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.