B2C2B2B: Success in B2B starts with a B2C mindset
By Sashi Reddi, Managing Partner, SRI Capital
OK, so let’s get the acronyms out of the way first. B2B refers to a business selling to other businesses. B2C refers to a business selling to consumers. This article is about how to build a successful B2B SaaS (software as a service) business. I believe my new acronym B2C2B2B essentially captures what I believe to be a winning strategy to build a large enterprise SaaS business: Build your business as if it was a B2C business if you are going to be successful at B2B. Why do I believe this?
When Amazon launched its AWS cloud offering, that was when “shadow IT” entered our popular imagination. Low level and mid level executives in large companies who were tired of begging their centralized IT departments for resources, began to buy the compute power they needed directly from AWS. AWS was trying to win business customers but marketed itself almost as if it was a consumer offering. This consumerization of enterprise tech was visible in other ways, such as when we got rid of our Blackberrys and went with iPhones and expected our enterprise apps to be easy to use like the consumer apps we were hooked on.
So what are the practical ways to develop a B2C mindset as we try and build an enterprise SaaS business? Here is a list of five must-do items:
(1) Simple and publicly stated pricing: On your web site have a pricing page and state clearly what you charge and what that covers. 3 tiers of pricing is plenty and do not get too cute with extra charges for small features— just keep it simple. You are not leaving money on the table by clubbing features into these 2-3 price bundles. Any complexity in understanding your pricing will make you lose potential customers. Always helps to have a free version, even if for a limited time or with limited functionality.
(2) Have a self-service/on-demand offering that requires no training: Yes, I am sure your software is really complex and cannot be deployed without days of training. That was OK a few years ago but is not viable today. Even if the fancy features require a ton of integration and training, you still need a minimal version of the essential product to something that can be used immediately and directly by the user. Once they get going, you can then make it worthwhile for them to invest in integration with other tools and get trained on the full product.
(3) Marketing driven with a small sales team for the upsell: If your offering can be tried out without help and the pricing is clear, you should expect to be able to sign up customers without having a sales team making contact. This should be true at least for the initial trials before the customer decides on a larger/wider deployment. As a concession for certain more technical offerings, you could have a tech support chat window or a bot to address questions during the trial period. No need to invest in an expensive field sales team, until you get to a point where customers are looking at $5,000 per month of subscription revenue and are asking a lot of questions regarding integration into other internal systems.
(4) Build in network effects: When we sold software to large companies, we had expensive sales people making expensive trips all around the world. In this current model, we are marketing to individual users who hopefully will try out our software and then champion greater adoption within their organizations. So to make this work, we need to make it easy for them to share this offering with others and draw them into engaging with the software. So the self-service offering that these users try out must come with a mechanism to invite other users or share their work product with other users so that starting with that initial user, we spread within the larger organization. Slack has done an amazing job of this.
(5) Finally, the user experience must be kickass: This is probably the most obvious and the most important point. What was acceptable as UI/UX in enterprise software before is not acceptable now. Hire a consumer design person to do the UX for your enterprise SaaS offering.
So that is what the B2C2B2B strategy is all about. B2C to B2B. Launch your offering as you would a B2C product and create a pathway for an enterprise sale after enough users in a large company get hooked on your product. This is easier said than done but I think a dozen super successful companies like Slack, Zoom, and Shopify have shown us the way.