The Product community should better understand and respect the Sales community

I am a business executive from a dominantly product background. Over the years, I have sold consultatively, but currently have to do much more actual selling than several previous years. The complexity of enterprise selling cannot be overstated. I am no expert on this subject, but my accumulating realization is that the enterprise sales process is a complex phenomenon, at best 50% scientific, 50% art, intuition, luck. Over the last 4-5 years having been personally involved in over 100 significant transactions, I have gleaned some realization that I want to share.

?I primarily want to share this with my product colleagues. My colleagues from sales will likely find this article juvenile, and amusing at best, because they live this life every day. I have noticed that in the product community there is a certain lack of maturity in understanding the difficulties of a complex B2B transaction. There is a little bit of an ‘ivory tower’ mentality summed up as-- if we have a great product with strong product market fit, significant transactions simply follow a pipeline build and maturation process-- plucking oranges from a ripe orange tree. My realization is— if the product is not competitive, certainly there is no orange tree, however, even if the product is one of the best in the world, there are thorns, insects, and snakes in the orange tree making it completely non-trivial to pluck oranges at will.

?The graphic below published by Gartner? a few years back portrays almost a comical view of the circuitous and often unpredictable pathway from consideration to transaction. The view supports my general thesis, but the rest of the article is written in small vignettes from my personal experience.

The beauty pageant

This is a situation where the buyer uses other vendors to apply pressure on an incumbent vendor. The buyer does not have true intent of replacing the incumbent but wants certain concessions. The concessions may be monetary to avoid a CPI increase, or maybe acceleration of certain feature on the roadmap. This could take many forms. Sometimes the official form it takes is an open RFP considering other vendors in a parade. Sometimes it is an executive level escalation that suddenly comes out of the blue. This may not have any correlation with product performance, NPS, and customer satisfaction at all. It is purely quid pro quo. In this situation if you are not the incumbent, you are effectively being used as a lever with little chance of success. If you are the incumbent, your renewal despite the best customer success metrics, suddenly is at risk. So how does one detect if something is a beauty pageant. I do not know. If you would like to help, add a comment.

?The change nothing buyer

There are a set of buyers who are intelligent, want to improve the service that a vendor’s product delivers to the end users, but eventually do not have the fortitude or the clout to manage change internally. These buyers could come via an RFP route or from an event or even inbound from your website. The buyer is fascinated by the new and advanced features of the product. You start having deeper and deeper discussions, you validate the budget, you qualify the reason to change-- you do all the right things that a sales process tells you to do. You have now put the deal in probable stage as all signals indicate that. Then there comes a time where you have an ‘integration’ discussion. The buyer realizes that despite the product’s far advanced features, the amount of change the buyer must manage either costs a lot or he depends on few other departments who must change their systems or processes. At best, your deal slows down and you move it out of a quarter having to answer your angry boss and at worst, the transaction dies down and you must move on.

?The change everything buyer

This is often bad news if your product is an incumbent and there is a leadership change in the customer who has decision making power over the product. Often, a senior leader will come into a company and for the first few months, attribute “all the troubles” to decisions the predecessor had made. Certainly, some of those decisions involve vendor and system decisions. A very typical new executive action plan includes “change system X”.? It is often never validated years later if changing X worked or not (there is no corporate historian) but while changing, the new executive demonstrates ‘action’ and ‘something is happening’.? Many times, these decisions are not objective. I have seen several cases where users are happy, product performance metrics are great, but still it is switched out because something’s got to change. In these cases, it does help if the product is deeply entangled with other systems and processes and it’s difficult to change out. The best sales colleagues I have seen seek to create integrations and entanglement after implementation and think through the next 3-year renewal from day one. The best sales leaders would use professional services, partnerships to create strong entanglement.

?

The security and architecture police

For significant enterprises there is often a comprehensive non-functional review of a product that can completely throw off the timing of a sales process or even scuttle it. It may start early on with review of a detailed vendor questionnaire which is normal. Certain companies, however, have an IT council review for even a SaaS solution. This could commence in an unplanned manner depending on the availability of the IT team. The company may have limitations regarding what single-sign on solution they could offer for employees or contractors. This introduces complexity of the overall solution. The company may have a particularly feisty architect who has a point to prove. Sometimes said architect can be quite unreasonable demanding certain data privacy provisions such as in-memory encryption of PII, that your data sheet already has said you do not support and no one in the competitive set does. At times I have seen IT departments make demands to understand the internal architecture of a SaaS service fully for no good reason even when the solution bears certain certifications. While all this goes on, the salesperson is struggling assembling internal teams, customer’s teams and the opportunity slips to future quarters.

Gravity effects

Gravity effects are often uncontrolled situations where a salesperson has little or no control. I have seen many in my times. The most common is a renewal or a deal is progressing fine, but the customer has a tough quarter resulting in stoppage of all procurement or at least delayed signature. The company has a regulatory fine imposed and that starts a domino effect of reviews of all vendors messing up any closure plans. Or, sometimes in cases of a government buyer, the government has a change in policy that implies product changes that must be rolled out on an emergency basis. All these things individually or in combination will affect commercial negotiations and closing a deal.

