Are you Selling Solutions or Tools to the Enterprise?
I regularly encounter SaaS application vendors who are having difficulty getting traction in Enterprise customer acquisition. The founders think they have an Enterprise Solution because it has the potential to change the way work is done in the Enterprise. Because they a) have limited functionality in the initial version and b) have not done the hard work to understand and quantify the value to the customer, they price it low ($25K ARR or less). The result is that prospects see the application as a tool or point product. Enterprise executives, who have the authority and political capital to authorize changes in the way work is done are looking for solutions to their top priority problems. They do not spend cycles on low-priced tools. They delegate the evaluation to those who don’t have the authority or political power to change the way work is done. Often, prospects see the app as a “nice-to-have” rather than a “must have”. The result is low close rates and long sales cycles. Sales reps try to solve this by forcing demos on every candidate they can find. They focus on features rather than value for the customer because they have not been trained how to sell value. The founders may see the traction problem as poor sales execution when it may well be product positioning, low price and the lack of a clear value proposition.
See a related post on Selling Value to Executives.
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