10 ms·

How Not To Sell Software in 2012

466 points by nreece 15y ago

sedev 15y ago
I notice a lot of comments taking on Al3x's comments about the way things are, but almost none taking on his comments about the way things will be. It'd be a little to facile to just say "skate to where the puck will be, not to where it is," but I definitely agree with him that the demographics are changing, and that the benefits that (let's be generous) used to be in the Enterprise Sales Process, are not guaranteed to be there in the future. If you assume that he's correct about the demographic changes and the consumer tastes, do you think he'll be right about the benefits of the Enterprise Sales Process evaporating over the next 5-15 years? I think that's a good bet.
mindcrime 15y ago
I'm on board with most of that, but I'm not sure about the "don't cold call me" bit. I mean, yes, I understand that you - the author of this piece - don't want to be cold called. But I'm not convinced that going with a pure "no cold call" strategy is optimal in the general sense. Everything I've seen / heard leads me to believe that cold-calling is still essential for companies that are selling in the b2b / enterprise space. But, then again, I'm thinking more in terms of "companies who are willing to host their own software, want 'best of breed' solutions, have extensive integration requirements," etc. Sure Google Docs is fine for plenty of firms, but there are firms who want an DMS that integrates with Active Directory, ties into their workflow / approval systems, etc. I guess the point is that "enterprise software" covers a pretty broad swathe of scenarios and situations...
tptacek 15y ago
Many if not most of the "business-to-business" software companies that try to adopt this mindset will find themselves losing money as a result. The "enterprise" sales process is intensely aggravating, yes, but it affords software vendors opportunities to discriminate on price, get direct feedback from customers, offer advance features, and qualify their customers so they can focus sales resources on budgeted projects. There are also pretty obvious economic reasons why companies with 5-figure customer LTVs might avoid credit card billing. There are services that work well with metered billing, but many others in which customers will demand flat licensing. I can also absolutely see why Github would would to keep a pretty tight handle on who's trialing what is in effect a packaged-up version of one of the most important software sites on the Internet. We're a FI customer. Incidentally, on the scale of "enterprisey" sales processes, they were an absolute dream to work with.
rgrieselhuber 15y ago
A lot of this depends on the type of product and market that you're in. For software that costs up to a couple hundred bucks a month, all of these points make perfect sense. Products that are more expensive tend to also be more involved. A lot of times, the sales team needs to understand how the customer is going to use the product and help them get it up and running. HubSpot is probably a good example of this. From my understanding, the way they nailed their retention problem back in the day was to go through extensive training / onboarding with each customer. Simply leaving customers to their own devices on a complicated product is quite often horrible for conversions, which is a wasted opportunity for the vendor and inconveniences a potentially customer that might have otherwise been perfectly happy with the product after learning how it works.
- einhverfr 15y ago
  Yep. My business takes the following approach: 1) Open source 2) Get in a consultation with you to see what needs to be changed 3) Submit a proposal. 4) Engage in further discussion to ensure we stay useful. Some degree of included support is good to do that. I have been told over and over that we charge too much for the SE Asian market, but once they start comparing what they get for the money (focus on delivering value) that goes out the window.
davmar 15y ago
i'm the ceo of a company that sells b2b software. we never sell a product for less than $2k annually, and our contracts are frequently in the 5 figures annually. our current sales cycle includes a lot of the negatives that you point out. however, we're up front with our pricing while our competitors aren't. we actually created a product that did nearly exactly what you said. we didn't get nearly as many customers with that method. people would sign up (sometimes) and when they did, they tended not to pay once their 30 day free trial was up. our conversion rates sucked. we ended up canceling that product and removing it from our site after 8 months. when we have a webinar with a sales call, our closure rates increase dramatically. customers tend not to pay by credit card even when given the option. i actually think you're 100% right for many, many products. but i don't think it'd work in my boring b2b industry. edit: we probably didn't do enough experimentation on the small product as we should have, so i take some of the blame for that.
- gruseom 15y ago
  Thanks, that is a great comment based on experience. Can you say more about your industry and/or path to success? What was most surprising? Do you have salespeople actively soliciting business or do most prospects find you? What advice would you give to startups planning to break into the b2b world?
  - davmar 15y ago
    gladly. i think the single biggest contributor to our success has been the fact that we are in close contact with our customers. if we lose a sale, we have the opportunity to learn why we lost. during a webinar, we hear the reactions of customers. with RFP's we get a list of the features they want. when we win, we stay close to them during implementation. we learn what works/what doesn't work with our products. based upon this feedback, we're able to constantly refine our products and messaging to what our customers want. we started with a product guy who could pump out code (me), and a phenomenal sales guy. the two of us essentially built the initial business. we never took any funding. the most surprising thing is how long it takes to build a solid product. how long it takes to get momentum. everything just takes a lot longer than you'd expect. it's also a funny thing. once you've achieved a small amount of success (and mine is small), people start thinking you actually know what you're talking about. in my experience - apart from geniuses like jobs, gates, musk, etc - there's nothing that separates you from me. it just takes time, dedication and hard work. edit: most people find us. we also have business associates who resell to their customer base and customers sometimes give us nice referrals. advice: b2b is great because people actually pay for shit. lots of b2b software is just awful, i think you can differentiate by providing an excellent product. it'll stand out and give you a solid niche. i'd also say that you should not give your software away for free in b2b. but you should give it to a trial set of customers initially who can help you work out the kinks. stay close to the customers, they can help guide you and tell you where they look for software like what you're selling. online advertising works great. use landing pages, a/b test them. all the things that you probably already know, just put them into practice. they exist because they work.
deleted 15y ago
[deleted]
Domenic_S 15y ago
Sales capitalizes on what works. If an enterprise sales process works for a company, guess what they're going to keep doing? This blog post should be titled "How Not to Sell Software to Alex Payne".
trotsky 15y ago
It’s 2012. Practically everyone who’s paying for software is doing so through an app store: one click or tap and you’ve got what you want. Practically everyone buying software for mobile or from Apple? In the rest of the world almost no desktop software is selling through app stores, one click or otherwise.
unreal37 15y ago
There is this space between "personal" and "enterprise" where this model works. Call it "startup" or "small business". I want something, I have a credit card, I buy, I move on. The less hassle the better. But in real enterprises, I don't have a credit card. I don't even have authority to purchase. (There is a whole department named "procurement" for that.) But I need to see "sales decks", do webinars, talk to salesmen trying to understand my needs and saying yes to every question I ask, download trial versions, spec out requirements, do a business case, write up a recommendation to management, and figure out how complex software with lots of optional modules fits within our existing environment. It could take months to make a purchase decision on some software. In the past year, my current client has paid to fly me 500 miles away (a few times actually) to talk to salespeople face to face to get product demos and talk strategy before the ink is signed on the purchase order. These decisions are not easy nor quick nor cheap. I understand the frustration in this post. I respect this model doesn't work at smaller scales. The current model is not perfect at larger scales. But $50,000 a year software doesn't get sold by credit card online nor through "app stores". Any company that tried to switch away from the old model and follow the new model at that level would fail, I believe.
- thematt 15y ago
  Spot on. As an example of just how ridiculous it gets, we recently drafted an RFP for a solution for licensing our custom-made software to our customers and had a vendor come in with their solution. When it came time to discuss pricing, their response was "we charge based on the amount of revenue you'll be getting from the software...so just tell us how much money you're going to make from your software and we'll get a quote over to you." Of course we told them to take a hike, but not before speaking with their other large customers who actually agreed to this model. It's frustrating to be sure, but also completely expected at the enterprise level.
  - Nrsolis 15y ago
    Of course it's expected! When you have a solution that is going to make a huge amount of money for some other organization, you'd like to capture some of that upside as well. Did you know that HBO prices it's channel lineup to the CableCo's at 50% of whatever they sell it for -or- $minimum_price_per_subscriber. Enterprise software is a whole different game and blog posts like these dont fully capture the wide range of customers in the enterprise space OR the WIDELY varying levels of technical acumen that they possess. YOU might be able to take an executable and integrate it into your systems just fine, but the IT-shop at the local car dealership down the road probably doesn't. They'll happily pay for the handholding. I guess I just find it amusing when a startup gets frustrated by the software business. If you think their sales process is cumbersome or opaque, that's probably a clue that you're not their target customer.
endlessvoid94 15y ago
I don't think it's in anyone's interest to sell a $2k / month / user enterprise software product on an app store and give some third party a 30% cut. That's the biggest reason it's still done this way. I think.
leftnode 15y ago
I can guarantee you SpaceX has a very extensive onboarding stage with their customers, but I love how they have a no-bullshit pricing guide. http://www.spacex.com/falcon1.php#launch_and_placement http://www.spacex.com/falcon1.php#launch_and_placement Want placement on that rocket? 10.9 million regardless of who you are. From there, if you're a serious customer they'll begin the onboarding process. I love it.
- nl 15y ago
