Moving From Enterprise To Consumer

Marty Cagan argues that enterprise software companies sometimes need to become consumer or small-business companies, whether because enterprise markets are saturated, investors demand bigger markets, or leaders tire of deal-driven growth. He warns that most companies fail this transition because enterprise corporate DNA runs deep, in sales-led habits, status symbols and beliefs about customers. Success requires the CEO to confront that culture directly, bring in new people, and move out those who resist. Consumer businesses win on product quality, scale, ease of use and low per-customer cost, with product and marketing taking the place of sales as the core engine. The piece matters for PMs and founders who face a similar pivot.

01Key takeaways

• Expect the enterprise-to-consumer transition to be hard, since most companies do not survive it.
• Look for enterprise cultural habits such as sales-driven marketing and client-pleasing rituals, which signal deeper beliefs to change.
• The CEO must personally lead the cultural change and be willing to replace leaders who resist it.
• Consumer products need to be far easier to learn and use, because no training or sales engineers will help users.
• With low revenue per customer, there is no budget for per-customer luxuries like custom work or heavy sales support.
• Shift investment from sales and sales support toward product and marketing as the business becomes consumer-focused.

02Key sections

Why companies make the switch

Enterprise firms move toward consumers and small businesses when they saturate their market, when investors point to larger opportunities, or when they want less reliance on individual deals. The author notes that such transitions are often necessary but rarely succeed.

Recognizing enterprise corporate DNA

Signs of enterprise culture include direct sales forces, client entertaining, marketing that serves sales, and heavy catering to a few big accounts. These habits reflect deeper beliefs about how to run a business and win customers.

Leadership must set the new tone

The CEO has to confront the culture head-on, add new leaders with consumer experience, and accept that some people will resist and need to be moved out. Those willing to learn can become strong supporters.

What changes in consumer economics and product

Consumer products must reach very large user numbers, scale marketing and support, and work immediately without professional services. Low revenue per user leaves no room for the costly sales and services model of enterprise deals.

Culture shift and org balance

Consumer culture focuses on user love, engagement and spreading the message, not on ties or big clients. Successful companies typically shrink sales and grow product and marketing.

03From the post

“A partnership dedicated to teaching best practices to product teams and product leaders”

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.