Enterprise software has shifted from boring, client-based software to sexy SaaS products. This “consumerization” of enterprise brings the user experience closer to how we buy and use consumer software and apps today.
Anticipating the complete consumerization of enterprise software, many startups are selling their SaaS solutions into what looks like a very traditional enterprise market. Users are driving sales of new applications, but IT is still involved in the purchase process.
Startups often come to market with a highly consumerized customer acquisition model, always striving to achieve zero or low touch conversions. However, if you’re planning to sell only extremely low touch conversions, today’s environment can be tough. The economics of each sale quickly start to slip away from you and you may be spending far too much money chasing too few customers. A customer acquisition cost (CAC) higher than a customer lifetime value (LTV) can mean death for enterprise startups.
The long-term solution is to focus on lowering your customer acquisition cost. Often this means a customer’s lifetime value will be lower as well, but you can find much more efficient ways to scale. On the other hand, not everyone has this option, and enterprise sales need to become part of a startup’s strategy.
So, what happens when you find yourself in the middle? In other words, you’re paying a premium to acquire customers because you have to, but also because those customers are contributing to your product development. To get out of “the death zone,” try the following four strategies.
1. Don’t Sell, Get Bought
Escape from the death zone by getting in front of more highly qualified buyers — the people who believe in what you are doing and are ready and willing to help you. These buyers can:
- Guide you through their buying process.
- Help you build relationships inside their organization.
- Define requirements at a time when you are still learning.
Finding these buyers can be challenging, but if you communicate effectively, they will find you. Not long ago, enterprise buyers only came to a few conferences a year. The rest of the time, you could only reach them through expensive channels such as analysts or trade media. Now, both buyers and users are proactively searching for great software to make their lives easier.
But first, you need to get out there. Today’s startups must be able to quickly communicate their value, but must be easy to find in the first place. Translation? You can’t hide behind complex websites and thick White Papers anymore. Becoming engaged and accessible are two of the most important things a startup can do today – and are the primary ways to attract the kind of buyer you need at this stage of the game.
2. Be Agile
Making bad assumptions can sink you, or set you back at a time when you can’t really afford to learn the hard way. Therefore, treat your customer acquisition process the same way you would your product development — be agile and constantly test assumptions.
Agility in sales doesn’t just mean trying new things. It also means measuring and monitoring existing processes, so you can clearly identify the outcomes — both positive and negative — and adjust accordingly.
3. Ask Questions
Many of the people with whom you network — and even your customers — can provide you with substantial product insight. When you work in a constrained environment, however, it can take time for people to warm up to you, but when they do, tap their knowledge as an invaluable resource. Ask the right questions in order to gather crucial feedback.
4. Be Honest
Above all, you need to be honest about yourself, your company and your product’s current stage of development. If you can be honest while simultaneously working hard to make up for any product shortcomings, you will reap rewards.
The best customers are the ones who are willing to jump into the fray with you to help accomplish your — and their — goals together. With their support and assistance, you can get through the enterprise startups death zone and emerge with both a positive margin and a better product.
