Scaling Enterprise SaaS Business in India: a masterclass by Sachin Bhatia of Exotel

In the last two decades, the software-as-a-service (SaaS) industry has reshaped how enterprises operate, communicate, and grow, becoming the backbone of modern enterprises. Today, software accounts for ~20 percent of the total enterprise spending on technology but has a value creation of ~50 percent. 

Yet, in emerging markets like India, the journey of growing an Enterprise SaaS business is far from easy. Startups need to navigate a rough terrain of opportunities and challenges.

I recently spoke to Sachin Bhatia, co-founder of Exotel, and exchanged notes, advice, and frameworks on scaling the Enterprise SaaS business in India. Exotel is a Blume Fund I company that offers an enterprise SaaS platform for connected customer conversations and is a canonical example of how to scale enterprise SaaS in India.

In this article, I have condensed the conversation into digestible insights and frameworks. This is a masterclass for SaaS founders aspiring to sell to enterprise customers in India and emerging markets. 

As a SaaS business in emerging markets, tapping into the Enterprise segment is essential to scale revenue and make profits. 

“Should we follow the pathway of SMB to mid-market to Enterprise, or go straight to Enterprise?” is a common problem faced by SaaS founders. If you are a SaaS founder in emerging markets, Sachin has clear-cut advice for you.

Sachin: “To make money in SaaS in emerging markets, there is no alternative to tapping into enterprises. Scaling a business purely from SMB in emerging geographies is a myth. Now, this is a very biased and personal view. But it has not happened so far.” 

Sachin suggests two things for you to get started:

• Start engaging with Enterprises early on instead of sailing in two boats and thinking of tapping into SMB for the first few years and then moving to Enterprise.
• Adopt a fail fast, learn fast approach, and be hands-on; do the first 10-20 pitches yourself. Once things fall in place and customers start coming in, hire a VP of Sales to do it for you.

Sachin: “Losing an enterprise deal is not a problem; it’s a learning experience. The deal not being on the table is the real problem. So, lose 10 deals, and only then will you win one. But this deal could have a revenue potential as large as 10% - 20% of your revenue from SMB.”

Qualifying a customer as an Enterprise account

The definition of an Enterprise account can be confusing for SaaS founders. Based on every company’s goals and industry focus, a mix of factors such as company size, revenue, complexity of needs, etc., can be used to qualify an account as an Enterprise. 

Exotel has been fine-tuning its definition of Enterprise over the years; they started with a bucket of 7000 Enterprise accounts, reduced it to 2500, and today their Enterprise bucket has just 500 accounts. 

Sachin: “Let’s say a national bank comes in and signs up for a small use case. Should the enterprise team handle it because of the org’s mammoth size, or should you have the SMB team handle it based on the current revenue? We had many of these discussions, but eventually, we narrowed it down to named accounts. We decided the definition of enterprise account is not based on today’s revenue but on the revenue potential of the account.”

Evolving your org structure while transitioning from SMB to Enterprise

When Exotel started, it got its first few SMB customers through content-led inbound motion. Its transition into the Enterprise space began when one of its products started seeing high-volume usage by a mobility tech startup. They identified that this use case was common across other sectors, and to tap into that potential, they created an outbound sales motion, calling it the Enterprise team. 

Today, the Enterprise sales team at Exotel has undergone several iterations. This transition required them to rewire their teams completely to adapt to the enterprise market. Below are the key learnings from Exotel’s journey of driving this transition.

Transition your Account management org from being opportunistic to strategic

Large enterprises are like oceans, where several departments have large budgets and could become buying centres for your startup. Thus, when selling to enterprise customers, Account Management teams should be strategic with their accounts & discover growth potential within their accounts, as opposed to the SMB approach of consistently scouting for new opportunities to grow business. 

Sachin: “Let’s say you and I are account managers with 200 accounts each. We will have a limited attention span allocated to each account. And our immediate focus will always be on the opportunity most likely to close. However, an enterprise account manager should not be opportunity-driven like this. If a bank is their account, they should strategically plan by looking at the bank’s annual budget instead of looking at their current running opportunities.”

Sachin suggests two structural changes to drive this shift when an organization is coming from an SMB/mid-market sales orientation. 

