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15 Mistakes GTM Teams Make When Moving Upmarket (and how to avoid them)
The GTM Newsletter
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You know we had to bring the heat for the first one so we tagged in a world-class crew to wrestle with this week’s topic: moving upmarket.
Anyway, let’s get into it.
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It seems like every second start-up founder and revenue leader I talk to these days is trying to move upmarket or ‘break into the enterprise’.
Done well, it can change your company/career trajectory.
Done wrong, it’s the kiss of death.
Tread carefully revenue pros…
To help you sidestep some of the potential growing pains, here are 15 mistakes GTM teams often make when moving upmarket (and how to avoid them):
One big flag would be shifting the conversation to consultative vs. transactional, which many reps don't understand how to do. Also ensuring the reps understand the structural make-up of MM or ENT size companies
Samantha Mackenna, Founder #SamSales, former Head of Ent Sales @ Linkedin
The biggest "mistake" is just assuming their current motion/process (assuming they're 100k-250k ACV now) across either Marketing, Sales, or CS works at this level. But I feel like that encapsulates about a million sub-mistakes. My question would be "why are they moving upmarket?" Is it something beyond just "we want bigger deal sizes to make our unit economics work" or do they feel they have a strong product market fit and can actually command those prices.
John Fernandez, SVP of Marketing @ Gila
Sometimes you can produce a bunch of leads upmarket, but if your product is not ready...it can lead to a lot of distraction. Both from a performance perspective and functionality needed upmarket. On top of this, the sale cycle is longer, more bureaucracy and more legal scrutiny up there.
Brian Weinberger, SVP of Sales at Cube
A big mistake I see is not understanding the decision making process and who actually makes decisions and then the second part is not multi-threading effectively.
Neil Weitzman, Fractional CRO and Founder at PORCH
Bigger deals - more lumpiness in the business, longer cycle; CXO level engagement becomes a must. Sometimes it is better to be under the radar than become the top vendor that always shows up on the list for vendor management to go after.
Sanjay Shitole, Founder/CEO at DigitalMain
Biggest mistake I've SEEN is the product not built for the use cases of a newer segment. Then you burn through customers and employees. Think about the move upstream if you're trying to penetrate a new vertical. (You can't ctrl-c / ctrl-v a GTM motion).
Russell Scherwin, former CMO @ IBM Watson Commerce & CRO @ FPX
The allbound/abm motion vs. being too dependent on inbound is to be defined and taken into account. Inbound predictability isn’t whale hunting behavior, more sardine fishing.
Alon Waks, former VP Market @ Kustomer @ Bizzabo now fractional CMO
They will likely need investments in a surrounding sales ecosystem - technical sales, services scoping, POC/pilot expectations are massively different at that deal size.
Elena Hutchison, former Chief Stretgy Officer @ Medallia
Marketing…their demand gen motion changes, need different product marketing, etc.
Sales…SDR motion is also different and may end up be more “research intensive”. AE’s need to be experienced with more complex selling (more stakeholders, longer sales cycles, etc). The sales motion may also look more like a Land and Expand which also requires a bit of diff skillset (although could have an account management team on that). Needs more pre sales support.
CS…this also changes as you’ll probably have a much smaller ratio of CSM to clients. Also CSM’s will be more high touch, value driven.
Product…requirements and associated features are probably different. Management…needs to really understand this shift and have a good handle on appropriate KPI’s/expectations.
I’ve seen companies who make this shift, and immediately freak out when they see results (meetings set, pipeline, sales cycles) look very different than what their used to.
David Teichner, Co-Founder @ Accelerate HC
It’s an uphill battle trying to go upmarket - tried pushing a rope lately? I’m a big fan on focusing on a target list of visionary leaders and creating a market gravity/pull. If they bring you in, it’s a heck of a lot easier. A KPMG partner heard me speak years ago and brought me in, which turned into a decade-long relationship. One of those partners leaves and goes to Deloitte, and bring us in there. Deloitte introduced us to Siemens and we worked there. Siemens was a sponsor of Disney, which got us into there, etc.
David Nour, Managing Partner @ The Nour Group
The biggest mistake is assuming that because you have PMF in MM/Commercial, that you will have PMF in Enterprise. I encourage startups to treat it like a new product/company and test that market with an open mind. Job 1 is to validate if you have PMF with customer interviews (instead of jumping into selling), securing a few lighthouse customers on very generous pricing terms and then investing more GTM dollars into the opportunity when it’s been validated. Best case is that you validate your fit and scale and worst case is you have great product feedback to go build before you try again. That may feel slower than most founders want but it could save a lot time and money.
