Should you get your clients to pay for a Proof of Concept before you do the deal?
It’s a question that divides the SaaS sales community. With the help of 2 founders and sales leaders, we try to come up with an answer.
Last month we staged our 4th Sales Confidence live event at the Salesforce Tower in London. 100 SaaS devotees gathered to hear 4 of London’s most knowledgeable founders and sales leaders share their secrets. If you couldn’t make it, we’re producing a series of articles covering all the talks, so you can still share in the knowledge.
After our guests had finished their talks, I opened it up to questions from the floor. We had a great question from Luba Reynolds, from Sales Expand.
‘Do you get your customers to do a paid Proof of Concept or should you do it free of charge?’
Great question, and one that causes division in the SaaS sales community. In fact, it caused a division amongst our panel!
Richard Potter, CEO of Peak, went first. Peak help enterprise-level companies do great things with data, so Proof of Concept (POC) is something he knows a lot about.
‘Yes, we are doing a paid POC right now. The deal is we will knock it off the final total. I’m a big believer in that. If your customer has got real intent, they’ll pay for POC. I think it’s important that the customer commits to the POC in some way. You don’t have to charge, but if you’re a startup and you want to generate cash, and they’re a big customer, charge. Have confidence in your technology.’
Christian Lund is Co-Founder at Templafy, currently changing the game in the way enterprises create documents and communicate. He took a different view.
‘I don’t like paid POCs. They tend to turn into a pilot. A POC should be what it is, a proof of concept. A paid POC takes much longer to close the deal. What we do instead is be very concise. Figure out what the real pain is for the customer, and how you can prove that you solve that pain. We get them to agree that if we can solve their pain, they will do the deal. If the choice is getting the deal done in 4 weeks or getting a bit of money upfront but it taking longer, we’ll always go with the first option.’
No one asked me to settle this argument on the night, but Sales Confidence is my site so I’m going to do it here!
I guess I’m kind of on the fence here. Whether you ask your clients to pay for Proof Of Concept depends on many things. I can understand Richard and Christian’s points of view. Here’s what you need to consider when you decide how to play it at your company.
· How much does it cost for you to prove your concept to your customer?
· How long does it take?
· What does your customer want to do? How badly do you want to work with this company?
I’m on the fence because both points of view demonstrate belief in your product in different ways.
What I’m not on the fence about is that it’s essential to manage the Proof Of Concept process so it leads to a sale, not more deliberation.
You need to establish criteria for the POC, and agree with your customer that if these criteria are met, a deal will take place. You need to establish a timeline for this to happen. If nothing else, this gauges their level of commitment. Document everything as it happens.
Over to you now. Where do you sit regarding this argument? Team Peak or Team Templafy? Let us know down in the comments.