Consumer products are sold off the shelf with minimal customization and the same is happening in software.
That’s quite a change for someone like me who has spent 15 years selling to enterprise businesses and learning how to work for sales-driven organizations. A common refrain when talking to the product team in the early days of my career was: “I sold it, now go build it.”
It’s a breath of fresh air working for a product-driven company like Intercom. And it’s certainly a new experience working with a research team who join salespeople on calls to truly understand our customers.
With all these changes in the space, including the continuing fall in average deal sizes, I’ve found that many of my colleagues have a background in consumer products. As a result there’s been many internal discussions about what are the fundamental differences between a B2C company and a B2B company these days?
Your Customers Define You
After giving this some thought I realized B2B companies are defined by the size of the businesses buying their product. Luckily I spent over four years studying organizational dynamics while selling at SuccessFactors because the size of the customer’s company determined what product we could sell them.
Since not everyone has had the benefit of that experience I thought I better try and come up with an analogy that works for a broader audience. We are currently applying to kindergartens in San Francisco for my son, so I’m using an example that is very much on my mind right now – education.
These examples should help tailor your sales strategy depending on the size of company you’re targeting. Please note my approach to sales involves understanding everything I can about the company that I’m selling to. That way I know how each potential buyer thinks and how our product can help.
This thinking is really invaluable during the startup stage when you may be dealing with customers of differing size and determining what size companies to target as well. But it can also help if you’ve reached the stage where you want to segment a sales team based on company size. Even if you aren’t involved in the sales process it can provide a useful look in the mirror if you are working at a startup that’s on this kind of growth curve.
< 10 employees. The time before organized school. You are free!
- The company consists of founders and engineers.
- They act like consumers because they are spending their own money.
- Money is tight so they do everything on the cheap and build it themselves.
- Sell to them like a consumer app: no sales people and make it all self-service
11-25 employees. Elementary school
- Someone becomes the CEO, or one is introduced, because startups begin to need leadership at this size. Think the principal at school.
- The startup is becoming a real organization and needs some structure.
- Everyone is in the same class, or same office space, typically.
- The focus is still on product and engineering.
- Companies reach this size because they have started to get traction. They might have raised funding, and so are starting to spend other people’s money.
- At this size organizations need tools and they tend to get a lot done with a few of them.
- It’s a great time to get in and grow with a company. Customers at this size start to ask questions of vendors but they are willing to spend real money on tools.
- You can introduce sales now but most companies at this size prefer self-service because the individuals making decisions are used to doing everything themselves.
26-75 employees. Middle School
- Another management layer is introduced and not everyone reports to the CEO.
- People’s world’s becomes bigger and new people are being introduced. It is no longer just the group you spent six years with in Elementary School.
- Individuals start studying specific subjects which is equivalent to hiring Sales & Marketing (and other business roles). This changes the needs for tools which start becoming business specific.
- It’s a bit like going through puberty: things become a little awkward with growth.
- To continue employing this many people it probably means another round of funding, so there’s more money in the bank.
- The needs of the company become more specialized because of the roles being created. It’s harder for everyone to use the same thing.
- You can introduce a sales team focusing on this size of firm – it’s justified by the amount of money they have to spend.
- From a sales perspective this is often described as the best time to start and grow with a company. It is right before hyper-growth starts.
76-250 employees. High School
- Managers are introduced, just like you get subject specific teachers in high school.
- You are almost at the stage where you don’t know everyone. In reaction to the growth in employee numbers, cliques start to form, but a common vision (school spirit or culture) unifies the company.
- Budgets and processes are introduced.
- The needs of the company can now be broken down on a department by department basis.
- This is a profitable segment and a large number of companies exist here.
- When companies get over 100 employees, IT usually becomes a job function. This changes the sales dynamic because they become an approval step in any decision about purchasing technology.
- Companies of this size need dedicated attention because politics are introduced to the equation and need to be navigated to get a deal done.
- At Box and SuccessFactors reps that targeted this segment always hit their number.
251-750 employees. College
- Another layer is introduced to the management structure and as a result you have to “choose your major” because everything becomes more specialized.
- You officially don’t know everyone in the company anymore.
- Processes become more formal because systems need to be in place at this size.
- You are an established company – it is like you are almost all grown-up…but you are still going to grow really fast at this size.
- Getting close to an IPO. As a result you have to start thinking about legal requirements and having an audit trail. Tools purchased need to comply with these requirements.
- Another great segment to target where you will find a lot of sales reps hitting their number.
- You can sell to these companies with an inside sales team.
- It will require some experience navigating an organization this size because of the politics between business groups, working with legal, managing IT policies, and finally getting spending approved from newly established budgets.
- It makes sense to start outbound targeting companies at this size.
751-1,500 employees. Recent college graduates
- This is a weird space because these companies act “big”, but don’t spend at big company levels. Just like a new grad with their first job.
- The company is now a grown-up, but is getting used to that and trying to find a new identity.
- They are not totally ready for the real world yet, but they are there.
- They require “big” company attention as well because they have created a lot of complexity getting there
- Might be newly public so the focus is on profitability which probably means cutting costs.
- Procurement gets introduced and things have got very specialized.
- I sold into this space for almost seven years at SuccessFactors, ServiceMax, and Box
- I would not focus too many sales reps into companies this size. Everyone tries, but it never produces.
- It is historically a difficult space to target and sell into because of the points I mention above.
For companies this size I can’t even make an org chart because there simply isn’t one typical structure. And beyond this size my analogy breaks down. While I don’t have a lot of experience selling to companies bigger than 1,500 people, or working at them, I’ve always said they are more like governments than schools or colleges.
One size doesn’t fit all
Despite the increasing consumerization of technology, if you are in the business of selling to other businesses, a one-size-fits-all approach is not the most efficient one. Self-service will work effectively for early stage companies and is a great way to get into any size company. But by the time startups are leaving “middle school” a sales force targeting them will start to pay off. The biggest advantage of these sales teams are to establish relationships that help create cross- and up-sell revenue. To be a successful B2B company you have to tailor your sales and product approach to meet the changing needs of your customers and potential customers as they grow their own businesses.
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