What’s the Difference Between SMB vs Mid-Market vs Enterprise Sales? Guide & Examples
If you've got a solution that could benefit customers of different sizes, how do you go about developing a B2B sales strategy?
The worst thing you can do is to not make a decision, and instead try to sell to small and large companies, and everything in between.
Should you sell to small business customers? Enterprise companies? Medium-sized businesses? Solopreneurs? Micro-enterprises? Startups? Only restaurants, or restaurants and groceries and office supply stores? There are many ways to slice and dice it, and how you go about it can be the difference between success and failure.
Since the sales management buying process will be different for every type of company, you need to decide who you’re going to sell to and why. Let’s discuss the differences between SMB vs Mid-Market vs Enterprise sales, and how you can choose the right market to enter.
What Is SMB Sales?
Making up 99.9% of all firms in the US, there’s no shortage of small businesses out there. Here are the main pros and cons of selling to SMBs:
- You have a huge pool of potential SMB customers because there are so many small businesses. You can become very creative and targeted with your sales approach, and experiment more to find out what works.
- SMB buyers make decisions faster with a lot less complexity than enterprise or medium-sized businesses. Oftentimes you just need to get the buy-in from one decision maker.
- Lots of word of mouth happening. Small business customers that are happy with your solution will often refer you to other small businesses.
- Transaction size is smaller, and thus the amount of time and money you can invest in pursuing individual deals is also capped.
- Small businesses are typically not recognizable brands, so featuring their logo as one of your customers in marketing materials doesn't have as much value as well-known brands.
Sales Strategy Tips for SMB Sales
Wondering how to sell to SMBs and what makes their sales cycle unique? Here are a few of our top tips:
- Take a consultative approach to sales: Salespeople who offer expertise can guide SMB buyers through the process and help them understand what they really need to close deals.
- Offer a self-service option if possible: While many providers require you to speak with a sales rep before buying, SMB buyers don’t always need that option. Make the SMB buying process easier by giving them an option to purchase without talking to sales.
- Lean into referral sales: Small businesses tend to have a tight network and work together with other small and medium-sized businesses. This is a prime opportunity to lean into referral sales and get that word of mouth going with a partner program.
- Lower the risks: Since SMBs don’t have as much cash to throw around, make the decision easier by lowering the risk to them. You could do this with some type of guarantee, providing monthly instead of annual contract options, offering a free trial, or providing clear social proof from similar businesses.
- Qualify early and thoroughly: Your profitability will increase when you focus only on the customers that fit your product and can see the most value from it. Follow the metrics to see who your top customers are, and aim to sell to that ideal customer profile.
What is Mid-Market Sales?
- Personas in a mid-market company are willing to spend more to get more, so the opportunity for revenue is larger.
- There are millions of medium-sized businesses around the world, and while they're not as big as a whale, you'll still catch plenty of big fish here, which makes lead generation that much more straightforward.
- Buyers normally come to the table with more experience in making similar purchasing decisions, meaning they have more reasonable expectations and a clearer understanding of what they need.
- Mid-size businesses are more stable, meaning they’ll have a greater chance of sticking around as customers as long as your product suits their needs.
- There is a very large variety of companies in this category, meaning you’ll need to be ready to adapt your sales process to fit their needs.
- A more complex buying process with multiple stakeholders.
Sales Strategy Tips for Mid-Market Selling
Ready to close more mid-market deals? Here are some helpful tips you’ll need to follow:
- Be flexible: When you can adapt your sales process to meet the needs of buyers, you can increase your sales velocity. And according to research, mid-size businesses have a slightly faster sales cycle and higher conversion rates than enterprise businesses, meaning the sales velocity is higher.
- Qualify and segment for purchase-ready leads: Mid-market buyers are still likely to start a free trial and do their own research before reaching out to your sales team. So, let them. Use B2B data to track actions that signal buying intent and qualify new leads specifically to find key indicators that they’re ready to buy.
- Use automation to keep following up with prospects: Since mid-market deals take more time to close than SMBs, automation can be a great way to keep the conversation going and maintain that relationship with your prospects as they decide whether your product is right for them.
- Be a trustworthy partner during implementation: Mid-size companies expect continued service after the purchase. To retain these customers, make sure you’re right by their side during implementation and create repeatable templates to implement faster for similar personas.
