For B2B technology startups one of the first questions they need to answer is whether or not they are going to focus on larger enterprise businesses or small-to-medium sized (SMB) companies. It is too difficult to service both enterprises and SMB with few companies ever successful at both. Companies like salesforce.com started almost exclusively with SMBs but now hunt large enterprises as well, and they are a rare exception.
Here are some things to think through when considering a focus on enterprise or SMB accounts:
- Enterprise products are typically much more expensive and require a larger amount spent on customer acquisition
- SMB products are typically cheaper and sold through a self-service or inside sales model
- Enterprise deals often involve long sales cycles and RFPs with SMB deals being shorter
- Enterprise focus can be better with missionary product sales where the prospect has to be educated and closed as the sales cycle is more complex
- SMB focus can be better when the enterprise segment has more advanced and entrenched competitors
There’s no right or wrong answer for focusing on enterprise or SMB accounts but it’s important to acknowledge the difference and pick one battle.
What else? What other ways do you differentiate enterprise and SMB focus?