Some days it seems like all I'm good for is buying other companies' software.
It's a little ridiculous. I get 5-10 emails a day pitching some SaaS solution. You probably get them too. Recognize any of these subject lines?
My blood pressure went up 10% just copy-pasting those. On the other hand, I can't fault these sales folks because, once in a while, I'm actually in market and end up having to buy one of these things.
And that's what this is about -- buying expensive software.
For our purposes, "expensive" is anything that costs enough money that the vendor has dedicated sales people who will actually schedule meetings with you, answer your questions, prepare demos, and negotiate pricing. Others have written about this before, but basically there is some threshold where prices jump from, like, $399/mo to $1500/mo. It's sort of hard to find software that costs $900/mo1 because I'm not going to spend that much money without demos and talking to a sales rep, but it's not really a large enough sale to support that kind of sales infrastructure either2.
For that reason, most real B2B SaaS solutions start somewhere in the $2000/mo range. If you're a growing company, at some point you'll suddenly find that every department in the company wants to buy SaaS products that are each $2000/mo. Yikes.
I'll walk you how these deals come together, what to expect at each stage of the purchasing process, help you ask the right questions, and ultimately negotiate price, while still remaining on great terms with your vendor.
So let's pretend you're in market for a business intelligence tool. Or a CRM. Or an inventory management solution. Or an email marketing system. Or possibly you're in market for all of these and SalesForce has promised that The Force.com Platform (r)(tm) can do all of this, plus get you out of unpaid parking tickets, and you will have lots of Success and not too much Software and it's going to be a lovely, platformy day.
The first thing you have to do is pick a couple of vendors. Even if you have a strong idea about who will be the best fit, I always like looking at two vendors, if possible. The competitive dynamics of the deal will give you some negotiating leverage later on, and even if the 'other' vendor ends up being weak, it'll give you just that much more conviction about the solution you picked. Anywhere between 2 and 4 vendors is great, and you can always drop unpromising ones at any point through the process.
Got a couple in mind? Great! If you don't have a contact there already, just fill out a lead form online and I promise you will have a sales rep at your doorstep in no time.
This is important to remember: the sales rep is on your side. This is someone who is very interested in both getting this deal done (therefore at a price you can afford, and with the features you want) and in making sure the solution is actually a good fit (because all sorts of things can go sideways after purchase, and that has real financial consequences for the rep).
Sales reps are your friends. They may frustrate you with their inability to answer technical questions, or give you a little bit of the runaround on how a particular feature works, but they are on your side. So be on theirs. When it comes time to put the screws to the vendor on pricing, it's your rep who will go to bat with their managers to get your pricing approved. So be friendly!
You've reached out and made contact with your sales rep via email. It's looking good and you are now a warm lead. The next step is an initial call.
It's somewhat unlikely you will actually get a demo of the software in this first call. Totally annoying, yes, but normal. Deal with it. Your rep is first going to want to understand your goals and your company, so she can put together a relevant demo later on. You'll definitely be asked to explain your role in the company. Regardless of whether I'm the sole decision-maker or just helping another department make a purchase, I always make sure the rep knows that I am necessary, but not sufficient, for getting this deal done. This puts me in a position where my concerns and questions have to be taken seriously, but also creates the propsect of additional stakeholders, who I can use as 'the bad guy' later in negotiations, and to buy myself time if I get in a jam.
Now, back to that first call: you have some important diligence of your own that you will need to perform.
But first, you will have to battle your way through the Boring Vendor PowerPoint of Irrelevance. After a few minutes of standard "can you see my screen?" GoToMeeting formalities, you'll probably get a slideshow like this:
I feel bad zoning out, but unless there's some buying process I'm unaware of where, like, you end up on sales calls based on that fact that you both swiped right on each other's LinkedIn profiles, you've almost certainly read this information on their website. I just never learn much via cookie-cutter PowerPoint presentations, other than slide transitions look the least crappy when screen sharing2.
I save my detailed solution and product questions for demos (which come later) and my approach in the initial call is to just kind of 'uh-huh' my way through the slides as quickly as possible so I can get to the real goal of the first meeting:
You're about to spend a bunch of money, so make sure you understand who you are partnering with. Here are the questions I like to ask in the first call (when relevant), and why I ask them:
There aren't right and wrong answers to the above, but trust your instincts. You really are going to be partners in making this work, at least through the sales and implementation period. If the vendor seems good, but the sales rep seems like an idiot, that's a red flag. If the rep is great, but the product story seems thin, that's a red flag. You're about to spend a lot of money, with a contractual committment that will be hard to unwind. Take your time, be thorough, and build conviction.
To get the most out of a demo, I prepare a list of requirements and questions in advance, and drill deep into the weeds during the demo. Don't be afraid to take the technical sales person off script. This serves two functions. First, it pressure-tests the system a bit. Is it flexible? Is it intuitive? Are the UX and data metaphors it uses ones that make sense to you?
Second, you can verify that the capabilities advertised actually work the way you need them to work.
I've never seen intentional dishonesty during a demo, but it's easy to interpret a question in a way that allows them to say "yes, we do that", but might not actually work for you. A real example: I was buying an inventory management system and asked "do you support EDI?" (EDI is a standard communication protocal for tracking the status of orders). The vendor said yes, and they do support it, but it turned out only for outbound orders, not inbound, which is where I needed it. You owe it to your company to be tenacious and dig in.
My last tip for demos is to have your screenshot tool of choice configured and ready to rock. These things can move fast so it's great to be able to save screenshots of each part of the demo to review later, and to send to colleagues who might also have questions. If you're getting demos of multiple solutions, this is especially helpful as they tend to run together in your memory after a while.
You're honing in on a decision - congratulations! Hopefully you have at least two vendors that look OK (you only need one, but having two is great for negotiation purposes). Next up you'll request a pricing quote, a statement of work (a scope), and a contract. Stay tuned for part 2 - how to negotiate price, and get the deal done.
1: The exceptions are things that start of cheap and get expensive based on usage.
2: I think there may be an opportunity for a start-up that doesn't really innovate on product but instead makes, e.g., a perfectly decent mid-market CRM product and innovates instead on the sales process by somehow avoiding it entirely, and charging, like, $900/mo, which would radically undercut their competitors.
3: The answer is: They all look terrible. Save the special effects budget for something else.