  Well that just isn't true. Here's what they actually say: SpaceX offers open and fixed pricing that is the same for all customers, including a best price guarantee. Modest discounts are available for contractually committed, multi-launch purchases. Falcon 1 is the world’s lowest cost per flight to orbit of a production rocket. Falcon 1 Price: $10.9M Current plans are for payloads that would fly on Falcon 1 to be served by flights on the Falcon 9, utilizing excess capacity. This is a very cost-effective solution for small satellite launch needs. So.. if you commit to using SpaceX more than once, you can negotiate a discount. If you are prepared to use a different launch vehicle, you get a discount. They offer a best price guarantee, so you can play them off against another company. It's nice they have a list price, but to me that sounds exactly like the list price for Oracle: only suckers pay what is listed.
etherael 15y ago
Although in principle I agree, I have to say this is simply naive and ignorant to the way things are done in other circles. If you were to purchase say Oracle licenses this way, there is no way this model would work. You will not go to the Oracle app store and it will not have a database of all the large corporate IPs in the world with which it can reverse engineer your available funds and likely chain of purchase decision, and it will not then just put up a few million dollar for that year figure that you can click and instantly pay with your credit card. Strippers must be witnessed, steaks must be consumed, conferences must be attended, rounds of golf must be played, lip service must be paid to ridiculous conceptual bugaboos, the purchasing bureaucracy must be reverse engineered, the chaff must be sorted from the wheat, starched collars must be preened, ignorant men in suits must be consulted as if their opinion had worth. And this is of course only the parodied incomplete summary of the entire horrifying affair. Oracle and their ilk are feasting on elephants. Some would even fairly say mammoths; they are big, fat and move very slowly. The entire idea that a strategy could be formulated, evaluated, shopped for signatures to the relevant parties, signed off on by the law department, agreed to and generally made in the amount of time it takes to make a purchase with the paradigm offered as an example in this scenario is likely terrifying if not utterly extraterrestrial to them.
program 15y ago
Addendum: 1) Don't ask me why/when/where/how I will use my brand-new software 2) Don't force me to "try" other software just because I bought one 3) Don't force me to give you informations that are not strictly correlated with the purchase
patio11 15y ago
Don’t automatically sign me up for a newsletter about your company or product when I give you my contact information. Ideally, don’t request my contact information at all until I’m giving you money. I agree with the first part -- always ask people for permission, probably by kicking them a sweetener (e.g. "1 month email course on X"). I have data that I cannot show you which is in you-could-run-your-company-on-just-this-trick violent disagreement with the second point here. If you don't like email, cool, but email is worth serious money in B2B software sales. (So are salespeople, by the way, even at pricepoints lower than you'd think would warrant a salesman. Think "4 figure LTV." + ) Also, at the risk of stating the obvious, every email-deleting-salesmanship-hating engineer in the world could drop dead of a heart attack tomorrow and neither buyers or sellers of enterprise software would notice until several months later when trying to figure out why the sales engineers stopped submitting expense reports. + Addendum: Joel Spolsky's famous Camels and Rubber Duckies article talks about there being basically two price points for sales now, but a combination of a better delivery mechanisms - SaaS - and better sales procedures/technologies opens up a bunch of very interesting options in the middle for something between BCC $30 "Every email from a customer is a wonderful opportunity to fix that from happening ever again" and steak-dinners-and-Powerpoint-decks enterprise sales for $75k+. I have some amount of knowledge about this these days, since I help my clients implement it. If you're interested in hearing more, say so, I'll try to blog it (some day when I get out from a mountain of work and email).
- pavel_lishin 15y ago
  > "1 month email course on X" What's the advantage of being spammed for a month vs. having the entire month's course on an HTML page that I can peruse at my leisure and at my own pace? Or am I misunderstanding what an e-mail course is?
  - wheels 15y ago
    Yes, you are misunderstanding what an email course is. An email course is a daily or weekly reminder to you to keep using the product so that you'll be primed for the sales process. Given that your viewing of images will be tracked, it will also qualify your level of interest to the sales person that will be following up in person.
ErikRogneby 15y ago
I don't think this is particular to software. It's just that software has the luxury of being transmittable electronically. Say your company needs some vehicles: buying one, two, three? Probably the same as a consumer. Buying 100-300? Need to start thinking about asset tracking, depreciation, maintenance & support contracts, etc. Does it even make sense on the balance sheet to buy or is leasing better? Enterprise sales have more to do with the structures of business than what is actually sold. This is why sales guys are often hired based on who've they sold to, rather than any product experience.
- alexro 15y ago
  Your comment makes a lot of sense, much more than many comments above you. I can only add that managers at BigCo want to cover their ass first and only then do the job. And how you gonna cover your ass when you 'try before you buy'?
raganwald 15y ago
There's no software priced between $1000 and $75,000. I'll tell you why. The minute you charge more than $1000 you need to get serious corporate signoffs. You need a line item in their budget. You need purchasing managers and CEO approval and competitive bids and paperwork. So you need to send a salesperson out to the customer to do PowerPoint, with his airfare, golf course memberships, and $19.95 porn movies at the Ritz Carlton. And with all this, the cost of making one successful sale is going to average about $50,000. If you're sending salespeople out to customers and charging less than $75,000, you're losing money. The joke of it is, big companies protect themselves so well against the risk of buying something expensive that they actually drive up the cost of the expensive stuff, from $1000 to $75000, which mostly goes towards the cost of jumping all the hurdles that they set up to insure that no purchase can possibly go wrong. Joel Spolsky, Camels and Rubber Duckies http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... The second paragraph is the key. Alex, these people aren’t trying to piss you off, they’re being driven by what BigCo wants from them. BigCo won’t let a manager try some software and declare that it meets their needs. BigCo demands that vendors respond to RFPs and RFQs, and if one vendor puts no-nonsense pricing on their web site, all of their competitors will undercut them by a penny or so and they won’t get any sales. I could go on, but Joel has made the point: These annoying vendors have evolved to sell to those annoying customers. It isn’t the vendors that need to go extinct, it’s BigCo. BigCo buys cloud services in 2012 the way it bought time sharing in 1972, so the vendors are still using 1972 sales processes in 2012.
- dpres 15y ago
  Right on! This should be titled "How not to sell software that costs under $1000 in 2012" because the do/don'ts obviously are wrong for non-cheap software.
- pnathan 15y ago
  Actually, I know of a number of products that are in the [1K, 75K] range. * Visual Studio 2010 Ultimate * vSphere datacenter edition * TestComplete from SmartBear * > 3 perforce licences
Sakes 15y ago
Remember this is written from a technical person's point of view. If you are selling to technical customers by all means give them a try now button and get out of their way. But if you are selling to project managers, marketers, or upper management, you should take his Don'ts list with a grain of salt. - Edit for typos
sovande 15y ago
Some sellers may have a bureaucratic sales process, but there are examples the other way around also, with customers having a long and windy buying process which is hardly worth a sale. Last year we sold our on-click download and try-before-buy product to a large US company and we had to fill out X forms and send them by hardcopy to become a "supplier". After 6 months we are still waiting for the payment.
mikeocool 15y ago
While I agree in principle with this list, experience has taught me that if I have to talk to sales person to find out the price software, it's very likely that it's out of my company's budget (seed funded startup). I move on and save myself and the sales person from wasting any time. If you're product targets early stage companies and doesn't cost 5+ figures monthly, and you sell software this way, then, yes, you're doing something wrong.
gesman 15y ago
In high priced product market ($5000+) it's a custom to babysit client and give him a lap dance with a brain massage before opening all the cards. I think shoppers for $47 products hate it more than corporate buyer/purchasing managers. Latter ones want to relax in a leather chair and listen to bullshit before assigning budget - it's their job and they used to it. They certainly are not used to $5000 "buy it now" paypal buttons.
deyan 15y ago
To summarize what many others are saying in this thread, unfortunately, software is currently sold not bought. That's why everyone ends up doing all this nonsense that the author describes. I am personally in 100% agreement that it should be App Store simple but reality proves more complicated than that. It is disappointing but not surprising.
joedev 15y ago
"How Not to Sell [Cheap] Software in 2012." or "How Not to Sell Software [to Small Companies] in 2012."
mattdeboard 15y ago
New Relic really gets all these right too.
suhail 15y ago
The problem with most companies that do this is simply that they want ultra-qualified leads. Truthfully, it's tough to determine whether a sign up is going to be worth $10 or $10K/mo. The other problem is, depending on the product, the sales cycle can be long. It's not that any B2B company wants to spam you, but it's that they want to remind you of their existence as much as possible so that when you start thinking about your options, they are first on your list. Here's the logic re: Alex's points: 1. Requiring a sales call helps qualify real leads. 2. Lack of trialing the software is in part due to wanting to have a conversation with you. 3. Hiding your pricing is simply the way to have a conversation and to qualify leads. It makes price discrimination also possible. Think about selling a startup vs. IBM. 4. Whitepapers are just old school. It's useful for when lower-tier decision makers need to present something. 5. Newsletters are simply a way to be in the conversation with your company prior to when you buy--constantly. 6. Larger organizations sub-divide their resources into people who can do X or Y. Where X sometimes primes the customer for Y. It's not done to the customer's benefit, but rather to the organizations. 7. Old school. 8. Well, the truth is, cold calling can work even though it has a fairly low conversion rate. You have to start somewhere. I am not saying we do any of this at Mixpanel necessarily, but it's the simple logic of enterprise.
- rurounijones 15y ago
