How to build an effective enterprise plan

Martin Jeret, CEO of Codemagic talks about the best features for enterprise plan customers, as well as how to build an effective plan.

You can listen to the full podcast interview here, as well as on Spotify and Apple or enjoy the highlights of our convo in this article.

From chemistry to Codemagic: My career trajectory

I used to be a chemist. I studied organic chemistry in the UK. But one day, I realized that I don't actually look up to a lot of chemists. Chemistry is fun, but I was afraid that if I went down this particular path, I might not be happy.

I decided to change my career trajectory and went into the startup world, working with software developers and apps.

The first startup I joined was a mobile application, but unfortunately, it didn’t work out. I then started doing corporate consulting, which was really boring. So then I went back to startups, and now I'm building Codemagic.

I started off as a business development person at Codemagic. The company used to be a mobile development agency back in 2010-2012. And back in those days, it was one of the first products that offered some kind of cloud infrastructure for mobile developers, and so DevOps people started to come around.

Jenkins was becoming more and more popular, as well as Travis, which was a continuous integration and delivery service from Germany. At the same time, we also launched a product that was a continuous integration and delivery service. It was similar to Travis, but we did it for mobile developers.

Codemagic is the second or third generation of our products. We launched it in 2018 in collaboration with Google. Google came out with Flutter, which was a mobile development SDK, so we were the CI/CD partner for Flutter developers.

The evolution of Codemagic’s enterprise plan

There’s a saying that 90% of your revenue comes from 10% of your customers. When you're a small business, you often think that this is an anomaly that shouldn't exist, that we have this one guy that pays a lot of money. But it's true. As you get bigger, there’ll be more and more of those guys.

So, you can either decide to ignore them or make an effort to help them use your product.

When I joined Codemagic, I didn't have a lot of experience, but I was very eager. I saw all these other tools had enterprise plans, so I put forward the idea that we should create our own enterprise page.

That was the reality of it. We created something that said ‘enterprise page,’ put the price tag on it, and said, “Okay, that's our enterprise plan.”

In the beginning, it didn't work. Nobody contacted us. But that's literally all we did. We said, “This enterprise plan called starts at $6,000 a year, contact us.” Over time, you do get some people who reach out. That was the surprising thing.

If you're getting requests in, it’s a very, very strong indicator that the person wants to buy your product. So, the first thing that I was trying to do was close those deals with whoever reached out to us.

Then later, I hired an engineer who was also interested in doing this kind of customer engineering or sales. And then we worked together on trying to close those deals that were coming in.

It's more complicated than you might think. It's not as simple as a person reaching out and saying, “I want to buy your product.” It gets quite tricky.

So, what we did was try to build easier onboarding docs for those enterprise customers because they usually had some complicated setup and they didn’t have a lot of time to configure everything. They said, “Okay, we’ve got these two weeks. Go ahead and see if you can adopt this product.”.

A lot of our efforts in the team were based on how to close those incoming leads. That was the bulk of the work.

The benefits and challenges of enterprise plans

There’s both a good and a bad thing about having an enterprise plan. The good thing is that you get to learn a lot about the customer because you have that human touch.

They’ll most likely reach out to you and say that they're interested and they know exactly what problem they have, and they’ve spent time thinking about the product specs and what they need to solve. Or if they're switching from something, they know exactly why they're switching and what they're looking for. So the good thing is that it gives us very good customer insights.

But the bad thing is that you're spending a lot of time on one customer when they can just read the docs and self-serve with them.

And sometimes you spend so much time on this one customer and then they end up not buying the enterprise plan, which is the expensive one. They just go and buy the self-service plan, which costs half the money or even less. Or they use a free onboarding service. But in the end, they don’t end up buying the expensive enterprise plan.

Top features to include in an enterprise plan

The motivation for describing enterprise plan features in the way that I do stems from a previous problem. You get customers reaching out and wanting an enterprise plan, but in reality, they don't need it. So they still use the pay-as-you-go plan or some other self-serve plans that might be available.

How do you protect yourself against that? How do you make sure that you're targeting the right buyer or the right end user?

This is why I think that the enterprise plan is mostly a way to buy the product, nothing more. If someone can’t use a company credit card, they need to buy some kind of enterprise plan. And that’s what I wanted to highlight on our enterprise page.

In terms of your enterprise plan features, you can offer some specific service level agreement, whether it’s supporting resellers, onboarding to a vendor registration platform, or filling in security questionnaires.

All of these sound like things you hate and you never want to do. But you'll be surprised how much people are willing to pay for these really basic things that just require a human touch. Those are the kind of features that I’d highlight.

If you're looking at the product, you've already done the proof of concept anyway. You already know what you're looking for in most cases.

So, the only cases where they're buying the enterprise plan is when they're convinced of the product and they just can’t use a card. So they’re asking, “Who do I contact in order to register this company?” Or, “Who do I contact to fill in the security questionnaire?” And then they look at the enterprise page, and that's where you can highlight what services you can offer to help the customer buy your product.

In terms of our messaging, what we've tried to do is think about the specific task that the buyer needs to complete. Do they need a quote? Do they need an invoice? Do they need to do a bank transfer? Where can I provide this information to the buyer? We do that on the enterprise page.

And this is completely different from when you're selling the product. If you're selling the product and putting it on the pricing page, you’ll do your job of making sure that people know how the product’s priced and which features they’ll get. But on the enterprise plan page, we just explain how you can buy it.

