There’s an ugly truth in the B2B tech world: You want to take over the world from the outside and give David a chance to beat Goliath, but in order to do so you need to sell to the very type of company you’re trying to displace.
The reality is that moving upmarket and selling to big companies (whether they’re Fortune 500 mainstays or blue-chip Silicon Valley upstarts) is the most reliable way to cement your position in the industry. In other words: No one gets to be a unicorn in the B2B world by closing small deal after small deal.
No, at some point every B2B company with dreams of finally fulfilling their potential must move upmarket.[contentblock id=111 img=gcb.png]
Unfortunately, the process of selling to bigger companies is not always simple. Chasing big deals has a lot of pitfalls, and successfully moving upmarket is a very delicate process with a lot of moving pieces. If you make a strategy shift to try raising your ASP without thinking through the implications, you run the risk of getting the worst of both worlds: alienating your base of SMBs without filling the gap with larger contracts.
Here are the 3 questions you should ask before trying to move upmarket.
Can you survive a longer sales cycle?
Bigger deals are more complex. They have more stakeholders, more legal red tape, and typically require a more robust proof of concept. All of this adds up to a longer sales cycle.
For some companies, a longer sales cycle is not a big deal. Whether they have less aggressive growth goals or a larger team of closers than can offset delays, these companies are in a good position to move upmarket without worrying about experiencing a contract drought.
But for the remainder, a lengthening sales cycle is a serious problem. Younger companies, especially those with rising bookings goals, often do not have the luxury of missing even a single quarter. These companies need to think seriously about the risks and rewards of chasing bigger deals before making any strategic decisions.[contentblock id=112 img=gcb.png]
There are two pieces of good news, however.
- There are proven ways to shorten your sales cycle, even when navigating complex deals and larger accounts. Before committing to moving upmarket, take steps to streamline your sales process and remove any of the common obstacles that may be unnecessarily adding days, weeks or even months to your sales cycle. These (sometimes) quick fixes can help you offset any sales cycle increases you may be adding by moving upmarket.
- Once accounted for, longer sales cycles shouldn’t affect your ability to hit your number. This is another argument for planning ahead and not just diving into a march upmarket head first. For example, running a marketing campaign well in advance of your move upmarket can help give your pipeline the boost it needs to make up for a longer sales cycle.
Are you willing to customize your product?
Mid-market and, especially, enterprise companies have different needs than SMBs. This is true in their buying process, as we just discussed, but also in their requirements for solutions. Perhaps they need stricter privacy policies, customized features, or extra help deploying the solution. Whatever the case, if you move upmarket, you need to be willing to adapt your product.
This, clearly, is a conversation that needs to go beyond the sales floor. The impetus for moving upmarket ‒ higher ASP ‒ may be sales-specific, but the consequence ‒ bigger customer with more complex needs ‒ affects every department of your organization, especially the product and customer service teams.
For this reason, you need to have these conversations well in advance of any decision to more actively pursue larger deals. And this means performing due diligence about what the strategy shift will mean for the other departments.
As part of this process, you should ask the following questions:
- How will the product need to change to accommodate larger customers?
- How will more elaborate implementations affect your customer service team?
- Is your product infrastructure equipped to handle bigger clients?
Moving upmarket could be a boon for your business, but it could also drive a wedge between sales and the product team if it’s not executed cleanly. Avoid this outcome by bringing in stakeholders from other departments early in the process.
Can you alter your marketing / outbound prospecting strategy?
Speaking of other departments, you’re going to need their help if you want to have the best chance of effectively closing bigger deals. There are some things you can do solely on the sales side to move upmarket, but a lot will need to be done on the lead generation side of the equation.
Your marketing department is built to target a specific type of potential buyer. Often, this profile is based on what has worked before ‒ what previous buyers looked like, and what type of campaign produces leads with similar characteristics.
But if you want to move upmarket, you likely need to fundamentally change the profile they’re targeting. Instead of going to SMB-focused events, for example, they may need to start attending events geared at Fortune 500 companies. Or, they may need to tweak their inbound marketing strategy to produce content geared at major players.
Whatever the case, it’s important for you to think about these changes ahead of time and determine if Marketing can accommodate them. Again, this is not a decision that can be made in a single day, or by only a few people ‒ you must find everyone involved, explain the strategy to them, and work to come up with a plan that satisfies everyone.
Moving upmarket is a natural part of most companies’ playbooks, but it is not always a turbulence-free one. Before you decided if (and when) it’s right for you, ask these questions to make sure you’re giving your company the best opportunity to succeed.[contentblock id=113 img=gcb.png]