Thursday, November 8, 2012

SaaS companies can't afford to sell

Most companies offering a software-as-a-service (SaaS) solution can't afford to sell it. 

I'm talking here about "selling" in the traditional sense:  finding prospects and convincing them to buy a product or service. 

In some cases that's done with experienced sales executives working their Rolodex (or its electronic equivalent).  Or it might be sold by a team of inside sales reps making cold calls from a purchased list. 

The best of these sales efforts may follow "solution selling," "SPIN," "customer-centered selling" or some other sophisticated technique.  But it still involves the vendor's salesperson reaching out to a potential buyer.

Selling is expensive

For most SaaS companies, however, these techniques are too costly. 

For one, those experienced salespeople are expensive.  Paying these folks to find and woo potential buyers, often with a sales support engineer in tow, means travel expenses, a decent draw, and a hefty commission. That's beyond the resources of many SaaS companies, who depend on future subscription revenues to pay for current sales expenses. (See "SaaS customer acquisition:  Feed it or starve it.")

(A notable exception to this would include SaaS companies like Workday, which offers talent and financial management solutions for large enterprises.  Selling these complex, enterprise-wide systems does indeed require experienced and expensive salespeople.  But unlike most SaaS companies, the large subscription fees can support that kind of sales model.)  (See "Customer acquisition spending: Lessons from Workday.")

Besides the cost, this approach - trying to find potential buyers, many who aren't really looking for a solution, and methodically coaxing through to purchase - just doesn't work as well as it once did.  With information so easily available, most prospective customers can do much of their research  before they even talk with a sales executive.  The sales exec comes in only near the end of the process, not the beginning.

Rely on "buying," not "selling"

So if SaaS companies can't afford traditional "selling" to grow their business,  they'll need a different approach.  They need to rely on "buying."  

That is, they need to attract prospects who are actively looking to buy.   The goal isn't to sell them your solution.  The goal is to attract them to buy your solution.

Perhaps an analogy can illustrate the difference.

"Selling" is like sending a brave hunter out onto the plains to stalk a large beast.  The hunter wanders for days or weeks over many miles, tracking the prey, and finally gets close enough to bring it down with a well-aimed spear.

"Attracting buyers" keeps the hunter in the village.  Instead of trekking for miles and days, he digs a water hole, provides a salt supply, and lets the wind carry the scent of this lovely feeding spot across the plains.  When the beasts gather around the watering hole, our brave hunter tosses a net over them.

Let prospects find you and move themselves toward a purchase

Attracting buyers means making your company and your solution visible to your prospective customers.  Build a watering hole where they can find you when they're searching. 

Make it easy for them to find you, and you won't need to rack up mileage or pound the phones trying to find them.

Once the prospects do find you, don't sell them; educate them.  Help them understand how to make an informed decision.  Be a resource.  Make them smarter. 

Earn credibility and trust.  Let them see what value your solution can deliver for them.  Show them how others have used it successfully.

And then provide a way for the prospect to "buy."  Give them an easy way to move themselves toward a purchase at their own pace

With certain more complex SaaS solutions, a salesperson may be needed to negotiate pricing, work through terms, or configure the precise package of services.  But in many cases, the prospective customer can take those steps without much help.

There's no need to push, no need to cajole, no need to "sell."

Creative Commons License

This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License. Images obtained via