Note: This post was originally published October 24th, 2011. And it's even more true today than it was then.
The demise of the traditional enterprise software sales model is widely reported. And widely, and joyously, celebrated.
And for good reason. The model has bugs. Lots of them. It's expensive (personnel, travel). It's time consuming. Picking good reps is hard; many fail. Finding good sales engineers is incredibly hard -- often even good reps fail if they have bad SEs.
But this biggest bug is this -- it takes too long to achieve uncertain results. Typically it looks like this.
You invest a lot of time (and money) up front in hopes of a big payoff down the road. You're solving a big problem, building consensus, evangelizing your approach, de-positioning competitors, meeting with executives and on and on. It all takes time.
The problem isn't that this approach doesn't work. It does. Ask any big software company.
The problem is that it's inefficient. All that convincing takes time, skill, and a ton of hard work. Much has been written (Solution Selling, Customer Centric Selling, etc.) about how to make this process more efficient and its outcomes more predictable. But these books, as good as they are (and they are great) are about improving an existing, and fundamentally flawed, process.
But the real game changer is a new approach. What if the timeline looked more like this:
In other words, what if you could deliver bite-size chunks of value and get paid along the way? How would this change things?
- You could sell at lower levels in your target organization
- Customers could convince themselves of the value of your offering
- When you go to sell a larger deal, you would already have proved your value
- You would have user advocates within your customer base
- Your sales reps would not just get leads from Marketing, they would get customers with whom they could build relationships (and sell more).
- You'd have many more (albeit smaller) customers.
- And so on...
In short, the whole machine is more efficient. Sounds great, right? Probably don't even need any sales reps, right?
Wrong. At least wrong in some cases.
If your product solves an enterprise level problem, you're going to need elements of a traditional enterprise go-to-market plan. You're going to need to be able to meet with senior executives, on their turf, and convince them that your approach solves a problem they care about. You're going to need SEs. You're going to need to build consensus. All that enterprise sales stuff. And the enterprise marketing stuff to grease the skids.
But wouldn't it be easier if the people you were talking to were already customers? Wouldn't the conversations be smoother if you already had internal advocates? Don't you think you might close big deals faster if you already had a commercial relationship?
And wouldn't it be nice to get paid along the way?
In part fueled by the consumerization of b2b software, this is where the world is going. Companies that can deliver incremental value for incremental dollars will have real and sustainable business model advantages over those in the the 'all or nothing' camp.
All of this has real impact on how you design your products. In part, your product must become an integral part of your sales and marketing machine. For thisto work, you products must be flat simple to use. They must be set up to deliver incremental value. Ideally, they'll have a social or viral aspect to them.
Below is a (very) simple diagram describing how this might work product wise.
At each step, the product is proving its worth and adoption is expanding in the organization.
This type of product design enables a far simpler
initial engagement with the customer -- many times this first
transaction can be closed online with no human contact. In other cases,
an inside sales function (less expensive, no travel costs) can drive
early and secondary sales. From a go-to-market standpoint, this might look more like this:
In short, the old model isn't dead. It's just becoming (much) more leveraged. And this benefits both vendors and customers.
As a vendor, the the imperative is clear: Find ways to efficiently deliver incremental value and collect incremental dollars. In the process, you'll transform your sales process by adding tremendous leverage.