Startup Selling + SaaS – Part 2

Who’s Actually Buying SaaS Software?

In part 1 we looked at how changes in the software product model have affected the way in which sales reps are selling into organizations. Another major shift and one that has had a big impact on the predictability of revenue projections is how software is purchased and consumed today—and it has to do with the person who’s actually doing the purchasing. Our sales rep interview continues with Ethan providing real-life examples from his sales experience.

“It used to be that the IT department carried the responsibility for purchasing software for the organization. IT worked with the company executive to identify requirements, allocate budget and oversee an installation and maintenance process.

IT developed and followed a clear process and as a vendor, you worked within that process to fulfill requirements. As a customer, the IT team was a sophisticated buyer. As a sales manager, this made it much easier to develop a sales methodology mirrored on this process. But, that’s no longer the case.”

Marketing departments are buying a lot more software today and Marketing is a lot less evolved as a purchaser, and in fact doesn’t want IT to get involved in the purchase cycle, but that makes for much less predictable cycles.

“Sales Managers often push their SaaS sales reps to create a sequence of events and ‘hold the customer accountable,’ but that’s an old-school approach. Today, the purchaser is purchasing a tool rather than a mission-critical component of the business, so missing a purchase date isn’t a big deal for the customer.”

When you look at Enterprise companies, the complexity of managing the purchase, deployment, and training of staff requires a sophisticated process to ensure a solid return on investment. However, with the shift in organizational purchasing patterns from a traditional and predictable IT model to one that is driven by the requirements of a specific use-case or department then you end up with something that is much less predictable.

Consider this: how many times have you had a conversation with a prospect who tells you that they want to deploy your product in 4-6 weeks, which is great until your customer discovers that the deal has to go through procurement, adding six months to the sales cycle.

“In the good old days, the IT team would have been upfront about the purchasing cycle. Today, your sales contact may not understand or even know about their company’s purchasing policies.”

Sales Managers have a really tough job and it’s only going to get more difficult. I feel for them because their skill set, one built from experience based on an older and different model, needs to evolve rapidly to reflect their current SaaS reality. Thankfully, startups provide a good model for understanding how to address this new reality. And what’s more good news is that the tools for success are built around a sales methodology that’s repeatable, so maybe things aren’t as dire as they first seem.

“I was lucky to have an old-school IBM guy show me the ropes. He was taught a formal sales methodology at IBM, one with a structured pipeline that included specific stages and probabilities, which made forecasting much easier. He taught me this methodology and it provided me with a great foundation in sales without even knowing. I still use it today.”

If you would like access to a PDF outlining a successful procurement/close methodology sign-up for the CapacityFlux Startup Thinking newsletter and we’ll send you a copy for free.

 

 

 

Vancouver Startup Week – Day 1 Update

Monday, September 25, 2017

Vancouver Startup Week is off to a great start with 12 events happening in and around downtown Vancouver on what is arguably a toss-up weather day. A little rain didn’t dampen attendee spirits but it did slow them down a bit getting from venue to venue.

Stripe ‘Office Hours’

I had the chance to meet some of the team from Stripe, who ran an Office Hours session for Startup Week attendees. Alex Litwin, Govind Dandekar and Ross Rich offered attendees valuable one-on-one time to review all kinds of questions about the commerce toolkit.

 

STRIPE Team Office Hours
Stripe Team @ Office Hours

 

Even if you have never heard of Stripe I’m confident that you have used the platform without knowing it.

Stripe operates in over 25 countries, and enables both private individuals and businesses to accept payments over the Internet. Stripe focuses on providing the technical, fraud prevention, and banking infrastructure required to operate on-line payment systems. Stripe has greatly simplified the business side of eCommerce with a robust and flexible platform that makes taking payments easy and cost-effective.

Health Tech Transforming Healthcare

Next up, I raced over to Science World to take-in a panel discussion called Built in Vancouver – Health Tech Transforming Healthcare. The session moderator was Curtis Duggan, CEO of Blue Mesa Health, a company that has taken an innovative technology approach for diabetes prevention. The Panel included a mix of Vancouver Health-tech pioneers, such as Dr. Alexandra Greenhill, CEO of Careteam, a healthcare coordination platform; Erin O’Neill, Chief Advocate at nourished babe, an app designed to drive better health outcomes for both moms and babies through perinatal nutrition; Dr. Damon Ramsey, CEO of InputHealth, a company that uses electronic patient health records as a starting point for deeper patient engagement; and Elliot Stone, CEO of Alavida, an alcohol use disorder treatment platform.