  I was searching for a library that does something. I found various options, commercial (approx 7,000 per server)and open-source. Getting my hands on one commercial library for testing was like pulling teeth. 1. Register for download which requires filling in loads of company information before being given access to a download. 2. Download the trial library (Only allowed to download either windows 32 bit, windows 64 bit, linux 32 bit or linux 64 bit..want more than one? tough) 3. (Wait 2 days) Sales guy sends me licence file (Forwarding the Salesforce "You have a new lead!" email no less which really annoyed me, "I am not a lead, I am a free man!") and I start testing the library 4. Find out the company I downloaded the library from (You can only download from their US based, English site) had partners in my (Non-English speaking) country so I got the sales guy speaking to me in a different language than what I expected (or wanted). 5. Asked to be put in touch with an English speaker because I had some technical questions. 6. (wait 1 days) Get an English speaker, ask some questions, get told they will be passed to technical guys 7. (wait 2 days) Get replies. 8. Ask about how I get the different library versions. Get told I have to re-do the ENTIRE process from step 1 just to get a different version of the library due to "Legal reasons". So, it took 2 days just to get my hands on the library for testing and being told that I have to jump through more hoops just to get different versions. Compare with the open source library: 1. go to sourceforge and download the library for any OS and start playing with it in about...oooh, 5 minutes. 2. Want to try a the library on a different OS? another 5 minutes. 3. Questions sent to the developer answered slightly faster due to not having to go through sales guy (although to be honest this was not a huge difference in response time). The hassle of getting my hands on the commercial library soured me on the whole idea of using that company. If just getting an evaluation license is such an arse I do not see us having a happy relationship with the company had we bought the license. -- On a side-note. I recently had to bug fusion-io because they had their webinars behind a registration wall. Really? You put your marketing information behind a closed door? I am researching your technology and I don't want to have to sign up to yet another site just to see some information.(Although to be fair they fixed this quite quickly after I had a moan at them on twitter)
wheels 15y ago
> Practically everyone who’s paying for software is doing so through an app store And how well's that working for them? • All of the revenue for the thousands of vendors in the Apple App Store together for 2011: $3.6 billion • Oracle's revenue alone for 2011: $36 billion Notice that decimal point there? There's a reason it's in a different place. I don't like the enterprise sales process – being on either side of it, and I have to be on both at times. But the reason I'll do it is because our customers demand it and folks at that level, when a deal closes, pay enough to make it worth it. It's the same on payment methods, actually. We got dragged, grudgingly, by our enterprise customers to allow paying by purchase order / ACH because that's how their purchasing departments expect to do things. It's not like we were going to tell them, "no".
- batista 15y ago
  • All of the revenue for the thousands of vendors in the Apple App Store together for 2011: $3.6 billion • Oracle's revenue alone for 2011: $36 billion Notice that decimal point there? There's a reason it's in a different place. Yeah. How about because Oracle is a 30 year old business, whereas the Apple App Store is a one year old new market that came out of thin air? What's the non Apple App Store Mac software sales revenue for the same time the Apple App Store is in operation? That'a fairer comparison. Also, how would the Apple App Store revenue be if they followed the Oracle sales process --call us to give you a price, etc? That would also be an interesting number. But the reason I'll do it is because our customers demand it and folks at that level, when a deal closes, pay enough to make it worth it. ie: la la la la, it's how it always been done, we don't need to look at the process, la la la la la, talk to the hand.
  - wheels 15y ago
    The app store is 3.5 years old, not one, and has been so successful that the original poster mentioned that "practically everyone buying software does it that way." Nobody is suggesting that the app store should sell software the way that Oracle does. In fact, the point was exactly the opposite: that there's a reason that software is sold differently in different price ranges. And the reason for that is that customers expect it that way. Some vendors may be bold enough to tell their customers to get bent and that if they want to buy their software they have to do it the way the vendor tells them to. Most of them will go out of business as a result. Ignoring your customers is rarely a good way to sell to them. What usually happens is that we see segmentation that's pretty close to what's described in the original post: non-enterprise software is sold via a transparent process and aims for scale by selling to small and medium sized customers. The transparency is a business requirement: you can't invest $10000 of a salesperson's salary into selling something for $99/month. Enterprise sales run with enterprise processes because enterprise customers demand that it work that way. The point here is that these processes aren't ordained by vendors, but by customers, and the economics around the deal size. For vendors that are focused on the enterprise, usually, they're not super concerned about losing the folks on the low end (just like SMB product sales aren't worried about losing enterprise customers). Usually the folks that are frustrated are because they're in one category and trying to buy from the other.
nate 15y ago
"the opposite is also true" - Derek Sivers Test. It'd probably be best to serve a company to be able to test whether or not it serves you best to force customers into a hand held sales process or let everything remain DIY. I've created a ton of self serve from the get go. For example: In one thing, we have so many tire kickers startup their site and do their thing, but then we find out, that they completely screw up how to even get started. It might be we just haven't figured out how to design it better. But we've been designing it and iterating on it for years. It's simply something that's a bit hard to understand until someone explains it in words. And since people tend to hate reading and skip the manual, without knowing what's going on, they screw up, and think the product doesn't work. So the solution to that might just be "lets force them into a process so we can make sure they have the best startup experience possible, and we'll be more successful with more sales". That could very well be an outcome. But you never know unless you split test that sales/conversion process.
dreamdu5t 15y ago
Don't make pretentious statements like, "Get ready to leave your bank" before telling me how you solve any of my problems. It's almost insulting.
nreece 15y ago
> Practically everyone who’s paying for software is doing so through an app store I wrote about 'The Other App Store' (organic search) on similar lines - http://blog.roveb.com/post/12003627967/the-other-app-store http://blog.roveb.com/post/12003627967/the-other-app-store
trout 15y ago
The truth is, most customers or end users for Big Software aren't capable of handling the process of researching, trying, deciding, convincing higher ups, negotiating, designing, implementing (or finding an integrator), and supporting it themselves. If they think they are, there is an astronomically high chance something will be wrong. And you know who takes the blame for that? The company with the logo on the software that doesn't work right. That and the guy who did it wrong. The argument scales as the software and customer does, but it's still a truth. Unless your software is dead simple, if you give people enough rope they will cause problems. That prevents the company from more opportunities, makes the customer's life difficult, etc. The solution to this is to be hands on as much as possible before things are implemented. Properly done, it's mutually beneficial spent time. It would be logical to compare the complexity of the product solution (see steps above) to the amount of pre-sales steps required. Disclosure: Pre-sales engineer for big software/hardware
tsunamifury 15y ago
Eloqua does every single one of the the things on the list of 'wrongs' here. It was one of the worst purchasing experiences of my life, they practically talked me OUT of the service.
stdbrouw 15y ago
> I can find and talk to your other customers basically instantly in order to determine what they paid for your product and if they’re getting the value they expected from it. I will do this. The joke is, quite a few enterprise vendors will ask you to sign some sort of NDA before they'll even show you a demo. And of course you'll pay before ever having tried the software. "Trials" – are you mad?
nandemo 15y ago
> we occasionally try commercial software. Mostly, we don’t end up buying it Given that, I'm not sure why I should pay too much attention to the rest of the post. I'd rather take advice from people who successfully sell a lot of software or otherwise have experience in buying it. > Practically everyone who’s paying for software is doing so through an app store This is a very myopic view, though unsurprising given the previous disclaimer. Besides the enterprise "shrink-wrapped" software market (see wheels commment), there's also a huge market for custom software.
freshhawk 15y ago
I know it's a minor thing but: > Heck, even free/open software people have an app > store these days Little off the cuff remarks can expose ignorance quickly. Not something you want to do when trying to convince your readers of a more complex point. It also makes the reader wonder what else you just threw in there because it sounded kinda right and you maybe heard it somewhere. If you couldn't get that little thing right, I have so much less trust when I get to a part of the post that I don't know as much about.
wtffffff 15y ago
Ok, just read this and absolutely have to comment, since I used to work for a telcom services agent. I learned there that where consumer services (low monthly recurring cost) could be sold online sight unseen, customers requiring business-level services (high monthly recurring cost) wanted more handholding, more discussion, and assumed there would be more paperwork. We actually tried to provide them with instant pricing on T1s, and sales dropped considerably. This is the story in almost anything, and its the reason cars and houses are still sold primarily by people, not websites. Websites may provide the in, but people close the larger deals better in the current day and age.
suresk 15y ago
Enterprise software purchasing is pretty broken from both sides, but the vendors make tons of money because of it and the managers who do the purchasing often don't care. Part of the problem Alex is seeing (and I've seen) is that the startup/small business segment just isn't that big, and vendors are usually fine with ignoring it and losing out on revenue. I do a lot of stuff on the side and have tried to buy licenses for some enterprise products, and even mid-sized vendors aren't really interested in talking to me. Large vendors like Oracle and IBM are heavily optimized toward selling to big businesses who need a purchasing process to take months and aren't as sensitive to price. The App Store model is 99%+ consumer-oriented. Unfortunately, a lot of startups and small Enterprise vendors end up recruiting sales and marketing people who have been successful at larger vendors, so the same practices get implemented. I blame this mostly on purchasing practices that are largely centered around managers mitigating risk. The risk they are most interested in mitigating is the risk that they'll get fired for making (or approving) a bad purchasing decision. Vendors are happy to play along, since it usually means they can make more money out of the deal.
usaar333 15y ago
> Heck, even free/open software people have an app store these days. Wasn't open source the first mover here? apt has been around for.. 13 years?
