Your software product buyer has changed without your knowledge, Part 2
There are plenty of challenges surrounding innovation in large companies; Generating viable new product ideas and translating them into reality is hard. But, this is just the tip of the iceberg. In many cases, unless companies make fundamental changes to their org structure, change their philosophy around go-to-market approaches and incentive models, and recognize fundamental industry trends, new product launches may not be successful.(Continued from Part 1)
“OK, Lesley, What’s on your mind”, Said Josh, GM of the Developer Tools business division, swiveling around in his imposing leather chair, the only perk he allowed himself in his otherwise spartan office. Tall, bald, with a loud booming voice, he was an intimidating figure, but he could also turn up the charm when needed. He made it a priority to meet with his product managers often, as he recognized their value and conversely their risk to the company.
“Josh…”, she began hesitantly, “ I am not sure that this direct to customer model is going to work out. We are B2B, we sell to buyers in big organizations. That is who we are..and well, this structure is something YOU put in place here.”
“I agree Lesley, that is who we are TODAY..but look at the trends in the software developer marketplace. With the move to Cloud and SaaS, there has been a general democratization of developer focused products in the market. The top-down selling model we follow is the exact opposite of that, and if our customers don’t get to try the product by themselves, they simply won’t use it, or will end up protesting to management about it. If they don’t use it, when the ELA renewal rolls around, they won’t renew. We will start to see a lot of customers move away.” Said Josh.
Seeing Lesley’s unconvinced look, Josh said, “OK, let me ask you a couple of questions:
How long does our installation process take for a new customer, or say, an upgrade for an existing one?”
“Hmm, new customers about 8–12 weeks, and upgrades probably a couple of weeks.” said Lesley
“Ok, that’s 2–3 months of unproductive work for the customer..,and what is the time it takes for our newest born-in-the-cloud type of competitors to get setup, and what is the downtime for THEIR customers?” asked Josh, knowing fully well, it only took his competitors a few minutes, not days, and certainly not months
“Oh, But they don’t offer everything we do, plus our customers are locked in with our contracts. They cannot just go off and start using whatever product they want?”, said Lesley, knowing where this discussion was going, and determined to head it off..
“Sure, WE don’t have to compare ourselves with these new upstart companies, but guess what, our customers do it all the time” said Josh. “And if we don’t GET this, we are done for as a company…”
“These customers are searching for, and are finding, and then trying and testing these easy-to-setup, easy-to-use developer products directly on the Cloud. They are finding that they like the User Experience, and guess what, for an individual user, the pricing is very affordable. They are making the argument that it is better for them to use products that offer more value to THEM, the individual, even, and this is critical Lesley, EVEN if it means spending a few dollars monthly out of their own pocket. Plus, there are no long term contracts, which means if they don’t like the product, they can always move on. THIS is a PARADIGM SHIFT from how we have done business in the past.”
The more she thought about it, the more it made sense. In fact, she had seen this behavior even within her own group, but had rationalized it away to the quirks of a few developers, and not a widespread industry wide phenomenon. She needed more data of course, but Josh was onto something real. “I see the point, and I agree with what you are saying…” said Lesley. “But, this is not going to be easy Josh. This model is going to take some time for us to figure out”
Josh responded with a grim smile, “Look, that’s why I have smart people like you on my team..go figure it out. This is sort of the like the wild-west now, with new entrants coming in, and customer attitudes changing. To survive, we HAVE to avoid the classic head-in-the-sand approach of many existing companies and be in denial mode.”
To the reader
Thank you for taking the time to read this blog. The topic addressed here is a relatively new phenomenon in the B2B marketplace, and is borne out by initiatives such as Heavybit. Have you seen this trend as well?