Death and Resurrection of B2B Software Sales

This is a guest post by Kamil Rextin.

Rapid technological innovation has altered the landscape of commerce. Yet while the mode and medium of modern business has evolved, many of the business strategies and frameworks that powered the old world of commerce are still catching up to those changes. And perhaps none more so than B2B software sales.

Business software used to have a much higher price point. Products were monolithic and often required significant on-site implementation costs. The focus of tech sales was getting prospects to close. To sign on the dotted line.

But the nature of software evolved. Products and services are now delivered more and more through the web browser, or mobile device. Products have become slimmer in functional scope, more lightweight and modular, with a generally lower price point.

And as software has changed, so too has software sales. The old “hard-sell” model is being slowly superseded by a “new customer” success model.

So let’s explore:

  • What is the incumbent “old” model of B2B software sales?
  • What are the changes in technology that have made this model obsolete?
  • And what exactly is this shiny new thing called “customer success”?

The Old Model Of Software Sales.

Once upon a time, before iPhones and broadband wifi, circa 1980 – 2000’s, implementing business software solutions was a long, slow and costly operation. Offices would be overrun with consultants and specialists for weeks or months at a time.

Business software in that era required “boots on the ground” to implement. Software needed to be installed and tested on each desktop workstation in the office. Some software even needed on-site servers to be setup and configured.

The complexities of such an implementation, meant a shifting timeline for delivery, and a mercurial final cost. Trying software was a business risk – if it didn’t work out, it could mean a big hit to the P&L sheet.

Since there was this significant migration cost for switching software solutions, customers stuck around. They bought long term licences. They bought support. For the software sellers, that meant: fewer deals than today, but with higher value.

This was the old world of business software: big, monolithic solutions, with a hefty price tag and a complex implementation.

This kind of software business required a sizeable sales force that could do “high touch” sales. Done right, the profit margin from high-value long-term contracts could quickly ameliorate the salary cost of sales people and the long lead times.

So, this software and sales model was hugely effective and profitable for the tech giants of the 1980’s Cisco, Oracle, Sun etc.

Today it is known as “sales development” (and has been re-popularised recently by Aaron Ross in his sales playbook: “Predictable Revenue”).

The basic structure of the sales flow is as follows:

  1. Demand generation: Create a flow of inbound interest in the product or service (aka marketing).
  2. Lead Qualification: Qualify potential leads on a spectrum from very-likely-to-be customers, to very-unlikely-to-be customers.
  3. Lead Nurturing: Nudge qualified, interested leads along the buying funnel. Feed them helpful guidance, assistance, be on-hand to answer questions. (More on the this aspect later!).
  4. Closing: The all important closing. Get the leads to sign on the dotted line.

It’s worth noting that Aaron Ross emphasises the specialisation of these roles. Sales reps don’t cross disciplines. Your closers are never the same people as your prospectors.

Now if your product or service has a high enough price point, this model could absolutely work for you today. Enterprise software sales teams are still working this way, and with great success.

But the nature of software now has fundamentally changed since the days of Sun and Cisco. Products are, in general, much more lightweight and modular than their 1980’s predecessors. They are not monolithic. They do not attempt to encompass all business challenges. Rather they “unbundle”. They solve specific problems, within a narrower band, and at a fractional cost.

Businesses are now free to pick and choose their own custom hybrid solution, comprised from a number of these products and services.

So what happened? What changed? Where did the big monolithic software go?

In short: it was killed by the web browser.

How the Modern Web Changed Everything

There was a time, not so long ago, when the web was a rather static medium. It was more akin to a digital newspaper, than an interactive application. Tech folks dreamed it could be more, but limited CPU power and internet bandwidth were blocking the way forward.

The desktop was the only place a business user could do “serious” work. Think word processors, spreadsheets, graphic design in the 1990’s.

But as processors became increasingly powerful and affordable, as the browser itself became powerful, the possibility of having an application-like experience in the browser (i.e. responsive, fast, data intensive) became a tangible reality.

These days it is standard practice for a business to run their core activities and operations through the browser. See: Google Docs, Xero, MYOB, Qwilr etc.

This changed the game in the software industry.

With the web as the mode of delivery, the barriers to becoming a global product were dramatically lowered. The potential audience reach and the potential scale of software became the entire connected world.

With this shift towards a mass volume of potential customers, came a flourishing of lightweight, lower cost software solutions delivered over the web, through the browser. Products and services with dramatically lower price points.

But the unit economics started to break down. The old “sales development” model stopped making economic sense with the lowered price point.

So what replaced the old model? And how indeed does one drive sales of B2B software in this brave new world of the browser?

Customer Success – The New Model.

The new model for sales is: customer success.

While the sales development model places all its energy and focus on the initial part of a customer relationship (i.e. getting the “deal closed”), customer success takes a more wholistic approach, and focuses on the relationship from beginning to end.

Customer success aims to help leads transition and evolve and into long-term customers and advocates. To move from an initial contact with a product or service, through an on-boarding and education process, to understand how the product can help them achieve their business goals, and to ultimately having such a positive customer experience that they become long term customers, and advocates for your business or service.

Sales Backed By Data.

Customer Success is a sales model built for the age of data. It leverages knowledge (provided by analytics data) of consumer behaviour in and around its product or service, to provide the right impetus at the right moment.

So for example: if you’re selling accounting software and you notice that a particular user hasn’t connected your software to their bank account yet – that’s a big red alarm bell that they’ve missed something fundamental, or are having doubts. You can contact them with tips on how to connect their account, or to answer any questions they have about it – and get them back on the buying trajectory.

To use Qwilr as an example: suppose you’re an agency, and you’ve sent out a pitch to a big client – the best time for a follow up call would probably be about an hour after the lead has read through the pitch (pro-tip: calling straight away is NSA creepy). With Qwilr you can see when your lead has opened the document, and you can see where they’ve spent their time reading. In this way, the salesperson is armed not only with the right time to call a lead, but also with fore-knowledge of their concerns and areas of interest in a proposal.

Obviously, the effectiveness of this method is predicated on quality analytics data being captured. User behavior and actions logged, time stamped and analysed.

If you’re in the services game – (shameless plug) you really should try Qwilr, access to that kind of data is built in.

If you’re building a product game, there are a number of excellent and mature offerings in the analytics space, from free and more generic solutions like Google Analytics, to purpose built services like KissMetrics (which we use and love at Qwilr!).

Customer success encourages sales reps to analyse this data, so they can identify when a lead is stalled, and needs a nudge to help them along the buying path.

What form these nudges take is up to you. In the product world they might come in the form of an in-app notification, a help bubble or an automated email. In the services world, perhaps a quick email or well timed phone call.

The Death And Resurrection Of B2B Sales

Sales used to be about pushing a lead over the finishing line, but now its about running the whole race with a lead, encouraging them, helping them when they start to flag.

Customer success is by no means the death knell of traditional software sales. Rather it is an evolution of that model, better suited to the shift in consumer behavior (i.e. how products / services are discovered, recommended, bought and consumed) that web has brought about.

dylan-baskind
Dylan Baskind is a Co-Founder & CEO at Qwilr

Dylan Baskind is the CEO and co-founder at Qwilr. He is also a designer, engineer, artist, musician and writer. He plays in this band. Sometimes he makes business focused helpers like like this. He chats with fellow artists and industry here and very, very occasionally posts articles here.