
If SaaS Products Sell Themselves, Why Do We Need Sales? - boynamedsue
http://a16z.com/2014/05/30/selling-saas-products-dont-sell-themselves/
======
dmourati
One thing I've learned is that the sales process is a continuum. Things that
work well in multi-million dollar deals are totally inappropriate in sub 5k
deals. The trick is getting the right amount of "touch" for the right types of
deals. One way to do this is to segment the salesforce. From there, you can
attack different sized opportunities with different levels of engagement and
investigation.

Freemium represents this process taken to one logical extreme where you have
zero-touch and rely on marketing from the web site and pure virality. Next up
might be limited email marketing/sales. Then phone, then phone and outside
sales.

At the very high end, you are talking about regional field sales as well as
face-to-face visits with your companies leadership up to an including the CEO.

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dangrossman
There are billions of individuals and millions of small businesses that can be
reached without a sales team. If you don't want to do sales, then don't target
enterprise customers. I make my living with SaaS products, and have never made
a cold call or sent an unsolicited mail about it.

~~~
notahacker
Two things have to be taken into account here. Firstly the original post is
from the point of a VC, and from the point of view of a VC, not hiring a sales
team to actively pursue high value enterprise sales and partnerships in a
market amenable to them represents the great evil of limiting traction and
leaving money on the table. From the point of view of a micropreneur or small
business not trying to win the entire market or go bust trying, it might be
taking a massive business risk on something with far less predictable return
than ramping up existing marketing spend.

The second is that there are millions of small businesses _which aren 't
searching Google for software solutions to certain problems_ and yet are
willing to part with cash if somebody shoves the solution in their face.

~~~
jimiwen
Agreed, small business have they own methods to hack, in a form of
authenticity, sincerity or creativity?

------
burgreblast
This cannot be over emphasized:

>Your biggest competition isn’t just other startups, perpetually licensed on-
premise packages, homegrown solutions, or incumbent vendors. It’s
inertia...the target company’s urge to do nothing.

So how do you make enterprises care enough to act?

I've found that as "obvious" as saving money should be as a change agent, in
many organizations that doesn't move the needle.

Products that increase revenue usually gets far more attention than money
saving products. Competitive leapfrogging / strategic value even more, but
that goes to Mark's about understanding and identifying their initiatives.

Would also add: identify their incentives. Make heroes the organization
rewards.

~~~
exelius
Totally agree. If you look at your company, where are your "rockstars"? I
don't mean rockstar developers; I mean the most ambitious, most well-connected
(and highest compensated) people in your company. It's a trick question:
they're almost always in sales, marketing or product because these are the
parts of the organization that drive profit.

This is true of almost every company. It's not a secret why Salesforce was the
first real SaaS success story: companies are a lot more inclined to spend
money to make money than to spend money to save money. Growth is the name of
the game; cost cutting is usually only a focus once growth is no longer an
option.

That's why I groan whenever I see something like yet another IT operations
management platform. Would the company be better off buying a software package
to manage their IT, or firing all their IT staff and hiring a managed services
provider to fill the gap? Operational cost cutting has a lot of different
modalities that are often mutually exclusive, while you can more easily chase
down multiple paths for revenue generation.

~~~
rubensmead
Does ServiceNow count as "yet another IT operations management platform"? Do
they make you groan because their IT applications business is doing so well?
Or because you think they're overhyped and will crash and sputter?

~~~
exelius
Yes, they do. And I groan because it's an idea I've probably heard a thousand
times. Companies will have success, but there will likely be another company
in 5 years that overtakes them, and another 5 years after that. It's basically
a zero sum market where the entrenched vendor's scale is too big to adapt to
the new use cases that pop up every 5 years or so, so a new vendor pops up,
becomes the entrenched leader, and the cycle repeats.

ServiceNow will likely just get acquired by someone (HP? SAP? Oracle?) and
integrated as a module in a massive ERP system. I definitely don't agree with
their valuation; they're trading at like a 300 forward PE which is just
ridiculous for an enterprise technology vendor in a space as crowded as
theirs. They're likely only trading at that level because the analysts are
anticipating an acquisition and subsequent bidding war. That doesn't validate
the value of their services; just that big enterprise tech vendors are willing
to pay a premium to displace their competitors.

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applecore
This is a decent article on enterprise/SaaS sales, but no knowledgeable person
has ever claimed that a SaaS product can reach its customers without sales.