ry0ohki 15y ago
Add Radian 6 to the "Doing it wrong" list. You have to talk to a sales person. Then watch a webinar. Then take TRAINING?!?!! Just to maybe get a demo.
bdunbar 15y ago
Today’s startups are tomorrow’s enterprises. Many of the other startup folks I know share the same expectations about how software should be sold. They'll change their minds when they become an enterprise. Listen: we don't do things that way because we like layers of bureaucracy, and long, tedious meetings. Well, some of us don't. Enterprise customers and vendors operate that way because it's the easiest, most painless way to get stuff done. If it wasn't, we wouldn't do it that way.
seltzered_ 15y ago
This reminds me of steve blank article, where the salesforce burned his well-written datasheet about a product because it's cause too many folks to "get to no" quickly: http://steveblank.com/2011/08/05/bonfire-of-the-vanities/ http://steveblank.com/2011/08/05/bonfire-of-the-vanities/ I work in the semiconductor industry which is rife with webinars, field sales/apps engineers, etc. I hate it, but in some ways it's a wacky industry where you have a garden variety of customers ranging from grad students wanting free samples for a science project, to Apple/Dell wanting to cut your margins to nothing while lying that their volumes will be huge when they're also just testing out a science project. You end up with a problem where you don't know how much effort your apps engineers will have to spend working with a customer and whether their time was worth working with them. So you end up with negotiators called sales people/field engineers. In theory it works unless those negotiators are bent on extracting as many commissions as possible, and/or don't walk into the right markets.
paraschopra 15y ago
Well, why can't you have the best of both worlds? Provide free trial for people who want to quickly trial it. Provide demos, webinars for those who are interested in going that route. It is hard to optimize for _both_ kinds of customers, but it is certainly not impossible.
bipolarla 15y ago
Anyone think Apps will one day replace websites? I notice many individuals and businesses still having a regular website. In 5-10 years will there be no websites and only apps? I actually like working on a larger computer be it on apps or websites. I know the phone market will continue to expand especially in China, Russia, India, and Brazil. Microsoft still feels they have value in new versions of Windows. What do you think?
rbarooah 15y ago
A major reason for buying software is because we want to trade money for time. Making the buying process time consuming significantly reduces the value proposition for those who are time constrained.
rythie 15y ago
Is this why most enterprise software has poor UIs? since they never had to optimise the UI for customer retention, they just rely on the sales process to get people to buy it.
zyeljanee 15y ago
Talking about sale of software, many people are searching for App Stores. What are the consequences behind this. Talking about sale of software, many people are searching for App Stores. What are the concequences behide this.
dansingerman 15y ago
The problem here is a lack of fit between the vendor, who is geared up to sell to Enterprises, and the buyer who is not an 'Enterprise' business. The Enterprise software sales process is about navigating big businesses' procurement processes, and helping the buyer build a business case that the enterprise will accept. I'm going through this pain myself. I work for a startup, and some of the vendors we are talking to are clearly geared up to sell 'Enterprise' software to 'Enterprises'. But I'm CTO of a small startup, and I just want to know what the damn software does, and how much it costs. There's no procurement process, probably not much of a (detailed) business case. I need to buy or build something, and I need to know how much it will cost to buy. What I do think the writer is correct about, is that software selling is moving towards a self-service/appstore model (not that I see Enterprise software sales disappearing very quickly) and eventually the Internet is likely to disrupt it like many other industries. All that said, I also found the Enterprise Software sales model really painful when I worked for an Enterprise level business ("Hello IBM, can I buy a database from you?" "Yes, please meet with our sales team of 24 people as a first step")
hr 15y ago
Waaaayyyy over simplified! Hire someone to handle the procurement, if you're not big enough - you'll have to do it yourself. Welcome to Smallco.
ralmeida 15y ago
About trial versions, a strange idea has just occurred me: has anyone out there thought of offering a trial in two separate periods? For example: 15 trial days = 1 day now + 14 days starting whenever you want it to. This is to solve the problem that when I stumble upon a service that has a trial period, I have a strong urge to see what it's like, but am afraid that I will forget about the service for n-1 days, when I will get an email telling me that the trial has ended and I haven't gotten around to explore it fully. Say, for example, I want to try out a project management suite. If I have a split trial period, I can explore the features and overall feel of the product for myself on a day and then prepare my workmates to use it in a test project, and only start the second part of the period when we are ready. Has anyone thought deeper about the advantages and disadvantages of this?
AndreyKarpov 15y ago
Good article! I read this article and was glad. I am pleased that we are moving in the right direction. We watched as our competitors sell Coverity (http://www.coverity.com/ http://www.coverity.com/) and Klocwork (http://www.klocwork.com/ http://www.klocwork.com/). The process is very complicated. We (http://www.viva64.com/ http://www.viva64.com/) have avoided almost all of the items listed in the article. Cool.
kingsidharth 15y ago
This is NOT how big boys (corporates) buy their software. They like it slow, at par with their pace. If it's too easy, they won't use it.
thekevan 15y ago
Sales guy here. Here's my response. Don’t require that I waste my time on a sales call – or, worse, in a “webinar” – before I can give you my money. Instead, provide all the information I need about your product on your website. We'd love to. The truth is it is the customers who ask for demonstrations, walk-thoughs and tours of the software. I spent weeks training to learn how this software works, who it is a good fit for and who it is not a good fit for. It's simply not realistic to think every product can be explained on a website and comprehended without misconceptions. Also, a robust software suite has many, many user needs. Creating a web site which is custom tailored to each need type is a very high permutation. Don’t make it hard for me to try your software. If I can’t play with a trial version or sandbox immediately, I’m moving on. Don't assume you know how to use it and can make an adequate evaluation in that 2 - 10 minutes you will spend on the trial version. Also, the purchaser is often not the same person as the user. I want them on the phone as well to make sure they have the need and skills to utilize what I have to sell. If you buy something that is a poor fit, I may have your money now but you will bury me with support and complaints later on. That's not worth it. Don’t hide your pricing behind a sales process, and don’t play pricing games. I can find and talk to your other customers basically instantly in order to determine what they paid for your product and if they’re getting the value they expected from it. I will do this. So just put the price of what you’re selling on your site and skip the games. How much is a website? Just tell me how much it costs to build a web site and skip the games. /snark. How much is a house? It depends on if you are talking about an outhouse or the White House. I don't know what kind house you want when you are looking at our site. Also, if you could teach everyone to do that competitive research you claim to be able to do, I would appreciate it. If all customers could become as educated as you claim you can become before buying my stuff, I'd be printing money. Don’t make me read a whitepaper in order to get essential information about your product. Put it on your website. In HTML. Not in a PDF, not in Flash, not in Silverlight or ActiveX or whatever. What your product does, on your website, in HTML. That's just a way to collect your contact info to follow up. It is a poor method. I am in sales and I am not giving anyone my contact info for a white paper either. But if you are getting something of value from me, I want something from you. Don’t automatically sign me up for a newsletter about your company or product when I give you my contact information. Ideally, don’t request my contact information at all until I’m giving you money. If you went through the white paper form mentioned above, you probably never read the text next to the submit button saying "okay to contact me". Businesses should not use this method, consumers should not patronize it. Don’t make it hard for me to talk to a technical person at your company about the nitty gritty details of how your product works. If you don’t provide a forum for those discussions, someone else will, and you won’t control it. Sure, you can speak with my development folks. You and everyone else who wants to know how we built what we built before spending a single dollar with us. Also, don’t assume that your sales person doesn’t know. Ask them. If they can’t answer your question, they should be able to find the answer quickly. If they can't, you just learned you shouldn't buy their product. Move on. Don’t make it hard for me to pay for your product. I have a credit card. I also have a PayPal account, a Google payments account, and an Amazon payments account. Any of those are fine (although PayPal is not ideal). Any other billing process is not. If I charge $10,000 for something, I'm not going to give PayPal a cut of that as well. Also, you having access to those payment methods doesn't mean you have the authority to use them. I've been burned by that quite a bit. This should go without saying, but don’t cold call or spam me. If your product is good and meets my needs, I promise that I’ll find out about it. This is just a pollyanna way of looking at it. Spam is wrong, nothing to debate with on that. But yes, I will cold call you if I identify you as someone who may need what I have. If you don't want my product, don't ask me to call later, don't refer me to the intern to while away the hours with pointless questions. Just say no, you are not interested. I will listen and be happy to move on to the next customer.
Nitramp 15y ago
I've once worked in a company on the other side of this. I needed a particular piece of software for work that was ~$50 on Amazon, with a $10 rebate, and something like $60 when bought from their website directly. They had a trial, and buying it was as easy as giving them your credit card number. Now the company I worked for had a policy to only obtain computery things through a supplier, which would be a local vendor or shop selling this software. The trick is, nobody does that for some random software on the interwebs that's only $50. The purchasing process itself also cost something like $700 for any individual invoice. So two minions and a purchasing manager set off on a journey to find a supplier for this software, with my boss, my office manager, and me constantly nagging them, as it was urgent. After two weeks they came back and said it was sadly impossible to buy this software. We ended up shipping our software late due to the delay, and buying the tool from Amazon, expensing it as a book. Moral of the story: the old BigCos indeed force this behaviour out of suppliers.

