At some level, most software companies navigate a relationship progression with prospective customers that includes the following elements:
- Discovery. A developer discovers and downloads the vendor’s solution. The developer’s initial objectives are a) to learn about the class of solution under review, and b) to evaluate the vendor’s implementation to determine whether it is a candidate for further consideration. During this process, the developer often seeks out additional learning material, such as white papers, webcasts and podcasts, to enhance his/her understanding of the solution domain. For a variety of reasons, many promising opportunities never progress past the Discovery stage.
- Evaluation. Assuming a positive experience in 1 above, the developer often performs a POC to prototype one or more components of the contemplated application. The POC may or may not also include performance benchmarking. Companies typically don’t allocate a lot of time for POCs, so the developer will often reach out to the vendor’s SE team for assistance in creating the prototype. This is where a traditional sales cycle starts, with the prospect typically becoming qualified on criteria such as project, budget, timeframe and economic buyer.
- Negotiation. This is the traditional process of constructing initial economic relationships. In volume markets, where initial ASPs are often quite low, there may not actually be much to negotiate. Properly priced entry-level deals usually close quickly, creating a “land and expand” platform for strategic account relationships.
- Upselling. This is the traditional process of expanding economic relationships into referenceable, strategic accounts.
At a glance, progressive engagement seems like a fancy term for what everyone already knows as the sales cycle. So why call it something different and spend a lot of time talking about it? Here are a few things to consider. First, the funnel illustration (left) reveals a cold reality – the overwhelming majority of interaction in volume markets takes place (mostly anonymously) in the Discovery stage. Poor execution at that stage can mean crushingly high sales costs, misdirected marketing spends and anemic bookings. Second, initial ASPs in volume markets are typically quite low – often well south of US$10k. It is, therefore, essential to implement a low-friction, high-bandwidth market “engine” that efficiently and consistently converts anonymous interactions to trusted relationships. During Discovery, self-service is king. Finally, every component of your business strategy – from products to services to demand generation to website content and functionality – must include capabilities to progressively and continuously engage your market audiences. At each decision point along the path, you must offer “no brainer” incentives to coax your audience forward. Easy to say, very hard to do unless progressive engagement best practices are wired into your organization’s DNA. Many CEOs feel they have this problem nailed; my experience is that very few have actually internalized the problems and defined the strategic framework for success.
In upcoming posts we will expose some of the go-to-market mistakes marketing and sales teams make most frequently; we’ll examine techniques successful companies are using to exploit progressive engagement; and we’ll separate the wheat from the chaff about volume market metrics.