The RSA cyber security conference in San Francisco, pictured here in February 2020, is giving way to … [+]
It has become a truism that “Covid-19 will change everything,” but in the case of selling software, the evidence for significant change is already clear. Few areas of business have felt more disruption from the pandemic than enterprise software sales – and few have seen as much rapid adaptation to the current environment. Using the tools of digital revolution, the traditional selling process is undergoing a fascinating reinvention.
Historically, enterprise-level software sales have depended on intensely personal connections and interactions. Regardless of the product, sales involved an elaborate, almost ritualized courting process. A series of carefully orchestrated in-person meetings, often involving CTOs, CIOs and even CEOs has been the norm. Multiple rounds of dinner, lunch or coffee meetings, extensive travel to corporate headquarters, and other social outings with decision makers were all regarded as crucial milestones in closing sales. The best sales executives were highly compensated and difficult to replace because selling was assumed to be a face-to-face relationship business built over time.
Covid-19 stopped much of this routine in its tracks. It has also forced organizations to ask whether the traditional world of sales was needlessly inefficient and with unnecessarily long sales cycles. For most software companies, sales and marketing is the single biggest expense. Now, as firms adapt to online selling, a welcome re-evaluation of the entire sales process is underway. Four trends are already emerging:
Product Discovery and Education Move Online.
The question that confronts every entrepreneur is how to find customers in repeatable and efficient ways. If you are not “discoverable,” chances for success are dim. Historically, the best channel for discovery was the tradeshow, even in leading edge technology businesses. RSA Conference, for example, has been the leading software security event for nearly 30 years. No aspiring cybersecurity business could afford to miss it. The same was true for industry events like CES or flagship company events like Salesforce Dreamforce.
Trade shows and conferences also offered another advantage: a customer could touch a product or see a guided live demo in person. Without that experience, educating prospective customers — and making your product “discoverable” — has become far more urgent. Every entrepreneur has to figure out ways to be readily discovered – starting with being prominent via relevant online search. Similarly, search itself will advance via new approaches such as Neeva (disclosure: Greylock portfolio company) in order to make finding and comparing solutions easier.
Once a product is discovered, customers are looking for online experiences on vendor websites that are highly personalized and curated. While standard, digital brochure-ware is helpful, the bar has been raised for sales and marketing teams. The demand for engaging, digestible information about a product – including short-form videos – will be a new requirement, and provides opportunity. Interesting podcasts and online thought leadership that help frame conversations about software solutions will also become increasingly important to help customers discover the product themselves..
Sales Video Calls Integrate AI and Analytics.
While Zoom, Microsoft Teams and Cisco Webex have enabled new virtual meeting experiences, sales teams have barely begun to exploit their potential. The next best test will be whether these tools (or others) successfully integrate artificial intelligence and analytics into the experience.
Some of this is already underway, Corporate recruiters have been using AI to screen job candidates, using customized algorithms that analyze not just a prospective employee’s interview answers, but their facial expressions to identify successful traits that are likely to predict job performance. The same techniques will have to be applied to sales.
The implications are easy to imagine. During a video conference, a camera can “read” the faces of every meeting participant, analyze facial expressions, assess emotions and changes in speech patterns and quickly analyze whether a sales pitch appeals to decision-makers. Using predictive algorithms, a sales team could access insights in real time, allowing them to adjust their arguments on the fly or recognize more quickly when a sale can’t be closed. Technology could be developed to identify the “champion” in the virtual room along with the skeptic – letting the salesperson focus their argument on the right person on a multi-person conference call. Entrepreneurial companies such as Gong, Chorus and Cresta (disclosure: Greylock portfolio company) have already begun applying analytic intelligence to sales conversations and the entire area is ripe for continued innovation.
Software Trials Gather Intelligence.
Software sales have traditionally included a trial period where the prospect can evaluate and test the product, provide feedback, and request some degree of customization. In a virtual selling environment, that will continue, but it will require more sophistication. Sales teams need to develop a deeper understanding about how a SaaS product is used during a trial. By adding more instrumentation to the trial designs, a sales team can find out how a product is being tested, who is using it, and whether they can advise the prospect on how to get more value and shorten overall time to value. Products like Amplitude, Pendo and Google Analytics allow teams to convert and engage customers, identify problems, communicate directly with customers while they are using the product, and flag potential problems. Sales teams must replace the intelligence they used to derive from in-person customer visits with much more granular and real-time on-line analysis of how their product is being tested.
Bottom Up Sales and Digital Contracting Become More Central.
For much of its history, enterprise software was sold from the “top down.” Companies like Oracle, IBM, and more recently Salesforce, Workday, ServiceNow and Veeva typically introduced a customer to software that required careful, months-long evaluation and strong commitment from CIOs and CEOs. The sales cycles for these products could stretch beyond six months and the cost for the customer could reach into millions of dollars.
That model will not completely disappear but is evolving and adapting in a virtual environment. In fact, the “bottom up” sales approach was already gaining adoption in certain software categories before Covid-19 arrived. Atlassian, the wildly successful company whose products are used by developers, helped pioneer approaches where a customer can quickly buy products bottom up for relatively small investments. This model will continue to spread as enterprises realize they can increasingly trial software directly from a website and initiate and grow their spend without ever having a formal in-person meeting with a sales team.
A similar shakeup is underway in sales contracts and procurement. Instead of establishing a cumbersome legal contracts and invoicing process with traditional workflows involving long meetings and conference calls, more sales teams will work with innovators like Ironclad and Docusign who are pioneering a purely digital experience for contracts and approvals.
None of these quickly moving sales innovations will fully eliminate the role that personal relationships can play in sales. We just don’t know yet what the digital equivalent will be of a handshake, a look in the eye, or casual conversation that signals “this is someone I trust and want to do business with.” What we do know is that the current crisis offers the software industry the opportunity born out of necessity to embrace new digital ways to connect with customers. No one should be surprised that the old, sluggish model where sales cycles were measured in many months may become much faster. Ironically, Covid may help improve sales and marketing efficiency by propelling companies into the future of software selling.