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A Quick Guide to Enterprise Sales for SaaS Startups

Updated: May 6

Once you’ve established the product-market fit for your SaaS startup, you’ll be spending a lot of time thinking about the sales model that fits your business. While helps to get this right when you initially go to market, many startups will pivot as they learn and gear up to scale.


Guide to enterprise SaaS sales for startups

Your sales model can be the critical difference between sustainable growth or becoming the next addition to the 90% of failed startups out there.


For SaaS startups, the big question is whether you should be targeting enterprise businesses or not. The enterprise sales model can be a boon to SaaS growth rates, rapidly increasing recurring revenue when successful. If it's not a good fit, though, and you're not successful, you could burn up all your cash pursuing the wrong market.


So, before you take your startup down an unmarked road with a dead end, get to know the enterprise SaaS sales landscape and what's necessary for success.


What is enterprise sales?

Enterprise sales is the process of selling high-value products or services to large businesses. These large contracts typically involve long sales cycles, multiple decision makers, more complexity, and a higher level of risk than sales deals with small- and medium-sized businesses (or SMB for short).


In short, it's selling large-scale corporate solutions with a big price tag.


Early-stage startups don't usually dive into enterprise sales out of the gate. It's far more common to focus on transactional sales with SMBs that are less risky and easier to close.


Is enterprise sales right for your SaaS startup?

Enterprise sales isn’t right for every startup, and is in fact more common in mature businesses that have already experienced significant growth (more on this later). As mentioned previously, the longer sales cycles and higher risk associated with enterprise sales makes it a less than ideal model for many startups in early stages of growth.


In some instances, though, enterprise sales is an ideal sales model for a startup. For instance, enterprise sales would make sense for your SaaS startup if you are creating a solution that might be considered critical to the success of large corporations, or where that solution directly impacts business operations on a strategic level.


For example, let’s say you are developing a revolutionary AI technology for supply chain management that saves manufacturing companies hundreds of thousands of dollars, enterprise sales would likely be the most appropriate sales model for your business.


3 Types of SaaS Sales Models

what is enterprise sales model

There are three main types of sales models in the SaaS industry:


  1. Self-service sales

  2. Transactional sales

  3. Enterprise sales


Self-service SaaS sales

This a popular model used by companies such as Zoho and Dropbox. It’s ideal for companies with low-cost products, and it has a similarly low customer acquisition cost. The customer goes through the majority of decision-making, signing up, and using the product by themselves at their own pace.


Combined with comprehensive website help documentation, the self-service model keeps the involvement of your customer support/sales team to a minimum, allowing them to focus on other aspects of growing the business.


Transactional SaaS sales

SaaS providers like Zendesk and Marketo have found this to be a successful sales model. Falling somewhere between self-service and enterprise, transactional distribution offers a flexible solution for a range of customer types. Some of the purchases can be made directly through the company website, while others require dialogue with a member of the sales team.


Transactional sales volumes tend to be less than that of self-service, but with a higher price point. There are typically more people involved in a transaction, which translates into a longer sales cycle.


This model is ideally suited for mid-high level SaaS companies who have a more expensive product. The focus here is on the marketing team to drive qualified leads and the sales team to rapidly close on them with a view to sustainable, high-volume sales and an onboarding process that’s as efficient as possible.


Enterprise SaaS sales

The enterprise sales model is typically adopted by companies with high price points and a technical product that needs more training, integration, and customer support. Acquisition cost comes at a premium, and sales cycles can be lengthy.


A handful of SaaS companies have had success with this sales model from the outset. For the majority though, enterprise customers are only considered when the product, sales, support, and monthly revenue are able to sustain the intensive demands placed on them.


Before you start marketing to enterprise customers you’ll need to think about things like:


  1. Onboarding – will it be a smooth process that won’t slow them down?

  2. Security – will their company data be fully protected? Can data access be restricted between teams and individuals across the company?

  3. Support – is there access to somebody 24/7 in case of an emergency?

  4. Proof of return on investment – if your product starts to lose an enterprise company money…it’s going to be a lot of money!

  5. Automation – will it save their teams time or make extra work for them?

  6. Social proof – are similar companies using the product already with good results?


Enterprise sales require a lot more thought and hard work than the first two sales models. While self-service and transactional sales are primarily driven by good old fashioned marketing, enterprise sales is driven by building and maintaining strong long-term relationships. Closing the initial deal and nurturing the relationship into a long-term partnership involves playing the long game, but it’s one that can have the largest payoff.


The pros and cons of selling SaaS to the enterprise

Enterprise sales are where the “real money” lies for some SaaS business. Contracts with enterprise customers can be substantial, and although the customer acquisition cost is exponentially higher, the payoff in terms of your revenue and company valuation is sometimes too good to be ignored.


But remember, the sale doesn't stop when the deal is won. Nurturing those enterprise customer relationships is just as important, if not more. Your sales rep is the MVP when it comes to both securing and retaining large, high-value customers. They must give these top-tier companies personal attention and provide tailored solutions for each one.


Enterprise sales are high-pressure, high-ticket deals. The level of care from your sales team will be instrumental in closing these long-term corporate customers. It can be worth the time and cost investments, as these are the customers that can guarantee stability and revenue over the long term.


However, most of your startup's revenue might only come from one huge customer or a few large customers, and that creates a high customer concentration risk. It's not only risky financially, but you may also have difficulty adapting to the market or a particular industry.


While a few companies choose an enterprise sales model from the beginning (typically those providing high-value, complex products that justify their hefty price tag), most companies choose to adopt this model when they’ve tested the market and begin to scale up.


Hubspot is a great example of a SaaS company that started out with a focus on small/medium businesses. As they developed, they reached the point where they could start marketing their product to enterprise-level customers. The results speak for themselves.


Hubspot's revenue growth as it went from SMB to enterprise sales

Source: Slideshare.


Adding an enterprise segment to your business makes sound financial sense if you’re able to do so. As Jason Lemkin of SaaStr notes, adjusting your product offerings to appeal to a team can increase your revenue (or a portion of it) up to 20-30 times – a benefit which can’t be ignored.


Final thoughts

Finding a way for your SaaS product to support enterprise customers can be a game-changer in terms of growth and revenue. Even if you’re currently running a self-service or transactional sales model, making the progression towards adding enterprise sales should be something you seriously take into consideration as soon as it’s a viable option.

 

Need Funding to Go Up Market?


For SaaS founders, adopting and enterprise sales model can lead to big opportunities. Many founders are able to bootstrap to gain early traction, however, doing so will only get you so far. At some point, putting off fundraising means limiting your growth. With Lighter Capital, entrepreneurs can receive up to $4 million in capital to help you get your startup to the next level, without giving up equity or control of your company.


Whether you’re looking to secure enterprise-level contracts and start scaling your business, or simply looking to secure funding that maintains a consistent state of growth, compare our flexible financing solutions first – if you like what you see, apply for funding today to connect with our investment team!



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