B2B software vendors’ efforts to streamline the Go-To-Market often pay off. Some vendors have been able to generate savings of 25% while increasing sales by 15% over three years; others have seen their partners’ contributions triple, and still others have increased the size of strategic deals by five times. Here’s how they did it.
Too often, technology companies try to sell their solutions based on product features (price, technical performance, functionality) in order to reach the broadest possible customer base.
Yet, customers are not actually interested in the products themselves, but in what those products will do for them. It is precisely the role of marketing and sales to articulate this value, and to define how this value will be delivered to customers, to the market.
The Go-To-Market (GTM) of technology manufacturers is thus a fundamental element of their economic performance, and all the more critical as the sale is complex. For B2B software vendors in particular, selling the business value of the offering has become a must, but implementing value selling brings profound changes in sales organizations accustomed (and for decades for some) to selling more technical performance at a given price than solving a specific problem.
The adjustment of the GTM to a solution sale or a business impact sale is a complex subject because it potentially addresses several dimensions and carries important consequences. Such an adjustment requires asking the right questions, in the right order.
ASK THE RIGHT QUESTIONS IN THE RIGHT ORDER
A technology manufacturer’s GTM, or how it addresses its markets, depends on what its customers buy in terms of products, solutions, and services to meet a comprehensive and complete need. This comprehensive need is itself defined by the reason why customers invest in technology.
It is the « Why » that explains the customer’s complete need, which is often only partially met by the technology. The comprehensive « What » thus allows for a better definition of « How » and with whom the technology sale will meet the customer’s need.
To define « how » to sell the business value of the technology, it is first necessary to identify the « why » and the « what » of the customer need.
THE WHY DEFINES THE WHAT
Customers may want to acquire technology for tactical, operational, or strategic reasons. Depending on these reasons, the components of the solution will be different and will call upon actors with various profiles. Thus:
- For a tactical need, such as the purchase of a feature (an antivirus, a CAD tool, a digital simulation tool), the customer essentially needs a product, product selection support, installation, and training.
- For a more operational need, such as automating or streamlining existing operations and processes (implementing an ERP, an MES, or a digital twin), it will be necessary to design target processes, select a solution, parameterize this solution and integrate it into an existing environment, manage the deployment program and in particular the change induced by the solution, and then measure the achievement of the value promised by the project. Selling is already much more complex, not limited to technology, and involves many players.
- Finally, for a more strategic need, the complexity increases further. Let’s take the example, which has been well known since the emergence of SaaS models, of renting the products that the company sells. The introduction of the « product as a service » concept is strategic because the company is transforming its offer and its positioning, which impacts the company’s economic model, the nature of the relationship it establishes with its customers, the services it will have to offer, and the price positioning of the new offer, which must not cannibalize the old one. The technologies chosen must be able to implement new operating modes (service level measurement, long-term customer relationship management), new management modes (service contract management), and new processes, and they must be operated by new roles in new organizations, and they must be in line with the business plan that led to the investment. Technologies must be part of a strategy and only be sold if they serve that strategy.
The sale of technology products or solutions must therefore always be repositioned within the customer’s exhaustive and complete need, which thus highlights what the customer is going to buy and what type of player he is going to buy it from. The more strategic the need, the more complex it is, and the wider the spectrum of internal and external stakeholders to be coordinated. The more complex the sale, the more necessary and sophisticated the organization of all these actors is.
THE WHAT DEFINES THE HOW – THE GO TO MARKET
The value proposition, the starting point of the GTM
The positioning of the technological offer within a business need (i.e. the value proposition of the manufacturer’s offer) is the starting point of its GTM, since it is this value proposition that defines the type of customers to which the publisher addresses itself, and the type of partners with whom the proposition must be sold.
