Episode 16 | Selling to Enterprise Customers

• Facebook
• LinkedIn
• Twitter
• Email

Show Notes

• Start Small, Stay Small – Rob Walling’s new book.
• WinZip – Sold to the enterprise, but is not Enterprise software.
• SQL Server – Enterprise level product sold to the Enterprise market.
• Hoovers
• Dun & Bradstreet
• ACT!

Transcript

[00:00] Mike: This is Startups For the Rest of Us: Episode 16.

[00:03] [music]

[00:13] Mike: Welcome to Startups For the Rest of Us, the podcast that helps developers be awesome at launching software products, whether you have built your first product or are just thinking about it.  I’m Mike.

[00:21] Rob: And I’m Rob.

[00:22] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made.  What’s going on this week, Rob?

[00:27] Rob: Not much.  I’m pretty excited.  My book launches tomorrow.

[00:31] Mike: Cool!

[00:31] Rob: It releases tomorrow.  I keep saying launch because it’s like it’s a software product or something.  But its publication date is tomorrow, and I have the launch email ready to go and the e-commerce site set up.  I think I said last week I had spent a bunch of time getting that all custom coded, and I’m not regretting that, because there’s actually been some last minute changes I wanted to make.  And if I had outsourced stuff, I would have had to figure someone else’s code out.  Or, if I had used kind of a plug-in or an off the shelf e-commerce solution, I know it would have been a fiasco to try to figure this out.  So I was pleased in the end that I had hand coded it, because I was able to make quite a few last minute things just last night, actually.

[01:09] So, how about you?  How has the last week been?

[01:10] Mike: Pretty good.  Just still kind of gearing up for my trip to Germany the next couple of weeks.  So I’m going to be in Germany for a week, and then I’m going to head over to Switzerland and see some friends just for the weekend and then head back to Germany for another week, and then home.

[01:23] Rob: Sounds good.

[01:24] [music]

[01:28] Rob: This week’s topic is one that stems from a listener question we received.  Let’s listen to that now.

[01:35] Joe Wildish: “Hi Mike and Rob.  I’d be interested in hearing what your thoughts are on a micropreneur being able to sell to the enterprise community.  So far, you’ve concentrated a lot on things like sales via websites, search engine optimization, how to increase conversion rates.  I’m not sure how relevant that is if your target market is the enterprise.  I’d appreciate any thoughts you might have.”

[01:56] Rob: This is a great question.  And luckily, Mike happens to be quite an expert on the topic of selling into the enterprise.  And lucky for you, I know that I’m not an expert on selling into the enterprise, so I’m not going to be talking very much today.  This is going to be maybe a little bit more like an interview podcast where Mike says stuff and then I just ask questions, because I feel like I represent maybe the prototypical micropreneur who has no experience in this area.  And so I’ll be able to lend some insight and some decent questions to get Mike thinking about topics that micropreneurs would need to address to sell into this market.

[02:32] So I think the first thing we are going to talk about is…I love the question, because it really does bring up the difference between selling in the traditional micropreneur sense, which is almost all via the website with a lot of SEO and other online marketing approaches, and then there is selling in to the enterprise, which is going to use very little of those topics.

[02:54] So first of all, Mike, I think we need to clarify what constitutes an enterprise customer.  What are we talking about today?

[03:01] Mike: Sure.  When you ask different people what they mean by enterprise, you will get answers from different people saying, “Well, any customer over 100 employees is an enterprise, or over 1,000, or over 10,000.”  And realistically, all you are doing is you are segmenting the market into small, medium, and large enterprise.

[03:18] I tend to look at companies that are anything over 1,000 employees and generally consider them an enterprise.  There are certainly customers out there who are 500 employees and consider themselves an enterprise, but realistically, when you are trying to sell your software, depending on what it is you are selling, who it is you are selling to, and how many people within the company are going to be using the software, that’s really kind of what dictates it.

[03:43] So my general rule of thumb is to say anything over 1,000 employees, I consider that to be enterprise.  Under 1,000 employees and above 100, I’ll say is roughly what I would call the small/medium business.  And then between 1,000 and 5,000, I consider that, as I said, the enterprise.  Above 5,000 employees, I generally say that that’s considered large enterprise.

