Woolly Mammoths

My friend Jim Fisher pretty much sums it up insofar as traditional enterprise software sales is concerned. I have often said, and written here, that customers have gotten better at buying software than we have at selling them software, but at the same time question what it is that we replace this system with then buyers fully understand that the current model benefits them and are thus reluctant to accepting change. Maybe at the end of the day it’s less about a new sales model and more about wringing costs out of everything else in order to afford the cost of sales and still deliver a decent margin?

The day of the enterprise software sales person is over. The idea of closing the multi-million dollar perpetual software transactions by flying around the world, doing major wining & dining and closing the deal in the Red Carpet Club has gone the way of the Wolly Mamoth. The adoption of the SaaS model, Sarbox, and new corporate procurement procedures have changed forever the way business applications are, and will be, acquired. The fat cat 1k sales guy is only relevant in software companies with revenues north of one billion. Small companies thinking that they can justify a business plan by adding enough of the $1.5 million dollar quota carrying relics are doing nothing but a disservice to their investors.

[From jimfisher.com]

5 thoughts on Woolly Mammoths

  1. Hey Jeff,
    I’m not sure if I’m seeing the same thing that Jim is. Granted, I work around big enterprise software AE’s all day and am thus, not overly unbiased.

    However, my sense is even (or especially) for small traditional license-based software company, you still need an AE.

    Someone has to drive the buy/sell process inside the customer
    – ensuring that the right people are at the right meetings (customer people I mean),
    – understanding the needs of the customer and which products might fit those needs,
    -understanding and deflating buying obstacles that the end user/purchaser may not be aware of or able to get around.

    Additionally, you need a customer champion within the selling org who can
    – get the right sw company people to address the needs/questions of the customer
    – ensure that any outstanding customer issues are addressed
    – keep product mgt and dev folks up-to-date on changing customer needs

    An AE may not be the only way to do the above, but my sense is that it’s one way that works and will thus continue to be employed.

    Further, my sense is that you will even see this model continue for Saas companies as they go after larger deals or get a wider footprint in an existing customer. I wonder what the ratio shift of sales to marketing in Sales & Marketing costs of established Saas companies has been.


  2. Kind of related, but slightly different is our problem. We sell a mix of services and software (that too as SaaS) at my company Dolcera. We are definitely not doing anywhere close to $1 billion in sales. :)

    Here’s our problem: We *have* to build relationships and do selling the old-fashioned way at least partially. We can’t go 100% the online or inside sales way – our clients are not buying services like ours by using their credit card online. But our deal-sizes are not that huge, and therefore the traditional way would be too expensive. Moreover, we play in a niche and so our market isn’t super-huge.

    Either we grow slowly without salespeople or we grow fast but riskily with salespeople. Rock and a hard place…

  3. Jeff, it was good meeting you today at Gordon Biersch with Ross & crew. As a member of Ross’ sales team, I have to agree with the other comments above.

    In fact, I believe just the opposite of Jim’s post to be true. A company with multi-million dollar investment into SAP will be less likely to yank it out and, thus, SAP need not have a high priced person managing the account.

    On the flip side, no business buyer in their right mind is going to sign a six figure check for a new, cutting edge solution without having a relationship in place. Software (whether installed or as a service) hasn’t been commodotized yet. An investment still needs to be made and people want to invest in products and services that will be supported in 12 months.

    The days of closing 7 or 8 figure deals are slowly dwindling, but the death of the enterprise sales rep has been greatly exaggerated.

  4. I think everyone should re-read Jim’s post… he actually said, and I quotes, that “the fat cat 1k sales guy is only relevant in software companies with revenues north of one billion.” He also wrote that for smaller companies the idea that adding more AEs to scale a business plan is essentially a false premise. I tend to agree with him that traditional enterprise software account execs are highly unleveragable.

  5. My comments were aimed at smaller to midsized companies that think that the historical sales models apply to the changed environment that we live in. This along with comments around how you don’t scale your sales operations by adding more headcount were the catalyst to me writing the blog.

    Trying to do your first software transaction with a new customer and expecting them to do a deal that passes the revenue recognition hurdle and is in mid-six to seven figures is unrealistic in todays reality unless you are a large stable company in the business with a core application that they ‘need’ to run the busines.

    I could also go on about the fact of the big perpetual transaction actually hurts the vendor / customer relationship, but that would violate the spirit of this forum.

    I’m a enterprise sales guy. Been one for a lot of years. Been the 1k forever. I am the wolly mammoth I wrote about.


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