If SaaS Products Sell Themselves, Why Do We Need Sales?
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Freemium represents this process taken to one logical extreme where you have zero-touch and rely on marketing from the web site and pure virality. Next up might be limited email marketing/sales. Then phone, then phone and outside sales.
At the very high end, you are talking about regional field sales as well as face-to-face visits with your companies leadership up to an including the CEO.
I'm sure if you created a SaaS for X, where X = farmers, or or home funeral owners, or home contractors, you would not have that luxury. So it definitely depends on the space, and for most people, your strategy simply would not suffice... not even close.
The second is that there are millions of small businesses which aren't searching Google for software solutions to certain problems and yet are willing to part with cash if somebody shoves the solution in their face.
I also work at a SaaS business and can tell you there is absolutely no way we could make sales on marketing alone (and we sell to primarily SMBs).
Whether or not you need a sales team depends greatly on what type of product you are selling.
>Your biggest competition isn’t just other startups, perpetually licensed on-premise packages, homegrown solutions, or incumbent vendors. It’s inertia...the target company’s urge to do nothing.
So how do you make enterprises care enough to act?
I've found that as "obvious" as saving money should be as a change agent, in many organizations that doesn't move the needle.
Products that increase revenue usually gets far more attention than money saving products. Competitive leapfrogging / strategic value even more, but that goes to Mark's about understanding and identifying their initiatives.
Would also add: identify their incentives. Make heroes the organization rewards.
This is true of almost every company. It's not a secret why Salesforce was the first real SaaS success story: companies are a lot more inclined to spend money to make money than to spend money to save money. Growth is the name of the game; cost cutting is usually only a focus once growth is no longer an option.
That's why I groan whenever I see something like yet another IT operations management platform. Would the company be better off buying a software package to manage their IT, or firing all their IT staff and hiring a managed services provider to fill the gap? Operational cost cutting has a lot of different modalities that are often mutually exclusive, while you can more easily chase down multiple paths for revenue generation.
ServiceNow will likely just get acquired by someone (HP? SAP? Oracle?) and integrated as a module in a massive ERP system. I definitely don't agree with their valuation; they're trading at like a 300 forward PE which is just ridiculous for an enterprise technology vendor in a space as crowded as theirs. They're likely only trading at that level because the analysts are anticipating an acquisition and subsequent bidding war. That doesn't validate the value of their services; just that big enterprise tech vendors are willing to pay a premium to displace their competitors.
The lower your price, the more your product and sales process needs to be self-service, because you can't afford to send a salesperson out for a $1000/yr contract (airfare + hotel + rental car + their time, annnd you're over any possible return, even before including R&D and support costs)
http://saasaddict.walkme.com/getting-your-saas-acv-annual-co...
Armando Mann over at RelateIQ uses Cohort Growth to measure LTV for each customer within a cohort to ensure the business is growing taking into account the bottom line.
An entire constellation of decisions about one's company/customers/product/pricing/business model/etc gets determined instantly when you pick your point on this continuum. (Or, equivalently, you get placed on the continuum basically instantly when you make most consequential decisions about a SaaS company/product/etc.)
The reason this article is on this blog is that there is a playbook for high-touch SaaS businesses which is amenable to venture funding and that is not exactly true for low-touch businesses. (There exist a handful of exceptions, but people consider B2B high-touch sales to be a solved problem.) Additionally, and more directly responsive to your question, there exists at least one popular and widely listened to corporate voice who quite literally wrote a bestselling book which might as well be subtitled Low-Touch Sales Mean You Don't Have To Take Dirty VC Money.
(Cards on table: My business is mostly on the low-touch end of the spectrum but I work with people all over it. There exists a shedload of money to be made in software and a variety of ways to make it effectively at the traditional points on the spectrum and at emerging points besides.)
When you consider this, the delineation between marketing and sales becomes increasingly blurred.
I have been leading a large-impact project internally where we need a solution that has potential vendors at different places in this spectrum.
Inevitably, the largest and most "enterprisey" companies had what I would consider by far and away the worst sales experiences. Very clearly sales people who are used to dealing with business customers who probably won't have anything to do with the actual product in the day-to-day.
I was given vague salesy answers that clearly intended to skirt around the issues I presented, and they had no issue trying to exert pressure come monthly/quarterly sales quotas. Exploding offers for a large purchase of this nature are simply not appropriate (and certainly not appreciated).