[04:03] Rob: OK.  Good.  And to be clear, today we are not talking about selling enterprise software to enterprise customers, right?  We’re actually going to be talking about selling a micropreneur product.  That’s really what the listener question was, and the question that I would have, is how to sell a small niche product, or maybe a product geared towards consumers and small businesses, how to sell that into the enterprise.

[04:29] Mike: Yeah, that’s absolutely right.  When you are trying to sell what I’ll call enterprise software to enterprise customers, generally what you have is you have a code base that is absolutely mammoth in size.  There’s generally a lot of consulting that needs to go along with it.  There’s a huge sales cycle that you have to deal with.

[04:46] My guess is that the vast majority of our audience is probably…they are not building enterprise software.  They are trying to sell to the enterprise customers, but they are not actually selling enterprise level software.  So let me give you a very good example.

[05:00] WinZip’s software.  I looked at it earlier today just for pricing information. But they have volume licensing for large customers.  And if you are a user of WinZip, you are familiar with it any way, shape, or form, you know that it runs on everybody’s desktop, and it is really not an enterprise product.  It can be installed on everybody’s computer, but it’s not necessarily an enterprise level product.

[05:22] SQL Server Enterprise Edition—that’s an enterprise level product because it is designed to do massive scaling.  WinZip, it really doesn’t quite fit that mold.  But a customer that is 1,000 employees might buy WinZip for everybody in the company.

[05:36] So, that makes it a sale into the enterprise market, but it’s not enterprise level software.  So I’m just trying to make that distinction between selling to the enterprise versus selling enterprise level software to the enterprise.

[05:49] Rob: Right, because I imagine the two processes would be dramatically different.  Is that right?

[05:55] Mike: Yeah, they are.  They are very, very different.

[05:58] Rob: OK.  Well, good.  We are going to cover four different topics today.  The first is pricing, the second is marketing/finding prospects, the third is selling, and the fourth is after the sale.  And there are a bunch of subtopics under each of those.  But let’s get started with pricing.  What are your thoughts on a product’s price point when you are selling to the enterprise?

[06:20] Mike: So when you are selling to the enterprise, and again, I will try to restrict the discussion to just selling products to the enterprise versus selling an enterprise level product, when you are selling what would typically be a micropreneur level product into the enterprise, you generally want to keep the price point down.  You don’t want to go above $5,000 or $10,000.

[06:39] And that number is a total number.  So let’s say, for example, you’ve got a company that you are targeting and there are 1,000 employees.  Charging them $10 per copy of the software, you can probably get away with it.  But you also have to remember that if that company is 1,001 employees, suddenly your price point goes from $10,000 to $10,010, which may put you over the limit of some of those invisible barriers that we are going to talk about later as well.

[07:06] But you really need to be careful about what your total price point is.  And that’s kind of the key thing that you need to keep in mind.  I know I’m emphasizing it a little bit much, but it’s something that is absolutely critical in trying to sell to the enterprise.  Because if your price point goes too high, then what happens is people need to start getting approvals.  And once it goes down that road, you are going to end up in the situation where you have to bring in people to talk to them, you have to bring in sales reps, you have to bring in account managers and things like that, because it is harder to land the sale.  And it’s much more difficult to get it through that process.

[07:40] If it’s below a certain price point, they can just issue a P.O., buy the software, and they don’t have to worry about it.  Above that, you have to start getting approvals.

[07:48] And there are these invisible levels that I’ll call them.  Basically, most companies have them somewhere around $5,000 to $10,000.  Then you will get up to around $50,000, there is usually another level there.  At about $100,000 there is another level there.  And then you’ve got $500,000 and then $1 million.

[08:06] And those are the different ballpark numbers you can use to kind of guide you to say, “If I see this number, I am probably going to run into problems,” because at each of those levels, you need to get approvals and signatures from everybody below them.

[08:18] So if you are going to sell a $1 million product, you’ve got to get the director of IT to sign off on it.  Then you have to get his manager.  Then you have to get the CIO to sign off on it.  And then you probably have to get the CEO to sign off on it.

