Sales and Marketing Performance Blog

Are Salespeople Needed in Selling SaaS Solutions?

In the past couple of weeks I have spoken to three entrepreneurs who have created, or are creating SaaS solutions to serve very specific needs for a well-defined market opportunity. In conversation it emerged that none of them were planning on having any sales people in their business.

The thinking here is that since the products are so strong and the market need exists, by offering a free trial, the prospect will learn to use and love the product and convert into a customer; all without needing a human touch. Who needs sales people anyway?

This approach is similar to the "Field of Dreams" (if you build it, they will come) strategy; popular with entrepreneurs who are long on product engineering skills but underestimate the importance of marketing and selling in the lifecycle of successful products. This attitude has led to the premature death of many killer-products.

Now let me say here that I would not advocate putting a salesperson in the way of a buyer who was motivated to buy and did not require interaction with a salesperson. Dell recognized this desire early on and enabled people to self-serve PC’s and Laptops nearly ten years ago and cut billions out of their cost of sale. Dell had a couple of things going for it that early stage SaaS companies don’t; - brand equity and market dominance in a mature buying category.

Killer-products, and especially software products don’t sell themselves unless they fulfill the following criteria

• A mature, clearly defined buying category exists,
• Market demand exists for the products/services,
• Acquisition is as simple as buying a book on Amazon,
• Implementing the products is seen as risk-free and the vendor is trusted,
• The products are easy to use, learn and deploy,
• The buyer knows what they want and it's really a matter of what color and how many.
• The market price is established and the vendor offerings are within an acceptable range.

Adoption of SaaS solutions and other innovations follow a predictable cycle according to the theory of “Diffusion of Innovations” by Everett M. Rogers, first published in 1962.

SaaS solution sellers potentially have a lot going for them to speed adoption. Rogers' thesis states that the rate of adoption of innovation is governed by a factor of 49-87% by the perceived attributes of innovations, which are:-
1.    Relative advantage (Cost and deployability of SaaS win here)
2.    Compatibility
3.    Complexity
4.    Trial-ability (SaaS solutions win here)
5.    Observability

The remaining variables are;-

• Type of decision
• Communication channels (The Internet amplifies this variable)
• Nature of social system (Social networking is now in its own "Tornado")
• Extent of marketing and promotion efforts. (Rogers point out the importance of reaching industry thought leaders and analysts in the latter part of the early adoption cycle; their influence in achieving critical mass should not be under-estimated)

I have two questions for SaaS entrepreneurs;-
1.    Where is the market in terms of the adoption of your product/service or class of products?
2.    Where is your product in that class?

This concept is excerpted from the IMPACT section of AMC's "Selling in the Internet Age, SalesCraft Process" E-Learning Course. (IMPACT is reproduced with permission of copyright holder HotRivet.com.)

Buying behaviour as we have observed, varies according to product maturity and risk profile of individuals and organizations.

The role of sales-people in selling to the early market.

The early adopter in the technology adoption life-cycle is described in "Why Killer Products Don’t Sell" by Dominic Rowsell and Ian Gotts as the Value-Created buying culture. In the value-created buying culture, the prospect senses an opportunity but can’t describe it. No buying category has been established for the potential solution and the buyer cannot articulate a specific pain or need for a solution. As a result, the supplier must bring into clear focus the opportunity to overcome a sub-optimal condition – or achieve an objective – and suggest a solution.

In a value-created sale, the sales-person needs to help the buyer or mentor visualize and quantify the opportunity and make a case for the purchase. Sales calls will resemble a conversation of possibilities, either pro-actively in existing accounts, or in response to inbound inquiries generated through marketing mindshare programs. To that end, sales reps need to find a mentor (or champion) within the buying organization and support that person in engaging the executive team and building vision to pave the way for a pilot.

If your SaaS innovation is in the late majority stage then maybe you could offer it as a service - without sales-people...assuming you could get found on the Internet. Until then, salespeople will be required to engage interested buyers, develop an understanding of their needs, to listen to their concerns and to differentiate your SaaS products vs. the competition and to assist them through the process of becoming customers.

Download our whitepaper on Converting Inbound Lead Generation into Better Sales Peformance for a complete discussion on the subject.

 

Recruiting SaaS B2B Sales Channels and Getting Sell-through

I responded to a comment on LinkedIn last week on the topic "Marketing and Selling SaaS is hard!!!" on the difficulty in recruiting B2B sales channel partners and getting them to sell-through and I thought  I’d expand on the subject with the help of my former colleague Bob Langer. Here is the original article Marketing and Selling SaaS is hard. 

This is a hot topic - not only for the new cohort of SaaS solutions providers, but for every entrepreneur with visions of channel sales success as well as medium sized companies wanting to sell innovative products through an indirect model.

The fundamental question is - why do you want to sell through channels?

Let’s assume you have some really strong business reasons for wanting to sell through the channel and everyone in your company, including the investors, is on board with the idea.

Before proceeding, please ask yourself the following four questions.


1. Is your direct sales process fully optimized, to the point that you have identified your own best practices and everyone on the direct sales team sells the same way?
2. Are you generating more inbound leads than you can handle meaning sales people spend all of their time speaking to interested prospects (inbound leads) who find you on the Internet -and are not cold calling or working on telesales developed leads?
3. Is your product fully-baked, to the point where the code is stable, you have an SDK, standards-based API and fully documented instructions on how to extend and integrate with your product?
4. Are your existing customers raving fans of your product?

