Cloud computing and everything-as-a-service (XaaS) is driving significant business model change of traditional enterprise technology vendors. We are witnessing a seismic shift in the way technology is acquired, adopted and consumed across the enterprise. With progressive adoption of SaaS in the enterprise, industry watchers are declaring the impending end of the era of traditional enterprise software business.
The old pay upfront or perpetual licensing model is being replaced with the new pay-as-you-go licensing models that may be based on subscription, consumption and/or business outcome, which in essence means that a tech company’s growth and profitability depends heavily on its ability to retain, nurture and expand customer relationships beyond the point of initial sales.
To succeed in the age of everything-as-a-service, technology companies need to bring completely new set of capabilities to the table. It all comes down to making customers successful with their products. Most companies will need to revitalize their service offerings, introduce new sales models, and change organizational behaviors and incentives so that Customer Success becomes an integral part of their DNA.
Today, the value of technology is measured based on how effectively it can be consumed to automate and augment an organization’s business processes and deliver a desired outcome. This new consumption-driven economy coupled with the plethora of available technology options, empowers customers to look at Cloud products through the lens of business results. Their purchasing behavior has changed and vendors need to adjust their sales and marketing approach and provide customers with services that guide them through every stage of the customer journey to help them make the right decisions.
Vendors, therefore, will need to put customer front and center, develop the capability to understand how customers use their product, and tailor their service offerings to deliver business outcomes that matter to them. Companies that focus on customer success will achieve higher up-sell/cross-sell revenue and lower churn rates, positioning themselves for sustained, profitable growth in today’s consumption-driven economy.
Customer Personas and SaaS Success
To keep up with this wave of change, SaaS vendors need to start understanding their customers and developing personas. Understanding the behaviors, needs and challenges of your customer personas at different points in the buying process helps you create effective sales messaging that will resonate with them along their journey to purchase. Furthermore, developing customer personas gives you the necessary focus to uncover precisely what business outcomes your customers want to achieve with your product so you can adapt your services to enable and support the realization of those outcomes.
When you market and sell your products and services you typically have three buyer personas within the same customer, each of whom have different perspectives and agendas. Therefore, your dialogues and conversations with customers have to focus on addressing the specific pain points that are most likely to influence buying decisions of each stakeholder or buyer.
Strategic/Economic Buyer (CxO, Line-of-Business executives) Strategic buyers want you to know their business and deliver them results. They want business outcomes.
Functional Buyer (End-users, Employees/ Managers) Users want to accomplish their tasks with ease and to be guided, when needed; they want things to be simple.
Technical Buyer (CIO, VP of IT) The IT wants technology to work, to be integrated, easily managed and they expect problems to be fixed even before they occur. They want their technical people to be trained, and their trained people to be certified and recognized for their knowledge and skills.
Buyer personas used in Pragmatic Marketing as a way to align Sales and Marketing, is extended to Post-sales because customer buying motions are continuous under Cloud.
In the traditional vendor/customer relationship, most of the buying decision was made by the technical buyer, since IT was responsible for the vendor selection, procurement, implementation, deployment, change management, and ongoing support and maintenance of the systems. They brokered between functional requirements from the business and technical capabilities of the vendor’s product. In the old model there was very little direct dialogue between the technology vendor and the functional and economic buyers.
In the new XaaS relationship model, technology providers often sell directly to functional stakeholders or the business domain owners, focusing the sales dialogue on the business value the product delivers rather than the underlying technology. In addition, technology providers now need to understand how customers adopt and use their technology in order to prevent the gap between what they offer and what consumers actually consume from forming.
In the old world of on-premise solutions, the technology vendor/customer relationship peaked at the points of sales and product delivery. But now with SaaS and XaaS, the buying motion becomes continuous. This requires a change in mindset – it is now critically important to think about these three buyer personas as your lifelong buyers, not just during your sales cycle or near the go-live.
In the next generation technology company, vendor’s commitment to customer success and targeting to each buyer persona at every stage of the customer’s journey are considered key to facilitating outcomes customers want to achieve, while maximizing customer lifetime value.
In my next post, I will talk about customer journey mapping in the context of sales and customer success and explain how journey maps can help XaaS companies design and deliver customer-centric experiences by aligning skills, roles, technology and processes to customer needs. I will also introduce three Sales Motions for organizations to achieve sustained, profitable growth.
This article is part 1 of the series New Rules: Sales and Customer Success.
Hi Omid: I agree with your statement that we are witnessing a seismic shift in the way technology is acquired, adopted and consumed. I’m not sure seismic fits, but it’s a shift.
The fundamental challenge for sales forces selling SaaS software and services is the fact that these are no longer capital purchases, the way large ERP systems once were. Sales forces must adjust to different operational needs and financial measurements. In theory, because salespeople are not pursuing capital investment dollars, sales cycles should trend shorter, but that’s not always the case. Whether on-premise or SaaS, implementation of an organization-wide software application still takes a large investment of time and human capital. Much of the costs are embedded in project management – and they are often significant. In addition, the risks from failure still exist, and some are the same for on-premise or SaaS.
Throughout the ’90’s, I sold large on-premise IT solutions (at they time, they were called Integrated business systems or Integrated applications software. Your statement that ‘”most companies will need to revitalize their service offerings, introduce new sales models, and change organizational behaviors and incentives so that Customer Success becomes an integral part of their DNA” did not connect with my sales experience – though I recognize that at the time, some companies were more perfunctory in their post-sale support.
Even though I sold a licensed application software product as a capital purchase, customer success was something my company and I rabidly pursued (reminder: this was the early-’90’s). There were service contracts to sell, upgrades for both hardware and software that were expected to accommodate client growth needs, custom application development work, and additional hardware to sell. In a nutshell, whether licensed software in the ’90’s, or SaaS in the 2000’s, customer success has always been paramount for vendors. Most of all, my company – as well as virtually all my competitors – had a strong dependence on excellent customer references. In my view, SaaS changed nothing in that regard.
As IT has become more intertwined with business strategy, the archetypal IT/technical buyer from the ’90’s has matured into a more economic buyer. So the personas you have described are useful, but I see them in a state of flux, and they are more difficult to categorize today.