When Consumer Risk Meets B2B Technology

July 1, 2015 Kyle York

I recently attended EnterConf, which was touted as an enterprise software tradeshow, but in reality it was a show for startups with B2B applications or products targeting enterprise. This may seem subtle, but it's a big difference. Attendees were in their seed round to A round stage and the speakers were the ones who'd already conquered that early stage journey.

The networking was good, but the enterprise buyer wasn't in the room. Attendees weren't enterprise target customers as I expected, but that's okay. Dyn's Internet Performance solutions (that's what we call "levers" but we'll get to that in a minute) are for all sizes of business, from startups and SMBs to enterprises across a myriad of vertical industries.

I gave a keynote on 'The ROI of Internet Performance' and moderated a panel that our EMEA Managing Director, Paul Heywood also sat on titled, 'Enterprise Software on the Cloud.' In both talks the discussion of KPIs (key performance indicators or metrics), when scaling both the business and technology sides, were in the forefront.

It was a theme of the conference. After all, B2B tech is supposed to be modeled: planned, predictable, scalable. "How do we measure success for our business, our technology and our customer experience?"

With freemium, inbound marketing, social media, devops, 1099 workforce, remote employees, mobile, and other new school philosophies leading market adoption in 2015, there’s a unique dilemma I’ve been seeing. And it was on display again at EnterConf:

Consumer risk in B2B tech is here to stay. And it’s not just limited to consumer apps.

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The SaaS model is great. But, it's also meant to be predictable in areas of Customer Acquisition Costs (CAC), Lifetime Value (LTV), Monthly Recurring Revenue (MRR) growth, customer and MRR churn/retention & expansion MRR potential. The funnel is supposed to be optimized for conversion at every layer and sales people are meant to be more like customer advocates in closing deals.

That’s all well and good, but here’s the problem: the consumer of B2B technology solutions has made it more unpredictable. Too many founders are left trying to find lightning in a bottle, looking for viral, explosive traction that often is too short lived with no long-term scaling strategy.

You're acquiring customers today in this more consumerized way through blogs, content syndication, PPC, SEO/SEM, social, affiliate, and free apps with the idea of converting and expanding the dollar relationship. It's a complicated, nuanced and tricky new world for B2B go-to-market efforts. It's become incredibly analytical. If you're a marketer today and not focused on metrics and revenue, you’re dead.

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Businesses riding the “consumerization of IT” are dealing with a B2B buyer who has the same sales process and user experience expectations that they get from Facebook, Amazon, Pandora or Orbitz, it's uncharted territory for companies who hope to be predictable at scale. It also means acquisition marketers and user experience talent are the absolute most difficult talent pool to find and keep.

This is why SaaS businesses need several levers (the “levers" that I foreshadowed earlier) to grow their businesses to great heights past that early product-market fit stage. Be it multiple products, distribution channels, market segments, pricing models, bundles, campaigns, headcount/structure diversity, tools, partnership, industry verticals, internationalization or others. it's imperative you find your levers today and plan for new ones in the future.

With the amount of early stage investment being thrown at initial traction B2B startups, there is going to be a lot of oversight and pressure to perform. It will be a really interesting ride for the EnterConf attendees and exhibitors I met, as they undoubtedly will need to diversify, scale, define and maximize levers, pivot and iterate. And, most importantly, eliminate that “consumer risk.”

About the Author

Kyle York

Kyle York is Dyn’s Chief Strategy Officer and has been a long-time executive, having joined in 2008. Over the years, he has held go-to-market leadership roles in worldwide sales, marketing, and services. In his role as CSO, Kyle focuses on overall corporate strategy, including: positioning and evangelism, new market entry, strategic alliances and partnerships, M&A, and business development. Outside of Dyn, Kyle is an angel investor, entrepreneur, and advisor in several startups. Follow Kyle on Twitter: @kyork20 and @Dyn.

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