Kyle Norton, SVP Sales and Partnerships @ Owner.com
It's minor but I haven't seen anyone mention issues around sales comp and prioritization. Once you say you want to go up-market, seems like everyone wants to go whale hunting and the sales motion that's working dies on the vine.
Scott Brown, former CMO @ Hum & VP Marketing @ Sapphire
Just be careful what you wish for. So many companies want to "play in the enterprise" as some sort of badge of honor, but they are not prepared for the cost of sales, the difference in the sales cycles, and the very large opportunity cost of going upstream. There is no substitute for getting to a level of scale in the mid-market where you have a rock solid process that is repeatable and will become very profitable - this will give you the space to hunt for the elephants later.
Dianna Tibs, former GTM exec @ Google, Salesforce and Microsoft
I was in a situation where our VCs told us we needed to add enterprise as a segment. I was the sales leader, and the instruction was basically "go sell enterprise deals." We eventually got to mid-six and seven-figure deals but it took a lot longer than it could have because it was basically just a sales strategy. Now, if I were approached with the same conversation, my response would be that I'm happy to sell those deals but the sales strategy comes last. It starts with the enterprise product strategy, then marketing. Once those are in place, then you can put together a real enterprise sales strategy.
Lucas Price, former SVP Sales @ Zipwhip, now Founder/CEO at Yardstick
I work with a lot of partners that are trying to make this leap by working with Cloud Platforms or large System Integrators (Deloitte, Accenture). There are two main challenges that I see; 1. Solving a narrow problem versus solving a large business challenge. Lots of SaaS companies have great products, but they don't position them into a big enough business problem to break through the noise at an enterprise level. Someone low in the organization might be able to spend $100k to solve a small problem but they can't spend $1M to solve an enterprise issue. 2. There isn't a flexible way to use the product along side other solutions. Enterprises use lots of tools and are getting more strict about what products make it into their stack, so if it is a single use solution it often doesn't grow within an organization.
Seth Hammac, Global Partnerships & Alliances @ AWS
Ok so what CAN you do to set yourself up for success?
The legendary Scott Gifis, former President of Adroll, now CEO at NoFraud has seen this dance more than a few times and he broke it all down below:
This is not for the faint of heart. Some businesses have products that just scale and it’s beautiful, but increasingly software companies are building for the end user in mind, product led growth organizations come to mind, and inevitably there comes a point where user adoption is strengthening but monetization is lagging and the business is not growing as quickly as you or your board would like. Don’t get me wrong, of the levers to accelerate growth in your business, increasing Average Customer Value is at the top of the list in terms of practical levers to drive growth… but don’t take it lightly or you’ll find yourself in a world of pain.
A few thoughts in my experience leading companies through this as an operator and an advisor.
Define “Going Upmarket”
Saying you’re “Going Enterprise” is like saying you’re “Going to Europe” — it’s naive. You don’t “go to Europe,” you go to the UK, or Germany, or France, or Spain… the point is each country has its own way of doing business. Its own requirements for operating in that market successfully. Are you crystal clear about what market segments you are going after? And why? And why you think you can win?
It’s VERY easy to have some early (maybe unplanned?) success with larger customers and misunderstand that to mean you have found product-market-fit upstream. Be thoughtful and intellectually honest with where you are and what you know. Are the customers you’ve won representative of a market where you can uniquely and consistently win? How much are teams like Customer Success or Solutions Engineering rallying to ‘fill gaps’ between what your product really does and what the broader market really needs?
Nothin’ for Nothin’
Know that as you start to experiment upmarket, you are going to face real trade offs. You’ll be able to avoid them for a while but they will come to a head — and the more success you have, the more rapidly and seriously those trade offs will come and impact your business strategy.
Product Led Growth businesses arrive here quickly (too quickly) when they start to see user level adoption of their product inside larger organizations and want to chart a course to bigger, enterprise deals but you need to understand that you’ll quickly find yourself in a position where you have to make very difficult decisions.
The friction this can create inside these businesses can become extreme. You’ve likely gotten where you are because you build great products for end users and do a great job empowering them, but that alone won’t get your enterprise deals done.