I've worked about half of my professional selling career in OEM, VAR and Reseller channels roles where my responsibility was recruiting and driving sales through channels.  Recently, I’ve consulted to numerous companies selling through channels.

Based on this experience I suggest that if the answer to all four questions above is not a resounding “yes”, then you are probably not ready to sell through channels.  I coined the phrase “when you are truly ready, the channel will show up”.  This was based on years of direct work with and observation of how the vast majority of channel partners actually work.  

Trying to move channel partners in a specific direction before either they, you, or more importantly, the market is ready, inevitably leads to wasted effort and disappointment.

Now let’s assume you already have a committed channels plan in place; you have dedicated resources and a number of channels partners signed up, and like thousands of companies worldwide - your program stinks. 

When I speak with CEO’s, they routinely point to weak channels as their number two problem in their B2B sales and marketing groups, right behind the top problem of insufficient qualified leads.

So how do we come to grips with the harsh realities of today’s market, the overall capabilities of channel partners and what we should really expect from them?  The remainder of this post will provide some insights and recommended tools that you can use to actually improve channel performance:

1.    Selling to the early market:
First and foremost, is your product, service or solution based on a novel or discontinuous technology? If not, is it an evolution of an existing product or technology in an established market? The answer to this question is crucial.
•    If your product is novel and truly disruptive, go back and answer the first four questions.
•    Now that you have answered the questions again in your own mind, is there an established buying category and have your products been accepted by the early majority (mainstream market) or are you still selling to the early adopter market and trying to get across the chasm?

• If you are across the chasm and into the early majority, please go to the next question
• If you are selling to the early market then you will need your channel to sell the way the early market wants to buy. The early market buys differently from the mainstream market and it is a "value-created" or consultative sell.
• The "Technology Adoption Cycle vs. Risk" animation is adapted from AMC's Salescraft Process training course IMPACT Buying Concept.
• Most channels sales teams are geared for "value-offered" or "value-added" sales models and simply don’t understand how or have the skills to sell novel technology to early adopters.
  
• This mismatch in the early market "value-created" buying culture vs. the way the typical channel partner is selling (value-offered or value-added) is the biggest reason why so many channel partners and programs fail.  Follow this link to a discussion on why value-created selling is key to penetrating the early market. You might want to have a discussion with your direct sales team on this topic as well and buy a few copies of the book Why Killer Products Don't Sell. 

2.    Selling to the Mainstream Market


If you’ve made it and sold your way across the chasm, congratulations are in order as this is a fantastic achievement for any business. If you're positioning a new product in an established buying category, with established competitors then you face another set of interesting challenges:

• How are you planning to, or how did you acquire your existing partners?
• Do they fit with where you are today and where you need to go?
• What training and performance support have you provided for them?
• Have you developed your own Buyer Relevant Messaging to raise the standard of conversations your direct sales team has with target buyers and to differentiate your product vs. competition and, more importantly, have you trained your partners to use it in role-playing situations?
  

o    Don’t expect the channel sales team to figure this out on their own.  Most have other products in their portfolio to sell and they are probably more comfortable doing so.

o    Channel sales performance is a direct result of how easy you make it for their salespeople to position and sell your product and the market demand for the product class.

o     If all your channel have is a PowerPoint, brochures and a price-list parked on a portal somewhere and distant memories of a ½ day product pitch from your product management team, then you will fail.

• Have you planned to collaborate on lead generation programs and have you shared leads with them?
• Have you gone on their first half dozen sales calls to give them feedback and coaching on their sales calls?

  

3.    What channels sales people need to be successful


If you plan to spend as much or more effort on training the channel to sell as you do your direct team, then this is a good equation. In the post-Internet era the value of a 1:1 call with a buyer has risen by an order of magnitude; here are a few suggestions as to what direct and channel sales people need to be successful.


a. It starts with a lead and Inbound Marketing is a better way to generate leads whether you are a technology vendor or a channel partner.
b. Product-usage training around the target-buyer persona, i.e. what are the roles, goals and likely issues your target buyers are having where your products could potentially help and the rationale?

• I suggest reading David Meerman Scott’s “New Rules of Marketing & PR”.  It’s a revelation on marketing to the interests of buyers and relevant for all marketers.

c. Product knowledge and how to position relevant capabilities and to diagnose and qualify if these capabilities are relevant

d. The ability to have the buyer envision using your product and/or service in solving their problem

e. Understanding and leading the buyer through the value-exchange in using your product and the associated ROI.

f. Communication, language skills, sales-craft skills and tools for Selling in The Internet Age

g. Relevant proof points, which are like "body-armour for sales-people" which are memorized and support discussion around capabilities.

h. Buyer-relevant solution summaries for target buyers, which are supported by proof points to create a story that engage the buyer, creates true differentiation and provides fantastic fodder for PR, Blogging and long-tail marketing.


4.    Where the channel works really well

In today’s technology market, there are many great examples of highly functional and well-developed channels.  Cisco Systems, Microsoft and Salesforce.com have surrounded themselves with thousands of partners that deliver, implement or extend their products and services with a high degree of effectiveness.  This primarily occured because all three companies realised that extending their ability to reach a broader audience would best be served though a channel.  Except for Microsoft, channel success ocurred after their markets were well developed and beyond the chasm, it was easy for the value-added partners to do exactly what they do best, e.g. add value. 

To enjoy the highest level of success with your channel, understand what they can and can’t do for you, equip them to win and set mutual expectations.  Most importantly, even though they are not your employees, treat them like they are, invest in training them like they are your own and manage them closely.  Otherwise, don’t be surprised when they fail to deliver.