466 points by nreece 15y ago

sedev 15y ago

I notice a lot of comments taking on Al3x's comments about the way things are, but almost none taking on his comments about the way things will be. It'd be a little to facile to just say "skate to where the puck will be, not to where it is," but I definitely agree with him that the demographics are changing, and that the benefits that (let's be generous) used to be in the Enterprise Sales Process, are not guaranteed to be there in the future. If you assume that he's correct about the demographic changes and the consumer tastes, do you think he'll be right about the benefits of the Enterprise Sales Process evaporating over the next 5-15 years? I think that's a good bet.

mindcrime 15y ago

I'm on board with most of that, but I'm not sure about the "don't cold call me" bit. I mean, yes, I understand that you - the author of this piece - don't want to be cold called. But I'm not convinced that going with a pure "no cold call" strategy is optimal in the general sense. Everything I've seen / heard leads me to believe that cold-calling is still essential for companies that are selling in the b2b / enterprise space. But, then again, I'm thinking more in terms of "companies who are willing to host their own software, want 'best of breed' solutions, have extensive integration requirements," etc. Sure Google Docs is fine for plenty of firms, but there are firms who want an DMS that integrates with Active Directory, ties into their workflow / approval systems, etc. I guess the point is that "enterprise software" covers a pretty broad swathe of scenarios and situations...

tptacek 15y ago

Many if not most of the "business-to-business" software companies that try to adopt this mindset will find themselves losing money as a result. The "enterprise" sales process is intensely aggravating, yes, but it affords software vendors opportunities to discriminate on price, get direct feedback from customers, offer advance features, and qualify their customers so they can focus sales resources on budgeted projects. There are also pretty obvious economic reasons why companies with 5-figure customer LTVs might avoid credit card billing. There are services that work well with metered billing, but many others in which customers will demand flat licensing. I can also absolutely see why Github would would to keep a pretty tight handle on who's trialing what is in effect a packaged-up version of one of the most important software sites on the Internet. We're a FI customer. Incidentally, on the scale of "enterprisey" sales processes, they were an absolute dream to work with.

rgrieselhuber 15y ago

A lot of this depends on the type of product and market that you're in. For software that costs up to a couple hundred bucks a month, all of these points make perfect sense. Products that are more expensive tend to also be more involved. A lot of times, the sales team needs to understand how the customer is going to use the product and help them get it up and running. HubSpot is probably a good example of this. From my understanding, the way they nailed their retention problem back in the day was to go through extensive training / onboarding with each customer. Simply leaving customers to their own devices on a complicated product is quite often horrible for conversions, which is a wasted opportunity for the vendor and inconveniences a potentially customer that might have otherwise been perfectly happy with the product after learning how it works.

einhverfr 15y ago
Yep. My business takes the following approach: 1) Open source 2) Get in a consultation with you to see what needs to be changed 3) Submit a proposal. 4) Engage in further discussion to ensure we stay useful. Some degree of included support is good to do that. I have been told over and over that we charge too much for the SE Asian market, but once they start comparing what they get for the money (focus on delivering value) that goes out the window.

davmar 15y ago

i'm the ceo of a company that sells b2b software. we never sell a product for less than $2k annually, and our contracts are frequently in the 5 figures annually. our current sales cycle includes a lot of the negatives that you point out. however, we're up front with our pricing while our competitors aren't. we actually created a product that did nearly exactly what you said. we didn't get nearly as many customers with that method. people would sign up (sometimes) and when they did, they tended not to pay once their 30 day free trial was up. our conversion rates sucked. we ended up canceling that product and removing it from our site after 8 months. when we have a webinar with a sales call, our closure rates increase dramatically. customers tend not to pay by credit card even when given the option. i actually think you're 100% right for many, many products. but i don't think it'd work in my boring b2b industry. edit: we probably didn't do enough experimentation on the small product as we should have, so i take some of the blame for that.

gruseom 15y ago
Thanks, that is a great comment based on experience. Can you say more about your industry and/or path to success? What was most surprising? Do you have salespeople actively soliciting business or do most prospects find you? What advice would you give to startups planning to break into the b2b world?
- davmar 15y ago
  gladly. i think the single biggest contributor to our success has been the fact that we are in close contact with our customers. if we lose a sale, we have the opportunity to learn why we lost. during a webinar, we hear the reactions of customers. with RFP's we get a list of the features they want. when we win, we stay close to them during implementation. we learn what works/what doesn't work with our products. based upon this feedback, we're able to constantly refine our products and messaging to what our customers want. we started with a product guy who could pump out code (me), and a phenomenal sales guy. the two of us essentially built the initial business. we never took any funding. the most surprising thing is how long it takes to build a solid product. how long it takes to get momentum. everything just takes a lot longer than you'd expect. it's also a funny thing. once you've achieved a small amount of success (and mine is small), people start thinking you actually know what you're talking about. in my experience - apart from geniuses like jobs, gates, musk, etc - there's nothing that separates you from me. it just takes time, dedication and hard work. edit: most people find us. we also have business associates who resell to their customer base and customers sometimes give us nice referrals. advice: b2b is great because people actually pay for shit. lots of b2b software is just awful, i think you can differentiate by providing an excellent product. it'll stand out and give you a solid niche. i'd also say that you should not give your software away for free in b2b. but you should give it to a trial set of customers initially who can help you work out the kinks. stay close to the customers, they can help guide you and tell you where they look for software like what you're selling. online advertising works great. use landing pages, a/b test them. all the things that you probably already know, just put them into practice. they exist because they work.

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Domenic_S 15y ago

Sales capitalizes on what works. If an enterprise sales process works for a company, guess what they're going to keep doing? This blog post should be titled "How Not to Sell Software to Alex Payne".

trotsky 15y ago

It’s 2012. Practically everyone who’s paying for software is doing so through an app store: one click or tap and you’ve got what you want. Practically everyone buying software for mobile or from Apple? In the rest of the world almost no desktop software is selling through app stores, one click or otherwise.

unreal37 15y ago

There is this space between "personal" and "enterprise" where this model works. Call it "startup" or "small business". I want something, I have a credit card, I buy, I move on. The less hassle the better. But in real enterprises, I don't have a credit card. I don't even have authority to purchase. (There is a whole department named "procurement" for that.) But I need to see "sales decks", do webinars, talk to salesmen trying to understand my needs and saying yes to every question I ask, download trial versions, spec out requirements, do a business case, write up a recommendation to management, and figure out how complex software with lots of optional modules fits within our existing environment. It could take months to make a purchase decision on some software. In the past year, my current client has paid to fly me 500 miles away (a few times actually) to talk to salespeople face to face to get product demos and talk strategy before the ink is signed on the purchase order. These decisions are not easy nor quick nor cheap. I understand the frustration in this post. I respect this model doesn't work at smaller scales. The current model is not perfect at larger scales. But $50,000 a year software doesn't get sold by credit card online nor through "app stores". Any company that tried to switch away from the old model and follow the new model at that level would fail, I believe.

thematt 15y ago
Spot on. As an example of just how ridiculous it gets, we recently drafted an RFP for a solution for licensing our custom-made software to our customers and had a vendor come in with their solution. When it came time to discuss pricing, their response was "we charge based on the amount of revenue you'll be getting from the software...so just tell us how much money you're going to make from your software and we'll get a quote over to you." Of course we told them to take a hike, but not before speaking with their other large customers who actually agreed to this model. It's frustrating to be sure, but also completely expected at the enterprise level.
- Nrsolis 15y ago
  Of course it's expected! When you have a solution that is going to make a huge amount of money for some other organization, you'd like to capture some of that upside as well. Did you know that HBO prices it's channel lineup to the CableCo's at 50% of whatever they sell it for -or- $minimum_price_per_subscriber. Enterprise software is a whole different game and blog posts like these dont fully capture the wide range of customers in the enterprise space OR the WIDELY varying levels of technical acumen that they possess. YOU might be able to take an executable and integrate it into your systems just fine, but the IT-shop at the local car dealership down the road probably doesn't. They'll happily pay for the handholding. I guess I just find it amusing when a startup gets frustrated by the software business. If you think their sales process is cumbersome or opaque, that's probably a clue that you're not their target customer.

endlessvoid94 15y ago

I don't think it's in anyone's interest to sell a $2k / month / user enterprise software product on an app store and give some third party a 30% cut. That's the biggest reason it's still done this way. I think.

leftnode 15y ago

I can guarantee you SpaceX has a very extensive onboarding stage with their customers, but I love how they have a no-bullshit pricing guide. http://www.spacex.com/falcon1.php#launch_and_placement http://www.spacex.com/falcon1.php#launch_and_placement Want placement on that rocket? 10.9 million regardless of who you are. From there, if you're a serious customer they'll begin the onboarding process. I love it.

nl 15y ago
Well that just isn't true. Here's what they actually say: SpaceX offers open and fixed pricing that is the same for all customers, including a best price guarantee. Modest discounts are available for contractually committed, multi-launch purchases. Falcon 1 is the world’s lowest cost per flight to orbit of a production rocket. Falcon 1 Price: $10.9M Current plans are for payloads that would fly on Falcon 1 to be served by flights on the Falcon 9, utilizing excess capacity. This is a very cost-effective solution for small satellite launch needs. So.. if you commit to using SpaceX more than once, you can negotiate a discount. If you are prepared to use a different launch vehicle, you get a discount. They offer a best price guarantee, so you can play them off against another company. It's nice they have a list price, but to me that sounds exactly like the list price for Oracle: only suckers pay what is listed.