[08:30] In schools, for example, if it is something over $25,000 or so, that’s generally the number that I’ve heard, you generally have to go to the board of directors and get their approval for something like that.

[08:42] So you have to be really careful about what those numbers are.  And depending on the type of industry that you are selling in, those numbers can fluctuate.  So in retail organizations or manufacturing, those numbers are actually going to be lower.  In finance and healthcare they are going to be a little bit higher.

[08:58] Rob: OK.  So that’s good to keep in mind.  Again, just for clarification, when you are talking about a price, you are talking about those numbers, the $100,000, $500,000, $20,000, that is the total price.  So it is your unit price times the number of licenses they need to buy.  It’s the total contract amount, if you will.

[09:16] Mike: Correct.

[09:17] Rob: OK.  So that’s a good primer on how to price a product.  Let’s talk a little bit about marketing; about how to find prospects.  We know that, as a micropreneur, we focus a lot on low maintenance marketing approaches like search engine optimization, some pay-per-click, blogging, social media—things to get people interested and get people to come online, because we’re selling to small business and consumers, which do tend to be online and are able to make buying decisions over the Internet, give a credit card, and execute.

[09:46] Now, I think most people realize that that’s not the realty when selling to the enterprise.  So when selling into the enterprise, what’s the best way to go about finding enterprise prospects?

[09:57] Mike: When you are selling into the enterprise, the thing that you have to keep in mind is that it’s not like a small business, obviously.  So what you need to do is you need to think about how an enterprise is run.  And the way an enterprise is run, especially when you are talking about software, is that the IT group generally maintains strict control over what runs on those computers and what doesn’t.

[10:18] What that means is that you need to make the IT department aware of the software.  And you can either do that through the users that you are trying to reach, or you can try and reach the IT people.  My recommendation would be to go to the users that you are trying to reach, because they are the ones who are going to essentially sell your product to the IT department.  And what that will do is that will get the IT department to look at your software and evaluate it, and figure out whether it is right for the organization or not.

[10:47] Rob: I see what you are saying.  So, when you are looking for prospects, you can prospect to the IT department or to the specific department that is going to use the software.

[10:56] Mike: That’s right.  And when you are trying to go to the end users, as I said, it’s not a lot different than if you were to try and sell it to a small business.  I mean what you are really trying to do is you are trying to get those people who have a vested interest in using your software to take a look at it.

[11:13] Now, it’s obviously a little different if you are selling software to the IT department.  So I’m kind of dividing up those two different groups of people.  You really have to approach those differently.  If you are selling to the IT group, this stuff doesn’t necessarily apply, because essentially, they have to convince themselves to buy it, which doesn’t really make a whole lot of sense.

[11:33] But if you are selling to any other department within an organization, whether it’s the HR department, or the marketing, or the sales team, those are the types of people who essentially have to turn around and talk to the IT groups and say, “Hey, can I install this software on my machine?”  Because a lot of companies have their desktops and laptops locked down so the end users cannot install software.

[11:53] It’s kind of gone by the wayside to allow for administrative rights and credentials on those endpoints.  The IT teams have really started to lock those down over the past five or 10 years.  And there are still companies that allow that, but by and large, people are starting to do away with that, just because of the inherent security risks associated with that.

[12:12] Rob: So it sounds like a key takeaway here is we are already seeing a lot of differences between selling to consumers and small business and selling to the enterprise.  And a big one is that selling into the enterprise, you are very likely going to have to get not only approval for five levels, but you are also going to have to get your IT department and your end users to agree to be on board.  Everyone’s going to have to click and approve this purchase.

[12:38] Mike: I would tend to agree with most of that.  At the end of the day, there is only going to be one person who is actually whipping out the corporate credit card and going to your website and downloading it.

[12:46] But depending on the price point, you may very well get a couple of phone calls, because they are going to want to know that your software is well supported.  They are going to want to know that you can handle any support issues that come up, or handle any pricing problems.  Or if something goes wrong on those machines, they want to know that you are going to stand behind your product and that you will fix the issue.

[13:07] Rob: Well that brings up an interesting question.  Do you think you can sell to an enterprise and not offer phone support, only offer email support?  I mean I guess WinZip might be a case of that, right?  I don’t think they offer phone support at all.