Health Panel

The panelists discussed a number of topics but what got the room really engaged was the discussion around trends affecting healthcare. There was much agreement that this is an exciting time, although one bringing a lot of change to the healthcare sector. Trends highlighted:

  • Cloud Computing and the SaaS business model are major trends enabling innovation in healthcare. The ability to scale computing resources on demand leads to many more great ideas being pursued and developed without having to invest in complicated technology infrastructure.
  • Healthcare off the Grid – Eric Dishman offers a compelling TED talk on the issue if you’re interested. The idea of freeing healthcare from the framework of hospitals and driving patient innovation and interaction to the home.
  • Innovation Officers working at large US Healthcare HMOs, a positive trend that is bringing digital innovation to otherwise slow-moving entities through healthcare startups.
  • VR is an interesting trend with applications in phobia treatment and PTSD
  • Quantifiable tracking systems need to put data to work. Figure out how to use data and drive wisdom. How do we bring humanity back into data?

Though well attended, there were sadly no representatives from Provincial Health Authorities, which underlines another point from the session, that most of the innovation happening in healthcare is happening south of the border. The model for reimbursement for preventive behavioural change programs exists in the US but not in Canada. Yet, critically, it’s this model that is driving much of the innovation in US healthcare.

If you’ve attended any tech or business conference in Canada over the past 18 months you have no doubt heard the urgent cries from conference organizers and speakers for Canadian business to increase its spending on innovation. Canadian companies are very much focused on innovation—however, the ones that seem to find the greatest success are monetizing their creativity in the US and abroad.

I would love to see the innovation mantra adopted by all levels of government, and for that to happen we as citizens, need to encourage our elected representatives to start dog-fooding innovation with buy-Canada programs that seek out innovative made-in-Canada solutions. If technology startups have a shot at winning a pilot and subsequent contracts at the municipal, provincial and federal level then we’re going to see Canadian innovation quickly change our slow-moving healthcare systems as is happening elsewhere in the world.

So much happening! Off to my next event.

Startup Selling: How the World Has Changed

This blog series covers selling at startups. It will look at successful methodologies being used today and will examine how the sales profession has evolved in the age of Software-as-a-Service (SaaS) and startup culture. It will feature interviews with a variety of active sales leaders who share their perspective on what works, and what doesn’t.

The topics covered in the series are most directly related to selling software, specifically SaaS, with a focus on startups that sell into the Enterprise, but the ideas and knowledge should be equally applicable for a SaaS sales reps as for a sales professional selling hardware.
always-be-closing
If you are a Sales Rep I hope you’ll learn something, or even better I hope what you read validates your experiences. If you’re a Sales Manager take heed because a lot of what you going to read will run counter to what you are probably doing today.

 

You Do What?

For many people, sales is a mythical profession made up of incredibly talented, confident and influential people, born with the right mix of skills, charm, and chutzpah that enables them to close deals with even the toughest of prospects. The majority of people have a preternatural fear of selling. How many times has someone at a party, once they find out that you’re in sales, looked at you and said, “oh, you do sales? I could never do that.”

Hollywood exploits this myth, reinforcing our fear of failure by celebrating the extroverted, in your face and ruthlessly driven sales rep—usually a man—that has magical powers of influence that without fail overcome any objection thrown up by the prospect. They’re called ‘closers’ and they’re the equivalent of highly trained assassins in the Hollywood sales world.

Truth is, sales isn’t rocket science. Successful salespeople usually follow a methodology. There are many recipes you can follow to produce success. Diligence, perseverance, attention to detail—all of these things will bring reward because sales is a process. The closer you follow the process the more effective you will be at your job, and ultimately the more successful a salesperson you will become.

 

It’s a SaaS-y World Out There
Startup Selling requires a methodology and management style that understands the shift in buying patterns that SaaS has enabled. It’s no longer the case that Enterprise customers purchase all of the required software from just one or two large vendors. Bring-your-own-device (BYOD) and similar trends that drive the SaaS economy have shifted how companies buy software.

Some of the most successful sales reps come from a non-sales background. They find themselves falling into a sales role only to discover that they love selling! In this installment, I interview a sales rep and former colleague about how his experience in sales and how he found himself running a multi-million dollar business unit. Because this person is actively engaged in selling to regulated industries, he didn’t want to publish his full name or that of his employer, so we’ll refer to him by his first name, Ethan.

