Earlier this year Tien Tzuo, Chief Strategy Officer for Salesforce.com, presented “Changing the Game of Enterprise Software” at Stanford Technology Ventures Program’s Entrepreneurial Thought Leaders lecture series.
In this presentation Tzuo reveals how Salesforce.com leveraged the Internet to transform their sales and marketing processes. The seven lessons he offers are:
1. Awareness Cycle
Prior to the Internet age, access to information about new products and solutions was limited to a few — it was a “closed access” world. Buyers had to attend trade shows and seminars or rely on research firms and the media. But today we live in an “open access” environment where buyers can find everything they need immediately on the Internet. Studies show the vast majority of all buyers begin their research online.
Today vendors must build a systematic way to have two-way dialogues with the market. To be relevant, you need stories and content. Invest in your web properties and online PR. You need to create a “buzz” so you are easily found by those in the market.
2. Free-Trial Offers
The ability to trial the software is one of the key reasons for the success of Salesforce.com. In the enterprise software world sales reps used to “negotiate” for trials. This was often very controlled, scripted and frustrating for the buyer. But Salesforce.com makes it extremely easy for customers to evaluate the product and by their own rules.
At first the sales organization didn’t want to make it so easy – they were concerned they’d loose control and customers wouldn’t have to call them back. But it turns out when they like the product and it meets their needs, they’ll call you!
In the Internet era, trials and evaluations are becoming “expected.” Salesforce.com has adjusted the trial period from time to time. It started with 12 months and after several iterations today they find 30 days works best.
3. Onion-Based Product Design
In the “RFP-driven” world, vendors were encouraged to jam as many features as possible into the product in order to be rewarded with the most check-boxes. But in the Free-Trial/Internet era, vendors must offer solutions that are easy to use and easy to implement. “Complexity” is the enemy of a successful “free-trial.”
Tzuo says the solution to this dilemma is a “layers of the onion” product design. He uses an analogy of the “New York Times” writing style. The brief beginning of the article tells the complete “50,000 foot level, big picture” story. The next few sentences or paragraphs provide more details (the “20,000 foot level” story). After that, the rest of the article spells out all of the remaining details.
In this same way products should be designed to be easy to use and comprehend. And when the buyer wants more, they “peel back the layers” to see the advanced functionality, but only as they need it.
4. Sales Model
Tzuo says the Internet has evolved the software sales model from a “field sales” orientation to a two-tier sales system:
- “Lead Qualifiers” follow-up with incoming suspects immediately before they get busy and move on to something else. The Lead Qualifier’s role is to make sure the prospect has everything they need. If and when they are ready to move forward, that’s when the “sales organization” gets involved.
- The “Sales Organization” is focused on moving prospects through a buying cycle and closing business. The sales organization should be segmented to best serve different types of buyers (e.g. SMB, Enterprise)
5. Segmenting, Targeting and Positioning
In the pre-Internet era, Marketers followed a Segmenting, Targeting and Positioning(STP) process:
- Segment the market into potential groups that may need your product
- Target one or more of those segments and make yourself most relevant to them
- Position your value to this target as superior to the alternatives
Often this approach required expensive interrupt-based tactics to reach the audience.
On the Internet, the market finds you. You can’t control who searches for your keywords or comes to your web site. So you need to pursue them all.
Packaging and price-points still make a huge difference. Salesforce.com analyzes the incoming customer requirements and demand and then “forks” functionality and pricing to create new packages that fit each of the sizeable segments.
6. Events
In the past events where often used to educate and introduce new concepts in the marketplace. Of course now this is largely available online. Today events are most useful for meeting with customers and also providing customers the opportunity to network with other customers.
7. Focus on the Post-Sales Experience
Initially 90% of the Salesforce.com customers went away after six months. Unless they were completely engaged and dependent on the product, they just stopped using and paying for the service. But once the customer is successful, the service is a self-sustaining engine.
This caused Salesforce.com to add positions like “Customer Success Manager” and concepts like “Adoption Ladder” to drive usage of the application. In order to ensure successful adoption, they offered “industry best practices” research and made it easy for customers talk to each other. After all, reducing the “attrition” has more impact on growth than adding new clients.
Sunday, 6 July 2008 . by Julie Hopkins
Posted in General |
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