In this write up,we are addressing the non-SaaS businesses that work with enterprises asdirect customers or partners, e.g., Fintech partnerships with banks, Healthtechs with hospitals / insurance companies as customers. Plenty of great articles have been published on GTM and scale-up for enterprise SaaS companies – while a lot of concepts may overlap, we’ve actively chosen to exclude enterprise SaaS from the current discussion.
Not until long ago, there used to be a clear distinction between “B2B” and “B2C”. Certain products and services were meant for enterprises only, e.g., accounting solutions, workspaces. Consumer products were directly offered to customers. As collaboration between enterprises increased, a huge potential was seen in targeting employees / existing customers of enterprises. Today, B2B and B2B2C are core levers for growth for majority of companies, bringing the promise of a sticky customer base and steep growth. A B2B GTM can come in the form of direct selling to clients or a more indirect B2B2C mode, where enterprises (often large enterprises) are partners to sell to the end customers.
While some founders come in with deep B2B experience and relationships in the relevant domain, many end up venturing into enterprise partnerships for the first time with limited head start. Once mastered, the B2B route can be super rewarding.However, the journey of partnering with/selling to large enterprises can present significant challenges. After speaking with several entrepreneurs building via these channels, we’ve summarised typical themes at the 4 key stages of the scale up journey (at the risk of over-simplification). Founders must not only get up to speed with the client dynamics, but also keep evolving their teams and approaches as the business scales.
Despite ensuring best-in-class delivery, many times, dynamics with enterprises get difficult because of multiple stakeholders involved and lack of structured interface with clients. Unlike colleagues in the same organisation, there is expectation to work together (across several levels) without formal interfaces to know one another’s concerns and motivations. While there is no substitute to making the product differentiated, a few challenges typically present themselves in nearly all situations. Here’s a sneak-peek into the “FAQs” of navigating the B2B ecosystem:
1. I am being asked to drive prices down / offer more at the same price, seems like mycompetitors are also under-cutting
While under-cutting is determined by dynamics of a specific industry, it’s key tounderstand that clients have their own budget targets at an overall as well as individual level. Getting insights on clients’ priorities can help direct bandwidth to the right problems and stakeholders. Here are a few ways to help avoid price cuts altogether:
- Gathering intelligence on whether and why competitors are driving prices down (sometimes, they are under-cutting and in the long run it is not sustainable for both the client and competitor
- Many times, no one is driving prices down– it is just a negotiation tactic deployed by the clients. To make matters more complex, large enterprises can afford to get procurement teams in between the decision-maker and the seller, making the connect very impersonal
- Irrespective of how the competitors are approaching the ask, focusing on historical performance, and rationale on what drives current prices (e.g., quality of product / offering) can turn the discussion in startups’ favor
- Lastly, sequential discussions across escalation matrices, and creation of an additional layer of finance or commercial team helps in better orchestration of discussions between the account management team and clients
If the onlyoption is to drive prices down, it should be done for a pre-agreed time andfuture price escalations should be built in.
2. I have been in discussions with some clients for a while, even running free pilots, but there’s no clarity on closure.
There can be a multitude of reasons, e.g., high switching costs, lack of budget, client evaluating multiple options and needing to show backups internally. Gathering information from connects in the organization is key for more effective discussions with the decision makers. Consider putting free pilots and trials on hold if the timelines are going beyond the initial agreement.
3. The contracts are very lopsided with demanding indemnity clauses, e.g., openliability, survival clauses beyond the agreement
Introduce legal expertise from the start – sometimes, it might be very early to onboard a head of legal, but availing services from a corporate law firm / independent referenced lawyer can be equally effective in early days. Let the person with legal expertise front the discussions with the legal POC at client, and when there is a deadlock, engage with the business decision-maker highlighting your genuine reasons for not accepting the specific clauses. Give clients sufficient time to deliberate.
4. The performance metrics are not possible to deliver, not sure how competitors are meeting them
Gathering competitive intelligence is key here. If delivery expectations are as per industry benchmarks, a constructive dialogue needs to be initiated with the client on piloting additional initiatives to exceed the best possible metrics.If your company’s performance is lagging, share a definitive improvement plan with the client, along with timelines and work towards improving the same. An assessment of which metrics are critical and which ones are “good to have” will help drive focus.
5. How do I keep my sales teams motivated and identify performance challenges ahead of time? I do not have clarity on my team’s inputs – are they doing everything they can?
Setting achievable goals (“minimum” and “stretch”), along with proportionate rewards works wonders in keeping sales teams motivated. For input metrics, a good sales tracking system, rigorous review cadence and frequent dipstick checks help identify gaps in approaches quickly. Lastly, building a culture where sales personnel feel comfortable to approach seniors after making their best efforts can unlock great outcomes.
6. My clients need me to step in for every issue. My delivery teams are equally/more capable of addressing these issues, and I would want to spend my time on other areas now.
Boundary setting can ease up a lot of burden for founders here. Your clients may be used to interacting with you in early days. With a sales and account management team set in place, your bandwidth should be freed up for solving more difficult / newer problems. Politely delegate by looping in the next layer on emails and Whatsapp messages – that way, everyone benefits and stays motivated. However, for bigger issues, it might be important to get involved in client discussions and be on top of the situation.
7. My receivables have been stuck for various reasons, I am asked to repeatedly furnish data to clients’ commercial teams to get the money. It’s been an endless game of follow-ups
Receivables typically get stuck either for compliance reasons (e.g., insufficient documentation or data) or when the client is optimising for their own cash cycles at the cost of their partners’. Aligning with the compliance and payments protocols of large enterprises before starting the business engagement solves for the former – in their best intent to start, many smaller companies tend to skip this step.
While it may seem super difficult, having clear governance around discontinuing the service is the best way forward if all approaches have failed. In addition to financial hygiene, it ensures a level working relationship between the stakeholders on both the sides and leaves more bandwidth with the whole team to focus on important stuff.
We at Sorin Investments are excited about the massive opportunities that startups have in providing innovative solutions for / in collaboration with enterprises. If you are a founder who is building with this theme, we would love to know about your journey! Do write to us on firstname.lastname@example.org and email@example.com.