Product is Eating Sales
Recently I’ve been bombarded with ads from Monday.com announcing their new Customer Retention Management (“CRM”) solution. While CRM tools are a dime a dozen, this one is significant because Monday, with it’s portfolio of successful Product Management tools, is designing a CRM not for VPs of Sales, but for Product Managers. Which begs the question: why would a company choose Monday.com’s solution instead of a more reputable option like Salesforce or HubSpot? The answer: Product Led Growth.
Whether or not you believe in the hype around product-led growth (“PLG”), popularized by Openview Partners, it’s a certainty that the software sales landscape is changing dramatically. Just as quickly as tools like Outreach helped entry-level tech sales folk effortlessly send emails and automate cold calls en masse, the CXOs receiving them are just as quickly buying tools to safeguard their inbox against them. Manually sending these messages to spam would take too much time, let alone reading any of them. Are they worried they will miss out on the solution that will solve all of their problems? Not a chance.
Below is a brief breakdown of the software buying cycle over time:
2003: Enterprise CIOs sign enterprise license agreements with Oracle, IBM and Microsoft. All technology needs are provided by these vendors, and the enterprise sales reps on these accounts make $500k-$1m a year on renewals and up sells. The sales “process” consisted of golf and steak dinners.
2013: The technology needs for an organization has increased significantly beyond what Oracle can provide. When CTOs have a need, they now want startup technology with a singular focus on solving that problem, and will go out to bid for all competitors in the space. On the flip side, these tech firms are deploying a good chunk of their early-stage capital to hire an army of sales reps straight out of college, who cold-call and cold-email hoping to get on the executive’s radar before they go out for bid to gain a competitive advantage.
2023: There are far too many tech needs being evaluated at any given organization for CXO’s, let alone VP’s or Directors, to be involved in the decision-making process. The “decision-makers” have pushed all of their budget down to their rank-and-file employees for technology purchases. It makes sense; since they will be responsible for managing the implementation and day-to-day of the solution, shouldn’t they be using the tool that works best for them? And, to boot, do you think principal software engineers (who prefer NOT to talk to people) will be wooed by the charms of a D3 college athlete 2 years out of school? No shot.
This does two things:
- The pool of money once held by Directors will now be divvied up to the people that report into them. This means that budget per decision-maker will be limited and pricing for the initial purchase must reflect that.
- These new decision-makers will “plug” the hole they need to quickly, and without speaking to the vendor they select. Thus, the vendor is responsible for making the time-to-value lightning fast and ensuring that the technology does exactly what it says it will do. Remember, there is no sales rep selling on the future roadmap.
As a result, forward-thinking CEOs should use their Series A money to prioritize product leadership before sales leadership. Giving their VP of Product a revenue number focused on logo acquisition will incentivize them to build extremely consumable technology that a principal software engineer can afford to purchase with a swipe of their company card.
Does this new reality mark the end of the software sales rep? No it does not, it just takes on a vastly different form. Take this example of Slack (just acquired by Salesforce for $27.7B):
Slack is a pioneer in PLG, before PLG was even a thing. It invested it’s early capital in ensuring that their product would be extremely sticky with the end-user, kicking revenue-generation down the line. As the company matured, and team usage of the product organically grew, they built out their sales teams to negotiate enterprise deals with executives whose teams are already on the platform. Do you think the massive IBM deal would get done without a skilled enterprise rep? Absolutely not, but…that rep would have never met those executives unless the organization was already realizing significant value from the product.
Thus, the VP of Sales will be responsible for renewals and upsells on the logos acquired by the VP of Product, and the playbooks they rollout will shift from populating the top of the funnel to maximizing account value.