~~~
jseip
and yet I find that is a commonly held misconception, and that there are many
founders who think of sales as a four letter word.

~~~
hawkice
Just more evidence that says they aren't knowledgeable: they cannot correctly
identify the number of letters in "sales".

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cperciva
Why do I get the feeling that there's a joke here with a punchline of
"Tarsnap"?

~~~
lanstein
Do you still sell in picodollars? :)

~~~
cperciva
Yes! And I take in many quadrillions of them!

------
il
A corollary is that your SaaS product needs to be priced in a way that enables
sales (typically >$5K ACV).

~~~
jfabre
Could you be more explicit please? I have no idea what's ACV.

~~~
chiph
Annual Contract Value.

The lower your price, the more your product and sales process needs to be
self-service, because you can't afford to send a salesperson out for a
$1000/yr contract (airfare + hotel + rental car + their time, annnd you're
over any possible return, even before including R&D and support costs)

------
dtournemille
Who said SaaS products sell themselves? Who said anything sells itself?

~~~
patio11
There exists a continuum of SaaS sales strategies. One end of the spectrum is
high-touch sales, which is Oracle's "We send you a sales guy, a supporting
engineer, a bunch of Powerpoints, and enough steak and wine to feed a European
wedding reception, and afterwards you pay us several million dollars" model.
The other end of the spectrum is low-touch sales, where the
website/email/product/onboarding tour does the heavy lifting and contact
between the customer and the company is, to a greater or lesser degree, seen
as a bug to be fixed in a later version.

An entire constellation of decisions about one's
company/customers/product/pricing/business model/etc gets determined instantly
when you pick your point on this continuum. (Or, equivalently, you get placed
on the continuum basically instantly when you make most consequential
decisions about a SaaS company/product/etc.)

The reason _this_ article is on _this_ blog is that there is a playbook for
high-touch SaaS businesses which is amenable to venture funding and that is
not exactly true for low-touch businesses. (There exist a handful of
exceptions, but people consider B2B high-touch sales to be a _solved
problem_.) Additionally, and more directly responsive to your question, there
exists at least one popular and widely listened to corporate voice who quite
literally wrote a bestselling book which might as well be subtitled Low-Touch
Sales Mean You Don't Have To Take Dirty VC Money.

(Cards on table: My business is mostly on the low-touch end of the spectrum
but I work with people all over it. There exists a shedload of money to be
made in software and a variety of ways to make it effectively at the
traditional points on the spectrum and at emerging points besides.)

~~~
shostack
Interesting how you described the big enterprisey sales experience there.

I have been leading a large-impact project internally where we need a solution
that has potential vendors at different places in this spectrum.

Inevitably, the largest and most "enterprisey" companies had what I would
consider by far and away the worst sales experiences. Very clearly sales
people who are used to dealing with business customers who probably won't have
anything to do with the actual product in the day-to-day.

I was given vague salesy answers that clearly intended to skirt around the
issues I presented, and they had no issue trying to exert pressure come
monthly/quarterly sales quotas. Exploding offers for a large purchase of this
nature are simply not appropriate (and certainly not appreciated).

Perhaps my biggest gripe has been with the lack of transparent pricing for any
sort of B2B SaaS where you are on the highest tiers, and thus need "custom
pricing." I understand some things are variable and need to be custom scoped,
but in this case that was only true for some add-on services vs. the core
product with volume-based pricing. As a prospective customer, I absolutely
loathe these sorts of pricing negotiations. The time wasted on the back-and-
forth is also a giant PITA and doesn't win the companies any points. It is
always very obvious that their initial price is a high-ball offer, and they
expect you to negotiate, which means that they in part are
structured/incentivized to make some margin/sales commission by not giving the
customer the fairest price they could. This in and of itself starts the
relationship off on the wrong foot.

In general, I wish there was a way to choose the type of sales experience I
want before beginning the process. If I'm a key decision maker and care more
about the actual functionality, UI, integration, etc., I want someone
knowledgeable of the technical aspects of the product. Someone who will be
upfront on the product's shortcomings (to avoid surprises that result in a
pissed-off customer down the road and make the buyer look like an idiot). I
also want someone who can communicate with zero sales fluff, and give me fair
and transparent pricing. Is that really too much to ask? Apparently so when it
comes to enterprise B2B sales. Over the years I've often had the distinct
impression that many of the salespeople I've dealt with exist simply to funnel
communication between a sales engineer. I get their value if they are out
hunting and bringing in their own prospects, but these have all been for
inbound leads where I've contacted them.

Also, do all those fluffy buzzword-filled sell sheets and cheesy marketing
videos devoid of any meaningful, tangible content actually add value for
anyone? I had one sales guy send over an (often unrelated) white paper or
marketing video link with every. single. email. I ultimately had to tell him
to stop because it wasn't adding any value and was doing more harm than good.

Guess this turned into more of a rant...but if anyone has good solutions for
dealing with the above I'm all ears. I've negotiated these kinds of contracts
for years, know how the game is played, and play it reasonably well (IMHO).
Doesn't make it any less frustrating.

