Let’s start with… do enterprise clients care for “trying” products before they buy it?
Yes. They do. They just don’t know it’s ok to act like that. We have lots of bad IBM-like examples of conducting business. Most people will make the case for enterprise caring for a trusted partner much more than a better product. That’s bull. The process can definitely be optimized.
It’s about knowing more information. It’s about understanding what you are purchasing. Most importantly, it’s about not wasting time. Enterprise or not, you don’t want to be responsible for purchasing a poor product.
Buyers are getting smarter and demand more. We all know that. So why aren’t enterprise clients changing the way they demand information? It’s simple.
They usually aren’t the end users are the product that they purchase. That’s a serious issue. It’s massive.
Most of us in the web world are use to completely different purchasing dynamics. We are use to a predictable experience. It’s the idea of trying before buying. It makes complete sense and we are demanding it now more than ever.
Going back to enterprise… The issue is the role of sales. They are confused about where their client interaction begins. You can create a more scalable sales organization by creating a better “try” funnel and still inserting sales but only when it makes sense.
It will always make much more sense to scale advertising, getting customers informed / interested, and then involving sales.
The key thing to figure out is what is informed and interested? How do you do that effectively? It is different for every product but I believe in recreating the sales experience online. That requires lots of work upfront. That means understanding who is visiting your site. Knowing what they are looking for. Anticipating the questions that they are going to have. And more importantly, knowing when to involve sales in this flow.
There is something very powerful about predictable experiences which plays into many aspects of marketing and scale in branding… especially when you involve technology. If you know how to give a guided tour or trial without being present, you can scale advertising rather than sales.
The goal is to decease your customer acquisition costs by figuring out which parts of the sales process are fairly repetitive and which require human interaction (sales).
The other issue besides being disconnected from the end-user benefits is the lack price transparency. It’s the lack of creativity in the space to understand how to present some level of pricing informational to make the potential customer feel as though they are not going to get ripped off the second they start speaking with a sales rep.
Vendors need to follow some sort of transactional pricing model in order to be competitive. At least that is what has worked for most of them.
Why? Well, that’s how those organization stay profitable. Their customer acquision costs are very high because they are chasing individual deals. They have to chase them because the pool is not that large.
In order to make up for the differences in sales cycles and difficulty to close a harder account, they need to make up the difference by charging a different price. You can’t do that when your pricing is transparent. That is a problem!
The way this old model works is by squeezing the most revenue from the bigger clients (with the bigger/longer chase) but also grabbing middle of their respective curve as well. Those accounts are not as profitable but they are enough to have value for the company.
The goal here needs to be how to present a semi-transparent pricing model. You need to communicate some basics. Like how do you charge? Per site? per user? per user/month? You give discounts to volume clients? Obviously? Ok.. then say that.
Most of these organizations are built with a large sales force. The way they can justify such high salaries is by having them optimize revenue per transaction.
So what happens if you bring in a fully transparent pricing model but still keep the sales force? You get a horrible customer acquisition model. A very expensive one. Even if you optimize the salary of sales and the price of the product and production to create some sort of margin, the model won’t scale because you’ll get stuck in client retention.
Sales people have to sell. With that comes promises attached to a person which requires proper account management to have a respectable client retention rate.
When you isolate the promise pre-sale and account manager which handles the account post-sale, you get horrendous retention rates. You’ll make money if the market is massive and you can churn through it but I personally wouldn’t ever want to be involved in that type of business.
That’s called theft.
You are robbing a market based on their lack of understanding on your offering. We are seeing this in the local advertising / promo space right now.
You don’t see much of this in the enterprise space because they don’t switch much. Even if they do make a horrible choice, they stick with it for at least a year.
So what is a b2b tech company suppose to do?
Let’s make a big assumption first… that enterprise clients start to slowly act like consumers in some respects and request the same type of practices that seem familiar to consumers
In that scenario, what will be a good model for a b2b tech company to adopt?
It’s obviously different for everyone but I think that the bulk of predictable experiences that we’ll start to see in entp products on the web is the try now (in some form) and then let the sales person in to optimize revenue type of relationships.
It’s leveraging technology the right way (show it to me). It is respectful to the consumer and it’s a model that could be optimized to return a healthy profit given all the other parameters are correct. The only thing is if you have a crappy product and really good sales people, you are not going to do too well either.
It takes a long time to get a consumer’s trust. On the web, we get it by mainly letting the products shine.
Web people haven’t been that great at marketing their products. They build utilities and let the use cases market themselves. They wrap the product features in the idea. It’s a different dynamic. It’s much more real.
We build a product and then let them give it a try. It’s because trying is effortless. Why not? It is the engineer’s way of marketing.
We have to remember that when more effort exists to try, the more we require trust from the customer in the sales process. The more we require trust, the better job the marketing and sales department has to do in selling. Most b2b products on the web still work like this.
In many of today’s b2b markets, you see a horrible trend of the most horrendous companies investing very little product and a ton on sales. The saddest part is that they will outperform the company with a better product and weaker sales. It’s true… It will be a short term play and you’ll still lose to the guys with a better product and better sales but at least you’ll win against the ones who spend most of their resources on product. It’s a horrible thing. The end users end up losing with this dynamic. I hope this changes soon.
The one trend that we’ve seen over and over again is tech companies that have enabled a bottom-up approach to their target markets. Those companies tend to have great products with a super frictionless way of using their product. Think Salesforce… Yammer.
The goal of marketing and sales in a b2b (not including small business) tech company should be to work with the product team to get to a sustainable product cost model that can allow them to get the product in the hands of the consumer without the need for them to ask for it.
Most of what sales should do is just optimize the revenue once the relationship (could be very loose) has been created and for marketing to focus on tracking and communicating results.