Dario: Why has the technology industry so strongly embraced the cloud?
Mark: The move to the cloud is driven by customer preference. Our clients focus on building a business and don’t want to divert resources to managing complex, custom software and infrastructure. Cloud-based software is highly sophisticated and the cost of ownership is relatively low due in large part to the subscription model. Cloud customers are essentially renting cloud-based products. It doesn’t require a big capital outlay and upgrades, such as security and bug fixes, are handled for you. The simplicity, flexibility, and investment are dramatically different than buying on-premise software. The next 10 years will see the vast majority of software in the world moving to a secure cloud. SAVO invested in transitioning to the cloud four years ago, which has allowed us to capitalize on the transformation in the market, and, most importantly, deliver our solutions in a manner that best supports our customers’ ability to succeed.
Dario: How is selling SaaS software different from selling on-premise software?
Mark: Combined with the increased availability of information, the SaaS software sales process is now almost entirely in the buyer’s hands. To be a successful sales rep in this industry, you have to be extremely buyer-focused. This means allocating more time to understanding client challenges, partnering with clients to shape the vision for the solution and articulating value throughout every step of the relationship – from the initial meeting to post-implementation touch points.
The typical buyer for SaaS software leads a particular line of business, for example, a CFO or CMO, whereas, with on-premise software, sales reps were working with the CIO or an IT manager. The cadence, and substance, of conversations with a CMO will be very different from conversations with a CIO. Selling to the CIO required a high-level of technical knowledge because the infrastructure was such a big part of the total solution. To sell SaaS to a CMO, your sales reps must speak to his or her challenges, for example, empowering a marketing team to be successful, ensuring brand consistency, generating demand and enabling the sales team. Of course, IT will eventually enter the conversation, but only to “check the boxes” that IT owns, such as data, security and application availability.
Today, SaaS salespeople are, and need to be, more attuned to industry pains affecting a client’s business rather than focusing on technology expertise. Clients expect reps to come to the table with a specific understanding of the client’s industry and business pains, not just a thorough understanding of the rep’s own product offerings. The B2B sales cycle is quickly beginning to resemble stages of a growing partnership rather than a strict seller/buyer exchange.
The financial impact is also a major differentiator when comparing on-premise software to the SaaS experience. On-premise software typically requires a large upfront payment, and is treated as a capital expense. SaaS typically requires a much smaller upfront payment and is treated as an operating expense. While this can make selling SaaS a bit easier from a budget standpoint, it certainly does not negate the need for best-in-class sales rep.
The financial impact extends to the way SaaS companies incentivize and support salespeople. On-premise software salespeople lived and died by an ability to land big deals, and, at times, this led to behavior that wasn’t fully aligned with the customers’ best interests. The sales rep would disappear with the signing of a contract, leaving any and all ROI up to the customer.
So while SaaS companies aren’t going to turn away big deals, SaaS customers have the ability to start small, demonstrate ROI and scale up when ready. This creates a dynamic wherein the SaaS salesperson must be fully vested in their customer’s success beyond the initial purchase. Expanding the value of existing opportunities for all parties involved is incredibly important to running a profitable SaaS business. There is much tighter alignment throughout the customer lifecycle.
Overall, both SaaS companies and customers benefit from the transition to the cloud. Buyers are given more power and support in realizing ROI from SaaS purchases; the subscription format of SaaS puts the impetus on the vendor to maintain the relationship and ensure the customer is successful. Instead of a smash and grab approach to the sales cycle, SaaS reps are encouraged to land and expand. This leads to behaviors conducive to customer success, and also creates a two-way line of communication that enables us, as a SaaS vendor, to incorporate customer feedback into our products. In this way, we grow together with our customers, instead of leaving clients to fend for themselves.
Dario: Based on your experience as CEO of a cloud company, what nuggets of advice can you share with other cloud CEOs?
Mark: First and foremost, always listen to your customers. Take time to understand their current business challenges and use your industry expertise to help them anticipate future challenges. The time you spend discussing your products should only go so far as to communicate how they solve the pain your client is currently experiencing, and demonstrating how you can deliver a sustainable and measurable solution.
Secondly, I believe in agility and taking risks, and have found it to be one of the benefits to leading a cloud company. With software you have the ability to move quickly and course-correct if necessary. There’s no penalty for tapping the brakes to make sure something is just right. If you need to accelerate, then give it some gas. Take the risk and commit to what you think is going to be most valuable to your customers and they will reward you with loyalty.
Finally, I would tell anybody in a leadership role at a fast-growing business to put a lot of focus on hiring great people that fit your culture and aligning yourself with great partners that complement your value proposition. At SAVO, we invest heavily in recruiting the best people and developing them. We work closely with partners, like Richardson, that share our culture and purpose. Together we are focused on bringing value to our customers and helping them succeed in growing and profiting.
When we see our customers succeed using our solutions, and continue to give us business year after year, it drives home how fun and rewarding it can be building in the cloud.