Sales & Marketing

Is the Big Deal Dead in Software Sales?

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The world of software has changed. It used to be that everybody lived off of the big deal —selling perpetual licenses. And when it came down to the end of the quarter, companies were made and broken based on their ability to jam in during the last two weeks of the quarter all the deals they needed to get in. Now we’re in the SaaS world, the monthly subscription model. But success still requires understanding how to sell a big commitment and how to build and manage an institutionalized sales force. That’s tricky. It’s not a core competency of all companies, and a lot of companies mess it up.

Why selling the big deal/commitment is a challenge

By definition, if you’re getting a lot of money, it means you’re creating a lot of value. The onus is on the sales force to prove to the buyer that it’s worth the money, that the customer will actually get the value. That’s a more complex process than what sales people usually do —demo the product, and discuss features and benefits.

The process of selling a big deal is a whole different matter. You have to ask a lot of questions in the effort to try to understand the business that you’re selling to and then try to create metrics so that you can prove in the mind of the buyer that there’s a realistic, monetizeable value proposition. That is hard to do and takes a different skill set.

The biggest competitor that a software company’s sales rep has is the “no decision” customer. Of course, if you’re in a good market, there’s always a name-brand vendor competing. But in three or four times out of five, you have to win over the customer that doesn’t want to make a decision.

In reality, in a “no-decision” or “do nothing” situation, you’re really competing against other internal projects at the customer organization, all vying for the same limited funds to do their projects. Winning the sale in this situation requires getting better at institutionalized sales skills.

With these skills, the sales rep can easily articulate the value proposition and present the product as a multi-million dollar solution the buyer can’t do without. Basically the rep helps the customer’s internal supporter for your product understand the impact of your solution on their business. You help them understand their own business, not your product features.

Imagine being the customer hearing this sales pitch: “Here’s the benefit of doing business with Software Company ABC. I can show you 20 examples of where we have contributed $800,000 to each of their customer’s bottom lines. And here’s 30 cases of how we saved our customers more than $100,000 a year. And here’s how we helped 18 customers eliminate their compliance risks.”

Your internal supporter can then articulate to the CEO facts about your company’s solution, how they’ll achieve return on the investment, customer references, and projected monetizeable outcomes. Compare that to another internal person vying for the funds with “We’ve got a problem and I like the guys at Company XYZ for fixing it.”  Which one would you choose if you were the CEO?

By helping the customer’s internal supporter of your product know how to articulate the value of the product’s impact on the buyer’s business, you’ll triumph over the no-decision scenario.

If you do this correctly and the company (or a functional silo decision maker) believes they will get significant value from your solution, and the price is insignificant compared to the value created — and assuming the company has the money and is not drowning in turmoil — landing the sale is a lot easier.

This institutionalized sales approach delivers competitive advantage and results in selling big deals. But it’s very hard to do and very few do it well.

How to create an institutionalized sales team

Big-deal selling requires team selling. You need pre-sales, or product engineers who also support the sales process and implement the solution.

1. Teach your salespeople to be analytical and consultative. It starts with teaching your sales force how to “train” the internal supporter. Selling the big deal or big commitment is a consultative sales process. Salespersons need to look at a customer’s industry and also ask questions such as, “What is your business model?”, “How do you generate revenue?”, and “How you take orders?”.

A big-deal salesperson needs to be able to articulate how the product will create revenue velocity. What is there about the product that can do that? It is the fact that customer churn will go down? Is it the fact that it will enable them to get more orders and more clients? What capability in the product enables that?

For example, if you have a mobile banking solution where customers can check their balances on the phone or iPad or iPhone, and there are other banks that have it, your salesperson needs to state that customers will leave the bank if they don’t have this solution, and that will cost money. How much? How many customers will the bank lose if customers can’t order by their mobile device? There’s a cost to not having it if the bank’s competitors have it.

The salesperson needs to become analytical and develop case studies, or your company needs to do analytics on your customer base so you can prove, for instance, that 30 companies in the potential buyer’s industry have had a particular range of outcomes. This provides a great way to approach customers. Call them up and say, “I selected you because you’re outside the industry range. We have 30 customers in your industry using our solution. If you just perform to their level, using our solution, it would be $37 million of value to you. Do you want to talk about that?”

With those kinds of analytics, you’ll probably start the conversation at a higher level than usual. Even if you don’t get to talk to the CEO or VP, your internal supporter at the buyer organization will report to the CEO that “I just got a call from Company ABC. These people are doing business with a lot of our competitors. And these guys are quoting big numbers about how much they can save if we do as well as them. I want to understand what they’re doing.” And that starts the sales process in a much more beneficial dynamic than dealing with a manager who can spend $20,000 at the most and is scared to make a decision.

