Not all sales processes are created equal. In fact, the whole purpose of developing a sales process for your company is to uniquely match the dynamics of your target audience’s purchasing methods with the approach you use to convince them to buy your “stuff”. One major mistake I see a lot of startups make is thinking that a transactional, SMB-focused sales process can work with large enterprises but just with longer sales cycles and bigger deal sizes. It’s not nearly that simple.
There are many books about enterprise sales. In this article I’ll highlight what I think are the key attributes of a successful enterprise sales process while sharing some tips and tricks I picked up during my tenure as an IBM enterprise sales rep and later as Sales VP for an early stage tech company with an enterprise focus.
Just as a Series A financing round isn’t simply a large Seed round, an enterprise sales process isn’t simply an expanded version of an SMB sales process. In fact, possibly the biggest challenge startups face when trying to sell to large enterprises comes from a required attribute many startups can’t afford – TIME. Yes, it’s true that typical enterprise deals take a lot longer than SMB sales (often 1 year or longer). How much longer depends on the average deal size, solution complexity, market adoption/awareness and various other factors. But suffice it to say that with an enterprise sales focus you will be in a mode of “elephant hunting”, which means fewer deals and less often, but when you land them you bring in a lot of fuel to operate the company.
Most of the topics covered in this article relate to solutions that cost $250,000 per year or more. Companies with less expensive offerings might avoid some of the issues described, or perhaps a less extensive version of them.
A Fast “No” is the Second Best Outcome
Since one luxury startups don’t have is time, you would much rather get a fast “no” from an enterprise prospect than get dragged through a 6-12 month sales process only to get an eventual “no”. No sales person likes to get a slow “no” but in the case of a startup that is regularly projecting their next cash fume date, these are excruciatingly painful and sometimes terminal.
Referring to the graphic, you’ll see there are only two desirable outcomes: getting an inevitably slow “yes” or getting a fast “no”. I’m eliminating getting a fast “yes” because, from my experience, they don’t happen in enterprise sales. And if they do, it’s because the deal size is really small and not indicative of the typical or desired deal size that necessitates the enterprise sales process described in this article.
The remainder of this article describes various attributes of a successful enterprise sales process, with a primary goal of winning large deals and a secondary goal of quickly identifying when there’s little-to-no chance of winning the deal. Don’t treat this article as a full-blown sales process but rather key attributes that accompany a strong and successful sales process for enterprise targets.
Establishing a Sales Playbook
Since everything about enterprise sales is big and takes a long time, any inefficiencies or mistakes are also amplified. Because of this, it is critical to establish an effective sales playbook over time. The stages of establishing and leveraging your sales playbook are as follows:
Decode the process
Most of the topics throughout the rest of this article related to the sales process. One end result is a list of stages from start to finish, including the activities within each stage, the typical time spent in each stage, and the milestone accomplishment required to move to the next stage.
Optimize the process
Identify tools and methods for compressing time in each sales stage and for improving odds of moving from stage to stage.
Magic happens when the timing and odds for closing a given sales opportunity aren’t just predictable after reaching the latest stages in the total process, but rather mid-stages and even earlier.
One of the most common mistakes made is to nudge the prospects from stage to stage without mapping out all of the activities and required involved players from start to finish. That is like driving your car to a new location without looking much ahead of the bumper and without a map. One of the biggest benefits of simply decoding the whole sales process for a typical deal is the visibility it provides all the way through closing the deal.
Large enterprises move slowly but deliberately, based on a strategic planning process that occurs annually. Budgets and priorities are set based on high-level company goals. Those goals get cascaded throughout the organization, often all the way down to the individual contributing employee but certainly to the department level.
Your mission early on in the sales process with a large enterprise is to discover these cascaded set of goals, starting with the key influencers and recommenders for your project and then moving “upward” to their department and ultimately the company level. You’ll do this so that when it comes time to present your proposal and later deal with objections, you must communicate everything in context of helping your prospective customer accomplish their stated goals.
The hierarchy goes something like this:
- Your product has features and capabilities
- Features and capabilities provide benefits
- Benefits solve problems
- Eliminated problems help accomplish individual, departmental and/or company-level goals
Your enterprise prospect is not paying money to get #1 in the list above but rather #4 in the list. HUGE difference and valuable to understand when you enter the inevitable price negotiations. For additional help mapping features to benefits and goals, see my related article titled “The ‘So What’ Rule“.
Players & Roles
Large enterprises are big enough to have employees, managers and even mid-level executives with fairly narrow responsibilities. Because of this, selling to them always involves multiple players. Sometimes as many as a dozen or more spanning different departments. Because of this, you’ve got to map out the players involved and their role in the purchasing decision. Below are common roles, to give you an idea of what I’m talking about:
- Decision Maker
It’s pretty clear what their role is but just make sure there’s not more than one (see the Decision Process section for more info). It will be extremely difficult to get access to the ultimate Decision Maker but this is a key objective (see Access to Power section for more info).
They do much of the research and are actively involved throughout the sales process. There are commonly multiple recommenders.
