Jacco van der Kooij is the founder and Managing Partner of Winning by Design, a Silicon Valley based B2B sales expertise firm with offices across the globe. Winning by Design helps the next generation of SaaS businesses, including some of Notion’s fastest growing portfolio companies, to transform their sales operations. His team’s work is based on experience gained from working with over 150 SaaS startups and corporates, which has led to two significant outcomes.
First, Jacco believes that customers, their needs and their buying process has changed forever. Secondly, that a new customer-centric sales methodology is demanded by customers. If you launched a business 20 years ago, the window of opportunity was measured in years, offering a bit of leeway for failure.
The trends in the SaaS world that are changing sales
That is no longer the case. Jacco says that today, two trends are ripping up the rulebook. “First, in the platform world, the difference between first position and third is radically greater. It’s not like Pepsi and Coke. LinkedIn, Twitter and Facebook are uncontested leaders. There’s room for second and third players – especially in different markets – but there’s no profitable player in 8th position.
“Second, the window to success is much narrower. Modern companies use SaaS platforms: containerised development, marketing automation, ERP and Salesforce.
With a SaaS stack, you can launch a reasonable company within 2-3 months – and know that it will scale from a laptop to global reach seamlessly. So if the window of opportunity two years ago was 18 months, it’s more like 9 months now.”
For all the talk of ‘pivots’, there’s little to no room for error.
In parallel, the SaaS revolution has changed go-tomarket strategies, too. After the financial collapse of 2008, discretionary spending across commerce simply disappeared. Nobody was prepared to take risks on new products – and they didn’t have to; because SaaS pioneered the remodeling of service provision onto a low-risk OpEx basis. Clients from SMEs to corporate giants could turn the tap on and off at will and pay only for what they used.
However, companies delivering on an OpEx basis make their profits not at the time of closing a sale, but on expansions, upgrades and renewals, and Jacco says this has required a similar refactoring of sales operations. “We call it impact”, he says:
“The sales effort must shift from being volume centric and focused on leads and closing, to impact – making the customer successful. Both American and European companies have had a hard time adjusting to this – because sales is no longer one-size-fits-all or built around your organisation; it’s built around customer personas and their varying needs. Different customers respond to different models (provocative selling, consultative selling, solution selling, transactional selling), and you will find yourself selling to many different people in an organisation at different times; each demanding a different value proposition.
“For example, if you thought that only CXOs made purchase decisions, you’re very wrong. Now that services are OpExed, decisions that were $50,000 across five years are now $8,000 per year – and that sort of decision is delegated not just to line managers but ultimately to users. Services like Marketo are successful because the user experience and interface are superb. Similarly, Dropbox remains overwhelmingly popular despite security concerns, because effort has gone into the end user experience: it’s a product that users endorse. Today’s sales process engages with users, managers, technical evaluators and senior strategists all at once. This makes a mockery of old sales mantras like BANT (Budget, Authority, Need, Time). BANT validates customers to deliver value to only one party in the conversation: the wrong party.
Jacco continues, “Similarly, traditional sales teams also like to negotiate. But there’s no discounting in OpEx sales. Most SaaS products have transparent pricing, listed on their websites. Plus, if you discount OpEx, you’re discounting across months and potentially years – repeatedly reducing your rate, despite the fact that your true value will be delivered in the service you give across those months and years. In the old days, discounting mattered because a customer might only have a $50,000 budget for a $60,000 product. But today, across five years, that’s $1,000 per month – are you really going to engage in discounting over that?”
In short, he says: “Think big, act small, move fast.” Have an eye on the scale of the opportunity and what the sales organisation might therefore look like. But treat every customer as though they were your whole world. And assume that speed is of the essence as never before; because there will always be someone as hungry as you, pushing for market share.
• The top two players in a SaaS market will win big. The rest will never be more than also-rans
• With launch cycles for tech products down to 2-3 months, your window of competitive opportunity is 12 months at most, and shrinking.
• SaaS requires that service providers invest in the success of their customers. It’s a consultative sell, and to many different people in an organisation.
• To succeed in the US, you must cut your operational costs by learning how to sell at a distance.
• Sell from your home market first – if you can do that, you will have refined your product enough to succeed.
How to win at SaaS sales on any deal size
So, your task is simple: set up a sales operation, with no margin for error, in a new country, and using evolved models. What can you do to maximise your chances? Jacco offers several priorities:
Excel at online distance selling
In Europe, we’re used to driving everywhere to see clients. The US is too big. So, you need to get good at distance selling online – for example, “tab based-selling” with slides in a Powerpoint are replaced by tabs in a web browser. “It’s the only way you can hope to see everyone you want to see fast enough”, says Jacco. “It’s also how you avoid building a complex regional sales force – expensive people who don’t know the DNA of your business, don’t understand this high-velocity environment and aren’t committed to it.”
Go where your customers are
When you (or a co-founder or trusted early hire) make the move to the US, Jacco advises locating where your customers are. “Focus on your best customer base rather than the whole of the US”, he says. “Most SaaS companies will gravitate towards San Francisco, but if the customer base is Chicago’s creative agencies, go there. Traditionally European companies will choose New York because of the time zone – but if their customers are on the west coast sooner or later they will end up quitting the New York and rebuilding it all over again in the Valley. This costs time.
Sell collaboration, not value
“Europeans still like to sell value propositions: how much they can lower costs or increase revenues”, says Jacco. “But in SaaS, that doesn’t work. You can’t keep reducing costs or increasing revenues – and after year 1, the client gets used to the benefit they receive. Instead, we must get used to selling partnership, collaboration, security and shared goals.”
Build out your relationship sales operation
“Your sales organisation must include a product expert. You’re no longer ‘selling what’s in the truck’, you need to listen to the market and feed needs back to base in order to refine and define the product appropriately for the American market.”
Sell from home first
“You should always be willing to travel, but you can also sell from your home country first – if nothing else, to get to know your market. This is another good reason to refine your online sales skills.”
This story was taken from Notion’s Crossing the Atlantic Report