[13:18] Mike: I do think that you can get away with not offering phone support, but you do have to be very good about your email support.  You can’t just let anything sit for a little while.  I mean you really have to consciously watch your email box.  And if you see something come in from what could potentially be an enterprise customer, you have to answer it, probably a little quicker than you might for your small or medium business customers.

[13:42] Rob: Right.  We’ve actually sold into the enterprise as well as to some cities and counties with DotNet Invoice.  Someone in the IT department needs to build an invoicing app, and they decide to base it on our code since we offer the source code with the purchase.

[13:55] The funny thing is they don’t care at all about price, right?  I mean our product is $329.  You get a small business and they hee and haw about it and they ask for discounts and stuff.  But man, the enterprise customers, they just pull out the credit card!  It’s really not a big deal.

[14:10] But, I’ve found that there are a lot more questions up front about support, and about the product, and they tend to want to do a trial first and do a demo, and small businesses don’t tend to do that stuff.

[14:24] And then on the backend, they do tend to be OK with email support as long as, as you said, the response times are really low.

[14:30] Mike: Yeah.  And I think a lot of that just has to do with the fact that enterprise customers, although, for the most part they will say, “We want phone support, and we want somebody to answer on the first right when we actually call.”  The fact of the matter is that enterprise customers tend to move so slow that that stuff generally doesn’t matter.  Unless you are offering software that is mission critical, it really doesn’t matter.

[14:54] Rob: OK.  So as a micropreneur, if SEO and pay-per-click are not going to work to go after the enterprises, how am I going to find prospects?

[15:01] Mike: So there’s a couple of different ways.  And I think that somebody in a previous podcast had posed a question, and I will kind of reiterate the answer a little bit.  You can go and essentially buy directories of companies that match the criteria that you want to meet.  So you can go to Hoovers.com or Dun & Bradstreet.  Those types of companies maintain credit information and additional employee information about what you would consider to be your prospective enterprise customer market.

[15:28] And by paying them the money that they ask, they can filter down the list of things that they give you.  In addition, they can tell you specific contacts or points of contacts within those companies.

[15:42] So if you wanted to go out, for example, and find all hospitals that have between 500 and 1,000 employees that are located in the state of Pennsylvania, for example, you could go to Hoovers.com or Dun & Bradstreet and you could probably pay them the money and get a list of exactly that.

[16:01] In addition, if you said, “I only want the companies that you have a point of contact in the HR department for,” you could get that as well.  So those are very, very good places to get that information.

[16:14] A second place that you could go to is if there are any tradeshows, or conferences, or magazines, those are the types of places where you could advertise with your software and try and get the word out to the people that you are trying to reach.

[16:27] Rob: So, do you think in this day and age that tradeshows and conferences would still be worth it if you are targeting enterprise customers?

[16:34] Mike: I think that the real value of tradeshows and conferences and magazines is really to bring about awareness of your product.  I think that on day one it’s definitely not the way to go.  I think that you are just completely wasting your money.  Because one, people are going to have to switch mediums from one to the other.  Two, the price point of actually doing that upfront when you don’t have any money to do it is just far too high.  It is not a cost effective investment.

[17:00]  You really have to get awareness of your product out there and get people using it and get a solid base of customers before you start going down that road.  It just won’t be worth it otherwise.

[17:09] Rob: OK.  So it’s pretty obvious the standard approaches, the online marketing approaches, are not going to necessarily work here, and that there’s going to be, I imagine, a much longer sales cycle.  There’s a lot that’s different between the two approaches.  So let’s move from marketing and talk a bit about selling into the enterprise.

[17:25] I guess my first question is, what’s the sales process like, and how long to sales cycles tend to be?

[17:31] Mike: In a small business situation, your customers are generally going to make a decision either same day or within a couple of weeks.  They are going to look at your software, they are going to maybe evaluate it, check out what your competitors are doing.  And if it is something that they’ve really been looking for for a while, they will buy it on the spot.

