The other day, I was sitting in the airport and had a few idle minutes. For some reason, I started playing with my IPhone. I started moving some of the apps around to make them easier to find, based on my utilization. Business, Social Media, Conferencing, and Travel on the first page. Mapping, “Yelp-like,” and my fitness apps on the second. News, Reading, Entertainment, Music apps on the third. Camera/Photo and miscellaneous apps on the fourth.
At some point I looked at the number of apps on my phone–215. I was blown away. I had no idea I had so many apps, I didn’t know how I accumulated them. I started looking at them, slowly recalling, “This app had this one neat thing.” “That app had another….” Each of the apps had something that was attractive for a moment, I supposed I used the app a few times, but then forgot about it.
So I decided to reduce the apps on my phone. Arbitrarily, I deleted all the apps I hadn’t used in the last 60 days. I’ve gotten down to about 50. In reality, I think I can get down to 30. But there’s that fitness app I’ve been meaning to use when I travel–I’ll keep that a few others.
I’ve done the same thing with my IPad. It’s interesting, the one’s I’m keeping on the IPad are very different than those I keep on the IPhone.
I think we are experiencing much of the same thing in the sales and marketing automation markets.
The sales and marketing automation markets are booming. There are literally 1000’s of new apps being introduced every year. The market is very crowded and confused with many, though useful, very “niched” or “nuanced” applications.
There are apps that enable sales or marketing people to do one specific thing very well and perhaps pass data to a common CRM or other app. That thing is very important, so the app becomes very important. After a while we find our organizations have dozens of specialized apps, each helping us do one or two things very well.
But, we sit back and start to take notice, how many are we really using, is everyone using them or just a few people, how do we keep people trained, how do we support the continued integration between these apps.
A new set of terminology has started creeping into the vocabularies of sale and marketing operations execs: The Sales Stack and the Marketing Stack. This is the complete set of applications being inflicted on sales and marketing people. Each one, no doubt has some value to at least one person, otherwise it wouldn’t be in our “stacks.”
It’s not unusual to see a sales stack of $15K per year per person–or larger. That’s $15K we are paying for apps for each sales person–not including all the services and support around them. Using Salesforce’ SalesCloud as the “mothership” base application, a fully blown out version of Salesforce, at full retail, costs roughly $3K per year. This leaves another $12K for my prospecting, research, presentation, content, learning, expense, collaboration, messaging, proposal, account planning, call planning, reporting, analysis, and 1000’s of other apps.
As I talk to sales ops/enablement leaders, they struggle with getting people to use all of these apps. Each is optimized to something different, each has a different user interface. There are inevitable overlaps, particularly as the vendors try to grow their solutions, so which app do we use, when several enable us to do the same thing?
The business cases for each are becoming increasingly difficult to make on a standalone basis. Or the justifications overlap, with each app claiming credit of the improvement, but none, on it’s own is justified. Perhaps, in isolation, we understand the business case for each, but in the reality of how the organization uses the apps, much of the real justification seems to be disappearing.
I look at my own team. We leverage as many tools as we can. We’ve invested in a number of apps to support our work, we also have been fortunate to be granted some “free licenses” of a number of other apps. We use all of them for a while, but over time, the patterns keep coming back to a small number of core–go to apps.
These core apps tend to be the platform or system of record apps. Think of these as your base CRM or Marketing Automation systems. A way of thinking about them is, “What are the apps that all the other apps integrate to?”
These core apps and the ones that we use everyday, 365 days a year, critical to the business.
More and more execs we speak with are questioning their tool strategies, focusing on the platforms and systems of record. Of course there are also those that are struggling to get utilization, compliance, and value from some of these core systems.
On the vendor side, we are seeing interesting things, reflecting what both they and their customers are discovering about the sales and marketing stacks.
There’s a huge amount of consolidation. The long term winners are those that offer a platform or a system of record.
Those vendors or those that are borderline are acquiring many of the other players to consolidate their platform strength.
Likewise, those applications that will never achieve platform or system of record status are consolidating, trying to become platforms or near platforms–all while still hundreds of other niche apps come to the market.
Private conversations with the exec teams of many of these SaaS based apps, show their concerns. They are seeing declining retention/renewal rates. This decline is not due to customer dissatisfaction with the products, but more due to the fact that not everyone needs the app or the app isn’t used everyday.
