5 Key Differences Between SMB and Enterprise Sales Cycles
Very often the enterprise sales cycle is mistaken to be just a scaled, more complicated version of a small and medium business (SMB) one. In reality, these two processes are completely different from each other, with very distinct ways of conducting business, communication strategies, persuasion tactics, and, of course, sales processes.
Thus, your sales strategy should depend not only on the product or service you sell but also on the type of organizations you target. By having a clear understanding of the specifics of selling to both enterprises and SMBs, you can create a more effective sales cycle, which will secure more stable and profitable conversions.
Defining Criteria of SMB and Enterprise
To avoid any confusion between what SMBs and enterprises stand for, it's necessary to establish the exact definitions of both types of organizations. Gartner sets up two main criteria for defining the type of the businesses depending on the number of employees and the company’s annual revenue size. According to this classification:
- Small businesses include organizations with up to 100 employees or up to $50 million in annual revenue.
- Middle-size businesses are organizations with 100 to 999 employees or an annual revenue between $50 million and $1 billion.
- Enterprises have more than 1000 employees or more than a $1 billion annual revenue.
Some sources also define large enterprises with at least 5,000 employees or an annual turnover greater than $1.5 billion. With this in mind, let’s find out how to distinguish between SMB and enterprise sales cycles.
5 Differences Between the SMB and Enterprise Sales Process
There are five main differences between SMB and large enterprise sales processes to take into account during the sales journey:
1. The purchase sequence
SMBs and enterprises have completely opposite purchase procedures. With small businesses, the sale process depends on a spontaneous urgent need of the company. The buying journey is often an impulsive and unstructured sequence, based mostly on a subjective verdict of a single decision-maker. In 96% of cases, in SMBs the CEO of the company makes all the purchasing decisions themselves.
The enterprise sales process, on the contrary, is characterized by a more organized sequence of actions, more detailed research of the company’s long-term solutions, and the direct involvement of multiple decision-makers. On average, there are 6.8 employees taking part in purchase solutions in B2B organizations.
At the same time, only 17% of their time is dedicated to actually meeting the potential suppliers. The rest of the time is spent on offline and online market research, analysis of competitors, internal meetings with other buyers, etc. That is why, when conducting enterprise-level sales deals, it is crucial to make the most out of each interaction with the prospects.
2. Sales cycle length
The average sales cycle length for small and medium businesses is about three months. As enterprises have a more sophisticated and complex purchase sequence, their sales cycle is much longer too and takes about seven months. Enterprise sales also involve much larger budgets, which makes the buying procedure even more time-consuming. As a rule of thumb, the more money the deal brings, the more time it will take to close it.
Besides that, to win an enterprise contract, a salesperson would have to deal with about thirty objections from all the decision-makers, as each of them usually finds four to five pieces of information on your business to clarify before making the purchase. All these factors make enterprise selling more especially demanding and challenging on SDRs.
3. Sales skills
Depending on the type of organization you are targeting, sales representatives would need to develop different sets of skills too. Thus, the enterprise sales process requires a special level of persistence due to the multiple decision-makers to keep close contact with and a high-touch approach.
Sales representatives need to have substantive experience in conducting one-on-one conversations with C-level employees and to feel confident enough to address all the possible objections. Besides that, they have to develop a deep knowledge of the industry and a precise understanding of how the product they sell stands out from other competitors on the market.
One of the key points sales representatives have to keep in mind with enterprises is to be mainly focused on building long-term relationships rather than just closing another deal. That is why their job requires more than just excellent sales skills, but also empathy and professionalism.
With SMBs, things are quite different. Here, due to the high automation of the sales processes, the fewer touches you make with the prospect, the more successful your sales strategy is. The goal is to close more deals at a faster speed. Therefore, the key qualities SDRs have to acquire for working with SMBs is the ability to adapt fast to the conversation, attention to small details, and the ability to repeat the same set of actions from one customer to another.
4. Client’s pain points
Due to the differences in organization sizes and revenues, SMBs and enterprises have different challenges and priorities to address. For SMBs, the top two pain points are securing stable business growth (47%) and increasing the productivity of the team (47%). Thus, SMBs’ main focus is on getting fast solutions to businesses’ immediate needs. If your product satisfies this requirement, selling to SMBs is the right decision.
Enterprises, on the contrary, have both the money and resources to focus on long-term goals. That is why most enterprise pain points include exclusively business-related issues like expanding the market share, increasing investment returns, improving the business strategy, etc.
5. Communication strategies
Both SMB and enterprise sales cycles are most efficient when a multi-channel outreach is applied. However, with SMBs, a combination of outbound and inbound tactics works best, as the mix of paid and organic search is very often a way decision-makers look for solutions to their business needs. Enterprise organizations require quite a different approach.
Due to high competition, there are very few chances that enterprises will accidentally flow into your sales cycle without any outside help just through the organic search. While you’ll be waiting for inbound to work out on a five-billion-revenue company, your competitors will be already setting up demo calls with them. The most effective way to outreach enterprises is through outbound tactics with multiple touches. Each of these touches needs to drive value to the prospect and be relevant to their business needs.
When building your communication strategy with enterprise prospects, you’ll need to deliver a precise message to your prospect through the right outreach channel. Brent Keltner, president of Winalytics LLC, offers this advice: “Think about this environment as hyper-personalization—the message and channel they care about—to figure out what’s going to break through the noise.”
Nurture Benefits of the SMB and Enterprise Sales Process
To build up an efficient sales cycle, you need to know what problems your product solves and who is going to benefit from it the most: SMBs or enterprises? If you decide to target both types of organizations, remember to adapt your sales tactics accordingly.
Enterprises aren’t just scaled SMBs, and SMBs aren’t just smaller versions of enterprises. To maximize your conversions, take into account the sales process differences stated above, and stop missing opportunities by targeting the wrong types of companies.