etherael 15y ago

Although in principle I agree, I have to say this is simply naive and ignorant to the way things are done in other circles. If you were to purchase say Oracle licenses this way, there is no way this model would work. You will not go to the Oracle app store and it will not have a database of all the large corporate IPs in the world with which it can reverse engineer your available funds and likely chain of purchase decision, and it will not then just put up a few million dollar for that year figure that you can click and instantly pay with your credit card. Strippers must be witnessed, steaks must be consumed, conferences must be attended, rounds of golf must be played, lip service must be paid to ridiculous conceptual bugaboos, the purchasing bureaucracy must be reverse engineered, the chaff must be sorted from the wheat, starched collars must be preened, ignorant men in suits must be consulted as if their opinion had worth. And this is of course only the parodied incomplete summary of the entire horrifying affair. Oracle and their ilk are feasting on elephants. Some would even fairly say mammoths; they are big, fat and move very slowly. The entire idea that a strategy could be formulated, evaluated, shopped for signatures to the relevant parties, signed off on by the law department, agreed to and generally made in the amount of time it takes to make a purchase with the paradigm offered as an example in this scenario is likely terrifying if not utterly extraterrestrial to them.

program 15y ago

Addendum: 1) Don't ask me why/when/where/how I will use my brand-new software 2) Don't force me to "try" other software just because I bought one 3) Don't force me to give you informations that are not strictly correlated with the purchase

patio11 15y ago

Don’t automatically sign me up for a newsletter about your company or product when I give you my contact information. Ideally, don’t request my contact information at all until I’m giving you money. I agree with the first part -- always ask people for permission, probably by kicking them a sweetener (e.g. "1 month email course on X"). I have data that I cannot show you which is in you-could-run-your-company-on-just-this-trick violent disagreement with the second point here. If you don't like email, cool, but email is worth serious money in B2B software sales. (So are salespeople, by the way, even at pricepoints lower than you'd think would warrant a salesman. Think "4 figure LTV." + ) Also, at the risk of stating the obvious, every email-deleting-salesmanship-hating engineer in the world could drop dead of a heart attack tomorrow and neither buyers or sellers of enterprise software would notice until several months later when trying to figure out why the sales engineers stopped submitting expense reports. + Addendum: Joel Spolsky's famous Camels and Rubber Duckies article talks about there being basically two price points for sales now, but a combination of a better delivery mechanisms - SaaS - and better sales procedures/technologies opens up a bunch of very interesting options in the middle for something between BCC $30 "Every email from a customer is a wonderful opportunity to fix that from happening ever again" and steak-dinners-and-Powerpoint-decks enterprise sales for $75k+. I have some amount of knowledge about this these days, since I help my clients implement it. If you're interested in hearing more, say so, I'll try to blog it (some day when I get out from a mountain of work and email).

pavel_lishin 15y ago
> "1 month email course on X" What's the advantage of being spammed for a month vs. having the entire month's course on an HTML page that I can peruse at my leisure and at my own pace? Or am I misunderstanding what an e-mail course is?
- wheels 15y ago
  Yes, you are misunderstanding what an email course is. An email course is a daily or weekly reminder to you to keep using the product so that you'll be primed for the sales process. Given that your viewing of images will be tracked, it will also qualify your level of interest to the sales person that will be following up in person.

ErikRogneby 15y ago

I don't think this is particular to software. It's just that software has the luxury of being transmittable electronically. Say your company needs some vehicles: buying one, two, three? Probably the same as a consumer. Buying 100-300? Need to start thinking about asset tracking, depreciation, maintenance & support contracts, etc. Does it even make sense on the balance sheet to buy or is leasing better? Enterprise sales have more to do with the structures of business than what is actually sold. This is why sales guys are often hired based on who've they sold to, rather than any product experience.

alexro 15y ago
Your comment makes a lot of sense, much more than many comments above you. I can only add that managers at BigCo want to cover their ass first and only then do the job. And how you gonna cover your ass when you 'try before you buy'?

raganwald 15y ago

There's no software priced between $1000 and $75,000. I'll tell you why. The minute you charge more than $1000 you need to get serious corporate signoffs. You need a line item in their budget. You need purchasing managers and CEO approval and competitive bids and paperwork. So you need to send a salesperson out to the customer to do PowerPoint, with his airfare, golf course memberships, and $19.95 porn movies at the Ritz Carlton. And with all this, the cost of making one successful sale is going to average about $50,000. If you're sending salespeople out to customers and charging less than $75,000, you're losing money. The joke of it is, big companies protect themselves so well against the risk of buying something expensive that they actually drive up the cost of the expensive stuff, from $1000 to $75000, which mostly goes towards the cost of jumping all the hurdles that they set up to insure that no purchase can possibly go wrong. Joel Spolsky, Camels and Rubber Duckies http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... The second paragraph is the key. Alex, these people aren’t trying to piss you off, they’re being driven by what BigCo wants from them. BigCo won’t let a manager try some software and declare that it meets their needs. BigCo demands that vendors respond to RFPs and RFQs, and if one vendor puts no-nonsense pricing on their web site, all of their competitors will undercut them by a penny or so and they won’t get any sales. I could go on, but Joel has made the point: These annoying vendors have evolved to sell to those annoying customers. It isn’t the vendors that need to go extinct, it’s BigCo. BigCo buys cloud services in 2012 the way it bought time sharing in 1972, so the vendors are still using 1972 sales processes in 2012.

dpres 15y ago
Right on! This should be titled "How not to sell software that costs under $1000 in 2012" because the do/don'ts obviously are wrong for non-cheap software.
pnathan 15y ago
Actually, I know of a number of products that are in the [1K, 75K] range. * Visual Studio 2010 Ultimate * vSphere datacenter edition * TestComplete from SmartBear * > 3 perforce licences

Sakes 15y ago

Remember this is written from a technical person's point of view. If you are selling to technical customers by all means give them a try now button and get out of their way. But if you are selling to project managers, marketers, or upper management, you should take his Don'ts list with a grain of salt. - Edit for typos

sovande 15y ago

Some sellers may have a bureaucratic sales process, but there are examples the other way around also, with customers having a long and windy buying process which is hardly worth a sale. Last year we sold our on-click download and try-before-buy product to a large US company and we had to fill out X forms and send them by hardcopy to become a "supplier". After 6 months we are still waiting for the payment.

mikeocool 15y ago

While I agree in principle with this list, experience has taught me that if I have to talk to sales person to find out the price software, it's very likely that it's out of my company's budget (seed funded startup). I move on and save myself and the sales person from wasting any time. If you're product targets early stage companies and doesn't cost 5+ figures monthly, and you sell software this way, then, yes, you're doing something wrong.

gesman 15y ago

In high priced product market ($5000+) it's a custom to babysit client and give him a lap dance with a brain massage before opening all the cards. I think shoppers for $47 products hate it more than corporate buyer/purchasing managers. Latter ones want to relax in a leather chair and listen to bullshit before assigning budget - it's their job and they used to it. They certainly are not used to $5000 "buy it now" paypal buttons.

deyan 15y ago

To summarize what many others are saying in this thread, unfortunately, software is currently sold not bought. That's why everyone ends up doing all this nonsense that the author describes. I am personally in 100% agreement that it should be App Store simple but reality proves more complicated than that. It is disappointing but not surprising.

joedev 15y ago

"How Not to Sell [Cheap] Software in 2012." or "How Not to Sell Software [to Small Companies] in 2012."

mattdeboard 15y ago

New Relic really gets all these right too.

suhail 15y ago

The problem with most companies that do this is simply that they want ultra-qualified leads. Truthfully, it's tough to determine whether a sign up is going to be worth $10 or $10K/mo. The other problem is, depending on the product, the sales cycle can be long. It's not that any B2B company wants to spam you, but it's that they want to remind you of their existence as much as possible so that when you start thinking about your options, they are first on your list. Here's the logic re: Alex's points: 1. Requiring a sales call helps qualify real leads. 2. Lack of trialing the software is in part due to wanting to have a conversation with you. 3. Hiding your pricing is simply the way to have a conversation and to qualify leads. It makes price discrimination also possible. Think about selling a startup vs. IBM. 4. Whitepapers are just old school. It's useful for when lower-tier decision makers need to present something. 5. Newsletters are simply a way to be in the conversation with your company prior to when you buy--constantly. 6. Larger organizations sub-divide their resources into people who can do X or Y. Where X sometimes primes the customer for Y. It's not done to the customer's benefit, but rather to the organizations. 7. Old school. 8. Well, the truth is, cold calling can work even though it has a fairly low conversion rate. You have to start somewhere. I am not saying we do any of this at Mixpanel necessarily, but it's the simple logic of enterprise.