Things like Security and Admin Features are Gateway Drugs… once you start, it’s hard to stop. If you’re going to move upmarket, I recommend you have rock-solid alignment at the table, deeply rooted in shared product-first principles that will set the right guardrails around what you are willing to build and what you are not willing to build or you will quickly find yourself pushing user based features out, indefinitely, for enterprise grade administrative controls, reporting, and security features.
You say “nah, not me… not us,” but when that deal has the potential to make a tough quarter (and it’s got upside for days)... it’s harder than you think to say no, even for very disciplined operators.
Before you know it, you can lose your way and someone else (Remember when Invision was the user’s choice in Design? Then there was Figma) will sneak in and steal the hearts and minds of the users that used to love you.
It’s a Journey
Moving upmarket inevitably introduces a number of challenging twists and turns, ups and downs, and you need to understand that if this has not been your target customer it’s going to take time to figure out how to consistently, predictably win and retain customers at this level.
Be thoughtful about how you set goals. They should be relevant to where you are on your journey. Your goals should be appropriate to where you are on your journey. If you don’t know what causes churn in your business then you should not have a goal to reduce churn, you should have a goal to understand what causes churn. If you have not consistently closed Enterprise businesses then perhaps your first milestone should center around consistently opening up quality opportunities. You’ll focus at first on targeting, messaging and positioning, and understanding how to prepare for introductory Enterprise sales calls.
Do Not Go Alone.
We’ve all heard the proverb, “Alone You’ll Go Fast, Together You’ll Go Far.” It should say “Alone You’ll Get Fucked…” (and I mean proper fucked, like they say in Snatch). Making a decision to pursue a new ICP is not a decision that GTM can make on their own… PDE needs to buy in, so does G&A.
When you move up market, inevitably you uncover gaps that extend beyond your GTM strategy, beyond your Product… Larger organizations are going to challenge your thinking, the way you price and package, the way you think about your product roadmap, the way you think about talent, the way you think about contracts, the way you think about investment allocation, and the way you organize to enable and support.
I’m not saying you can’t create a lightweight organizational framework to test moving upmarket but know it’s going to quickly escalate to an unmanageable state of friction without an aligned, committed, supportive team around you.
So if you’re thinking about going alone, don’t.
Invest in the Right Team
This is a big bet. It has big implications. And it’s unfamiliar territory for your business. Remember this is an experiment. The goal is to gain clarity around the opportunity. Everyone is brought into support it so derisk the goal by ensuring you have the right people to lead the charge. The SMB or Mid-Market AE that closed a few deals may be trusted with lots of potential but if they do not have experience selling upmarket, it’s probably not going to go well. The sales motions are different. The buying cycles are different. The way you build champions across multiple threads and align major deals is… different.
You want people that know it and you need to listen to them. If not internally, then make sure you have advisors and be prepared to see the experiment through… the last thing you want to do is be 6 months into an experiment and “reset” because you didn’t have the right people involved from the start. If you’re going to experiment, invest in the experiment… more than anything, you want to gain clarity through this effort.
Which brings me to my final point.
It’s easy to dream big and think about what success looks like as you move upmarket. What you need to do is get crystal clear as a team about what failure looks like and get alignment with the team for when you call it quits.
Once that’s in place, run like hell at the opportunity, but if you reach the threshold where you determined the experiment should not continue, then you have to be willing to do the hardest thing, you need to be willing to walk away. Remember, it’s never really a failure unless you fail to learn. If you get clarity and conviction in the right direction for your business then you have everything you need to win.
👀 More for your eyeballs:
Cool to see Capchase featured in Forbes’ Next Billion-Dollar Startups 2023. Check out the article below for the full list👇
👂 More for your eardrums:
Special edition week for the GTMnow launch - we released three episodes with some of the best revenue leaders in the game.
🚀 Start-ups to watch:
UserEvidence launched their new website and branding this week. Love to see great Portfolio Companies up-level their branding/messaging game! Go check em out💥
🔥Hottest GTM job of the week:
Head of Marketing & Communications at GTMfund, more details here.
Waiiiiitttt, that’s us? Big opportunity to come join us on the GTM rocketship.
See more top GTM jobs here.
That’s it for this week.
Thanks for rocking with us until the end.
I’ll leave you with some good vibes for your *hopefully* sunny summer weekend.