For business owners and sales professionals alike, enterprise sales are a highly coveted goal — and for good reason. Often, the revenue and sales commissions you can make on a single enterprise sale are worth a year or two of what you might make by working with smaller companies, but the work required and the risk are proportional to the rewards.
There are about 5.6 million employer firms in the United States, according to the U.S. Census Bureau, and of these companies, only 0.3% have more than 500 workers. So, it's quite easy to see that enterprise sales aren't something that every small business will get to do.
Often, any large company that employs 1,000 people or more can be called an enterprise. However, selling to large companies alone can't always be considered enterprise sales, meaning that it's the size and complexity of the sale that makes it different, not just the number of employees
TL;DR (Too Long; Didn't Read)
The enterprise sales definition is the sale of large contracts to large companies that have a long sales cycle, which can range anywhere from six to 24 months. They usually include multiple decision makers, with a higher level of risk and reward than other sales contracts.
The Fundamentals of Enterprise Sales
Enterprise sales have a lot in common with traditional business-to-business sales. Relationships, for example, are important, and you will have to take care that you understand what the client's needs are before you start pitching what you have to offer. Beyond that, however, there are three fundamental differences:
- Complexity: It's possible to sell to a multinational company with a single phone call and a one-page purchase order, but these are not enterprise sales. Enterprise sales usually involve detailed, multipage proposals and sales contracts.
- Time: Enterprise sales almost always involve multiple meetings with multiple people regardless of how many decision makers there may be. Typically, the process can take up to two years, and more often than not, the process is stopped before you ever get to make a full proposal.
- Money: Enterprise sales involve a lot of money compared to the sales you typically make to other companies, which can be anywhere from $10,000 to several million dollars depending on what you're selling.
If you sell services, contracts are usually one to two years. If you sell products, your initial contract may just allow you to be put on the company's preferred supplier list so that purchasers can order from you with an email when your products are needed. Sales volume is almost always high, but profit margins are usually much more slim than traditional sales.
When You Should Avoid Enterprise Sales
While an enterprise sale can be phenomenal for a small business, it does come with some serious risks that could cripple your company if you're not careful. Not only is the sales cycle long but it will tie up resources that could be better used going after smaller accounts. It can take a year or two to land an enterprise account, and there is a lot that can go wrong along the way. The client could, for example:
- Change its plans and cancel the upcoming project
- Give your detailed proposal to a current supplier and ask it to match your prices
- Issue a request for proposal based on your proposal and go with the lowest bidder
For a small company, winning the deal is sometimes worse than losing it. A small-business owner usually needs to hire new employees to service an enterprise account, negotiate new credit limits with suppliers to fulfill a surge in volume and then pray that the new client pays the bills on time and doesn't hold back payment for six months because of a minor issue with the product or service or just decide not to pay you the full amount until you sue them.
Another scenario for which you need to prepare is that when you do win the contract, the enterprise could essentially start running your business. If the company's decision makers see that you have put almost all of your eggs in its basket, there is little to stop them from renegotiating terms or demanding that you lower your prices. In short, if you can't afford to lose an account that you win, then you shouldn't try to win it in the first place.
Enterprise Sales Decision Makers
In large companies, finding the right decision maker can be a complicated process. It's usually the person with the right combination of authority and expertise, which varies with different purchasing decisions and is not something you're likely to find on a corporate organizational chart.
Many beginning sales reps mistakenly believe that the decision maker is the person with the highest title who is willing to talk to you. In technical sales, it may be an engineer, or it may be the president or CEO who makes the final decision. If you're selling office equipment, it may be anyone from the office manager to the director of human resources or a vice president of accounting who isn't even in the same city.
With a small business, you're usually wasting your time if you don't talk to the decision maker from the very beginning, but this isn't always the case in enterprise sales. Often, you may be talking to someone else through most of the sales cycle, who introduces you to others only when you're close to making a deal. This could be a manager, a consultant or even a supplier to the company. So, while you need to know who makes the decisions, it's just as important to know the decision-making process.
The Decision-Making Process
Every company is different, and each has its own culture and its own rules for making purchases. There are essentially three different structures an enterprise client may use for making purchasing decisions:
- Sole decision maker: One person has the authority to make a deal with you for the products or services you are selling. This is usually someone high on the company's organizational chart, such as a CEO or president, vice president, director or senior manager. For projects, it could be an engineer or the person in charge of an ad hoc committee for that project.
- Sole decision maker with board approval: This is similar to working with a sole decision maker right up to the end of the sales process, when the decision maker needs to get the board to approve the deal you negotiated. In this case, you will have to wait until the board can meet to vote on the proposal, which can take several weeks. You may be asked to present to the board or to be there for questions.
- Multiple decision makers: Some purchasing decisions may require input from multiple departments or from people with different areas of expertise. The company may have formed an ad hoc committee to make the decision, or it may be less formal, with someone from each department needing to weigh in once you are close to making a deal.
What each of these processes have in common is the need for patience. Expect to have multiple meetings with different people and don't expect to meet with the final decision makers at the outset. Because the sales cycle is so long, it's also common to have one decision maker replaced with another midway through the sales cycle due to promotions or employee turnover.
- Small Business and Entrepreneurship Council: Facts & Data on Small Business and Entrepreneurship
- CNN: The Small Business Owners Trump Never Paid in Full
- Lighter Capital: What is Enterprise Sales and Why is it Important for Your Business?
- Neil Patel: Sell to Large and Enterprise Businesses Using This 16 Point Checklist
A published author, David Weedmark has advised businesses on technology, media and marketing for more than 20 years and used to teach computer science at Algonquin College. He is currently the owner of Mad Hat Labs, a web design and media consultancy business. David has written hundreds of articles for newspapers, magazines and websites including American Express, Samsung, Re/Max and the New York Times' About.com.