Advice from Leading Entrepreneurs on When to Move Upmarket
In our last entry we discussed the benefit for early-product, SaaS companies to initially target the SMB market with the goal to move upmarket and capture larger accounts over time. While this presents a smoother entry into market, it creates a new set of challenges including: when to move upmarket? And when the timing is right, how does one move upmarket? As investors and board members we work with our companies closely through this growth. It is a broad subject that could be covered in many chapters of a book. Instead, here, we have asked some of our portfolio executives to share lessons from their own experiences.
How Do You Know When To Move Upmarket?
- My belief is this process works best when it happens organically. It will happen when enterprise customers are not having their needs effectively met by other providers and may often ask you to partner with them on building the functionality. Making those first few enterprise customers successful at whatever cost is essential for building your brand and word of mouth. -Tim Kopp (@tbkopp), former CMO, ExactTarget & WebTrends
- Don't get lured into going upmarket. Get pulled. Make sure you first have a strong base of smaller clients. They are references and sources of learning that will be part of the foundation that you build on. If sales start coming in, soak up as much knowledge as possible in terms of what the success factors have been, and allocate more resources towards the effort, wherever you need them most. Be disciplined about not signing a client that's much bigger than what you are capable of delivering. -David Blanke (@davidmblanke), COO, Sailthru
- Don't hire an enterprise sales team until you have proven the ability to sell and service the demand. Don't staff up on the promise of great meetings and an overly optimistic pipeline. While it's a bit of a chicken and egg situation, it's better to wait until the signs of success are proven with deals that close and successfully go into production. If you do it right, you will see a steady increase in the size of the customer and deal size before you ramp up spending in sales and marketing. Zack Urlocker (@zurlocker), former COO, Zendesk
- Go deep in verticals and establish a great brand name which will begin to generate a lot of inbound interest and excitement from larger prospective customers who hear positive buzz about your products. -Nate DaPore (@peoplematterceo), CEO & Founder, PeopleMatter
What Are Some Tips, Tricks, and Lessons From Having Moved Upmarket?
- Use a land and expand model of inside sales for hunting to get a ground swell and then take it back to corporate and standardize with field sales. Large centralized deployments are hard to win so don't waste valuable selling time going direct. Hire entrepreneurial salespeople with business development DNA. Finally, don't hijack the product roadmap for one large customer's unique requirements. It must work for the masses initially. -Dave Berman (@daveberman), President, RingCentral
- Spend time with your five largest customers to understand why they are happy and paying. Basically, make sure you understand the pain points that compelled them to act, who they evaluated competitively, and what is not working about your product. -Rene Lacerte (@rlacerte), CEO & Founder, Bill.com
- Begin working on building your brand, thought leadership, partner ecosystem, agency relationships and deep vertical expertise that enterprise accounts require. Perception is reality. -Tim Kopp (@tbkopp), former CMO, ExactTarget & WebTrends
- Enterprise customers definitely put stress on an organization. Their expectations on are much higher than mid-market or SMB customers. But they are also much more willing and able to pay for premium support, training and implementation services. You should be able to introduce and staff some of these premium services with commitment from enterprise customers to pay for them. For example, many enterprise customers may be willing to pay for the attention of a talented Technical Account Manager. -Zack Urlocker (@zurlocker), former COO, Zendesk
- Sign-up great SMB companies that are going to grow and you will be able to grow and scale with them. -Billy Bosworth (@billy_bosworth), CEO, Datastax
- To achieve success, tight cross-departmental coordination is necessary. Otherwise, one piece gets ahead of another, where sales is selling a product that marketing is not messaging or new clients are coming on board that can't properly be handled by your client services team. -David Blanke (@davidmblanke), COO, Sailthru
One executive summarized the upmarket timing simply with "you will know". In board rooms we often get asked whether it is time to start pushing upmarket. It is a much more organic path where you get pulled by staying close to your customers, having an open line of communication internally and externally, and strategically investing in your product and organization as the upmarket demand increases. The methodical approach also allows you to pace the disruption of an incumbent, making it harder for them to swiftly react.