~~~
beachstartup
the vast majority of potential customers (leads) are a waste of time, for a
million different reasons. they want you to invest in the process because
that's the only way to signal you are serious.

try doing all of the above, for 12-18 months, and then learning that the
customer never intended to go with your solution, but was rather just leading
you on to get a price foil for a competitor that he already decided he was
going with. you'll be a different kind of angry. a real kind of angry -
because there are real consequences and costs, in dollars, and time, to that
kind of fuckup. this is very different from a real evaluation, and the only
way to avoid that kind of scenario is to get investment from the buyer. a
sales organization that runs into that kind of situation with any kind of
regularity is dead in the water because they're spending all their time on
people who don't want to give them any money.

having said that, what you want in a sales process does exist, it's just that
it's usually the smaller, younger, hungrier, less "proven" companies that are
willing to withstand the abuse to provide it. it'll all sound great, until
it's time to sign the contract, then all of a sudden any of a million reasons
to not move forward are produced from thin air, and instead, a larger more
established competitor that practices universally disliked sales techniques
gets the $ and the validation.

in short, be the change in the world you want to see. next time, buy from a
smaller company that puts your career at risk. it's hard to do when you have
large budgets because the purchasing process is basically just a giant a
cover-your-ass operation.

~~~
shostack
I appreciate your point. But all of those consequences you listed in your
example stemmed from the customer trying to get a price out of you for pricing
leverage with a competitor.

If the company being used in this regard simply had transparent pricing, they
wouldn't have to waste those sales resources in the first place.

I also think in this day and age of anonymous online review sites, Quora,
Reddit, etc. that a lot of this pricing information gets out there anyway,
NDA's be damned. So it almost seems like a futile battle.

I agree though with your statement on types of companies, and ultimately
decided not to continue considering the large established enterprise players
and focus more on the smaller, younger companies. There was still pricing
negotiation and other sales process challenges, but overall the process was
much less painful (still not anywhere approaching enjoyable though).

~~~
beachstartup
getting to a price is about 1% of the sales process, but it's the only thing
the customer _thinks_ he wants, so it's used as a gatekeeper.

also, the companies who don't publish pricing do not _want_ people who are
interested in just the price. they're usually selling something that has a lot
of intangibles like a custom crafted solutions or quality of service. by
reducing their entire sales pitch down to a single number, they're devaluing
themselves before they even get a chance to pitch their solution. by not even
being willing to communicate with a sales person the details of what you want,
you immediately disqualify yourself.

in my opinion it should take about 30 minutes to an hour of your time to be
able to get a price out of an enterprise product or service (this includes
requirements gathering, specifications, etc on the part of the sales person).
anything less, and you're not dealing with a serious buyer. usually this is
just one phone call and a follow-up email with specs. in our business that's
enough to generate a proposal with a $ amount on it.

~~~
shostack
I think the % of the process that is spent on pricing is highly dependent on
the situation and players. In this particular case, I've had some where it was
very quick and clear cut, and some where it was very clear they were trying to
jerk me around on it to see how much they could get out of me and it took
waaay too much time to get to the bottom of that.

I likewise will also agree that there are valid reasons for not publishing the
price as a way of better qualifying leads before first sales contact.

That said, that still doesn't justify why pricing can't be transparent and
clear cut once the lead is qualified and they are in the sales process. Simply
knowing that the initial pricing presented is not final and needs to be
negotiated is a giant PITA and still a waste of time. If you claim pricing is
such a small piece of it, why then do companies bother with the negotiation
piece if the actual amounts might be trivial compared to whether or not they
close the deal? Does the psychological benefit of conceding to a lower price
(from an already padded initial price) really make that big a difference in
close rates?

I agree pricing discussions should not take longer than 30 minutes, but
unfortunately, many sales people I've dealt with prefer to play car salesman
style games.

Do you have any suggestions on how to approach such conversations to get the
best/fair price with a minimum of back-and-forth headaches that can cut
through some of what I've described? I've tried a few different approaches
with varying success and am always open to others to test out.

