One of our first projects was with an organization which was transitioning to a solution sale model vs. a product sales model and it wasn’t going according to plan. The software company had some early success with adoption in a freemium model and while they were in beta they aggressively created an opt-in list which quickly grew to north of 4000 subscriber in the first six montha. To that we say – “Bully to you fine customer, you are creating valuable content and a lifeline to your market which you can nurture and cull potential leads from.”
This company serves a whole spectrum of organizations from really small businesses on their freemium software platform to providing coaching and consulting to companies in Global 2000.
The client had two business lines – one software and the other coaching and training around the software and the domain in which the software was used. The business revenues were about 60% coaching, 30% training and 10% from software. The software business was growing at a high rate, but small numbers can have high growth rates, just do to math.
The team historically had found that nearly all customers which consumed services also became software customers and about 15% of software customer who converted from the freemium version became coaching or training customers.
The Business Goal
The founder of the company had made a significant investment in the software and saw it as the future of the company. To that end, he hired a sales team and a marketing team to start driving growth since the beta had been successful and adoption was high from his historical services company.
One of the folks he brought in was a VP of Sales and Marketing to “growth hack” the business into a high margin, non-labor bound and solution sale business. I mean who doesn’t want to sell to the “C-Suite” and drive up average deal size and establish an annuity with their cloud software. Not a bad idea based on the data and so the team pivoted to a solution sale focused on the software.
The team repositioned the portfolio and engaged the market to limited success. Deals did get larger, but the close rate when down for both businesses and deal timelines bloated.
So after meeting with the sponsor, the VP of Sales and Marketing, we had a frame for the project with the Program Overview and schedule. The goal was – “Figure out how we sell this as a solution.” Not a very good goal to manage to, but the customer is always right.
Program Insight Themes
There were several items we learned which the team took back based on the learning of interesting buying criteria which the team hadn’t focused on which came out in several of the interviews:
- “The sales person kept pulling the discussion to their software and it just wasn’t what we wanted” – lost customer
- “They had a salesperson follow up after we added additional users to the account and to position consulting and we already were using the app and didn’t need consulting.” – freemium converted customer and lost consulting.
- “We started out looking for coaching, but didn’t ultimately select their software too. We had to engage more people to make the decision, but in the end it was a success.” – won customer.
- “Ultimately it came down to budgeting which was toughest. Consulting came from one budget, training another and software another. Working in a big company like ours adds overhead.” – won solution customer
It became evident that the business desire to sell solutions vs. products was not embraced by the buyers and had a detrimental impact on the business.
The CEO had invested in a real sales team and it was a bust so far.
The Recommended Actions
At the first quarterly read out for this customer the team was a little concerned about the recommendations they were going to put forth for the team. The recommendations based on the interviews were:
- Sell them what they want.
- The buying centers and budgeting constraints make a solution innately harder to close.
- Focus on nurturing and inbound leads, rather than cold calling and old-school interrupt marketing.
- Position the sales team to focus on coaching and consulting.
The team had to recalibrate their sales commission plan, onboard a new consultant and go back to the old positioning with an added solution option to the portfolio.
- 2H of 2016 exceeded the services expectations now that a real sales team is focused.
- Q1 of 2017 is oversubscribed and sales team is already focused on Q2
- Software just continued to grow without material sales efforts.
- The opt-in list has surpassed 6000 subscribers