What Is Enterprise Sales?
- Selling to enterprise customers can generate a lot of revenue. They've got huge budgets, and don't care about spending large amounts of money to solve important problems.
- You gain prestige and credibility. If you have Fortune 500 companies among your customers, and you feature that in your marketing materials, prospects will trust your company more.
- They're very sophisticated buyers. They're willing to pay the price for the high level of support and service they require, and they know what to expect coming into the buying process.
- Closing an enterprise deal is difficult and takes time—a sales cycle of up to 18 months is normal.
- Enterprise deals are complex and involve multiple stakeholders across the company. With so many moving pieces, it’s far too easy for something to go wrong and derail the whole deal at any moment.
- With fewer companies in this range, you’ll find a more limited pool of potential customers.
- Retention is more difficult, especially if you’re a small team without the proper infrastructure in place to properly serve your enterprise customers. There's no point in catching a whale if it will sink your boat.
Sales Strategy Tips for the Enterprise Sales Market
A lot of startups go after enterprise deals because they see dollar signs and a high potential for revenue. But many startups who try to close these deals prematurely end up shutting down because they ran out of money before the deal was closed.
Here are some tips to create a balanced, profitable sales strategy for the enterprise market:
- Set up an account mapping strategy: Even if you’re selling to large corporations, remember that you’re still selling to people first. Account mapping will help you understand the stakeholders likely to be involved in the deal, the key decision-makers you’ll need to get on board, and the end users who will ultimately see the most value from your product.
- Have a very clear ideal customer profile: Since enterprise sales requires a huge investment of time and effort from your sales team, you want to make sure that you’re not wasting anyone’s time. Set clear criteria for the enterprise companies that fit your business best.
- Set a structured enterprise sales process: With a more complex process and much higher stakes, you’ll want to make sure your sales reps know exactly what they should be doing with each deal. So, establish a clear process, and track how each step in that process is converting to keep optimizing it.
Key Differences Between SMB Sales vs Mid-Market Sales vs Enterprise Sales
Trying to catch small fish, or are you diving in for that whale? The success of your customers and the conversion rates and revenue you see will depend on the type of market you sell to. Let’s discuss some of the main differences when selling to SMBs, mid-market, and enterprises.
The Number of Key Decision Makers
On average, the number of people involved in a B2B purchase has been on a rising trend, with the average now sitting at about 7 people involved in every deal according to Harvard Business Review. Of course, for each market, the exact number will be different.
- SMB: Small businesses have fewer decision-makers and stakeholders involved in the buying process. Small startups may only involve the business owner in a decision, while slightly larger SMBs will still only have a handful of people involved in the purchase process.
- Mid-Market: With a more complex purchasing process, mid-sized businesses will likely involve the end users, a director-level decision-maker, a C-suite executive and maybe a few other individuals who have power over finances or legal.
- Enterprise: As the most complex process, expect to deal with C-suite executives, directors, end users, as well as finance and legal departments during the sales process.
Duration of the Sales Cycle
In a study of sales cycles by CSO Insights, it was found that 28% of B2B companies had a sales cycle of 4-6 months when selling to new customers. Only 20% could do it in a month, and up to 18% took over a year to close deals.
- SMB: Less complexity equals shorter sales cycles, meaning you should be able to get deals from start to finish in less than four months.
- Mid-Market: Interestingly, one study found that mid-sized businesses only close about 10% faster than enterprise companies, meaning the sales cycle could be between four to six months, or in some cases up to one year.
- Enterprise: The longest sales cycle by far, normally taking more than 6 to 18 months to close.
Psst! Ready to optimize B2B lead generation? Dive into our B2B Sales Funnel insights.
Customer Pain Points
While the size of the company may change, remember that there are always four basic types of customer pain points:
Whether you’re selling to SMB, mid-market, or enterprise companies, those basic pains will remain the same.
Even if the company you’re dealing with is a huge corporation, you’re still dealing with individuals. These individuals have their own daily work needs to meet, the needs of the teams they manage, as well as the needs of the company. Get to know your customers’ needs and pain points by talking to them directly and collaborating with the teams that talk to customers most—support, customer success, and sales.