~~~
beachstartup
yeah. tell the sales guy what your budget is, and have him suggest some
solutions that will maximize that value for you. you don't have to tell the
exact truth here. a good sales person will use that as a starting point and
craft a series of further questions and/or discussions for you to hone your
needs into a specification that can be delivered.

too many people who usually don't buy things try to play amateur negotiator
and refuse to name a number. it's really transparent and frustrating.
generally these deals don't go through because the person doing the buying
doesn't know what the hell he's doing and he assumes a combative relationship
instead of one that tries to solve a problem.

especially when you spend hours crafting a proposal and getting input from
sales engineering and executive management and accounting and client delivery,
and the first thing that comes out of the customer is sticker shock because
the customer refused to state his budget and requirements because he read it
in a self help book somewhere.

again, most of these sales 'techniques' really are just designed to not waste
anyone's valuable time. buyers will waste their own time and not even realize
it because it feels like you're "getting one over" on them when in reality
you're just being a moron.

------
reubenswartz
"The true purpose of sales is to create new value for customers."

Yes. If you're just parroting talking points, you can be replaced by a
website. Plus, it's more fun to really help people.

"your biggest competition isn’t just other startups, perpetually licensed on-
premise packages, homegrown solutions, or incumbent vendors. It’s inertia.
Enterprise/SaaS salespeople find themselves in a constant battle against the
target company’s urge to do nothing."

Yes, again. This isn't just a sales problem-- this is a human nature problem.
It's just that selling to big companies involves lots of humans, almost all of
whom are deeply resistant to change.

~~~
jusben1369
"Do nothing" understates the challenge here. Every change introduces risk and
costs. The process today might be less than optimal but changing it will
require hard and soft investment costs and take time and comes at an
opportunity cost of doing something else. 1 in 4 projects runs terribly over
budget/time etc. So the urge to do nothing is actually "The barrier to
implementing change is much higher than simply "hey once implemented this will
save you x per year or generate Y per year" How tangible and achievable and
risky are those goals.

A good rule of thumb is that as a sales person you want to feel like there is
a 4x minimum change vs the cost of your solution. So if your solution is
$250,000 a year as a SaaS offering you want the company to believe it will
save or generate $1 million a year. Anything under 3x and they'll probably
punt because of the risks and opportunity cost of all things change.

~~~
reubenswartz
These are good points. The game theory in enterprise sales is pretty perverse.
Buyers want to guard against risk (including lying sales people), so they
create more hoops for the vendors to jump through, which increases the cost of
sales and makes the project more expensive, which drives the creation of more
hoops... I've seen RFP processes from both sides where buyers asked hundreds
of questions, vendors responded "optimistically", because that was the only
way to get into the next round, and most of the energy on both sides was spent
dealing with the buying process instead of the actual problem.

------
AndrewKemendo
This reads really interestingly to me. Things like:

 _Then I’d show the sales reps a long list of initiatives they needed to look
for in companies_

 _Once the sales and marketing teams have uncovered these initiatives (as well
as the critical capabilities that need to be in place for the initiative to be
successful), they can begin to define the unique value proposition._

This data is almost never public, so it couldn't be found by just doing your
standard research on a company from the outside. The only way you get this
kind of stuff is with an access agent.

What this article basically says, without saying it, is that your sales team
needs to be Human Intelligence officers out there recruiting individuals from
large organizations to be champions for your product.

Nothing new here[1][2]certainly as this is a fantastically useful way to do
business, but you had better know how to do it right or you look like an
idiot. It also means you really need to hire top notch sales people.

[1][http://www.amazon.com/Work-Like-Spy-Business-
Officer/dp/1591...](http://www.amazon.com/Work-Like-Spy-Business-
Officer/dp/1591843537)
[2}[http://webcache.googleusercontent.com/search?q=cache:W6r6dsv...](http://webcache.googleusercontent.com/search?q=cache:W6r6dsvp8TQJ:https://www.linkedin.com/today/post/article/20140626110221-20747703-sell-
like-a-spy-using-an-access-agent+&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a)

------
dkrich
In my experience the reality of enterprise purchasing is far more depressing.

