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The 10 Essential SaaS Growth Strategies

Expand into the Enterprise

Introduction

For every successful SaaS company that has grown over 50% year over year — including such well-known companies as Zendesk, Box, Hubspot, and New Relic — there are thousands of startups that have failed.

In fact, according to a recent McKinsey study Grow Fast or Die Slow,

If a software company grows less than 20% annually, there is a 92% chance of failure.

McKinsey, Grow Fast or Die Slow

When you’re a startup, it’s fairly easy to double revenues in a month (for example, going from $10K to $20K). As you start to grow, you can expect to double revenue in a quarter, then in a year. But as you get larger, it’s very, very difficult to double your revenues in these same time frames — after all, how many companies grow from $50M to $100M in one month?

So how can SaaS companies grow, grow fast, grow efficiently, and keep growing?

In working with hundreds of SaaS companies, we’ve learned that the solution to sustaining a high growth rate is to diversify your approach to growth and embrace multiple growth strategies.

We’ve boiled it down to the top 10 essential growth strategies: this article highlights the eighth – Expand into the Enterprise.  

Expand Into The Enterprise

While most SaaS businesses initially start with self-service or transactional sales into smaller accounts, to avoid stalling growth they will eventually need to sell into the enterprise.

As TechCrunch reported, “At around $30 to $50M ARR, and sometimes earlier, the law of large numbers takes hold, and adding enough new ‘small deals’ to maintain a high growth rate becomes increasingly challenging.” The “law of large numbers” essentially dictates that without landing large deals, it’s going to be pretty hard to reach $100M ARR, and beyond. 

Moving upmarket into the enterprise means bigger ACV (annual contract value) and increased overall market share. But moving into the enterprise isn’t as easy as the glib “land and expand” mantra would make it appear.

Going upmarket isn’t just about selling bigger deals. It’s an internal cultural shift that requires thoughtful preparation.

There needs to be demand for an enterprise version, the product needs to be enterprise-ready, and systems need to be in place to support these larger customers. On the sales side, a business needs to have proven their ability to sell — to multiple stakeholders across organizations — and needs to be prepared for the much longer sales cycles that come with enterprise sales. 

STAR EXAMPLE: Box

Box provides a great example of a company that successfully moved upmarket.

When Box first started, as a cloud storage and filesharing company, their revenues through a sales team were just 0-1%. In other words, they were pretty much a pure freemium product with almost all self-service signs-ups.

Now, even though so many of Box’s customers are just individual users, almost all of their revenue comes from businesses — with 99% of their revenue being produced through their sales team. 

Box CEO Aaron Levie succinctly explained how this came about: “You make your product as easy as possible to adopt but you make it so a large enterprise can fully adopt it across their entire company.”

According to Levie, “There’s probably not a single enterprise that we ever sold to that didn’t start with users in that organization having adopted Box.” When enough individual users within an organization have adopted a product, organizational adoption is the next logical step.

When Box started to make the shift from a consumer product to an enterprise business application, they discovered that they needed the right infrastructure to scale. 

They needed:

  • The ability to support multi-year contracts or ramp deals for larger deals
  • The ability to track product usage to promote upsells and negotiate renewals
  • The ability to guide sales teams to the right products and add-ons in their quoting tool

The right infrastructure helped Box to make the charge into the enterprise market. Box has more than 140,000 active businesses using its products, which includes 92 percent of the Fortune 500 and 14 million total users. 

There’s probably not a single enterprise that we ever sold to that didn’t start with users in that organization having adopted Box.

Aaron Levie, Box CEO

Key Takeaways

To successfully expand into the enterprise, SaaS businesses need:

1. Internal infrastructure that is “enterprise-ready” such as data access controls and multi-entity management

2. Quoting flexibility to sell into larger enterprises, with the ability to price for multi-year contracts or ramp deals

3. Systems integration so that global sales, finance, and customer success teams can all work off the same data

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