What make ‘enterprise sales’ challenging for startups?

Getting a startup anyway is hard. But when you have a software product aimed at enterprise customers, you have to be prepared for even more daunting challenges, and to overcome those challenges, entrepreneurs have to have a plan in place.

Enterprise customers are not accustomed to buying from startups, and hence their buying process is designed to deal with large enterprise vendors.

Here’s a look at some of the major roadblocks that make the ‘enterprise sales’ journey a challenging one for startups:- 

Drawing the attention of CIOs of large corporations

So you have a great idea, a great team and a great product! But what will it take to draw the attention of CIOs of large corporations? How do you even reach them?

Enterprise SalesStartups therefore have to try a variety of things to access relevant customers. Most effective usually is warm introductions by someone known to the CIOs. And for you to get warm introductions, you need to network and meet with individuals who can make those introductions. It could be ex-clients, old bosses, someone you met at a networking event or industry conference, or even VCs, etc. But people don’t make introductions simply because you ask them to. Because it is their credibility on the line too. Hence, it is important for startups to keep potential recommenders informed about your product and progress so that when you request them to make introductions, they can do it with confidence.

Is there a compelling reason to switch?

Large corporations prefer to partner with no less than the best companies in the industry to add value to their own offerings. They would need very compelling reasons to even consider providing you an opportunity to give a demo of your product.

So unless your product fills a gap or addresses an important pain-point that existing players do not offer, there is no real reason for large enterprises to consider switching from a proven vendor to a startup.

It is important to note that for large enterprise customers, a slightly lower price is not a compelling enough reason for switching. Even if the price is much lower, or even if you offer the product free, the implementation and training of the users will generally cost lot more and will impact ROI benefits the customer can derive. Further, the risk with a start-up of a failed implementation is perceived high and impact of failure can be bigger than product costs. (E.g. for a USD 2 bn company, a HR management software product by a known vendor at USD 100K might be a safer bet than a USD 10K software from a startup as a failed implementation will impact HR / payroll / appraisal for all employees).

Proving credibility of the product AND the company

If you did get an opportunity to give a demo of your product to the decision makers in a large corporation, the very fact that you are a startup will make them reluctant in giving their approval because you have no prior track record to prove that your product will be as effective and successful as you claim it to be., and that you will have the organizational maturity or competence to deploy and service the product across the country (sometimes across the world).

Established vendors have the advantage of sharing references and recommendations of existing clients to add a stamp of credibility to their product, which is not possible in the case of the startup. So even though a product looks convincing, investing in technology needs serious consideration, because if your product does not deliver on its promise or if you are not able to service the product well, switching to another product is can prove to be both, costly and cumbersome.

The seed of doubt regarding the startup’s survival

Working with or buying a software product from a startup can be a risky affair, simply because there is fear that it will survive beyond a certain period if it doesn’t have a steady revenue stream or is unable to find suitable investors.

This often becomes one of the prime reasons for opting in favour an established company. It tilts the scale in their favour even if their product doesn’t really measure up to what the startup is offering.

Here are some things that startups can do to help their customers overcome this fear:

  • Build a strong advisory board
  • Focus on customers known to take risks (lead adopters) – ask them which other startups they are working with. If they have not bought from other startups, they are unlikely to buy from you. Innovators and lead adopters generally boast about it and love to tell everybody.
  • Build a credible partner ecosystem – partners who are selling, implementing at your target customer. They can bring credibility to your products. Budget some presales and post sales $ for these partners.
  • Identify key stakeholders – especially in LOB, IT and procurement. Most deals will need a sponsor in each of these departments and anybody can say no to a startup risk. Take time to understand you has authority to say Yes.
  • Plan for in person meetings with key stakeholders. Nothing builds credibility than the enthusiasm of a founder in front of a customer.
  • Highlight advantages relevant to function you are speaking to (example talk about new revenue to LOB, less price to procurement etc.).
  • Identify who your stakeholders consider as experts – industry analysts, industry peers. Etc. They will absolutely look for external validations.
  • If you have investors, ask those investors to accompany you for final sales closure meetings (or at least offer to the potential customer to speak to the investors)
  • Start small to minimize perceived risk – example start with a department specific deal

At iSPIRT we recognize these challenges and have undertaken initiatives to bridge the gap between large corporations and software product startups. InTech50 is one such initiative where we shortlist promising software product companies in India and showcase them to large enterprise customers.

Launched last year, the initiative is now in its second leg and will be held on April 15 – 16 in Bangalore. InTech50 is a collaboration between iSPIRT and Terrene Global Leadership Network and aims to facilitate both startups and established large corporations to leverage from each other in their endeavour to grow bigger and better. While the larger corporations can benefit from the expertise that startups offer, the startups get to work with the best clients and give their business a stable foundation.

The unique initiative brings both, startups and CIOs from the best global companies on a common platform, and explore ways to find synergies in their operations. For CIOs, InTech50 curates the best product startups from across India.

Startups get a rare opportunity to gain easy access to and pitch to 50 global CIOs, all under one roof.

InTech50 Business Catalyst program

In addition, this year, InTech 50 will include Business Catalysts program. Business Catalyst Program connects startups with senior sales leaders and sales consultants from across the globe. These consultants can help you with lead generation; they can identify project sponsors in LOB, IT and procurement. They can help you identify who has tendency to buy from startups and who will never. And they can help you with in-person meetings with stakeholders when you cannot travel. Intech50 is not charging for participation in the program. If you engage with Business Consultants, you can pay them directly for their services. See more about business Catalyst program here.

So, come to listen to catalysts on how they can engage with you.