Sales Tactics and Strategies
Different sales strategies and methodologies will work better for different markets. Here are some ideas:
- SMB: Referral sales is a strong tactic for SMBs since their core network is normally tighter. You’ll also want to dive into a more consultative selling approach, or try
- Mid-Market: To use your time wisely selling to mid-sized businesses, you’ll want to try account mapping to find the right stakeholders and lean hard into case studies of your existing customers that can help sell to your other similar target buyers.
- Enterprise: Target-Account Selling (TAS) is a time-intensive sales strategy that is great for customizing proposals and pitches for potential enterprise customers.
The Buyer's Journey
With an extremely varied approach to purchasing decisions, the buyer journey for each of these markets is unique.
- SMB: Individual members of the team may discover your product organically, or you may be doing cold outreach to pitch your product to them. The journey from there is relatively simple, going through fewer hoops to gain the approvals needed for a purchase.
- Mid-Market: These companies don’t want to be treated like your typical SMB. Even though they’re not at enterprise level, the mid-market buying process
- Enterprise: For large enterprises, the buyer journey will normally start with their own internal investigation into your product. If you’re doing cold sales to enterprise-level clients, expect to go through multiple people and talk to different departments before you get closer to a deal.
Additional Insights: How to Sell to Prosumers
These are professionals who mostly run a one-person business (solopreneurs) maybe with the help of one or two other people. This includes freelancers, single-practice doctors, consultants, and so on.
- They are very easy to identify and find. Their contact information can often be found in listings, on websites, in yellow pages, etc.
- Deal size here is very small, but if you pick the right kind of niche you can still find plenty of potential customers willing and able to spend several hundred dollars a month.
- Because most of these professionals basically "sell their time", they often don't want to spend it talking with people who want to sell them something.
- Sometimes it takes a lot of convincing to get them on board, they're usually very price-sensitive buyers on a tight budget
When you're selling to highly-specific businesses that are not necessarily defined by industry, but by the stage of their company. Selling to startups or SaaS is one common hyper-niche.
- If you help a couple of hyper-niche customers succeed, this can often lead to many other hyper-niche businesses signing up with you. When something works well, it tends to spread rapidly.
- Hyper-niches can be a great target audience to focus on if you're very familiar with them and know what makes them tick. It can give you a strong competitive advantage over others who don't understand the hyper-niche to the same degree you do.
- When servicing hyper-niche customers and optimizing your product for them, you might find that the specific features they want are not in-demand outside of the hyper-niche. This can limit your ability to grow.
Who Should You Sell to First: SMBs vs Mid-Market vs Enterprise?
If your product could be valuable to different-sized businesses, which should you focus on first?
First and foremost, let your decision be guided by your own understanding of the audience. Pick a market you know really well, enjoy serving and (ideally) feel a personal connection with.
Look for things that give you an unfair competitive advantage with a particular segment:
- Do you have a personal or professional network you can tap into?
- Do you possess insider knowledge?
- Do you have experience working in or with that kind of business?
- Do you have some recognizable branding strategy within that space, are you known among these businesses?
What if you don't have any of these competitive advantages?
Start small. Map out the spectrum for which your product could be a good fit, and then pick the smallest kind of business to sell to. You want to sign up your first paying customers as quickly as possible, and build momentum, gain traction as fast as you can.
A high frequency of closed deals, even if they are small deals, is a good place to start. As you build a steady stream of sales, look for signals that you're ready to move upstream.
Learn From Our Example at Close
At Close, we mostly sell to small companies with a number of employees at or below 100 users of our software (100 salespeople or less), and initially, we were focused on selling to startups only.
As we gained momentum and built out our product, we started seeing medium-sized businesses and enterprise organizations sign up for our product. Somehow they heard about us (this happened organically, mostly by word of mouth and content marketing). Initially, these larger companies signed up, but most stopped using us after the free trial.
The more mature our product became, though, the higher our win rate with these mid-market and larger customers became.
This is the kind of signal you want to look out for.
This trend indicates that you're ready to start dedicating a certain amount of your sales efforts to selling to higher-level customers that can afford to pay a premium for more features and functionality.
This isn't the only way to grow, but it's what I recommend to all growing sales teams. Why? Because we see companies following this path tend to have a much higher success rate than those who try to sell to enterprises right from the start.
Think you’re ready to start selling to enterprise companies? Check out Enterprise Sales For Startups, our guide for startups looking to close their first whales.