Let’s say you’re a CEO leading your startup’s migration from mid-market to enterprise. To do that, you’ve hopefully already done the following:
- Analyzed existing success in enterprise accounts. (Most people don’t start purely from scratch, but instead have picked up a few “accidental” customers that they hope to replicate.)
- Hired a team to pursue enterprise, ideally with dedicated AE, SCs, SDRs and even more ideally with a dedicated CSM and marketer. Concretely, that initial team might look like 1 sales manager, 4 AEs, 2 SCs, 3 SDRs, 1 CSM, and 1 field marketer. A focused team of dedicated resources is an infinitely better approach to opening a new market segment than making it everyone’s pastime.
- Done market research to understand the competitors you’ll encounter and the buyers to whom you’ll be selling. You’ve then made an initial strategy for beating those competitors and built messaging that maps to those buyers and their business priorities.
- Identified product gaps. Your product team has done a study to identify missing product features that customers in the new segment will demand. You’ve made a plan that combines workarounds and the product roadmap to sell successfully despite these gaps while you work to close them. (Beware that product gaps, often involving non-functional requirements, doom more new market migration initiatives than any other.)
- Sold the initiative to both the board and the company as a valid and important priority. This will get you buy-in at both the board and team level, hopefully evoking real commitment to the new and difficult undertaking. As part of this, you may well have set initial end-state goals — e.g., getting 25% of new ARR from enterprise in six quarters, increasing your average sales price (ASP) by 50% relative to mid-market, and increasing product penetration per account from 1.5 to 3.0 products.
That’s awesome. You’re doing it by the book. So what did you forget to do? Particularly when getting to the initial end-state might take six quarters and another year or two beyond that to look at renewal and expansion rates?
What did you forget? To sell hope along the way.
I don’t mean selling hope in the metaphorical Charles Revson way. I mean selling hope in a literal way to the team and the board. Twelve to eighteen months is too long for people to wait for results. But if it takes 3 months to build the team, 3 months to ramp them, and sales cycles are 9-12 months, then your earliest possible results are 15-18 months from when you hit the “go” button with the board. Coincidentally, that approximates the MTBF for CMOs.
How do you sell hope along the way?
- You lay out expectations, up front. You describe how you expect things to progress over time (e.g., enterprise team staffed up, first enterprise marketing event, hit enterprise pipeline of $3M, first closed new customer). And like any expectations, you set them carefully and remind people of them often.
- You tell stories along the way. This is the part most people don’t forget. Hey, 125 people showed up at the enterprise event. Hey, we had a great meeting at BigCo. Hey, an analyst positioned us in an enterprise report. Hey, we hosted a great enterprise dinner in Philly. This is good, but the stories start to ring hollow pretty quickly in the absence of up-front expectations setting and downstream data.
- You use leading indicators. Sure, we all know the end-state indicators that we want. A big chunk of total ARR. Faster growth. Bigger deals. Higher win rates. Increased GRR and NRR. Those are real indicators — and they’re important — but they’re lagging and, in cases, badly. You need to find some leading indicators to track and measure along the way. For example, in the enterprise segment: pipeline size, pipeline coverage, average size of oppties, high- and mid-funnel conversion rates, number of customers. Note that when moving up market, some metrics are going to get worse (e.g., stage progression velocity) so you may as well track and set expectations for those as well.
The main point here is to not make the rookie mistake of screaming: “Mid-market is dead! Long live enterprise!” Thus setting impossible expectations for enterprise all while undermining your mid-market efforts. Instead, you should carefully think through how the enterprise initiative is going to unfold, lay that out both qualitatively and quantitatively with leading indicators, and then report back to the company and board with progress reports, war stories, and metrics.
You’ve already convinced people that the enterprise initiative is a good idea. Now you need to make and execute a plan to keep them excited along the way.