So this may seem like a pretty specific post, but it’s a big and real issue I see so, so often these today in SaaS companies at scale, from $20m-$200m+ ARR:
They’re reacting to tougher times by going “more enterprise”. That can make a lot of sense. But they’re using bigger deals to hide the fact they aren’t growing new customers enough.
I hear this again and again. At some point, 98%+ of us eventually go upmarket:
- Canva is now going all-in on enterprise … at $2B+ ARR :).
- Klaviyo has SMB roots but is pushing hard at $50k+ deals as it approaches $1B in ARR.
The law of large numbers means this just makes sense. To start adding eight figures and then nine figures of new bookings a year, it can really help to focus on bigger customers. And bigger customers almost already have higher NRR. Which makes them even more valuable.
What I worry is when it’s going all-in on bigger customers and going enterprise is for too many tactical reasons. To combat the fact that new customer growth has slowed. Then it can often mask issues around new customer acquistion for a year or two.
And what I see in that case is folks often abandoning their long tail. They stop supporting, or at least investing, in their smaller customers. Their advocates. Their biggest champions. And some times, folks that can grow into larger accounts over time.
As founders especially, you have to fight for the smallest customers. You have to fight for the ones than in 3-5 years may get bigger. You have to fight for the ones that may only pay $29 a month, but tell 100s of folks how great you are.
The sales team? The marketing team? The CS team? They may just be focused on the big ones. Especially if that’s a top company goal.
The Most Important SaaS Metric of All: Net New Customer Growth
The post Going Upmarket and “More Enterprise” is Great. But Don’t Let It Be an Excuse to Hide From Slowing Customer Growth. appeared first on SaaStr.
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Jason Lemkin, Khareem Sudlow