These are sometimes much harder to identify because they might not officially be a part of the project team. But they have the ear of the decision maker(s) and, for some reason, have decided to get involved in the decision process – possibly because it somehow affects them or possibly because the decision maker requested their help. Influencers can sometimes be more valuable to have on your side than the formal Recommenders.
This is not actually a different role but rather a designation you will give to a Recommender or Influencer that most significantly influences the final decision. They often have emotional involvement in the process, unlike the rest of the members of the evaluation team. A key objective of yours is to identify and work closely with the Champion.
With a dozen or more people somehow involved in the decision process, you will need to be organized with this information as you identify and decode the players. This is obviously where your customer relationship management (CRM) system comes in handy. Use it.
Large enterprise organizations are complex beasts, and this attribute extends to how they go about making decisions for things that either cost a lot (subjective, but certainly anything that costs $500,000 or more annually) or will deployed across a broad part of the organization. In order to protect themselves from various risks and to ensure they’re making the right decision for the organization as a whole, they develop a specific way for making such purchase decisions.
You will need to get really at decoding each enterprise’s decision process. Use the following questions as a guide:
- How will the enterprise prospect go about making their final decision?
- What activities will be involved?
- What is the planned sequence of those activities and how long does the process typically take?
- Is there a recommendation committee?
The decision process and decision criteria operate in synergy with each other. How will the solution alternatives be evaluated? A generic answer is “whichever one best meets our needs” but that’s not a response that helps you very much.
If you’ve identified a set of goals per the guidelines mentioned above, you’ll be ahead of most competitors but you still need to find out how various trade-offs will be evaluated. For example, if the highest scoring solution is also by far the most expensive, will cost be taken into consideration? In fact, is there a formal scorecard that you can get your hands on? If not, or if they won’t give it to you, you still must figure out the criteria that will be used to make the decision. Otherwise, you’re flying mostly blind and subjecting yourself to high risk of a slow “no”.
Access to Power
Engaging with large enterprises will consume multiple resources from your company. That probably means the founders and other key executives, at least until your company grows to justify having a Sales VP and others that can offload this work. As your commitment increases for a particular sales opportunity (resources, time, money), so does your right to ask for access to power. And by “power” I mean the decision maker. You have to earn this right, so don’t ask to meet the decision maker during the first meeting. Instead, get conditional commitments that, if met, will gain you access to the decision maker. Here are some examples:
- Following a successful product demonstration
- Being selected for the short list of companies that will submit a formal proposal
- Request to perform an on-site pilot test (described in more detail below)
The reason you desperately need to meet the decision maker before committing substantial time and resources is 1) to get his/her specific goals 2) confirm that you have some legitimate chance to win the business (seeking a quick “no”, if needed).
The Inevitable Pilot Test
Prepare yourself for this inevitability because large enterprises all require pilot tests. You might call them a “trial” but essentially the enterprise prospect needs to see your product in action before they are going to make a $200K or larger commitment.
If you earn enough credibility to be asked to start a pilot test, congratulations. The large enterprise is now willing to more completely evaluate your product. This isn’t just an expanded product demo and they don’t take such a decision lightly. Their plate is already full of projects, deadlines and regular day-to-day chaos. As a result, starting an on-site pilot test consumes their time, resources and money. But it’s the same for you. So if you haven’t already gotten access to power, now is the time to diplomatically ask for it. Here are some other things to consider regarding pilot tests:
- What is the enterprise hoping to accomplish from the pilot? Get specific.
- How long is the pilot test expected to last? It only needs to last long enough to accomplish the stated objective(s). Can you do that in 2 weeks instead of 2 months?
- Who will be involved from the enterprise and who is your key point of contact? Get specific.
- What assistance will you be allowed to provide during the pilot test? Sometimes, enterprises want you to install and configure the product and then get out of the way, only providing support if requested. Be careful about this because your ultimate objective is to get a successful outcome.
- If there are important pre-requisites to a successful pilot of your product (technical, operational, etc), now is the time to ask.
Once the pilot test starts, any negative outcomes or delays are reflective on you, your company and your product. So before you start, “measure twice and cut once”.
For insights and best practices associated with enterprise POC’s and trials, read my article titled “Getting Maximum Credit From Your Enterprise Trials“.
One more thing about pilot tests. It’s your perfect opportunity for what’s called a “trial close”, which is a sales technique to help make sure the enterprise isn’t just kicking the tires but is still prepared to make a buying decision. Your question might go something like one of these:
- “Can we assume that we have been selected and this pilot is to confirm we can deliver the promised benefits?”
- “Following a successful pilot, how long do you think it will be before we could get a purchase order and start the deployment?”
- “With a successful pilot test will you recommend an enterprise-wide purchase to _____ (decision maker’s name)?”
Hopefully you can see how questions like these help identify any remaining objections or reveal that you’re not in the leadership position that you thought you were. The great thing about a “trial close” is that you’re not asking for the ultimate decision, which leaves you options to recover if you don’t get the answer you’re hoping for.