Inevitably, there will be huge fall out in the sales and marketing app world.
It’s also an opportunity for clever people to rethink their business models. Why do we need to base our SaaS models on seat/user based monthly subscriptions? What if we looked at models based on utilization?
Perhaps it’s not important to have everyone in the organization paying $20/month (or whatever your subscription is), but having those few people who really need the app paying $100/month?
What if we developed business models that look at how people actually use the product or the return they get, rather than flat monthly subscriptions?
Over the next few years, 1000’s of vendors will disappear, not because their products weren’t useful products, but because their business models aren’t aligned with how and who uses the products. More will pop up in their place, only to disappear a few years later.
We tend to think the big winners will fall into two camps, those that are core platforms/systems of record, and those niche apps that have moved beyond the classical SaaS model and have discovered new business models, more aligned with actual utilization in organizations.
What do you think?
I was doing a deal review with a sales person. It was a big deal, important to the sales person and to my client. But the deal had been stuck for some time.
As I reviewed the deal history, there were a bunch of things “wrong” with the deal.
When it originally, was put into the system, it had a projected close date that was unusually fast. Both because of the very short sales cycle and the size of the deal, it caught management’s attention. Everyone was ecstatic.
Then it slipped, and it slipped, and it slipped. In the past 8 months, the target close date has slipped 8 times. Hmmmm…….
The deal is still in “Qualifying,” it hasn’t moved since it was originally identified as an opportunity. Hmmmm…….
The deal history is filled with lots of notes about meetings with the customer, great demos, but also peppered with phrases about funding problems. The sales person did not seem to be executing the sales process, he didn’t seem to be doing the things necessary to move the customer through their buying process and the deal through the sales process. Hmmmm………
Nothing about this deal seemed to be right, there was only the sales person’s insistence that this was a good deal and it would close on the date he had listed in the system.
At this point, I was asked to do a deal review.
You can imagine the meeting:
I sat with the sales person, saying, “There’s been a lot of activity on this opportunity. It continues to slip, it’s still in qualifying and hasn’t move out of qualifying in the past 8 months. What’s really going on? What is it that makes you believe this deal will close when you say it will, what’s different than the last 7 dates you believed it would close.”
The sales person looked at me with one of those, “You just don’t get it” expressions. He replied, “They really need the product!”
I asked, “Why?”
I got the same look again, this time with a little more frustration.
The sales person described all the meetings he had, how interested the customer was in the product, concluding with, “They really need the product!”
I asked, “Why?”
We were clearly at an impasse. To help our conversation, I looked at their sales process, I looked at the criteria to move the opportunity from “Qualifying” to “Discovery.” I asked the sales person about those things–one of which was a compelling need to change. I asked, “What’s their need to change? What problems are they having that are forcing them to change?”
The sales person didn’t answer. He talked about the meetings he had had, how interested they were in the product. In fairness, he identified issues the customer was currently having and how the product would help eliminate those issues. But he couldn’t identify the urgency or compelling need to change.
I looked at other criteria in the qualifying and discovery parts of their sales process. ‘What are they trying to achieve? How will they justify the investment to their management? What are the consequences of doing nothing? What alternatives are they considering?”
At this point, the sales person, frustrated, started waving his arms a lot, reiterating all the meetings he had, how interested the customer was, concluding, “They really need the product!”
I challenged him, “If they need the product, what are they doing to find the money?” He didn’t know.
“Why does this keep slipping?”
“Well,” he said, “They are really busy doing other things, they can’t take the time to do it now.”
I said, “Then it doesn’t appear there is a critical need for a change.”
You can guess how this review ended.
How many deal reviews just like this one have you participated in? It doesn’t matter what stage of the sales process they are in, but I’ve been in the “same” review hundreds of times. It’s a sales person driven by a compelling need to sell, a customer that’s showing interest, but none of the things needed to move the deal through the critical steps of the sales process are being done. Too often, these are deals where the sales person has “gone through the cycle,” has proposed and is trying to close, but they still can’t answer any of the questions I’ve posed.
The sales person has a customer who is interested in listening, but the sales person isn’t executing the sales process, asking the critical questions, making sure the customer is doing their part in “buying.”
Sometimes, the sales person confuses interest in a product, or even “wanting” a product, with “needing” a product.
