Ever conceive an idea and then find someone else takes it to market? I had this feeling when reading today’s release of Sandhill’s publication. Mike Mace forwarded it to me and said ‘it’s your song’. Even better, is that the idea is captured well. I have to share…
The CEO of JotSpot just did a great job of articulating some specifics of how the fundamental paradigm of sales and marketing in high-tech is changing. I’ve been having these conversations with clients that the Enterprise are effectively ‘consumers’ now given the ‘new world’. Software in the consumer world is being subsidized by advertising and production models, where the software can be ‘given away’ and commerce still achieved. This will, of course, seep into the Enterprise community. For a few reasons. But one is that the users are now able to (and wanting to) make business decisions and the new SaaS model enables it.
What it means is that all high-tech companies need a critical skill and capability to compete in the future. And that skill set has a lot to do with consumer marketing and business frameworks.
An excerpt from Sandhill’s post:
Empower End Users, Appease IT - The consumer enterprise embraces a new philosophy. Its point-of-view is based on the principle, “Empower End Users; Appease IT.” This contrasts the old model which revolved around empowering IT. The new model is not disrespectful of IT, it simply seeks to first meet the needs of the software’s users and keep them happy. Increasingly, these end users are the primary decision makers for business software purchases.
Product Design Matters - In the consumer market, design matters a lot. How a product looks impacts how it is used. In enterprise software, product design has historically not been a buying criterion. In the new consumer enterprise, software is sold directly to the group using the product which increases the importance of design. A clean, easy-to-understand user interface with an appealing visual design is critical to success. At JotSpot, 6 of our 22 employees are dedicated to product design and to making our browser-based software act like a desktop application. Finding a traditional enterprise software company with that level of commitment to design would be difficult.
Bottom-Up, Not Top-Down Sales – Traditionally, enterprise software has been a top-down sale. Vendor sales reps reach as high into the organization as possible, sell the CIO, and receive commitment from the whole organization. This process makes for a long sales cycle. In consumer products, there is no notion of a top-down sale. Consumer products are sold one at a time, which is by default, a bottom-up sale. Each consumer must be sold and satisfied, individually.
Expense-able, Not Approvable Pricing – Selling from the bottom-up affects pricing. At JotSpot, we want our products to be “Expense-able, Not Approvable.” We price our products at a price point low enough that an individual can choose to take ownership, buy the product using a personal credit card and expense it back to the company. After the product is proven useful and the number of users grows, the customer advances to the next pricing level. Our pricing model is set up as a series of adoption-based pricing plans which charge more for more usage.
Direct Marketing, Not Direct Sales - The traditional enterprise marketing model is very inefficient but its large sales deals tend to cover up the cost of that inefficiency. Consumer enterprise vendors will not have that luxury. Marketing must be efficient: footholds in key accounts are established from online leads, subsequent contact takes place by phone and online meetings. Few sales calls and mass marketing campaigns take place.
But this poses as many opportunities as risk, as I mentioned on my Sunday post. For those companies that have historically done only enterprise selling (aka Cisco), they have a new way to drive adoption. For those companies that have largely done consumer models (aka Adobe, Intuit), they now have a new access point to the Enterprise.