2. Make sure your salespeople are comfortable at all organizational levels. You need somebody who is very comfortable with communicating in the executive suite. But the salesperson also must be able to get data from all levels of management, bonding with them and gathering information in a non-threatening way. The mid-level manager may be worried about his own job or not be happy about the labor savings that would come with your solution and may not be supportive or may even send your salesperson astray.

Your big-deal sales rep needs to be able to compartmentalize behaviors and value propositions and messaging at all these different levels depending upon what’s in everybody’s best interest to get the information needed to be able to articulate the business value that the product will bring. That skill set is hard to come by. It takes a really sophisticated, smart, analytical communicator. And that’s expensive.

3. Be religious about managing sales performance.  Like many aspects of business, there is an 80/20 rule in this. Often a big part of the sales performers come from the top 20 percent. The bottom tier will fail completely or won’t meet expectations and will tell you it’s too complicated to sell the product.

The key to running these kinds of sales forces is to make sure that you spend time with the people who are in the middle tier and focus on getting them to be more productive. Your top performers will be the top performers because they’re good at what they do, and you can only help them a little bit. But if you stay very close to the mid-tier performers and teach them, you can scale them up to the next level.

Sales management is a critical success factor in big-deal selling. As a sales manager or executive, you need to ask your people to deliver information to you that helps articulate your product’s value proposition.

Let’s say you’re trying to sell your product to DuPont and you ask sales rep Daniel why he will win the sale. You can’t allow a superficial answer from him such as “They really like us and they really believe in the product.” Make sure Daniel can answer questions about the value proposition such as:

  • How much money will DuPont generate in incremental revenue?
  • How much money will they save on costs?
  • What impact will the product have on their customer base?
  • Does the product have a strategic impact on DuPont’s business?
  • Have you talked to every executive and what is their motivation? (or talked to Finance, IT, the supply chain folks or whoever is applicable)

If Daniel can’t answer those questions, then you as the sales manager are not training Daniel to be effective. When Daniel can answer the questions with all the facts, then the probability of the deal closing goes up exponentially. If Daniel can articulate why it’s in DuPont’s best interest to buy the product, then Daniel’s internal supporter who’s going up against the wall in the no-decision fight will be able to articulate it.

Startups. Startups face a challenge when they move from initial selling based on the founder’s passion to hiring and managing a sales force. It’s hard to hire the right people the first time out. Also, the natural expectation is higher than realistic.  Entrepreneurs are optimistic, aggressive, risk-takers, and they have high standards — all of which are good things. But they usually overestimate how fast salespeople can get up to speed and how productive they’re going to be. They don’t realize the day-to-day management it takes to train and effectively institutionalize a sales force for value metric behavior, competitive position behavior and delivering metrics to win. They vastly underestimate this effort.

4. Your company must commit to a new sales culture. Recruiting must be a 12-month a year effort, not just at budget and planning time. You have to seek out and “romance” top performers at other companies all year long so that you’ll be the first one they call when they don’t get promoted when they think they should be, or they get angry at the boss, or their company runs afoul for some reason.

But the key to building an effective big-deal sales force doesn’t stop with finding the right salespeople and having sales managers that are committed to training the sales force. A major piece is the company commitment. As I mentioned earlier, big-deal selling is a team effort.

If you’re all about delivering value to customers, you need to make sure your delivery team understands what value the customer expects.

Our industry has been trained to deliver on billability, customer satisfaction and references. Those are basically the criteria by which the delivery arm of a complex software company is judged. But in big-deal sales, it goes beyond those criteria. You must make sure that you can prove to the customer that they actually got what they paid for. It really, really matters whether you can do that.

Proving to customers that you deliver business value to them should be a powerful component in your corporate culture. It also will feed your marketing organization and come into play in the lead-nurturing aspects and in staying engaged with qualified potential customers over a long sales decision cycle. As you nurture those relationships, you’ll have opportunities for downloadable white papers or other actions where you can continually articulate a better sense of the value of your solution and carry those companies to the next level.

Peter Sobiloff joined Insight Venture Partners as managing director in 1998. He was president of Think Systems, an Insight portfolio company acquired by i2 Technologies. Prior to this he was president of Datalogix and held senior roles at Ross Systems, and led both companies to successful IPO’s. As president of Datalogix, he also led its sale to Oracle. Peter specializes in mentoring management teams to produce greater productivity and deliver incremental value to customers.

Comments

By Chuck DeVita

Peter,

Thanks for this very good article. I would like to discuss having you as a speaker to my Stanford class on “Cloud Computing-Selling & Marketing SaaS to the Enterprise.” My students are executives and managers of software companies. Let me know if you are interested.

By Ray Carroll

Great insight that runs parallel with the Solution Selling Model. If you want to sell big deals, you need to diagnose and then prescribe. As you diagnose, you’ll also help the prospect find other areas that “hurt” and drive more value throughout the organization.

By Peter

Sure, Chuck. Give me a call or send me an email.

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