If you are a new company with a new product, hoping to sell into the large
enterprise market, you're competing with large, well-funded sales teams who's
most compelling pitch is that "we're the safe choice." It may not be (and
usually isn't) the best or most cost-effective choice. Yet at the end of the
day, divisions or agencies making 7+ figure purchases want to feel confident
in their purchase. "SAP is a good purchase because Ford/AT&T/Apple (I'm making
these up) purchased them and they must know what they're doing."

Enterprise sales is a very tough business. If I were launching a product, I'd
probably target small teams first with a lower price-point to bypass the
politics and get almost instant purchase approval. There the stakes are lower.
Sure, you won't close a $500,000 sale in one fell swoop, but once you
establish yourself across a number of teams, you can always change your
product lineup and create an enterprise package that has a much higher cost.
Obviously a large number of SaaS companies already do this and I have to
believe it's the most effective route.

------
dspillett
Because the products only sell themselves once they are in front of the right
decision makers at the right time. Sometimes arranging that takes much
foresight, skill & determination (and not a small measure of bull too, if I
may be more cynical for a moment!).

Also, SaaS offerings are not new and therefore rare & exciting any more so you
are unlikely to be alone in the market - you need your sales+marketing people
to compete with everyone else's.

~~~
shostack
What's interesting is when sales people think they can get a leg up on closing
the deal by going over your head because they don't think you are a key
decision maker or influential enough in the process to worry about.

A couple years ago I had a sales guy at a large ad tech company that shall go
unnamed try to go over my head to executive team members. Of course the first
thing that happened after that initial contact was that executive coming over
and saying "so and so reached out to me...what do you think about them?"

At that point I explained that not only did I not think they offered a great
solution, but that it spoke volumes of how they do business if they go behind
people's backs like that.

The icing on the cake was when that executive sent an email back to the sales
rep, CCed me, and said that he would defer to my expert knowledge of our
needs.

Note to any sales reps reading this...just because someone doesn't have an
executive-level title, don't for one second think that you might be able to
close the deal without their buy-off.

------
wirefloss
"...Because selling an enterprise-wide deal is a lot like getting a bill
passed in Congress."

On how the above is done see Netflix original:
[http://www.netflix.com/WiMovie/70178217](http://www.netflix.com/WiMovie/70178217)

------
taksintik
Whoever thinks that is mistaken. Without an active sales strategy your
business is a hobby.

------
bulte-rs
Now, who will do Sales as a Service?

------
evv
Good products don't sell themselves? Somebody should tell Atlassian!

~~~
aspir
Perhaps Atlassian's VP of sales and marketing (now president)?
[https://www.linkedin.com/in/jaysimons](https://www.linkedin.com/in/jaysimons)

~~~
jsimons
Flattered by the shoutout. Atlassian's model is most definitely focused on
empowering customer self-service (and probably a strong counterpoint to the
a16z piece). We do believe software can sell itself, and I think there are
dozens of examples of other companies that do as well, from Basecamp to
Expensify. But we also enter and expand via teams. If we were dependent on
selling initially to the whole enterprise, our model probably wouldn't work.

Talk I gave on our model here:
[https://www.youtube.com/watch?v=JU1AWD_fue8](https://www.youtube.com/watch?v=JU1AWD_fue8)

------
notastartup
man I just read the article...I'm perplexed as to how I can take this to sell
my SaaS product to enterprise customers. It looks very complex and
intimidating. Even landing an enterprise customer alone is tough enough.

------
rokhayakebe
When you wear your sales hat, you almost don't care if what you are selling is
useful so long as the prospect satisfies your single condition: 1) has enough
money.

Sometimes I wished we eliminated salespeople entirely. I would prefer to have
"honest" marketing, and strong customer service.

What I mean by honest marketing is to continually share content with the
prospective client, and try to win them over without playing gimmicky mind
games and tricks. To do this, you must understand that your client may need to
time to understand your product, move away from current solution, etc..

A strong customer service agent would help answer all of customers' concerns
once the marketing has gotten them interested.

~~~
HeyLaughingBoy
_A strong customer service agent would help answer all of customers ' concerns
once the marketing has gotten them interested_

Often that "strong customer service agent" is a salesperson.