[17:49] With the enterprise it’s a little different, because you have to get the approval process going within the company.  Again, this is your standard company that is basically locking down all those desktops.  And a lot of them, depending on how many employees that this software will be distributed to, a lot of them will take a look to see if there are any upgrades that are required.

[18:10] So if you go out into the enterprise market today and you ask 100 different enterprises what version of Internet Explorer they are running, a lot of them are going to tell you IE6.  And if you ask them when they are going to upgrade to IE7, a lot of them are going to laugh at you.  They are just not upgrading yet.

[18:26] And the reason is because they have all of these applications that depend upon IE6 running.  They just don’t run on IE7, or they don’t run on IE8, and they don’t work in Firefox.  So these are the types of things that you need to keep in mind that are actually more technical in nature.

[18:42] And if those things become a problem in their environment, they simply will not buy it.  So even before you get to the part where you are trying to sell them your software, you have to make sure that all your ducks are in a row there.  You can’t have impediments to your software.

[18:56] If you are using something like DotNet 4, you are going to probably have more problems getting that out to your customers in the enterprise space that you would if it was a server level only product that ran on DotNet 4.  So you could, for example, have this application that runs as a backend service and install it on one server, or five, or 10, or something like that. And you’d probably be OK.  But the same application, if you were to try and distribute it among 500 people in a company, it would never get sold, because that requirement for DotNet 4 is going to kill you.  They simply will not buy it.

[19:28] So there will be a trial process.  There will be an evaluation of some kind.  They will look at it, see what the requirements are, see what it will take to push that out.  In addition, something else that you probably wouldn’t think of, if you’ve written an installer for your product, chances are good that the company that you are selling it to will actually disassemble your .msi file and then repackage it to distribute through their own software distribution mechanism.  That’s not something that’s probably common knowledge, but that does happen very regularly.

[19:57] And the reason it happens is because when the IT department pushes out a software package such as, for example, Microsoft Project, they want to make sure that they are the ones that installed this. So what they’ll do is they’ll rip apart the .msi’s that install Microsoft Project and they will insert registry keys to say, “This was repackaged by us. Here’s the date and here’s the version number of the packaging that we used,” and they push it out into their environment.

[20:21] When it comes the time to audit their environment, they basically check those registry keys and say, “Was this installed by us?” And they’ll look for those little signatures. If it wasn’t installed by them, they’ll take a deeper look at that machine and say, “Where did this machine come from? Where did this software come from, and why is it here?”

[20:37] Because to them it’s not just a security risk because they don’t know where that software came from, but it’s a licensing risk. They’re basically on the hook to Microsoft for a piece of software that is installed in their environment that they did not authorize to be there. So, just keep those things in mind when you’re going through that sales process.

[20:54] Rob: So how long is a typical sales cycle?

[20:58] Mike: If you’re not actually interacting with the customer, it could be as little as a month.  And they’ll go through their own internal evaluation, as I said. Within a month or so you can expect to land a sale.

[21:10] If it’s something that you have to go back and forth with them or there are a lot of questions, it could be a month, it could be three months, it could be a year. I’ve seen sales cycles as long as 24 months before, and it really depends on the problems that they encounter in doing the trial in their environment.

[21:27] There are some companies out there that run their environments extremely well, and there are some that are just a total mess. They’re just a disaster waiting to happen. You’ve got that ballpark number between one month and 24 months. I honestly wish I could give you a better number, but it really depends on how tight a ship they run on the IT department.

[21:46] In the manufacturing areas, it’s probably not quite as tight. It’s not nearly as locked down because they’re trying to get things done. They don’t have the sales margins to work with. If you’re looking at something like a retail company, Walmart for example,  just to use an example, my guess is that if you were to go to Walmart stores and you’re going to start taking a look at their point of sale cash registers, they’re very well locked down, they’re very regimented about when they push out updates.

[22:11] Something to keep in mind for a company like that would be that getting your software installed on their machines in the second half of the year is probably going to be very difficult, because you run in to situations where they’re going to lock down all of their machines and not allow updates on the second half of the year because you’ve got going back to school sales and you’ve also got holidays coming up. The last thing they want to do is roll out a piece of software that could break their machines.