Perhaps my biggest gripe has been with the lack of transparent pricing for any sort of B2B SaaS where you are on the highest tiers, and thus need "custom pricing." I understand some things are variable and need to be custom scoped, but in this case that was only true for some add-on services vs. the core product with volume-based pricing. As a prospective customer, I absolutely loathe these sorts of pricing negotiations. The time wasted on the back-and-forth is also a giant PITA and doesn't win the companies any points. It is always very obvious that their initial price is a high-ball offer, and they expect you to negotiate, which means that they in part are structured/incentivized to make some margin/sales commission by not giving the customer the fairest price they could. This in and of itself starts the relationship off on the wrong foot.
In general, I wish there was a way to choose the type of sales experience I want before beginning the process. If I'm a key decision maker and care more about the actual functionality, UI, integration, etc., I want someone knowledgeable of the technical aspects of the product. Someone who will be upfront on the product's shortcomings (to avoid surprises that result in a pissed-off customer down the road and make the buyer look like an idiot). I also want someone who can communicate with zero sales fluff, and give me fair and transparent pricing. Is that really too much to ask? Apparently so when it comes to enterprise B2B sales. Over the years I've often had the distinct impression that many of the salespeople I've dealt with exist simply to funnel communication between a sales engineer. I get their value if they are out hunting and bringing in their own prospects, but these have all been for inbound leads where I've contacted them.
Also, do all those fluffy buzzword-filled sell sheets and cheesy marketing videos devoid of any meaningful, tangible content actually add value for anyone? I had one sales guy send over an (often unrelated) white paper or marketing video link with every. single. email. I ultimately had to tell him to stop because it wasn't adding any value and was doing more harm than good.
Guess this turned into more of a rant...but if anyone has good solutions for dealing with the above I'm all ears. I've negotiated these kinds of contracts for years, know how the game is played, and play it reasonably well (IMHO). Doesn't make it any less frustrating.
try doing all of the above, for 12-18 months, and then learning that the customer never intended to go with your solution, but was rather just leading you on to get a price foil for a competitor that he already decided he was going with. you'll be a different kind of angry. a real kind of angry - because there are real consequences and costs, in dollars, and time, to that kind of fuckup. this is very different from a real evaluation, and the only way to avoid that kind of scenario is to get investment from the buyer. a sales organization that runs into that kind of situation with any kind of regularity is dead in the water because they're spending all their time on people who don't want to give them any money.
having said that, what you want in a sales process does exist, it's just that it's usually the smaller, younger, hungrier, less "proven" companies that are willing to withstand the abuse to provide it. it'll all sound great, until it's time to sign the contract, then all of a sudden any of a million reasons to not move forward are produced from thin air, and instead, a larger more established competitor that practices universally disliked sales techniques gets the $ and the validation.
in short, be the change in the world you want to see. next time, buy from a smaller company that puts your career at risk. it's hard to do when you have large budgets because the purchasing process is basically just a giant a cover-your-ass operation.
If the company being used in this regard simply had transparent pricing, they wouldn't have to waste those sales resources in the first place.
I also think in this day and age of anonymous online review sites, Quora, Reddit, etc. that a lot of this pricing information gets out there anyway, NDA's be damned. So it almost seems like a futile battle.
I agree though with your statement on types of companies, and ultimately decided not to continue considering the large established enterprise players and focus more on the smaller, younger companies. There was still pricing negotiation and other sales process challenges, but overall the process was much less painful (still not anywhere approaching enjoyable though).
also, the companies who don't publish pricing do not want people who are interested in just the price. they're usually selling something that has a lot of intangibles like a custom crafted solutions or quality of service. by reducing their entire sales pitch down to a single number, they're devaluing themselves before they even get a chance to pitch their solution. by not even being willing to communicate with a sales person the details of what you want, you immediately disqualify yourself.
in my opinion it should take about 30 minutes to an hour of your time to be able to get a price out of an enterprise product or service (this includes requirements gathering, specifications, etc on the part of the sales person). anything less, and you're not dealing with a serious buyer. usually this is just one phone call and a follow-up email with specs. in our business that's enough to generate a proposal with a $ amount on it.
I likewise will also agree that there are valid reasons for not publishing the price as a way of better qualifying leads before first sales contact.
That said, that still doesn't justify why pricing can't be transparent and clear cut once the lead is qualified and they are in the sales process. Simply knowing that the initial pricing presented is not final and needs to be negotiated is a giant PITA and still a waste of time. If you claim pricing is such a small piece of it, why then do companies bother with the negotiation piece if the actual amounts might be trivial compared to whether or not they close the deal? Does the psychological benefit of conceding to a lower price (from an already padded initial price) really make that big a difference in close rates?
I agree pricing discussions should not take longer than 30 minutes, but unfortunately, many sales people I've dealt with prefer to play car salesman style games.
