Note: The old school rejects the following as unrealistic. Strategic thinkers recognize it as inevitable.
Most companies are implementing sales as an afterthought, as management views sales as just another hassle to deal with like healthcare coverage or H1B visas. Startups, in particular, treat sales as a "checklist". They see it as "something you have to have" not as a company asset. It’s just another task that has to be done. So, they hire a bunch of salespeople and then, when most of them don’t sell, fire them and cycle through another crop. It’s a failed strategy and it’s destroying good firms.
But you don’t need salespeople to sell software.
After nearly 20 years marketing and selling big ticket software systems to corporations, I decided to start my own consulting business building marketing systems for software companies. One of my early clients was a startup CEO. He was a brilliant technologist and had invested years into developing an incredible product. But like so many of his peers he struggled to land new customers.
I asked him about his marketing and sales efforts, and he told me about how he had recently gone to a three-day industry meeting in another city where he had sponsored a luncheon while demonstrating his product to a group of over 50 technology buyers. The objective was to bring back quality leads justifying the five thousand dollars spent on travel and sponsorship. I asked him how many leads he got. He said that, although he had collected many business cards, none of the buyers ever purchased. In fact, almost none even returned follow up phone calls or emails. He couldn’t figure out what had happened because these events used to work.
What happened was there’d been an inevitable shift in the market. The old school marketing and sales efforts this CEO was using stopped working because technology buyers had become savvy and didn’t need or want to deal with outdated techniques anymore. All buyers want now is a clear value proposition, a simple pricing model and a straightforward onboarding process. They shun the old marketing and sales models that used to work.
So, what should a software CEO do?
Let’s take a step back and look at a typical cloud software sales cycle. There are four primary steps that drive purchase decisions. These are:
• Review of a vendor’s website – Let’s call this step Inspiration, since the buyer must be inspired to do something
• Transfer of knowledge – We’ll call this one Education, since this is where the buyer gets a deeper understanding of how a solution might help them
• Proof of concept – Let’s call this Verification, because this is where the buyer tests the solution in their own environment
• Subscription – This is called Activation, where the buyer becomes a paying customer
That’s it. Because cloud software is relatively inexpensive, often less than $10,000/month and buyers can cancel anytime, purchasing risk is low. There is no need for multiple decision makers and long sales cycles that include contract negotiations, hardware purchases, and implementation services that were required for complex on-premise software sales. For cloud software, a simple framework is needed that drives each of these four steps without the need for old school sales.
That framework is distributed ledger technology. When most people hear the term distributed ledger or blockchain, they think of crypto currencies like Bitcoin. But the power of distributed ledger technology goes way beyond. Distributed ledger technology is being used in international finance to track cross-border transactions, in supply chain management for quality control in aircraft components, and in healthcare for data security.
While these applications are crucially important, distributed ledger technology can also be used for incentivizing market activity. Smart contracts executed on private blockchains with programmed incentives can drive each of the four-sales cycle steps previously outlined. A business software company with a small existing client base can unlock the latent value in relationships between professionals. The firm can attract and onboard new customers without salespeople by incentivizing current customers to offer trusted colleagues at other organizations an exclusive opportunity.
This will be the cloud business software purchasing system for the 2020s.