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…

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