[22:33] Now on the corporate side of that environment, it’s a different story. They are able to push out software like that to their sales reps, to their HR reps, to their marketing departments– those sorts of people without really impacting those point-of-sale devices.

[22:48] Rob: OK, so when I think of selling or marketing into the enterprise, I think of cold calling and direct mail and that type of stuff. Is that something that you’d recommend for selling into the enterprise? Does that work?

[23:00] Mike: It does work, but it usually works more often for enterprise level software being sold into the enterprise. Cold calling is generally not a good strategy if, one, you don’t own the product. So if you’re an affiliate or you’re selling partner’s software products, it’s very difficult to make good margins that make it worth it.

[23:21] The other problem with cold calling is that it’s very time and resource intensive. I mean, you really have to have somebody who just does not make a whole lot of money beating down the doors of people just calling people and saying, “Hey, is this something you’re interested or not? Is this the type of problem that you have or not?” and just going through them.  And it’s not unusual for somebody to log anywhere from 50 to 120 calls a day just beating on the phones and calling people just to find prospects.

[23:47] And once they find a prospect, they’ll spend a couple of minutes with them on the phone and essentially hand it off up the chain to another sales rep who will start to get those leads, which are essentially somewhat qualified leads, to call those people and talk to them and get them to the next level. But again, you have to remember that now you’ve got two people who are trying to sell the software, not just one.  And the second one is just probably based on the commission, the first one you could probably pay just a straight salary.

[24:11] It’s very difficult to find people who are very good at cold calling.  And with the smaller price points, especially those microproneurial level products, the price points just don’t work out. The math doesn’t quite fit for you to be able to do that. So I really wouldn’t recommend the cold calling.

[24:26] In terms of direct mail, direct mail is a lot more cost effective because you can create a direct mailing piece that, again, you get that information from Hoovers or Dun & Bradstreet that tells you all the information you need and exactly where to send your mailer. If you make something that’s interesting, then people will respond to it.

[24:43] So let me give you an example. At the startup company that I worked at several years ago, what we did was we actually built cardboard laptops and we put a USB key in it and shipped it off to people. We shipped it off to all the CIOs and CISOs of various companies, and they basically opened up the package and in it, it looked like a laptop but it was a cardboard laptop. You open it up and there’s a little USB key in there.

[25:05] Basically, I forget exactly what the tagline was, but it was something along the lines of “Do you know where all of you data is going?” And on one hand it was just interesting because it looked like a laptop. It really wasn’t, but it was designed to get attention. The USB key, it wasn’t necessarily a throw away, but I mean it was decent size at the time, but it was more designed to get their attention so that when we did call them, they would at least have some sort of a frame of reference.

[25:30] So that’s really what those direct mail pieces are for, is to essentially get your company or your product on their minds so that when you do call them, you will have something to talk about. You can say, “Hey, do you remember this that we sent you?”

[25:43] One thing that my company did at a tradeshow once was we handed out all these rubber duckies. And our tagline for the conference was “Are all of your ducks in a row?” And it was all about security and compliance and getting people to discuss what they’re security concerns were with my company.

[26:01] And weeks later we could call people and say, “Hey, we got your information from this conference. We wanted to talk to you about it a little bit.” And there was always this little awkward moment at the beginning like, “Where did you get my contact information?” We say, “Oh, when we were at the conference booth, you gave us your business card. We were the ones with the rubber duckies.” Everybody instantly knew exactly who we were. So, those direct mail pieces are essentially a lead-in to cold calling.

[26:23] Again, I wouldn’t necessarily recommend cold calling to the Micropreneur community just because it’s not cost effective. But it doesn’t mean that you can’t send direct mail to get them to go to a website.

[26:34] Rob: It sounds to me like a key takeaway here is that, as a Micropreneur selling into the enterprise, it is pretty tough. It’s a lot of work, and if you don’t know how to do it, you could feasibly spend a lot of money and time and get nowhere with it. It’s almost like if the enterprise approaches you then that’s great, but if you’re actually following this and going to Hoovers, and doing some cold calls, and thinking about trade shows and conferences and direct mail, you’re kind of taking it in a whole different direction than we’ve talked about it in the past.