Do you have any suggestions on how to approach such conversations to get the best/fair price with a minimum of back-and-forth headaches that can cut through some of what I've described? I've tried a few different approaches with varying success and am always open to others to test out.
too many people who usually don't buy things try to play amateur negotiator and refuse to name a number. it's really transparent and frustrating. generally these deals don't go through because the person doing the buying doesn't know what the hell he's doing and he assumes a combative relationship instead of one that tries to solve a problem.
especially when you spend hours crafting a proposal and getting input from sales engineering and executive management and accounting and client delivery, and the first thing that comes out of the customer is sticker shock because the customer refused to state his budget and requirements because he read it in a self help book somewhere.
again, most of these sales 'techniques' really are just designed to not waste anyone's valuable time. buyers will waste their own time and not even realize it because it feels like you're "getting one over" on them when in reality you're just being a moron.
Yes. If you're just parroting talking points, you can be replaced by a website. Plus, it's more fun to really help people.
"your biggest competition isn’t just other startups, perpetually licensed on-premise packages, homegrown solutions, or incumbent vendors. It’s inertia. Enterprise/SaaS salespeople find themselves in a constant battle against the target company’s urge to do nothing."
Yes, again. This isn't just a sales problem-- this is a human nature problem. It's just that selling to big companies involves lots of humans, almost all of whom are deeply resistant to change.
A good rule of thumb is that as a sales person you want to feel like there is a 4x minimum change vs the cost of your solution. So if your solution is $250,000 a year as a SaaS offering you want the company to believe it will save or generate $1 million a year. Anything under 3x and they'll probably punt because of the risks and opportunity cost of all things change.
Then I’d show the sales reps a long list of initiatives they needed to look for in companies
Once the sales and marketing teams have uncovered these initiatives (as well as the critical capabilities that need to be in place for the initiative to be successful), they can begin to define the unique value proposition.
This data is almost never public, so it couldn't be found by just doing your standard research on a company from the outside. The only way you get this kind of stuff is with an access agent.
What this article basically says, without saying it, is that your sales team needs to be Human Intelligence officers out there recruiting individuals from large organizations to be champions for your product.
Nothing new here[1][2]certainly as this is a fantastically useful way to do business, but you had better know how to do it right or you look like an idiot. It also means you really need to hire top notch sales people.
[1]http://www.amazon.com/Work-Like-Spy-Business-Officer/dp/1591... [2}http://webcache.googleusercontent.com/search?q=cache:W6r6dsv...
If you are a new company with a new product, hoping to sell into the large enterprise market, you're competing with large, well-funded sales teams who's most compelling pitch is that "we're the safe choice." It may not be (and usually isn't) the best or most cost-effective choice. Yet at the end of the day, divisions or agencies making 7+ figure purchases want to feel confident in their purchase. "SAP is a good purchase because Ford/AT&T/Apple (I'm making these up) purchased them and they must know what they're doing."
Enterprise sales is a very tough business. If I were launching a product, I'd probably target small teams first with a lower price-point to bypass the politics and get almost instant purchase approval. There the stakes are lower. Sure, you won't close a $500,000 sale in one fell swoop, but once you establish yourself across a number of teams, you can always change your product lineup and create an enterprise package that has a much higher cost. Obviously a large number of SaaS companies already do this and I have to believe it's the most effective route.
Also, SaaS offerings are not new and therefore rare & exciting any more so you are unlikely to be alone in the market - you need your sales+marketing people to compete with everyone else's.
A couple years ago I had a sales guy at a large ad tech company that shall go unnamed try to go over my head to executive team members. Of course the first thing that happened after that initial contact was that executive coming over and saying "so and so reached out to me...what do you think about them?"
At that point I explained that not only did I not think they offered a great solution, but that it spoke volumes of how they do business if they go behind people's backs like that.
The icing on the cake was when that executive sent an email back to the sales rep, CCed me, and said that he would defer to my expert knowledge of our needs.
Note to any sales reps reading this...just because someone doesn't have an executive-level title, don't for one second think that you might be able to close the deal without their buy-off.
On how the above is done see Netflix original: http://www.netflix.com/WiMovie/70178217
Talk I gave on our model here: https://www.youtube.com/watch?v=JU1AWD_fue8
Sometimes I wished we eliminated salespeople entirely. I would prefer to have "honest" marketing, and strong customer service.
What I mean by honest marketing is to continually share content with the prospective client, and try to win them over without playing gimmicky mind games and tricks. To do this, you must understand that your client may need to time to understand your product, move away from current solution, etc..
A strong customer service agent would help answer all of customers' concerns once the marketing has gotten them interested.
Often that "strong customer service agent" is a salesperson.