?The free scoop of ice-cream

It’s human nature to feel like a winner in a negotiation. Sometimes at the penultimate moment pre-signature the customer would ask something in addition in the same price envelope. Sometimes the procurement department would negotiate extremely hard and try to wear your down knowing your quarter boundary pressures or at least would want something ‘in kind’ in return. The salesperson must run internal approval cycles up and down for either a few points of discount, or a few more ‘amnesty’ licenses, or some professional services, or some extra months of term. In the longer run, this may not matter for either the customer or the vendor but sometimes these negotiations take a personal turn between a few individuals involved.

?The price chopper competitor

Let’s say you represent a relatively mid-life or mature business with a great customer base, wonderful product, and happy users. Your shareholders or investors have a certain expectation of profitability. You may find yourself competing with a typically ‘younger’ company where the shareholders have a different value attribution method for their company. The company may be in ‘growth’ stage and the company is pursuing topline growth at all costs. Such a competitor will regularly undercut you on price and often with an inferior product will cause your deals to be slowed down or lost. Conversely, a much bigger company than yours can often offer bundled pricing with other product lines that puts tremendous pricing pressure on your product. Typically, a great salesperson will make a value-based argument rather than a price-based argument. Those arguments, while being the correct approach, take longer time and a more sophisticated buyer. This does cause lengthening of deal cycles and slippages and sometimes, losses.

?Legal from hell

After a commercial negotiation a salesperson must depend on legal experts on both sides for a contract negotiation. This can be especially challenging for a net new business where there exists no master services agreement. First, whose paper should the contract be on. If it is on the customer paper your own legal would want to scrutinize thoroughly for terms of service such as indemnity, timing of revenue recognition, etc. If it is on your paper, the customer would do similar and in addition will investigate vendor solvency, may ask for escrow, etc.? Basically, a new MSA with a sufficiently large customer can easily scuttle a deal for a couple of quarters if not more. The salesperson must plan around this, sometimes anticipate and provide heads up to the internal legal department and often ends up acting as a go-between across two specialist teams. When many such things are going on in parallel, there is often a capacity crunch with the legal departments on either side. Things as innocuous as vacations would move a deal out of a quarter.

?Buyers versus influencers

Depending on the nature of a product often the economic buyer must get full support from several departments and/or many users internally within the company. Those transactions tend to be complex where a salesperson needs to sell at all layers of the organization. Often a central purchase of a software or service would need departmental reviews. If the salesperson completely depends on the economic buyer, the transaction gets slowed down. Often a salesperson would need to assemble the required department heads to move the deal along. Even more, sometimes each department would require a user level pilot and feedback, and results must be processed and synthesized. While typically a salesperson will get help from product and services teams their timing and closure is on the line building support high, middle, low, and wide.

Your champion within the customer

Many times, a salesperson would have a relationship with a champion or a supporter within a customer organization. Sometimes the champion is often a domain expert, well known in the field. The champion could be your ardent supporter because she likes the direction, innovation, and roadmap of the product.? It’s good to have the support of such champions. One must be careful however, putting all eggs with the champion. Sometimes a champion would move, or the champion’s boss would change, or simply the political climate within the organization makes the champion less influential. As a salesperson, one must always be in tune with this dynamic.? The champion is passionate, but is the champion effective? Who around the champion is making what moves? Where did the budget shift? What is the relationship between the champion and the budget holder? Has that changed? The salesperson must continuously manage a dynamic stakeholder graph. Fortunately, there are sales intelligence tools to do this, but a tool is assistive, the onus is still with the salesperson.

?Managing to a date

Timing is perhaps the most complicated thing I have seen a salesperson manage. Progress is often measured quarterly and so there is significant pressure about a quarter boundary. In most backlog-based SaaS businesses, deferred revenue accumulation is the key metric and quarter boundaries should not matter for longer term value of a company. Still however, culturally, and because reporting is quarterly in a public company, what happened by a particular date is still culturally so important. I think the blood pressure of every salesperson shoots up near quarter boundaries trying to manage contracts, signatures, last-minute executive demos before someone signs off, last minute pricing concessions, all with people that the salesperson does not have any direct control over.

?… And all that I missed

This by no means is a comprehensive list of challenges that sales colleagues face. I am guaranteed to have missed many. You are welcome to comment and add things that I have missed and or not expressed very well. Great teams manage the inherent margin of error in execution via having a large enough pipeline and working to build pipeline all day long. There is certainly a deep role of analytics to understand statistical trends within a business and being able to forecast on a more sound statistical basis. That said, all the above still holds true day in and day out in the life of a salesperson… until we have Generative AI seller agents selling to Generative AI buyer agents in complex enterprise circumstances.

?Don’t get me wrong. Building great products for enterprises is also difficult. After all, at the end of the day, it is the product that delivers the terminal value to the customer. However, in the enterprise, getting the rite of passage to deliver the value goes through the sales organization. It behooves that all product leaders understand what efforts must go in to get that rite of passage.

If you enjoyed reading this feel free to simply repost in your feed. If you have colleagues who you think will enjoy regularly reading the newsletter encourage them to connect with Apratim Purakayastha and subscribe to this newsletter.