For the same offer, the value propositions of a publisher can be multiple: They depend mainly on the sector of its customers (the needs of the private sector are different from those of the public sector, for example), and on the use cases put forward (improving the efficiency of the existing system, making it more agile and flexible, or enabling innovation), but can be completed by more detailed contextual elements: Horizon of realization of promises, level of returns on investment, modernization and preparation for the future…
Each value proposition is the subject of a specific ecosystem of internal and external actors that will position the value proposition in relation to the customer’s need. It is the set of value propositions that allow to define the typologies of partnerships needed, and the organization of the manufacturer’s sales force – Verticals, Sales, Pre-sales Engineers, Value Engineering, Evangelists, Partnerships, Services.
Quantitative market analysis as a condition for profitable operations and detailed sales organization
Not all customers are as profitable to cover as others: their investment capacity is the key element that allows to align sales costs to expected benefits, which ultimately allows to define the target sales force organization that will address a market, considering its potential.
Above a level of profit/cost ratio to be defined (the « Sales Cost Ratio », representative of a particular sector, but also depending on a company strategy and market conditions), a direct sales force is possible, while below this level an indirect sales force will be necessary to ensure the profitability of operations.
The quantitative analysis of the markets, coupled with the value propositions offered by the publisher (which often distinguish the sectors in which the customers operate), are the basis for the publisher’s market segmentation, which defines the « sales motion » in a given segment (direct sales, indirect sales) but also the size and objectives of the organization defined in the previous step.
The partners, natural and necessary complements to the implementation of the GTM
Most of the customer segments thus defined require the intervention of one or more partners, whether it is a direct or indirect sale; depending on the segment, the partners will act either as an extension of the editor’s sales force, or as its complement, or both:
- Partners in an indirect sale are mostly value-added resellers (VARs), or local scope system integrators associated with distributors, or technology partners who combine the manufacturer’s technology with their own. The contractualization of the relationships allows a general economic balance beneficial to all stakeholders (publisher, partner(s), customer). They extend the coverage of the editor’s markets by allowing him a coverage that he could not afford alone.
- The partners of a direct sale are often, for their part, carriers of the business value of the global offer. They precede or participate with the editor in the sales process, positioning the value of the technical offer in an end-to-end customer transformation process. These partners are most often consultants or large systems integrators but can also be technology partners.
Solution maturity, a qualitative element of GTM
The technical maturity of the solutions depends on the difficulty of their sale and deployment. Thus, the more mature and proven the solutions are, the more capable the partners are of integrating or installing them efficiently, instead of the editor.
Consultants, in general, are interested in the competitive advantages that a solution can provide to their client. They therefore always intervene very early in the value proposition offered. Conversely, resellers are exclusively interested in the margin they make on each sale, which leads them to focus only on proven, mature, easy-to-deploy solutions. Between the two, a combination of partner models co-exists:
A MAJOR TRANSFORMATION
Most technology manufacturers have tended to focus on the technical characteristics of their offerings, rather than on the marketability of their offerings, which is fundamental and critical to their success.
However, the marketing of these offerings must follow a rational approach based on the positioning of the technical offering within a business value approach provided to the customer. Our experience with these topics shows that a properly tuned and rationally defined GTM can reduce coverage costs by 25%, increase sales by 15%, increase the size of strategic deals by 5 times, or triple the contribution of value partners.
The resulting transformation effort is substantial for manufacturers used to selling a product or a combination of products and services:
- Sales forces will indeed have to develop a business value approach to selling, not a technology one,
- The inclusion of evangelists and solution architects in the sales force will have to be carried out with care and attention, to limit cultural clashes with sales forces used to selling products,
- Technology’s share of the overall project will decrease as sales becomes more strategic, and the sales cycle time will tend to increase,
- Sales will be much less replicable, as they will be much more personalized,
- New partners will need to be identified, introduced into the sales process, and managed by resources that know and understand them,
- The inclusion of partners with different cultures, habits, and processes will require careful attention to avoid culture shock.
GTM’s transformation issues related to the implementation of a value sale from a product sale are thus as much technical, economic, as cultural.