If you are a software vendor, consider this: What would it look like if you approached each sale like you were trying to raise investment capital instead of just selling a piece of software?
Knowing that most software buyers (ah, funders, in this case) have a wide variety of investment options available to them, does your organization represent the best overall software investment opportunity out there? Can your prospects find better, safer opportunities that will give them a higher overall return on their software investment dollars with lower risks?
Stop thinking of the people who buy your software as customers and start treating them like investors. They don’t just want software. What they really want is the best return on their software investments!
The old rules don't apply!
Back in the days before SaaS, organizations implementing software treated their software acquisitions as a simple purchasing transaction. They were very focused on the costs of the software product. They focused just on the initial purchasing transaction, with little thought to the future.
When the SaaS business model first came on the scene, buyers continued to treat software acquisitions as primarily a purchasing exercise. They remained very focused on the overall costs, just now with the added benefit of shifting their cash outflows over several years. Over time they realized they could adjust their purchase quantities to reduce cashflow if they didn’t see the value in their purchase or if their needs have changed.
The new reality is that software buyers are making software investments, not purchases.
This awakening that buyers can focus on outcomes and value, and then adjust where they put their future software purchasing cash accordingly, is a massive shift in both mentality and fiscal practices.
With this shift, organizations are treating software buying decisions less like a simple procurement exercise and instead treating it more like an investment exercise. They are less focused on just the cost, and instead, they are more concentrated on the expected return and level of risk associated with the software investment.
Software buyers realize they are better off investing in a software vendor (notice I didn’t say application) that will deliver the most overall business value to them, even if the actual app doesn’t have all the bells and whistles found in competing systems.
After years of over-investing in software, wasting lots of cash on software and integration costs, suffering low user adoption and having their projects considered IT failures that didn’t deliver the expected business value, savvy software buyers realize they need to change how they make software investment decisions. They know they need to do more than evaluate the technical fit of the application.
Instead, they need to assess the overall vendor solution — the software, implementation team, technical support, and customer success services – to determine which one is the overall best investment. In effect, what they are doing is evaluating the ability and probability that the software vendor as a whole will make them successful and solve their business problems. Only after conducting this holistic analysis and comparing it to a similar analysis of other potential vendors will organizations decide with which company to spend their software investment dollars.
SaaS vendors need to quickly wake-up to the implications.
Historically, most software vendors have been incredibly product-focused. To software vendors, their products are sexy. To software engineers, building a cool piece of functionality is fun and exciting. And to many software executives, services are necessary, but not fun, scalable or profitable.
In many software companies, there is a bias to investing in building new features and functions in the application instead of investing in services, support, and customer success. For many vendors, the thinking is that the quality and price of the product is what will make or break a sale. While this may have once been true, it is no longer the case.
With buyers shifting their focus to evaluating the overall vendor solution and capabilities, a continued bias towards product will be the road to failure. Software vendors need to recognize the shift in buyer preferences and adjust how they set priorities, allocate internal resources, and position and sell their products accordingly. They need to realize that just having a great product, without the support and customer success resources customers demand (and competitors provide), will not make them market competitive going forward.
Software vendors need to stop treating prospective customers like they are making a simple purchasing decision and instead treat them like investors who are evaluating the complete software investment opportunity. Software vendors that similarly approach each sale to raising capital, that is, focusing on the business outcomes, minimizing risks, and explaining how you maximize the return on software investment, will be hugely more successful than those that continue to focus their sales efforts just on product features and price.
Most software projects fail to deliver the expected business outcomes because of the approach the buyer takes to getting the system live and driving adoption. Most buyer’s organizations don’t have the expertise, tools, and capacity to deliver their success.
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