How to Expand Upmarket—or Downmarket

Whatever business you’re in, the goal is to grow. And often that means entering new markets to boost your overall share.

Movement is the key:

There are two ways to go with expansion:

Punch up to land those big-ticket sales or reach down to bring lower-priced products and services to a much bigger pond of customers.

Moving upmarket means you have to provide greater flexibility to satisfy larger enterprise customers.

When you go downmarket, your focus has to be on removing complexity for the customer to reach scale.

Whichever strategy you choose, you’ll be taking on a new and different set of operational requirements and processes. And you’ll want to get these nailed before you enter the new market. The ultimate goal? Creating systems that let you easily acquire new customers, while not leaving your current ones out in the cold.

Rethink your offerings:

Adopt a wider set of go-to-market strategies

Whether you expand up or down, you’re going to have to support a wider range of acquisition strategies.

Going upmarket?

Enterprise customers don’t purchase by punching a “BUY NOW!” button. They expect to be wined-and-dined, or at least have access to your sales team to help them navigate a more complex buying process. To keep them in your funnel, you’ll want to take these ideas into consideration:

Going downmarket?

SMB customers and consumers love the self-service model because it puts them in control of their subscription. But if the buying process is too complex or confusing, they’ll be more likely to bail (or eat up your sales team’s valuable time). Your goal? Make time-to-value as short as possible. What to consider:

One great example of a company successfully moving upmarket is Invision. After launching in the SMB market, they upped their tech stack and went big for enterprise. The effort paid off: Today, 100% of Fortune 100 companies are Invision customers.

Note that for either strategy, you need to think about incentives for your sales team. If you’re paying your team the same for an SMB sale as you are for a much more intensive Enterprise sale, you’re going to get a lot of blowback. And you obviously don’t want to be paying Enterprise-sized incentives for a quick-and-dirty consumer sale. Reconsider what fair compensation looks like before you make the leap into multiple markets.

Expand your operations:

Adopt a broader set of order-to-cash requirements

You’ll want to look at implementing new operational requirements to support the payment preferences and buying habits of your expanded set of customer segments.

Going upmarket: Enterprise customers have more complicated subscriptions, which means their requirements are more complex. Give your finance team greater flexibility and control to keep those customers happy.

Going downmarket: Selling downmarket means greater scale, and you’ll need to equip your teams with automated tools for billing, collections, renewals, and payments to help them keep up.

Expand your reporting:

Adopt flexible reporting for more effective strategic decisions

When companies expand into multiple customer segments, reporting often becomes a messy and time-consuming manual process. Automating reporting lets you roll up all the different segments and create insights tailored to your different audiences.

For Executives: They’ll want to see aggregate transactions and key business metrics such as ARR, net retention, and churn.

For Finance Teams: They’ll want quick and easy closes, so make sure your AR and revenue numbers across different customer segments are nicely summarized.

For Stakeholders: They’ll want more detailed info, so use cohort analysis to show how each of your customer segments is doing.

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