“I came from the programming side of the business. I was at a company for ten years and transitioned to sales over time. I have a Computer Science degree from the University of Alberta and I was writing code, but then an opportunity opened up to work in a customer support role as a sales engineer. We sold a back office piece of interoperability software designed to assist developers in connecting desktop tools like Microsoft Excel with shared datasets. 

Before I knew it I was running an online business unit generating $2 million in online sales—and all of this was before most people even knew about the internet!”

When you think about sales today, so much has changed from even just five or ten years ago. What we call old school today is actually referencing a time just a few years ago. The rapid adoption of the SaaS model has changed not only how software is consumed but how it’s sold.

Old School vs. New School
“Old school software sales was very predictable.

Software

was sold and installed on a client’s centralized computer network or on the desktop, and pretty much every deal included a software maintenance agreement, which the client always renewed. It was like insurance. As a sales manager, you could map out the business based on historical revenue, find the trend line and apply it to the next year and there’s your revenue pipeline projection. Unless something catastrophic happened you would end up within 5% of projection.”

Today’s Sales Managers, who likely earned their stripes selling on-prem software (software installed on the customer’s network or computers) are struggling to adapt to this new reality. Today, most software is sold as a service and the old way of doing things doesn’t work. SaaS makes it much more difficult to predict revenue. The metrics and methodology that used to work are at odds with how customers purchase and consume software today.

“For customers, buying software-as-a-service instead of a locally installed version of code means they can switch on a dime. Moving on to a competitor’s product is a lot easier because there isn’t a hardware component to consider. In the past, it would cost the customer more to rip out software from their hardware. There’s very little friction to switching products today—comparatively speaking it costs nothing.”

Metrics that used to guide predictability such as Lifetime Customer Value (LCV) and Churn are still valuable indicators but they’re much more difficult to project. Ethan says:

“Churn rate can switch on a dime these days. The barrier to entry in the market is very low. You can be king of the hill today and tomorrow a new competitor can innovate you out of all your customers.”

Another major shift and one that has had a big impact on the predictability of revenue projections is how software is purchased and consumed today—and it has to do with the person who’s actually doing the purchasing.

To be continued in Part 2 of Startup Selling…

Does Your Business Think Like a Startup?

This series will examine the five key characteristics that define startups and explore how new and established businesses can take advantage of Startup Thinking to define or refresh their position in the market and build new lines of business that will sustain the company through an ever-shifting business climate.

So what is Startup Thinking? For the purposes of illustration I’ll start with an explanation of what it isn’t.

Startup Thinking is not an excuse for the bro-mentality that has come to define so many fast-growing startups. Though you will commonly find the ‘Brozo’ in startup culture this mindset actually runs counter to the spirit of Startup Thinking.

Nor is Startup Thinking a culture of entitlement and excess, as celebrated in the first dot-com bubble. Blowing investor cash on lavish parties, unearned bonuses and exotic trips is definitely not on then or now.

If you’ve seen the movie about a couple of old school sales guys that get a shot to intern at Google called The Internship then you might remember the scene where Vince Vaughn and Owen Wilson’s antics are lauded by Josh Gad as demonstrating the ultimate ‘Googliness’ because they worked with their team to solve a problem in an indirect way. It’s not a perfect analogy for what makes Startup Thinking different but the idea that of finding a unique way of solving a problem hints at where I’m going.

Thinking like a startup means seeing opportunity where often none exists. You see how things could be and you are curious enough to investigate how one might get there. In contrast to established businesses, startups live on the fringe of a market and identify ways to radically improve an element in that market. If successful the startup is positioned to reap the rewards of radically disrupting that market and changing the status quo.

Take Apple for instance. It didn’t invent the personal computer but its founders understood that an intimidating box that required specialized knowledge to use made it difficult to entice consumers to purchase a computer for home use. Apple’s computers were much more friendly and approachable, most notably the Macintosh, and that’s one reason why its Think Different campaign was so successful.

Arguably, it took Apple many years to establish its vision, but the company’s commitment to its founding principles has created one of the most successful corporations on the planet.

So what principles set startups apart from established businesses? Five letters, BCDFV, sum up the differentiating factors of a startup. It stands for: Bold; Curious; Disruptive; Fast and Visionary.

Startups are bold, courageously fighting what might seem like an impossible fight. They are definitely curious, and ask a lot of questions such as why, what if, and how about this? By nature, startups are disruptive because their founders are usually change-agents. They move fast, which is perhaps the greatest asset of a startup–if something doesn’t work then figure out a way to iterate and improve the outcome. Finally, startups are visionary because they are thinking about ways to make things better.

How could your business benefit by thinking like a startup?