1. Use the principle of “starvation leads to innovation” and allocate fewer accounts per account manager while maintaining aspirational revenue targets.

Having fewer accounts encourages the team to go deep into each account. For instance, an account manager with 100+ accounts can only engage with 2-3 stakeholders in a company. But when they have only 10 accounts, they will automatically engage with many more stakeholders in every company as that will be their best option to meet their sales quota.

This manufactured starvation enables your sales team to go deep into an account to understand use cases, map the buying centers, and decode their decision-making process.

2. Talk in use cases, not products:

Enterprises in emerging markets buy software for only 2 use cases: to make money or save money. Founders need to align their products to one of these or a related KPI that directly impacts the enterprise's P&L. Any use case besides these two will be very difficult to scale in emerging markets. 

Add to this that the enterprise buyer is not interested in buying your product. They are interested in solving a problem they have and becoming better at their job. Unless you can bundle your products and position the bundle as a solution to their pain point, you will find it extremely difficult to scale your enterprise business.

Sachin: “We no longer sell voice, SMS, WhatsApp, and contact center. We now sell to use cases such as customer engagement in marketing, sales efficiency, collections efficiency, and digital customer experience. 

These are the themes around which buying centers are aligned rather than how my product and technology are built. So, if I go and talk to a collections leader in a bank, my pitch would not be that I have a voice product or an SMS product. My pitch is, what’s your collection efficiency today? And can we improve it by a percentage point? That would be huge for them. That’s like Rs 100 crores or Rs 200 crores savings Rs 20 to Rs 40 crores opportunity for us. So, the whole organization is now aligned on verticals, use-cases, and solutions, rather than products.”

Enterprise sales motion is like Tapasya. It requires a lot of investment before it can lead to fruition.

You measure the SMB sales team’s progress by volume and revenue. But in Enterprise sales, revenue can take a lot of work and time to land, which makes tracking performances and progress toward sales projections difficult. 

Sachin advises closely tracking customer conversations in CRM as a leading indicator of future revenue. You should evaluate the team’s understanding of use cases and problems, track the number of buying centers they are talking to, how far they have mapped their account, and so on, to determine the odds of future sales in an account.

Sachin: “I call the Enterprise sales motion tapasya. Think of it as an investment for one to two years where you spend time and energy, and be prepared that the result will come after a long time. And you can’t do hybrid tapasya, which means you cannot say, I will work with this large bank. But here are the 50 SMB accounts that will give me run-rate business.” 

To improve the quality of sales conversations, align your teams to verticals instead of geographies, SKUs, or products

A geo-based sales team optimizes for reducing the travel of the sales rep, which in turn saves the company cost of travel. However, instead of indexing on cost of travel, Sachin suggests you should index on the quality of sales conversations.

To have deep conversations, a salesperson must speak the same language as the customer. However, the use cases and the spoken language around them greatly change across different verticals. Thus, organizing your sales team around verticals such as BFSI or eCommerce enables them to develop depth in each vertical and leverage it in customer conversations.

For startups doing a low volume of very large Enterprise accounts, having a squad of four or five sales reps and one cluster head in a vertical can prove worthwhile.

Sachin: “Let’s take the example of the BFSI sector. A salesperson serving BFSI should know the difference in the onboarding process for a loan versus an insurance customer. What are the regulatory problems? What sort of collection numbers do people do? What are typical collection efficiencies? But If the sales team is working across verticals, then there is a high likelihood that the sales rep will have one call with a bank in the morning and a second call with a logistics player in the afternoon. In this setup, the chances of the sales rep having process knowledge for both calls is heavily reduced.”

According to Sachin, verticalization also tends to pay off strongly in the network effects because the customer POCs will most likely switch jobs within the same vertical. So, if your sales rep stays with you for long, there is a good chance that in 4 to 5 years, they will know everyone in the ecosystem very well. 

Setting sales quotas for a verticalized sales team is not as straightforward as a geo-based sales team

One of the challenges of setting up a verticalized sales team is assigning sales quotas to sales reps in different verticals. You could assign quotas using a cost-plus model in a geo-based sales team. If the CTC of a sales rep is Rs 100, you can expect them to earn you 5x to 10x of their CTC to hit your Gross Margin target and assign quotas using straightforward maths. 

