How identity can help startups scale up-market to win bigger deals.
Most (not all) founders at Business-to-Business (B2B) and Software-as-a-Service (SaaS) startups dream of becoming the next industry-defining enterprise application like Salesforce, Slack, or Atlassian.
To have millions of daily active users, billions of dollars in market capitalization, and the comfort of being a staple in the technology stack of another business, is a revered status that fuels the ambition of hungry startups.
An important step to attaining such scale is the difficult journey of moving upmarket to acquire enterprise customers. From both a go-to-market (GTM) and product perspective, enterprise customers come with their own unique set of requirements, which can overwhelm even the most disciplined teams. As a burgeoning startup, pursuing these opportunities may feel like a double-edged sword.
On the one hand, adding a large, recognizable brand to your customer base would improve your company’s standing in the market. On the other, it would mean diverting most (if not all) development resources towards building capabilities that aren’t central to your business’s core value proposition.
The good news is that business customer identity solutions can help provide startup teams with the necessary tools to incorporate standard enterprise-ready capabilities early on in their product development, thus unlocking future growth. In doing so, identity can support GTM motions without bogging down technical teams in the long run.
670 Billion Reasons to Move Upmarket
The enterprise market is an attractive space for SaaS companies for one main reason: there’s a lot of money on the table.
Digital transformation continues to change the way businesses operate, particularly related to the adoption of cloud applications. Investments into SaaS products were up 50% in 2020 compared to the previous year and showed no signs of slowing down. According to a Gartner® report, worldwide spending on Enterprise Software is projected to reach almost 670 billion dollars this year alone, representing an 11% growth rate.
For startups, entering this segment of the market not only signals a level of product maturity but also supports long-term, sustainable growth by widening the total addressable market (TAM) of the business and increasing profitability in a few ways.
First, the average selling price (ASP) for an enterprise customer is typically much larger than others. As an example, let’s consider Shopify, the Canadian E-commerce company that helps businesses sell, ship, and process payments online. Their core platform, geared towards small and medium-sized businesses (SMB), has an upper price point of $299/month. In stark contrast, Shopify Plus, their enterprise offering, is nearly ten times that, starting at $2000/month. This is why enterprise deals can grow revenues from 10 to 30 times the original product’s value depending on the market, product, and offers.
Top comments (0)