B2B customers: how they impact your startup in every way — Part 1

6 min readJun 15, 2017

B2B startups target businesses to sell their products and services, nothing new here. However, in the land of B2B, the size your target B2B Customer has a huge impact on your team, product or service and lots of other things you didn’t think of.

In a series of posts, I’ll share my experience on what to expect from targeting different company sizes as your startup’s customer segment.

At the bottom of this post I’ve added a picture and link to the B2B Customer Matrix I’ve created to summarize all posts.

Note: As this post got longer and longer, I’ve decided to split it into several parts and also do sub-posts on certain differences to provide more examples and explanation. Be sure to follow me on Medium or Twitter to receive updates.

Disclaimer: I’ll be generalizing a lot here, there surely are outliers and contradictions. Deal with it 😎

Outline

Here’s the list of differences I’d like to discuss. There surely are more but these are the most important for now in my opinion. Later on, I might add additional parts, let me know in the comments if you’re missing something!

Part 1 (this post)

Prospect visibility: how well can you find prospects online and reach out to them.
Risk appetite: the amount of risk your customer is willing to take.
Business goals: the goal the company tries to reach.

Part 2

Decision making: how decision making takes place.
Sale size (annual): how much money they spend on average when buying software, equipment etc.
Av. sales cycle: the average length of the sales cycle selling your stuff to the company.

Part 3

B2B customer matrix: a concise overview of aspects per company segment.

The segments

There’s no universal agreement on how to group companies in correlated segments. Wikipedia shows how different countries and continents are dealing with company segmentation. I’m trying to be compatible with western norms. The company sizes I’d like to differentiate between are:

Freelancer: single person company
Small company: 2–50 employees
Small to Medium-sized Business (SMB): 50–500 employees
Enterprise: 500+ employees

As you’ll see in a moment there are vast differences between the segments. Knowing and understanding these differences are important for (future) founders.

The differences and how they impact your startup

In this post, I’ll kick off with the first three differences prospect visibility, risk appetite, and business goals.

Prospect visibility

What does it mean?
Prospect visibility is how well we can find companies and their decision makers or key stakeholders.

Note this does not include Search Engine Marketing (SEM) and Social Media Marketing (SMM) with advanced targeting. I’m talking hardcore hunting down the contact details of real people that eventually will pay your bills 💰

How do the size segments differ?
Freelancers can be found easily because often they rely on their online visibility to get new gigs. Reaching out shouldn’t be hard either.

On the contrary, lots of small companies lack a website and social media profiles. Looking for the owner of SweetTooth Cake Shop or Down the Drain Plumbers? Good luck with that 😩 You might get lucky on LinkedIn but that’s about it. Prepare to pick up the phone after you’ve found a phone number through YellowPages and go in completely cold to get the owner on the phone.

SMBs and Enterprises are a different story. They have marketing budgets to do outreach, so we can locate those companies pretty easily. They often have a clear organizational structure to keep the company manageable, this is in our advance. In some cases, the organisational structure or hierarchy can even be found on their website or in annual/stakeholder reports. Finding people with a specific role in a company is not that hard either. There are plenty of online databases (LinkedIn, Data.com Connect) to look up prospects’ names and email addresses.

Why should you care?
If you can’t find your target company, budget owners and decision maker(s), you can’t learn their problems and sell to them. The end.

Risk appetite

What does it mean?
Risk appetite is the amount of risk a company is willing to take to meet strategic objectives. A risk is the potential of gaining or losing something of value. For example the potential of your product or service is going to deliver the promised value, or not delivering value but only cost money 💸.

How do the size segments differ?
As a ground rule, the larger the company, the less risk it is willing to take. This risk aversion may be forced by regulatory demands and corporate risk management models. So Enterprises and medium sized businesses are the usual suspects. You should figure out from the very beginning if the enterprise or business you’re dealing with has to comply with regulations like HIPAA, SOX, PCI, etc. Secondly, find out what the regulations mean for you and your product or service.
Smaller companies and freelancers are less risk averse as long as the costs and impact of the risk are within proportions. Paying a monthly subscription for SaaS tooling for some employees isn’t going to bankrupt the company.

Why should you care?
This one is pretty important. The business you’re dealing with might impose conditions on the companies they work with and products/services they use (e.g. security features in software) in order to stay compliant with regulations.

Risk appetite also affects the sales cycle in a negative way (becomes longer because of higher complexity). At a large institution I worked for I have seen software vendors sell to local departments but the sale got stuck in risk reviews by Risk Management.

Business goals

What does it mean?
No-brainer: the goal a business is pursuing.

How do the size segments differ?
In general, freelancers want to sustain, do great work and gradually increase demand and rates. Small companies and SMBs want growth. An Enterprise is organized to cut costs and reduce risks.

So for freelancers, make sure you make them more productive. SMBs like to have more customers and grow turnover (and revenue in the end). To rock the Enterprise game you should contribute to making organizations better manageable and reduce complexity.

Why should you care?
In order to be successful, your product/service has to be in line with your customer’s goals. The better you align your product, the more value is delivered.