However, quota allocation is not straightforward in a verticalized sales team. You need to do one-year account plans with your sales reps based on the size of the vertical, growth trajectories, the revenue potential of the account, and how much you can capture. Sachin believes that Exotel is in the process of arriving at the best practices for this and shares the following advice for you.

Sachin: “In your annual planning, you will have to ask your sales rep “Hey, what’s going to happen in banking this year? And what’s going to happen in this bank this year? You should get to a stage where you know how much they will spend on specific use cases in the next financial year and how much we can capture. Then, you can write against each account; this is what I expect to happen in those 12 months. So then, you aggregate it and say this is your quota.”

The DNA required to do Enterprise and SMB sales is very different. Segregate the teams and treat them as separate units

An Enterprise sales rep, on the other hand, needs a very different DNA. They not only need to understand their product but also develop a deep understanding of the customer’s business, have the personality to have dinner meetings with prospects to understand their budgets and buying centers, and thereby discover problems-product fit in the enterprise.

To transition your sales org, Sachin's advice is to have an honest conversation with the teams about the skill sets required and enable them to make the transition from SMB to Enterprise only if they want to. 

Sachin: “The sales DNA needed to keep the engagement and conversations in Enterprises is completely different from that of SMB. Some people have been able to scale from SMB to Enterprise, but we had to tell the teams that what got you here would not get you there and that they would have to develop new skills if they wanted to transition. Some were excited to invest in the training required to transition, while others decided to stick to their current skill sets and stay there.”

Sachin further adds that this segregation between SMB and Enterprise sales teams should not be just at the field and team level but also at the leadership level. Two different people should hold SMB sales leader and Enterprise sales leader roles with different KRAs, and both should report to the CEO.

Sachin: “At Exotel, we look at SMBs as a top of the funnel with the hope that some of them will become a Flipkart or Ola or Myntra, and hence we continue to build for them and serve them. But for us to grow with them, we should catch them early. The objective of driving SMB business is not to make a lot of profit there, but to ensure that our coverage is really good so when they do become big, we move them to Enterprise and grow with them.”

The role of Customer Experience (CX) in driving Enterprise accounts’ growth

After acquiring an Enterprise account, customer experience (CX) and sales are needed to retain and scale that account together, but CX in Enterprise looks very different from SMB/mid-market. 

• The customer success teams in the SMB space often operate in a reactive mode, i.e., when a customer reaches out with an issue, they step in and resolve it.
• But in Enterprise, you need a customer experience team that works more closely with the customer. They need to deeply understand the customer needs and use cases such that even if there’s a small fluctuation in traffic, they know why it happened and whether it was an opportunity or a glitch. 

Sachin: “To understand how closely CX works with enterprise customers, let’s look at how our CX works with Flipkart. During Flipkart’s big billion sales, they see a 2-3 times uptick in volume, and in an infra-heavy business like ours, scaling our systems is of prime importance. So for the whole week, our team observes and closely works with them to ensure sufficient capacity, immediately scaling up and scaling down and even rerouting if there is a problem.”

Role of CX in onboarding a customer

According to Sachin, an ideal Customer Experience team should be able to understand the product technicalities and do a bit of solutioning for the customers. Graduating or hiring people from support and product teams instead of sales is one way to build a versatile CX team.

Sachin: Think of CX as a mix of pre-sales and delivery in a traditional enterprise organization.
So, these people should do basic implementation and configuration. If something has to happen at the back end, only then engineering steps in for delivery and owns it. But the primary interface for the customer for delivery is always CX, whether they are doing it themselves or getting it done through an engineering-led delivery.”

The CX team should always be the primary interface for the customer for delivery, but its role in onboarding a new customer depends on the type of product you are selling. Suppose your product is straightforward to use without complex integrations with other systems or uploading of historical data. In that case, the CX team can own both the program management and the delivery of the onboarding process.

However, if you have a complex product, like Exotel, that needs multiple integrations, pulls data from different tech stacks, and needs customizations, the ownership of delivery shifts to a specialized delivery team that sits under engineering. Even in this scenario, the customer experience should own the program management and be the primary interface with the customer.