[27:05] While these tactics obviously work for selling into the enterprise, and if you have a product that is X thousand dollars, $50,000 or $100,000 based on volume, then these tactics will ideally pay off for you. But realistically, if you do have a $300 product or, heaven forbid, a $20 product, then actively targeting enterprises doesn’t sound like a very good idea to me. Would you agree?

[27:30] Mike: I would agree with that for the most part. Again, it depends on what your product is. So for example, your product’s DotNet Invoice.  I would certainly not recommend you go into the enterprise.  And there’s a few different reasons for that.

[27:30] One is you give them the source code for it. That and in of itself, I certainly wouldn’t be concerned about piracy because an enterprise customer’s going to pay you for the licenses they used. They don’t want to get in trouble for that sort of thing. So for them to shell out an extra $300 for a second license is no big deal.

[27:58] The problem is that your software is server-based and you’re licensing it per server. Well, how many licenses do they realistically need? One. So, there’s very little value in you trying to sell into the enterprise.

[28:10] If you have a piece of software that’s something like a customer relationship management database such as ACT! or something along those lines…ACT! is basically the desktop equivalent of a piece of software like Salesforce.com, which helps you manage the sales funnel, which I think we’ve talked about in the past. Essentially, if your price point is $300, in the enterprise space you would offer volume discounts. So if they bought more than 25 or 100 or something like that, you would give them increasing discounts the more that they bought.

[28:40] For example, WinZip, as well, is a price point of about $30. If you buy 10,000 licenses of it, it will cost you less than $3 per license. So, you can see how there’s this sliding scale – the more you buy, the cheaper the discount is. These sorts of things will help you get into the enterprise market.

[28:58] Rob: So, do you see any value in Search Engine Optimization, or pay-per-click, or blogging, or social media, or any of that stuff when trying to sell in the enterprise market?

[29:09] Mike: I see a lot of value there in getting the attention of the people that you’re after to ultimately use your software. There are a couple of things you have to keep in mind here. One is that the people who are in those enterprise companies, not all of them were there their entire lives. I mean, some of them were.  But some of them came from small businesses. Some of them are going to go from the enterprise down to small businesses and some of them will come back, some of them won’t. So there’s this transition of people that you’re going to be able to, after a while, count on to kind of spread the word about your software.

[29:41] My advice would be really to kind of concentrate on the small and medium businesses because they have a lot more flexibility in what they can buy and how they can buy it, where it can get installed, etc. But there’s no reason to say, “I’m not going to go after the enterprise market at all.” I mean, I would certainly set up volume discounts of some kind.

[30:01] I would certainly set up special customization procedures for enterprises, because enterprise customers love to do customizations.  There is always software that almost does what they want, but not quite, and they need it customized.  So if you need to spin a special build for an enterprise customer, you may very well need to do it.   That’s a slippery slope, but if you build your software in such a way that those customizations can be made, it can certainly be a fruitful business.

[30:27] So I guess overall, though, my advice to most people would be not to concentrate solely on selling to the enterprise.  My advice would really be to concentrate on that “lower end”—the small and midsize business that are going to be able to buy your software, there is going to be a reduced barrier to entry.

[30:44] And if your software is something that gets installed on a lot of desktops or is useable in the enterprise space, I wouldn’t worry too much, because it will get there.  You don’t have to try and push in that direction.  I would certainly not put barriers in it.  And as I said, something like volume discounts and making your product able to be customized, those are certainly steps that you can take in that direction.  But I wouldn’t focus on selling solely to the enterprise market, unless you have an enterprise level product.

[31:12] [music]

[31:15] Rob: If you have a question or comment, please call it in to our voicemail number at 1-888-801-9690.  Or you can email it in MP3 or text format to questions@startupsfortherestofus.com.

[31:28] If you enjoyed this podcast, please consider writing a review in iTunes by searching for ”Startups”.  You can subscribe to this podcast in iTunes or via RSS at startupsfortherestofus.com.

[31:40] Our theme music is an excerpt of “We’re Outta Control” by MoOt, used under Creative Commons.  A full transcript of this podcast is available at our website, startupsfortherestofus.com.  We’ll see you next time.