So sales at your early-stage B2B company have hit a plateau. Your salespeople are overwhelmed pitching and managing their flock of small- and medium-sized clients—clients who, up to now, were the primary drivers of your growth. But that growth is starting to stall, and the team is working overtime just to match last quarter’s results.
It’s clearly time for a change in strategy. It’s time to consider moving your business upmarket.
The reasons for doing so are many—assuming your business is ready. Look hard at your sales process for an idea of your preparedness. Why are you losing deals? What are the most common complaints your customer service reps hear? What’s the value proposition for larger clients? Are you ready to customize and iterate your product for pickier and more powerful clients?
It’s better to figure these things out when your clients are smaller; your stumbles will be smaller, too. But if you’ve have good answers for each of those questions, you may want to consider looking for sales growth by hooking bigger fish.
Beyond the obvious larger contracts, there are a number of reasons why moving upmarket can reenergize growth at your company.
More Flexibility: Enterprise accounts have larger budgets and thus more opportunities to make sales. While SMBs are often less receptive to pitching anything beyond the original agreement, enterprise accounts are usually open to new ideas and shifting goals. Says David Skinner, President of Chicago’s Drum Agency: “This has been a crucial aspect for us. Moving from a collection of small clients to a couple large ones has not only given us focus, but allowed us to tap relationships for sustained growth.”
More predictable revenue streams. Similar to less uncertainty when contacts shuffle, there’s a higher degree of accuracy built into revenue projections. Whereas smaller clients often have sporadic buying patterns (an effect multiplied across all of your accounts), larger clients can be depended upon for solid forecasts.
Upselling and cross-selling opportunities. You typically aren’t just dealing with one point of contact, as is often the case with SMBs. Instead, you’re seeking buy-in across teams and departments and up and down the chain of command. Each new contact presents opportunities for upselling and finding peripheral pain points you can address.
Potential to increase your Average Sale Price. Provided you don’t make the rookie mistake of discounting your product just to attract the bigger clients, you stand the chance to see improvements in your ASP. You’ll be able to find growth opportunities within those big customers, provide a higher level of service, and increase your margins.
You’ll expand your network. In addition to deeper relationships within the company, you can expand your sphere outside of it as well. A few marquee referrals can add grease to your entire sales funnel, and you may find potential large clients respecting you more than they did before. And the best part? Good referrals have a tendency to multiply, setting the flywheel in motion. “This was something I didn’t quite anticipate,” Skinner adds. “Having one brand-name client opens doors to all sorts of new ones.”
Less exposure to factors you can’t control. Small businesses go bankrupt all the time. The potential for this happening is proportionally smaller at larger companies (though it still happens, of course), so there’s less risk of losing accounts due to forces beyond your control. Furthermore, there’s less uncertainty at larger companies when a key contact leaves the company.
Your salespeople will feel more effective. Salespeople hate wasting time and resources chasing after leads that never pan out. When dealing with a smaller number of large accounts, however, your salespeople can focus on increasing business with established contacts. They won’t spread themselves too thin cultivating relationships with lots of smaller clients.
You’ll protect yourself against competition from above. It’s easy to get comfortable dealing with SMBs, as the challenges are smaller and the stakes lower. But if you never move beyond this low orbit, you’ll eventually face competition from much larger and better-funded competitors. The road to IPO is littered with small, erstwhile world-beaters who failed to heed this advice.
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