How we do not secure a six digit agreement with a huge enterprise
How can a small six-person startup secure a $286,219 annual agreement (9,000 seats at $20 per seat plus onboarding and support fees) from an enterprise with about 30,000 blue-collar employees?
The answer is simple - there is no way.
I mean real sales, not those fancy "social proof" pictures with big names that most startups have on their landing pages. If a person from an enterprise buys access to your SaaS with a corporate card, it is not an enterprise sale.
We almost closed a real one.
How did we get the lead?
There is no rocket science involved - they came to us through search.
They were calm, very curious, and clearly explained their needs. But in the end, all we got was: "Sorry, the solution does not fit the company’s global strategy at the moment."
It took them about six months to go from a very warm and promising lead to a complete decline.
Why did this happen?
Enterprise structures are huge.Even though we spoke with very energetic and purposeful people, they were not decision makers. Making a decision is not a simple process in companies of such size.
They might have a strong internal purpose for new software, but there are too many barriers before the deal can be finalized.
After spending a lot of time on countless calls and negotiations, I would suggest not wasting time on such big opportunities, even though they might seem very promising. It's limbo for early-stage companies.
It's better (and faster) to grow on small bets first.
The bright part? They gave us incredible direction for further development and priceless experience. We received incredible feedback and used this data properly, but we lost time, which is priceless.
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I understand your frustration, and it's refreshing to see someone on IH talk about enterprise sales - finally :)
I agree that enterprise is a pain in the arse, but the post lacks context:
I could go on forever, but I'll stop here.
Sorry for being overwhelming and using some jargon. There's no other way to put this.
Corporate sales are very complex if you don't understand them, and that's why enterprise sales reps are unaffordable for small startups.
In an ideal world, you want to conquer the SME sector until you're comfortable and risk-diversified revenue-wise (say $2-3M ARR), then aim for corporate moonshots.
You do that by hiring a proper enterprise sales guy unless the CEO (or current VP of Sales) thoroughly understands the process, giving him a budget for traveling and 6 months to build a pipeline. If he's great, he'll convert 30%.
If you can't be bothered with all the above, hire a reseller / partner and sacrifice some revenue. They'll deal with all that crap.
The process requires patience, but it can skyrocket your startup.
Don't give up - the fact that they reached out to you is a testament that what you guys do has enterprise potential.
Congrats on the failure and keep going!
Daniel, thank you very much for such a meaningful comment. You asked the right questions. To be honest, I don't understand part of the abbreviations you used in the question, but okay, I'll try to share briefly.
We were contacted by the IT department of a construction company. They aimed to solve a very simple problem - handling their internal video content database. We are a small team, so in most meetings from our side, it was me and our CTO. My friends working in enterprise helped me a lot with advice. We went through some kind of procurement process and as far as I know, there were four other competing companies involved.
Pretty tough. We had at least five long conversations to cover this topic.
Yes. I'm pretty sure that was the main reason they decided to freeze the deal. Unfortunately, I can't share technical details publicly.
Totally agree. It's our current goal.
They gave us a perfect signal on what to do next. I do not regret at all the time we spent building this deal. As Steve Jobs said, "Trust that the dots will somehow connect in your future" and they definitely will connect for us.
Thanks, really appreciate it. Failure is the best way to learn.
Even if the deal doesn't work, it can still provide valuable insight into what you can do better. It's not a total loss!
Yes. I have seen the corporate world from the inside (which is very new for me), met incredible people, and received an incredible proof of what to do next with our project.
Keep up the good work man. Sometimes it doesn't work, but truthfully, time is still priceless given techs' fast-paced nature.
Thanks, Martin. To be honest, I know that the other companies they chose also worked to solve their requirements, and being selected from among them is already a good sign. So we are very motivated, even if the deal didn't work out for us.
I'm glad you're taking it very positively. I wish you all the best things!
I spent a lot of time in SaaS Enterprise Sales in my Career. Closing those big deals takes a combination of traction, luck, PMF and sales expertise.
The biggest thing is that the 6 months process should definitely have a forward direction towards close. Meaning if you get to Month 5, you should be way farther along than you were in Month 1 with a clear path to close. I'd be curious what your sales cycle looks like for your smaller deals (and what is the size of those deals).
It was my very first experience with a company of such size. Of course, I made tons of mistakes, but it is fine - a lot of friends in sales confirm that even having a conversation and beginning the procurement process with a company of this size is a very positive signal.
Intro call with demo -> 2-month paid trial ($500) -> close annual commitment (prices vary from $800 to $3500). 90% won from the paid trial atm, but honestly, not an impressive number of total deals.
Interesting. Yeah, the sales cycle is much more straightforward in this case. Actually, if you start asking too much many questions and dive too deep, people will get annoyed in your current sales cycle. With Enterprise Sales, it is a 'REQUIREMENT' and people will expect it. So small deals are almost giving you the habits to not have a proper Enterprise sales cycle.
I do believe that one of the best ways to learn is through execution. Theory is very important, so my reading list now consists of 80% sales books. Thank you very much. I didn't expect such good and meaningful comments about enterprise sales on IH - I really appreciate it.
Good luck!