The Dreaded Price Negotiations
If you thought getting a positive decision was the final step, you’re wrong. For enterprise deals, you’re odds of getting a purchase order might have increased to 90% but you’re probably only 80% of the way through the complete process. You still have to go through pricing and contract negotiations and then the administrative process of purchasing.
Both are topics for another article but I can tell you that many enterprise deals get delayed 2 months or more for these final steps. One month is considered favorable and 4-6 months is not unheard of, unfortunately.
So if you are still in your startup or early phases of evolution and don’t have a ton of cash in the bank, don’t go hire those two new developers just because you got a winning “decision” at a large enterprise. Just in the same way an investor isn’t fully “closed” until their funds hit the bank, an enterprise deal isn’t fully “closed” until you get a purchase order and deliver the product. Even then, many enterprises are also slow to pay their invoices (45-60 days is common) but that’s also a topic for another article.
You must understand that the primary way the enterprise Purchasing department shows its value to the organization is to beat the vendors down on their price. So when they bring out their sledgehammer to use on your, make sure they understand specifically how your product has already proven (via the pilot test) that it will help them accomplish one or more strategic goals. The purchase agent will not care (or won’t seem to care), so if their demands seem ridiculous you might need to call on the support of your project Champion or the executive they report to. They are the ones that care about accomplishing their goals. I have a personal story in which this exact strategy was used to negotiate a $1.8M deal with a US Fortune 500 corporation at LIST PRICE!
4-Legged Sales Calls
If I haven’t yet convinced you that enterprise sales is different than SMB sales, this is my final chance. Most products sold to enterprises have a level of complexity that is beyond SMB-focused products. And when I say “complexity”, it could be a technical complexity for operating the product. Or it could be complexity related to installing, configuring and integrating it into the enterprise environment. Either way, the expertise needed to demonstrate and ultimately sell most enterprise products is beyond what a sales representative alone possesses.
Because of this, you might hear the term “4-legged sales calls” in context of enterprise sales. It simply means that a 2-person team (4 legs between them) is required to handle the start-to-finish enterprise sales process. Obviously, the sales rep is one member of the team. The other is the sales engineer (SE). The SE often leads the product demonstrations and always oversees the on-site pilot test. They serve as the lead for all things technical throughout the sales engagement and good ones are worth their weight in gold, even though they usually get less glory than the sales rep.
4-legged sales calls means a larger sales organization, which means more sales-related expenses. So make sure to account for this in your expense budget. Also realize this increases the numerator of your customer acquisition cost (CAC) calculation (sales & marketing costs / new customers acquired) and might cause your CAC payback to be so long that your customer acquisition model is not affordable (see related article titled “Visualizing the Interactions Between CAC, Churn and LTV“. If this happens, you only have a few options to remain a viable business:
- Shorten your sales cycle (more customers acquired in a given period of time) – reduces your CAC, which shortens your payback
- Increase your average deal size – shortens your CAC payback
- Reduce your solution complexity so that your ratio of SE’s to sales reps is reduced – reduces your CAC, which shortens your payback
- Accelerate your upsell and cross-sell success after the initial deal – shortens your CAC payback
Land & Expand Opportunities
Selling to large enterprises brings a great opportunity to generate a lot of revenue from the same customer. But almost never will these customers fully deploy your solution in the beginning. That means maximizing your revenue will take time. Combining this with the complex decision process associated with big ticket purchases introduces a favorite trick with enterprise sales: land-and-expand.
Rather than go for the $1M per year large-scale deployment, the land-and-expand strategy involves landing a smaller sale initially and expanding on that over time. The smaller initial deal size will avoid at least some of the complexities described in this article. That’s hugely valuable to any organization, but especially startups with limited cash in the bank and desperate to prove to investors that large enterprises are buying their solution.
Companies with multiple products or products that appeal to different functions within a large enterprise are especially advantaged with this strategy.
The most common forms of the land-and-expand strategy are listed below:
- Land with a single division or department within the enterprise, then expand to the others over time
- Land with a certain product in your portfolio, then expand by selling the other product(s) over time
- Land with a sale in a given geography or geographic location, then expand to other geographies
As you can see, there are ways to combine two or more of the strategies. Experimenting with the options over time, will almost surely derive a playbook for most efficiently acquiring new enterprise customers.
Walking Before You Run
As much as I’ve tried to be honest about the trials and tribulations of selling to large enterprises, if they’re your best target customer, you don’t have a choice. You’ve got to become a master at enterprise sales. But many founders either forget, or don’t understand, that “enterprise” doesn’t have to just mean federal government, Fortune 500, or Global 2000 organizations. The smallest of those have tens of thousands of employees and the smallest of the private sector ones generate several billions of dollars in annual revenue.
Consider starting your sales pursuit a notch or two down from these largest organizations. The lower and middle levels of the enterprise range (ie – 2,000 employees, $500M revenue) are still large organizations that can pay lots of money for your solution. It will be easier to get to decision makers. They’ll move faster in their evaluation and decision-making. They’ll be more willing to take risks on startups as solution providers. The benefits are numerable and better yet, you’ll have a chance to get multiple at-bats and hopefully some landed deals before running out of money.