rurounijones 15y ago
I was searching for a library that does something. I found various options, commercial (approx 7,000 per server)and open-source. Getting my hands on one commercial library for testing was like pulling teeth. 1. Register for download which requires filling in loads of company information before being given access to a download. 2. Download the trial library (Only allowed to download either windows 32 bit, windows 64 bit, linux 32 bit or linux 64 bit..want more than one? tough) 3. (Wait 2 days) Sales guy sends me licence file (Forwarding the Salesforce "You have a new lead!" email no less which really annoyed me, "I am not a lead, I am a free man!") and I start testing the library 4. Find out the company I downloaded the library from (You can only download from their US based, English site) had partners in my (Non-English speaking) country so I got the sales guy speaking to me in a different language than what I expected (or wanted). 5. Asked to be put in touch with an English speaker because I had some technical questions. 6. (wait 1 days) Get an English speaker, ask some questions, get told they will be passed to technical guys 7. (wait 2 days) Get replies. 8. Ask about how I get the different library versions. Get told I have to re-do the ENTIRE process from step 1 just to get a different version of the library due to "Legal reasons". So, it took 2 days just to get my hands on the library for testing and being told that I have to jump through more hoops just to get different versions. Compare with the open source library: 1. go to sourceforge and download the library for any OS and start playing with it in about...oooh, 5 minutes. 2. Want to try a the library on a different OS? another 5 minutes. 3. Questions sent to the developer answered slightly faster due to not having to go through sales guy (although to be honest this was not a huge difference in response time). The hassle of getting my hands on the commercial library soured me on the whole idea of using that company. If just getting an evaluation license is such an arse I do not see us having a happy relationship with the company had we bought the license. -- On a side-note. I recently had to bug fusion-io because they had their webinars behind a registration wall. Really? You put your marketing information behind a closed door? I am researching your technology and I don't want to have to sign up to yet another site just to see some information.(Although to be fair they fixed this quite quickly after I had a moan at them on twitter)

wheels 15y ago

> Practically everyone who’s paying for software is doing so through an app store And how well's that working for them? • All of the revenue for the thousands of vendors in the Apple App Store together for 2011: $3.6 billion • Oracle's revenue alone for 2011: $36 billion Notice that decimal point there? There's a reason it's in a different place. I don't like the enterprise sales process – being on either side of it, and I have to be on both at times. But the reason I'll do it is because our customers demand it and folks at that level, when a deal closes, pay enough to make it worth it. It's the same on payment methods, actually. We got dragged, grudgingly, by our enterprise customers to allow paying by purchase order / ACH because that's how their purchasing departments expect to do things. It's not like we were going to tell them, "no".

batista 15y ago
• All of the revenue for the thousands of vendors in the Apple App Store together for 2011: $3.6 billion • Oracle's revenue alone for 2011: $36 billion Notice that decimal point there? There's a reason it's in a different place. Yeah. How about because Oracle is a 30 year old business, whereas the Apple App Store is a one year old new market that came out of thin air? What's the non Apple App Store Mac software sales revenue for the same time the Apple App Store is in operation? That'a fairer comparison. Also, how would the Apple App Store revenue be if they followed the Oracle sales process --call us to give you a price, etc? That would also be an interesting number. But the reason I'll do it is because our customers demand it and folks at that level, when a deal closes, pay enough to make it worth it. ie: la la la la, it's how it always been done, we don't need to look at the process, la la la la la, talk to the hand.
- wheels 15y ago
  The app store is 3.5 years old, not one, and has been so successful that the original poster mentioned that "practically everyone buying software does it that way." Nobody is suggesting that the app store should sell software the way that Oracle does. In fact, the point was exactly the opposite: that there's a reason that software is sold differently in different price ranges. And the reason for that is that customers expect it that way. Some vendors may be bold enough to tell their customers to get bent and that if they want to buy their software they have to do it the way the vendor tells them to. Most of them will go out of business as a result. Ignoring your customers is rarely a good way to sell to them. What usually happens is that we see segmentation that's pretty close to what's described in the original post: non-enterprise software is sold via a transparent process and aims for scale by selling to small and medium sized customers. The transparency is a business requirement: you can't invest $10000 of a salesperson's salary into selling something for $99/month. Enterprise sales run with enterprise processes because enterprise customers demand that it work that way. The point here is that these processes aren't ordained by vendors, but by customers, and the economics around the deal size. For vendors that are focused on the enterprise, usually, they're not super concerned about losing the folks on the low end (just like SMB product sales aren't worried about losing enterprise customers). Usually the folks that are frustrated are because they're in one category and trying to buy from the other.

nate 15y ago

"the opposite is also true" - Derek Sivers Test. It'd probably be best to serve a company to be able to test whether or not it serves you best to force customers into a hand held sales process or let everything remain DIY. I've created a ton of self serve from the get go. For example: In one thing, we have so many tire kickers startup their site and do their thing, but then we find out, that they completely screw up how to even get started. It might be we just haven't figured out how to design it better. But we've been designing it and iterating on it for years. It's simply something that's a bit hard to understand until someone explains it in words. And since people tend to hate reading and skip the manual, without knowing what's going on, they screw up, and think the product doesn't work. So the solution to that might just be "lets force them into a process so we can make sure they have the best startup experience possible, and we'll be more successful with more sales". That could very well be an outcome. But you never know unless you split test that sales/conversion process.

dreamdu5t 15y ago

Don't make pretentious statements like, "Get ready to leave your bank" before telling me how you solve any of my problems. It's almost insulting.

nreece 15y ago

> Practically everyone who’s paying for software is doing so through an app store I wrote about 'The Other App Store' (organic search) on similar lines - http://blog.roveb.com/post/12003627967/the-other-app-store http://blog.roveb.com/post/12003627967/the-other-app-store

trout 15y ago

The truth is, most customers or end users for Big Software aren't capable of handling the process of researching, trying, deciding, convincing higher ups, negotiating, designing, implementing (or finding an integrator), and supporting it themselves. If they think they are, there is an astronomically high chance something will be wrong. And you know who takes the blame for that? The company with the logo on the software that doesn't work right. That and the guy who did it wrong. The argument scales as the software and customer does, but it's still a truth. Unless your software is dead simple, if you give people enough rope they will cause problems. That prevents the company from more opportunities, makes the customer's life difficult, etc. The solution to this is to be hands on as much as possible before things are implemented. Properly done, it's mutually beneficial spent time. It would be logical to compare the complexity of the product solution (see steps above) to the amount of pre-sales steps required. Disclosure: Pre-sales engineer for big software/hardware

tsunamifury 15y ago

Eloqua does every single one of the the things on the list of 'wrongs' here. It was one of the worst purchasing experiences of my life, they practically talked me OUT of the service.

stdbrouw 15y ago

> I can find and talk to your other customers basically instantly in order to determine what they paid for your product and if they’re getting the value they expected from it. I will do this. The joke is, quite a few enterprise vendors will ask you to sign some sort of NDA before they'll even show you a demo. And of course you'll pay before ever having tried the software. "Trials" – are you mad?

nandemo 15y ago

> we occasionally try commercial software. Mostly, we don’t end up buying it Given that, I'm not sure why I should pay too much attention to the rest of the post. I'd rather take advice from people who successfully sell a lot of software or otherwise have experience in buying it. > Practically everyone who’s paying for software is doing so through an app store This is a very myopic view, though unsurprising given the previous disclaimer. Besides the enterprise "shrink-wrapped" software market (see wheels commment), there's also a huge market for custom software.

freshhawk 15y ago

I know it's a minor thing but: > Heck, even free/open software people have an app > store these days Little off the cuff remarks can expose ignorance quickly. Not something you want to do when trying to convince your readers of a more complex point. It also makes the reader wonder what else you just threw in there because it sounded kinda right and you maybe heard it somewhere. If you couldn't get that little thing right, I have so much less trust when I get to a part of the post that I don't know as much about.

wtffffff 15y ago

Ok, just read this and absolutely have to comment, since I used to work for a telcom services agent. I learned there that where consumer services (low monthly recurring cost) could be sold online sight unseen, customers requiring business-level services (high monthly recurring cost) wanted more handholding, more discussion, and assumed there would be more paperwork. We actually tried to provide them with instant pricing on T1s, and sales dropped considerably. This is the story in almost anything, and its the reason cars and houses are still sold primarily by people, not websites. Websites may provide the in, but people close the larger deals better in the current day and age.

suresk 15y ago

Enterprise software purchasing is pretty broken from both sides, but the vendors make tons of money because of it and the managers who do the purchasing often don't care. Part of the problem Alex is seeing (and I've seen) is that the startup/small business segment just isn't that big, and vendors are usually fine with ignoring it and losing out on revenue. I do a lot of stuff on the side and have tried to buy licenses for some enterprise products, and even mid-sized vendors aren't really interested in talking to me. Large vendors like Oracle and IBM are heavily optimized toward selling to big businesses who need a purchasing process to take months and aren't as sensitive to price. The App Store model is 99%+ consumer-oriented. Unfortunately, a lot of startups and small Enterprise vendors end up recruiting sales and marketing people who have been successful at larger vendors, so the same practices get implemented. I blame this mostly on purchasing practices that are largely centered around managers mitigating risk. The risk they are most interested in mitigating is the risk that they'll get fired for making (or approving) a bad purchasing decision. Vendors are happy to play along, since it usually means they can make more money out of the deal.

usaar333 15y ago

> Heck, even free/open software people have an app store these days. Wasn't open source the first mover here? apt has been around for.. 13 years?