Eventually, these deals are abandoned. Sometimes they are categorized as “No Decision Made,” which is wrong–there was never a decision to be made in the first place.
This kind of wishful thinking, the absence of any attempt to help the customer move through their buying process, the inability to drive the customer to address the critical business issues, is nothing more than sales failure. It is inexcusable. In this case, the sales person wasn’t selling, he was just a live information source for the customer. They would have been better off going to my client’s web site.
In fairness to this sales person, it wasn’t all his fault. This situation had persisted for 8 months. It was a significant deal, his manager wasn’t asking the questions I posed. The sales manager wasn’t coaching the sales person through using the sales process to engage the customer in “buying.” The manager should have been engaged months ago, but hadn’t been.
If a customer really “needs” a solution, we have a responsibility to help them move through their buying process. The “need” indicates there is a real business problem, there are consequences to not addressing the issue, there is justification and great value to the solution. If the customer “needs” the solution, nothing should stop them or us.
I was visiting a company recently, they had a full court press on doing demos. People were measured on the number of demos they were doing, they had created a contest around who did the most demos, they had banners and buttons around the Demos Sell theme.
There was a problem—which was the reason I was visiting the company. Clearly, the sales people were selling demos, but they weren’t getting PO’s.
I asked to sit in a couple of the demos to see what was happening. I had my suspicions, but I wanted to see the demo.
My suspicions were confirmed. Every demo I saw went along the same theme, “Here’s all the cool stuff our product does!”
Sales people would regale customers with functions, feeds, speeds. They would toss in a lot of sizzle, they would demonstrate one or two killer features–the one’s the competition would struggle to demonstrate. And then the demo would be over.
Ron Popeil would have been proud of how polished their demos were.
They’d answer any questions, they’d thank the customer. A few would try to close the customer, asking for the order–most of the time with unsuccessful outcomes.
Customers might have responded with “Thanks, that was interesting,” or even an excited, “That’s really cool stuff.” Then they’d go back to doing their jobs.
There were a couple of problems with what they were doing–and why they weren’t producing results. These problems aren’t isolated to them, I see similar things in virtually every demo sales people conduct.
The problem with most demos is they are all about the product. They are designed to show off the capabilities of the product and differentiate it from the alternatives.
Customers usually respond with a big “Ho Hum,” and a yawn—if they’ve taken the time to sit through the demo.
They don’t care about the product, they care about what they do –how to do it better, how to address new opportunities, how to simplify their lives.
For a demo to be effective, the customer has to be front and center. We have to focus on the things the customer cares about–ignoring the 99 other cool things our products do because the customer doesn’t care about them.
We show only what they care about, tying the demo directly to their issues and what the solutions does to address those issues. And we stop there. We resist the temptation to show all the bells and whistles–they are distracting, confusing an irrelevant.
Many years ago, in competing on a several $100M deal, I saw one of the most effective demos I’d ever seen. The sales team was speaking to a group of design engineer at GM. They were talking about a very complex body surfacing problem.
The engineers shared the way they currently did it, the problems it created, how much time it took, the errors, the “do-overs,” and the challenges of translating the design into a drawing. They brought one of their most challenging parts with them.
The sales team did a remarkable thing. They sat down, with the engineers watching, and they designed the part. They did in a few hours, what had taken the engineers weeks. They stopped there. There were 100’s more “features and functions” they could have demonstrated. Instead they focused on solving the customer’s problem.
They had a lot more to do to win the deal, but in that demo, they won those engineers.
If your demo doesn’t focus directly on your customer’s biggest problem, then you are demoing the wrong thing.
Is selling SaaS solutions different than selling other complex B2B solutions? Certainly, the business model and revenue stream looks different. Rather than making money in a single transaction, the revenue stream is spread over the period of a subscription. As a result, customer retention and renewals become critical in order to maintain the revenue stream.
But how different is it really? As we discover in this discussion with Chris Palmisano, the fundamentals remain the same.
I couldn’t think of anyone better to discuss this topic than Chris Palmisano. Chris is current Vice President of Worldwide Sales and Business Development at Solarwinds. Prior to that, he was a sales executive at Google.
Chris has a wonderful, pragmatic perspective. I hope you enjoy listening to him as much as I enjoyed the discussion.