The current trend among technology companies (and others) is to assign accounts based on company size. While definition of size varies across the market, the three categories generally defined are:
- SMB (small, medium businesses)
Gartner defines SMBs by the number of employees and annual revenue they have. The attribute used most often is number of employees; small businesses are usually defined as organizations with fewer than 100 employees; midsize enterprises are those organizations with 100 to 999 employees. The second most popular attribute used to define the SMB market is annual revenue: small business is usually defined as organizations with less than $50 million in annual revenue; midsize enterprise is defined as organizations that make more than $50 million, but less than $1 billion in annual revenue.
The market definitions are important because both the decision-making process and the level of sales expertise required for success in each segment are closely tied. It is no surprise that with each level of added complexity to make the sale, the compensation for the sales team also increases. The rep who can be successful dealing with the small company owner as decision maker is a different rep than those who can navigate across departments, multiple decision makers, long sales cycles, budgets and internal politics.
In many organizations, reps start out in the SMB space and with improvements in skills and account success are promoted into the upper tiers of Mid-Market and some into Enterprise. If your product offering fits neatly into any one of the categories, then the decision is rather simple. If you do cut across different size organizations with either the same product set or an enhanced product for the Enterprise, then you need to consider segmenting your team to match the skills of your sales team for the best possible outcomes. This is now considered a “Best Practice” for many sales organizations.
Also, as a sub division in the SMB space, the startup and small accounts may be managed entirely by an inside team where the lower cost of sales matches the annual expected revenue for these emerging accounts until they can “graduate” into an outside rep or assigned account manager for SMB.
Consider what many companies have learned the hard way, you cannot always “grow your own” and promote reps from the lower tiers to the Mid-Market or Enterprise. Sometimes you have to go outside your own team and recruit the talent with the proven success in the segments you need to penetrate. Nothing wrong with that, just be ready to write a bigger check as the cost of entry into these most challenging spaces…