One tangential storyline to the consumerization of enterprise technology is the need for products to be Enterprise Viral. Like every change to an established go-to-market strategy, going enterprise viral has significant effects on the business, especially sales and product development. In this post, I'll take a look at the impact enterprise viral has on Sales.
Traditional enterprise sales are defined by a long process, multiple stakeholders, lengthy cycles, and an eventual payoff with a big check. An enterprise viral product reduces all four attributes with significant implications for the sales engine of your organization.
Often that starts with helping the customer fully realize the value of what they have already purchased, which is precisely what a great account management and support team provide.
The biggest elephant in the room is the much smaller check size. With a viral model, you aren't selling an enterprise, but a group. A fraction of a company means a fraction of the check. This will make life very difficult for a traditionally comped sales team. Unless they are somehow compensated for the total value of a customer, selling your software will not be worth their wild.
Another implication is that sales is no longer a transaction. The reality is that process, cycle, and stakeholders have not gone away, but their involvement and the revenue they provide are amortized and most of the value comes post initial sale. Sales stops being pure selling and a mix of selling and support. Marc Andreessen states it very well, sales' job is to create more value for the customer. Often that starts with helping the customer fully realize the value of what they have already purchased, which is precisely what a great account management and support team provide.
The final major implication is that complementary services have to be valuable. Gone are the days where sales execs can pad their commission checks and the company it's bottom lines with support contracts to questionable products. In modern enterprise sales, if the product does not work, it does not expand and the company forgoes potential revenue. The services offered have to bring real, tangible value. The upside is that enterprises are often happy to pay for meaningful value-adds.
If there is a need for a traditional sales team, their compensation should be linked to the true realized revenue of the customer and not just the initial deal size.
So what does this mean? For starters it means that the traditional sales organization is less meaningful to the bottom line of the organization. Early staffing should focus on finding entrepreneurial account managers that discover opportunities while helping customers realize the value. If there is a need for a traditional sales team, their compensation should be linked to the true realized revenue of the customer and not just the initial deal size.
As Tomasz Tunguz wrote when introducing the Flywheel model, this model of building the sales engine focuses the entire company. The bottom line benefits are equally valuable as it takes some of the risk after going after larger customers. This approach will require some imagination and iteration, but the benefits are there.
Did you like this? Please share:
On Leaving Startup Life
Musings on the transition from being in a startup to working for a very large company.
Another new Manager Challenge: Managers Have a More Stakeholders
Bad managers never shift from the mindset of an individual contributor. Great managers broaden the number of stakeholders when making decisions.
Self-Evaluating Success as a Manager
In the first part of my series on understanding the difference between management and contribution, I focus on the challenges of evaluating success.