ry0ohki 15y ago

Add Radian 6 to the "Doing it wrong" list. You have to talk to a sales person. Then watch a webinar. Then take TRAINING?!?!! Just to maybe get a demo.

bdunbar 15y ago

Today’s startups are tomorrow’s enterprises. Many of the other startup folks I know share the same expectations about how software should be sold. They'll change their minds when they become an enterprise. Listen: we don't do things that way because we like layers of bureaucracy, and long, tedious meetings. Well, some of us don't. Enterprise customers and vendors operate that way because it's the easiest, most painless way to get stuff done. If it wasn't, we wouldn't do it that way.

seltzered_ 15y ago

This reminds me of steve blank article, where the salesforce burned his well-written datasheet about a product because it's cause too many folks to "get to no" quickly: http://steveblank.com/2011/08/05/bonfire-of-the-vanities/ http://steveblank.com/2011/08/05/bonfire-of-the-vanities/ I work in the semiconductor industry which is rife with webinars, field sales/apps engineers, etc. I hate it, but in some ways it's a wacky industry where you have a garden variety of customers ranging from grad students wanting free samples for a science project, to Apple/Dell wanting to cut your margins to nothing while lying that their volumes will be huge when they're also just testing out a science project. You end up with a problem where you don't know how much effort your apps engineers will have to spend working with a customer and whether their time was worth working with them. So you end up with negotiators called sales people/field engineers. In theory it works unless those negotiators are bent on extracting as many commissions as possible, and/or don't walk into the right markets.

paraschopra 15y ago

Well, why can't you have the best of both worlds? Provide free trial for people who want to quickly trial it. Provide demos, webinars for those who are interested in going that route. It is hard to optimize for _both_ kinds of customers, but it is certainly not impossible.

bipolarla 15y ago

Anyone think Apps will one day replace websites? I notice many individuals and businesses still having a regular website. In 5-10 years will there be no websites and only apps? I actually like working on a larger computer be it on apps or websites. I know the phone market will continue to expand especially in China, Russia, India, and Brazil. Microsoft still feels they have value in new versions of Windows. What do you think?

rbarooah 15y ago

A major reason for buying software is because we want to trade money for time. Making the buying process time consuming significantly reduces the value proposition for those who are time constrained.

rythie 15y ago

Is this why most enterprise software has poor UIs? since they never had to optimise the UI for customer retention, they just rely on the sales process to get people to buy it.

zyeljanee 15y ago

Talking about sale of software, many people are searching for App Stores. What are the consequences behind this. Talking about sale of software, many people are searching for App Stores. What are the concequences behide this.

dansingerman 15y ago

The problem here is a lack of fit between the vendor, who is geared up to sell to Enterprises, and the buyer who is not an 'Enterprise' business. The Enterprise software sales process is about navigating big businesses' procurement processes, and helping the buyer build a business case that the enterprise will accept. I'm going through this pain myself. I work for a startup, and some of the vendors we are talking to are clearly geared up to sell 'Enterprise' software to 'Enterprises'. But I'm CTO of a small startup, and I just want to know what the damn software does, and how much it costs. There's no procurement process, probably not much of a (detailed) business case. I need to buy or build something, and I need to know how much it will cost to buy. What I do think the writer is correct about, is that software selling is moving towards a self-service/appstore model (not that I see Enterprise software sales disappearing very quickly) and eventually the Internet is likely to disrupt it like many other industries. All that said, I also found the Enterprise Software sales model really painful when I worked for an Enterprise level business ("Hello IBM, can I buy a database from you?" "Yes, please meet with our sales team of 24 people as a first step")

hr 15y ago

Waaaayyyy over simplified! Hire someone to handle the procurement, if you're not big enough - you'll have to do it yourself. Welcome to Smallco.

ralmeida 15y ago

About trial versions, a strange idea has just occurred me: has anyone out there thought of offering a trial in two separate periods? For example: 15 trial days = 1 day now + 14 days starting whenever you want it to. This is to solve the problem that when I stumble upon a service that has a trial period, I have a strong urge to see what it's like, but am afraid that I will forget about the service for n-1 days, when I will get an email telling me that the trial has ended and I haven't gotten around to explore it fully. Say, for example, I want to try out a project management suite. If I have a split trial period, I can explore the features and overall feel of the product for myself on a day and then prepare my workmates to use it in a test project, and only start the second part of the period when we are ready. Has anyone thought deeper about the advantages and disadvantages of this?

AndreyKarpov 15y ago

Good article! I read this article and was glad. I am pleased that we are moving in the right direction. We watched as our competitors sell Coverity (http://www.coverity.com/ http://www.coverity.com/) and Klocwork (http://www.klocwork.com/ http://www.klocwork.com/). The process is very complicated. We (http://www.viva64.com/ http://www.viva64.com/) have avoided almost all of the items listed in the article. Cool.

kingsidharth 15y ago

This is NOT how big boys (corporates) buy their software. They like it slow, at par with their pace. If it's too easy, they won't use it.

thekevan 15y ago

Sales guy here. Here's my response. Don’t require that I waste my time on a sales call – or, worse, in a “webinar” – before I can give you my money. Instead, provide all the information I need about your product on your website. We'd love to. The truth is it is the customers who ask for demonstrations, walk-thoughs and tours of the software. I spent weeks training to learn how this software works, who it is a good fit for and who it is not a good fit for. It's simply not realistic to think every product can be explained on a website and comprehended without misconceptions. Also, a robust software suite has many, many user needs. Creating a web site which is custom tailored to each need type is a very high permutation. Don’t make it hard for me to try your software. If I can’t play with a trial version or sandbox immediately, I’m moving on. Don't assume you know how to use it and can make an adequate evaluation in that 2 - 10 minutes you will spend on the trial version. Also, the purchaser is often not the same person as the user. I want them on the phone as well to make sure they have the need and skills to utilize what I have to sell. If you buy something that is a poor fit, I may have your money now but you will bury me with support and complaints later on. That's not worth it. Don’t hide your pricing behind a sales process, and don’t play pricing games. I can find and talk to your other customers basically instantly in order to determine what they paid for your product and if they’re getting the value they expected from it. I will do this. So just put the price of what you’re selling on your site and skip the games. How much is a website? Just tell me how much it costs to build a web site and skip the games. /snark. How much is a house? It depends on if you are talking about an outhouse or the White House. I don't know what kind house you want when you are looking at our site. Also, if you could teach everyone to do that competitive research you claim to be able to do, I would appreciate it. If all customers could become as educated as you claim you can become before buying my stuff, I'd be printing money. Don’t make me read a whitepaper in order to get essential information about your product. Put it on your website. In HTML. Not in a PDF, not in Flash, not in Silverlight or ActiveX or whatever. What your product does, on your website, in HTML. That's just a way to collect your contact info to follow up. It is a poor method. I am in sales and I am not giving anyone my contact info for a white paper either. But if you are getting something of value from me, I want something from you. Don’t automatically sign me up for a newsletter about your company or product when I give you my contact information. Ideally, don’t request my contact information at all until I’m giving you money. If you went through the white paper form mentioned above, you probably never read the text next to the submit button saying "okay to contact me". Businesses should not use this method, consumers should not patronize it. Don’t make it hard for me to talk to a technical person at your company about the nitty gritty details of how your product works. If you don’t provide a forum for those discussions, someone else will, and you won’t control it. Sure, you can speak with my development folks. You and everyone else who wants to know how we built what we built before spending a single dollar with us. Also, don’t assume that your sales person doesn’t know. Ask them. If they can’t answer your question, they should be able to find the answer quickly. If they can't, you just learned you shouldn't buy their product. Move on. Don’t make it hard for me to pay for your product. I have a credit card. I also have a PayPal account, a Google payments account, and an Amazon payments account. Any of those are fine (although PayPal is not ideal). Any other billing process is not. If I charge $10,000 for something, I'm not going to give PayPal a cut of that as well. Also, you having access to those payment methods doesn't mean you have the authority to use them. I've been burned by that quite a bit. This should go without saying, but don’t cold call or spam me. If your product is good and meets my needs, I promise that I’ll find out about it. This is just a pollyanna way of looking at it. Spam is wrong, nothing to debate with on that. But yes, I will cold call you if I identify you as someone who may need what I have. If you don't want my product, don't ask me to call later, don't refer me to the intern to while away the hours with pointless questions. Just say no, you are not interested. I will listen and be happy to move on to the next customer.

Nitramp 15y ago

I've once worked in a company on the other side of this. I needed a particular piece of software for work that was ~$50 on Amazon, with a $10 rebate, and something like $60 when bought from their website directly. They had a trial, and buying it was as easy as giving them your credit card number. Now the company I worked for had a policy to only obtain computery things through a supplier, which would be a local vendor or shop selling this software. The trick is, nobody does that for some random software on the interwebs that's only $50. The purchasing process itself also cost something like $700 for any individual invoice. So two minions and a purchasing manager set off on a journey to find a supplier for this software, with my boss, my office manager, and me constantly nagging them, as it was urgent. After two weeks they came back and said it was sadly impossible to buy this software. We ended up shipping our software late due to the delay, and buying the tool from Amazon, expensing it as a book. Moral of the story: the old BigCos indeed force this behaviour out of suppliers.