In terms of the other features you should have when building an enterprise plan, it’s as simple as putting in a contact form. I think that people have this fear of selling enterprise plans.

Imagine you get a really, really big company trying to buy your product for 100 times more than your average customer is paying. Let's say that somebody comes in and offers you $500,000 or $100,000 for a year, but they require you to build a custom product for them. That’s the typical case where I see people are hesitant to start offering this plan.

But I can be hesitant as well. If a customer comes in and says, “Hey, can you guys build some special product for us in order for us to buy it?” It's really difficult to get this past the CTO and get the entire team on board as well. Why are we building our product roadmap in the first place when we have some person come out of nowhere and say they'll pay us $500k and then we'll build some features?

That’s usually where people say, “Don't offer enterprise plans because they’re not good for you in the long run.” But what I'm saying is that you shouldn't do that either. The way you should think about the enterprise plan is to just use it as a payment method.

I wrote an article about the top 10 features of enterprise plans, and one of the other features I mentioned was security questionnaires. And this is the thing that drives technical people crazy.

I often find it really difficult to get my CTO to sit down with me and go through the security questionnaire. It consists of hundreds if not thousands of questions about things like, do you lock your office doors? Do you have video surveillance in place? Who has keycard access?

We’re a remote company, and one of our senior backend engineers just lives on a boat in the middle of nowhere. He doesn't have servers on the boat. So how do you apply these 1980s rules to the modern world?

But you still fill them in, you do your best, and you send it out. Some people will say no and they won’t buy it, and some people will say yes it's fine, it's ticking the box. And then there's a third group of people that say the developers really want to buy this product, but the security questionnaire isn’t good enough. It’s not up to the standards that they’d need from their vendors.

There's a good reason for that. They have contractual obligations that they need to fulfill to their customers. Therefore, they need to apply similar standards to the vendors that they're trying to buy from.

Here’s where the remediation plan comes in. If your security questionnaire isn’t up to standard for the buyer but they still have a big motivation to use your product, then you can offer something called the remediation plan, which is in between a priority feature request and building a product roadmap for a specific customer.

An example of this is that in the past, we didn't have single sign-on (SSO). We only offered an email login with Magic Link, and we also offered sign-ins by different Git providers.

One of the hard requirements was that we could pass you through if you built the SSO functionality and you also did an independent third-party penetration test of your security systems. And then they had eight other items as well.

Now you get into this game of putting in the date when we should expect these items. So out of 10 items, we can guarantee that with this SSO and the independent security audit, we can get this done in the next four months. But we’ll revisit the other eight items in six or 12 months.

This is something that you can do if you have a big enterprise buyer who really wants to use your product. The remediation plan is something that you can do to help them buy your product by giving some leeway into the feature development because, at the end of the day, the SSO and independent security audit require very little resource from the development team.

But you can potentially get a bigger customer on board who, contrary to what a lot of people say, in our experience, requires very little customer support. They generally know exactly what they're doing compared to pay-as-you-go or freemium customers who require the majority of support. So doing this in order to get a bigger customer is worth the effort.

The role of account managers in enterprise plans

I haven't yet discovered a good reason or a good way to sell the account manager service. And this is partly on me because I haven't done enough customer research. But if I'm comparing quotes from competitors in our field, for example, then I can see that they explicitly highlight an account manager in their offer or when they provide a quote to the customer. We haven't done that.

If you explicitly say that you can offer account manager services, then currently the only thing that I can see it affects is the price. So maybe offer a higher price if you have an account manager there.

But in general, you shouldn't try to tier your enterprise plan. You should just have one price that includes everything, as long as it makes sense. You should have as few options there as possible because the less complicated you can make it, the better.

Account managers in our company remind customers that they have a renewal coming up. Surprisingly, it's very difficult to automate this. You can try to send emails, but sometimes you just need people to reach out from different places.

Secondly, sometimes the customer has feedback to give on a product, and the account manager is the person in the company that listens to them and tells them that they’ve relayed their feedback to the development team. It’s somewhat reassuring and helps to improve retention.

Setting the right price for enterprise plans

When it comes to choosing the right price, I think a similar question can be asked about non-enterprise plans as well. How do you come up with any pricing? And what's the difference between pay-as-you-go pricing and enterprise plan pricing?

When I come up with pricing for the product itself, for example, if we have pay-as-you-go pricing, it's a fairly straightforward mathematical equation. You do your gross margins and you calculate your retail price.

It's mostly a testing game in a way. You put the price where you're willing to do the work. That's the honest truth. You put up a product price that motivates you enough to do the work. There’s a lot of work and it shouldn't be underestimated.

Some people refer to it as enterprise tax that you add on top. But in reality, I think it has to do with what motivates the team to do it, as well as the dev team for that matter. Why would you pay more attention to one customer over another? You should answer that question.

We started off with $6,000, and then I tried this tiered approach where $6,000 was the minimum amount required to get an invoice from us. And then we said that $12,000 is what’s required for an SLA.

And then what we discovered was that a lot of customers who said they wanted the $6,000, actually wanted the SLA or the security questionnaire. So to make things easier, we said, “Okay, let's just put it at the higher price.”

But it doesn't really show the value of the product. The same guys that are buying it for $12,000 are going to buy it for the other price as well. Who’s it valuable for? It's this payment method that's valuable. Otherwise, they couldn't buy it.

You add bureaucracy to add value. That's how money moves.

Pricing is an interesting question. You need to experiment and test your limits, and you'll be surprised at the results.

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Building an effective enterprise plan

Martin Jeret

Teresa Garanhel