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I’m not sure I agree 100% with your thesis on the B2B side. I’ve seen a few companies recently that seem to be getting strangled by the long tail. They have la
by poof131 11y ago
I’m not sure I agree 100% with your thesis on the B2B side.
I’ve seen a few companies recently that seem to be getting strangled by the long tail. They have large numbers of low paying, price conscious customers draining resources. They can’t raise prices to a level that enterprises would be happy to pay since this would kill their established customers. Enterprises don’t want to pay a different higher price, why would they. The companies usually skimp on sales, especially field sales, so they have trouble competing in larger deals. And they can become arrogant that their niche solution, while better at one thing, can take on larger platforms that solve multiple problems.
Not saying your points are invalid, just that there seems to be a bit more at play and going from the long tail to the enterprise doesn’t seem trivial and shouldn’t be an after thought. In B2B it does seem like all the biggest winners have generally nailed the enterprise, but not necessarily the long tail.
- debacle 11y ago> Enterprises don’t want to pay a different higher price, why would they. If you can't convince an "enterprise" why they should pay more than a standard customer you're bad at sales. It's simple math.
- LoSboccacc 11y agogood article on topic: https://training.kalzumeus.com/newsletters/archive/enterprise_sales https://training.kalzumeus.com/newsletters/archive/enterpris... it's not just that they are price insensitive, but you can use trigger words (auditing, apis, slas) to segment them into a higher tier since they have to have certain services provided.
- cmdkeen 11y agoPro tip - along with auditing add permissions and security. For example Github charge twice as much for 50 repositories on the Organisation plan as the personal. One of the downsides of many startup types never having worked in a traditional enterprise place is they don't appreciate the features that will move you from the "small team in the company using" plan to the "whole department / company" custom plan where you're charging hundreds of dollars per user.
- nostrademons 11y agoCentral to the Innovator's Dilemma thesis is that the company has to be profitable on the low end. The idea is that by going after low-margin customers, it forces them to cut their cost structure to the point where this is profitable, usually by investing heavily in automation & UX. Then when they want to move upmarket, this cost structure is a competitive advantage they can leverage. Note that successful applications of this theory usually don't try to sell the same low-margin, self-service product to enterprises. Rather, they create a new "enterprise" product, priced according to what enterprises will pay. They get to leverage all the infrastructure, R&D costs, and ecosystem that's already gone into the mass-market product, but then apply that (with some additional features, and usually hardened security & reliability) to beat incumbent enterprise software on price. Curious which companies you're thinking of - I can think of a few other mass market SaaS companies that have stumbled recently for the reasons you mentioned, but they have other things going on too.
- visakanv 11y ago> Enterprises don’t want to pay a different higher price, why would they. They would. The people buying products on behalf of enterprises aren't spending their own money, they're spending their company's. They'd happily spend an extra 10-30% (or more) if it means better support, easier setup and all-around less stress or headache for them.