Aligning CX and Sales using a two-in-a-box model.

Unlike a lot of organizations that adopt a hunting and farming approach to segregate sales and customer success, Exotel adopted a two-in-a-box model, where:

• The account director and the customer experience director both carry the same quota of total revenue from the account.
• Sales leads everything relationship-driven, and CX leads everything related to identifying or delivering a use case, solutioning, or account mapping. 

Sachin: “SaaS startups dealing with large enterprises should think of their accounts in perpetuity. At Exotel, we believe all accounts are always underpenetrated. In such cases, CX and Sales co-owning an account is a good way to grow revenue. If you have to navigate the account and say somebody is a blocker in an account or we need to map new stakeholders in an account. That’s on the sales side. If our use case is under threat or we are facing challenges around the efficiency of a use case, these discussions are led by CX.”

“By giving co-ownership of the account quota to both CX and the account management team, we have created a system and culture where both the account director and CX director plan and problem-solve together. By playing off each other’s strengths, they can pair up really well and celebrate each other’s wins instead of fighting over target ownerships.”

Incentive structure of CX and Sales team

Incentive models for sales and customer experience teams can vary based on the nature of business, but they are largely of two types: Fixed variable and Fixed commission. 

Pure SaaS companies with uniform platform pricing can leverage a fixed commission model to incentivize and motivate teams. However, for companies like Exotel with high variance in gross margins across products, a fixed variable model works better to achieve common ground across teams. 

Sachin’s advice is to customize the incentive structure based on how closely the role’s responsibilities are tied to revenue while keeping the quota and target of revenue the same across CX and Sales.

Sachin: “In our case, the quota is the same for sales and CX, and we incentivize both of them. However, the structure of incentives can differ. Based on how you have defined the responsibility for each role, the % of variable pay can vary across sales, customer experience, and other teams. For example, sales might be on a 60/40 plan, whereas CX might be on a 70/30 or 80/20 plan. However, once you have decided on the plan, a common quota or revenue can be commonly assigned to both.”

Tracking your on-ground positioning and messaging is crucial to scale to a successful enterprise SaaS seller

Over the last 10 years, Exotel has transitioned from being a SMB player to a large enterprise player, and with this transition, it has constantly evolved its offerings as well as its brand and positioning. 

• Exotel first launched as a cloud telephony brand.
• Post Ameyo-Exotel integration, followed by the merged company’s acquisition of Cogno, Exotel positioned itself as full stack customer engagement, facilitating customer engagement on any channel. 
• Today, Exotel is a connected customer conversations platform with a promise to enterprises that wherever their user is in their journey, they can use Exotel as the infra backbone to engage with them.

To manage this transition in positioning, there is no way better than regularly mentoring and coaching the sales team, irrespective of their experience level. Founders/sales leaders should closely monitor sales conversations in the CRM and intervene to coach sales reps who are defaulting to the older ways of selling. 

Sachin: “If you are transitioning to a higher order positioning, your sales team may still go down to the lowest effort. You have to monitor all opportunities in CRM to ensure the conversations are changing ground. For instance, the sales guy might still be saying, if you have WhatsApp for business, you take WhatsApp services from me while you are trying to become a connected customer platform.”

The holy grail in the journey of Enterprise sales is to make the boardroom your buyer and drive top-down adoption  

Enterprise Account Management is an ongoing process that requires continuous improvement and adaptation based on the level of maturity your organization is at. 

In the early days, the focus should be to broaden your buying centers from selling to procurement function to selling to use case owners such as heads of marketing, sales, customer service, and operations. Your first goal should be to work closely with them to design solutions, drive adoption, and deliver business outcomes for their departments. 

But the real peak of Enterprise selling lies in working with the top management directly on driving organization-wide outcomes. If you can align with whatever is happening in the boardroom even before they distill their strategy with requirements, you have uncovered the peak of enterprise selling and its revenue potential. 

Sachin: “Let’s say a large D2C company wants to launch in Saudi and UAE over the next two years. Can we start planning infrastructure with them as they are planning their business? Can we get involved with them in their boardroom? Today, we get engaged after they have launched and have a solution. Can we engage at a level when they are strategizing?”