In most cases, the answers to life’s more complex questions have really simple answers. In today’s selling environment it’s often hard to determine who exactly is “the buyer.” Your salespeople are given a lot of inputs:
Your executive leadership want them calling on “business people” or “executives.”
The sales training courses they have been to instruct them to find “champions,” “decision-makers,” and “influencers.”
Marketers produce information about “personas.”
Business unit leaders and other subject matter experts talk about “users” or “doers.”
Sales managers tend to be more interested in understanding the opportunity (Access to power? Is it qualified? Is there budget allocate? When is the account going to make a decision?).
Their contacts within an given account give them different people or process steps to follow, or kick them over to procurement.
With all of the different voices – “You should do this,” “You should say that,” “You need to present this way” – echoing in the heads of your salespeople, things can get very confusing.
A Tale Of Two Sales
The thing is – the buying environment for most of us has changed, leaving us with two distinctively different buying patterns:
On the one hand, the customer knows what they want and have developed fairly sophisticated procurements steps to acquired what they need at the best possible price.
On the other hand, the customer is looking for the expertise to help them get value from their investment and solve a problem.
Why are sales and marketing professionals working harder and longer than ever before? Why are they seemingly in a constant firefighting mode, moving from one fire drill to the next, one meeting to another?
We are in the middle of a major transformation in the B2B sales model. Your company is caught between a rock and a hard place because your investors want to see accelerated growth and improved margins. However, your customers have the same pressures, and all have some form of enterprisewide strategic procurement initiatives underway. Your goal: sell at a higher price. Their goal: buy only what they need at the lowest possible price. Something has to give.
In response to these tectonic forces, we find many companies have a variety of internal projects designed to combat the commoditization trend. Some common efforts include:
Training salespeople to get access to executives.
Creating "solution selling kits" (in marketing).
Developing return-on-investment tools.
Focusing on demand-generation campaigns.
Developing sales-coaching frameworks.
Creating more structured opportunity identification and account scorecards.
Fine-tuning the customer relationship management (CRM) system to improve reporting and forecasting processes.
Pricing and packaging exercises and corresponding negotiation training.
Reinventing product marketing functions into "solution" marketing roles.
The lines are blurring between software and services — with the rise of cloud computing, that trend has accelerated faster than ever. But customers aren’t just looking at cloud business models, such as software-as-a-service (SaaS), when they want more flexibility in the way they license and use software. While in 2008 upfront perpetual software licenses (capex) made up more than 80% of a company’s software license spending, this percentage will drop to about 70% in 2011. The other 30% will consist of different, more flexible licensing models, including financing, subscription services, dynamic pricing, risk sharing, or used license models.
Forrester is currently digging deeper into the different software licensing models, their current status in the market, as well as their benefits and challenges. We kindly ask companies that are selling software and/or software related services to participate in our ~20-minute Online Forrester Research Software Licensing Survey, letting us know about current and future licensing strategies. Of course, all answers are optional and will be kept strictly confidential. We will only use anonymous, aggregated data in our upcoming research report, and interested participants can get a consolidated upfront summary of the survey results if they chose to enter an optional email address in the survey.
It's nice to see that SAP has managed the turnaround to leave the recession behind and pick up growth again. The company reported a strong 34% SW revenue growth in Q4 2010 as compared with the previous year - "The strongest software sales quarter in SAP's history" as stated by Co-CEO Bill McDermott. However, one has to keep in mind that one year ago SAP was in deep crisis and reported a YoY -15% SW revenue decline in Q4 2009 followed by the departure of CEO Léo Apotheker in February 2010 and other subsequent executive changes.
Indeed Q4 2010 was the strongest SW sales quarter in SAP's history but the fourth quarter is always the strongest in SAP's annual sales cycle. Actually Q4 SW revenue declined for 2 years since 2007 (€1,4 billion) to 2008 (€1,3 billion) to 2009 (€1,1 billion), and it was about time to turn around the curve again. While Q4 2010 was the best SW revenue quarter, the full year 2010 was still not the best in SAP's history. In 2007, SAP reported total SW revenues of $3,4 billion, followed by 2008 (€3,6 billion), 2009 (€2,6 billion), and now total SW revenue 2010 with €3,3 billion – SW revenues are still below the level of 2007! While total revenue (€12,5 billion) looks to be back on track, net new SW license revenue still remains a challenging point in SAP's balance sheet!
The new Q4 2010 revenue announcement is a very positive and promising signal, but the company needs to continue to innovate its portfolio to accelerate again new SW revenues for long-term sustained growth.