a specific problem that a potential enterprise customer is facing.
But, they are unable or unwilling to do the extra work in order to meet the needs of a larger firm.
Enterprise sales start with the enterprise and end with a product.
In other words, the process of selling to an enterprise customer often looks more like a service transaction — understanding specific needs, developing solutions, defining scope, etc — than product sales.
Product-market fit is broadly defined as the intersection of viability, desirability, and feasibility of a specific solution within a market or industry. But, enterprise sales layer in an additional set of requirements. Each enterprise stakeholder may have a different idea of what is desirable, viable, and feasible. The needs of the user of the product in the enterprise may differ greatly from what the buyer of the product needs in the enterprise. We’re calling this multi-market challenge “Enterprise Stakeholder Constraints” and these requirements can encompass all kinds of specific needs and come from any number of enterprise stakeholders.
In order to achieve product-money fit with enterprise customers, you must meet all of these criteria in some manner, and sometimes simultaneously.
In order to achieve product-money fit with enterprise customers, you must meet all of these criteria in some manner, and sometimes simultaneously.
This may seem like a difficult or frustrating proposition. And that is undoubtedly why many companies fail at enterprise sales — or just give up on them.
But let’s break it down.
No enterprise company is willing to sink a small fortune into your startup (that is what you want after all — right?) without knowing that the product itself has been crafted to meet the specific needs of their firm. Enterprise sales can present a giant windfall for a young startup. But there are strings attached.
Enterprise customers expect products to be built for them. They often refuse to adapt to a product that is already built. (And for good reason — that process would likely have enormous costs for a company of 5,000++ employees.)
But this ultimately brings us back to the key importance of relationships.
If enterprise sales end with the product — in other words, if the product must be custom-tailored to meet the needs of the buyer, user, and other stakeholders — then it stands to reason that the first step in successful enterprise sales is a discussion with the customer about their needs.
This is why we’re hosting The Inside/Outside Innovation Summit.
There are many corporates out there looking for innovative solutions to problems they’re already facing, looking for opportunities to grow/innovate in new markets, or looking for partners capable of helping them speed up their own innovation efforts.
At the end of May, hundreds of startup teams and corporate innovators will converge in Lincoln to talk about emerging technology, lean practices, and problem solving.
Startups looking to sell to enterprise customers have a unique opportunity to build relationships with enterprise decision makers who are actively looking for partnership opportunities. And their corporate counterparts can learn what startups are going to innovate faster and better — and what opportunities that presents for their firm.
Remember, product-money fit all starts with meeting the right people.
The Inside/Outside Innovation Summit is taking place in Lincoln, NE. May 29–31.
