Why software sales today looks a lot more like media sales
And how sales leaders can take advantage of it
Software companies and media companies share the B2B model but have historically taken very different approaches in executing it.
Software sales has typically been focused on going to great lengths to acquire customers, knowing they would be locked in to long contracts, whereas media sales has typically been about going to great lengths to retain customers, knowing that they are constantly evaluating new vendors.
However, the world of software sales has changed a lot in the past year and now looks a lot more like media sales in certain areas. This change presents an opportunity for software sales leaders to capitalize on.
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The new and striking similarities between software sales and media sales
There have been 3 big changes in software sales which make it look a lot more like media sales:
Switching costs for customers are lower than ever
Customers need to see recurring impact to consider renewing
Self-serve channels have emerged as a way for buyers to bypass sales
Switching costs for customers are lower than ever
Software is a budgeted line item for most of today’s companies, so today’s software sale is less about convincing stakeholders to find budget from other parts of the enterprise and more about competing for the budget that already exists. This looks a lot like media sales, where advertising is a budgeted line item and vendors compete for a piece of it (aka the test budget).
At the same time, today’s software market is is more crowded than ever with dozens of players in every niche — G2 cites 115,000+ companies listed across its 1,700+ categories. This makes it much easier for buyers to switch vendors as there are multiple companies with similar offerings in every category. This looks a lot like media sales, where the majority of vendors in any given category offer access to similar inventory, targeting options and reporting capabilities and buyers routinely test and evaluate new providers.
Sales leaders can capitalize on this by creating a precise ideal customer profile to focus on their most valuable prospects and stand out from the crowd as a trusted expert. The smaller you make your target market, the deeper your expertise will be and the more likely you will be viewed as an expert in your category. You’ll also have fewer competitors. By contrast, the broader your ideal customer profile, the more competitors you will have and the more generic your messaging will be, causing you to be lost in the noise.
Customers need to see recurring impact to consider renewing
With more vendors competing for their business, software customers need to be regularly reminded of the impact they are getting from their vendors in order to build loyalty and deter switching. Your day-to-day champion can no longer push through a renewal on their own as other stakeholders will push back and have their own opinions on which vendors to use. And upsells will no longer land in your lap as customers are being bombarded by your competitors.
Solving this this requires taking a proactive approach to managing customer relationships, which looks a lot like media sales account management. Media sales account managers know that their customers will consider cutting them at least once a year, if not once a quarter, so are forced to be on the front foot. It’s a fundamentally different mindset to the traditional customer success role.
Software sales leaders can capitalize on this by turning their customer success team into an account management team; building renewal and expansion processes that focus on high impact moments and training customer success reps to think and act more like salespeople and less like customer support people.
Self-serve channels have emerged as a way to bypass sales
Product-led growth has become a popular GTM strategy for selling software, as people look for the buying experiences in their business lives to catch up to the buying experiences in their personal lives, where they do their own research, bypass traditional salespeople and look for instant gratification.
This looks a lot like media sales, where buyers have been signing up to self-serve platforms, building campaigns and reviewing results for the past two decades. Google Adwords launched way back in October 2000, Facebook Ads will be 16 years old next month, even LinkedIn Ads has been around for over 10 years. (There have been hundreds more self-serve ad platforms during that time — I personally tested 50 of them in 2009).
The vast sums spent on developing these self-serve media platforms have produced innovations like objective-based campaigns to improve customer acquisition, algorithmic bidding to reduce management overhead and robust measurement and notifications to demonstrate recurring impact and reduce churn. By contrast, product-led growth is still very much in its infancy with time-limited trials and drip campaigns that still feel like a lightly automated version of a traditional sales process.
Software sales leaders can capitalize on this by adopting a framework for diagnosing a self-serve journey to identify weak points in their self-serve funnel, understand the drivers of low conversion and implement appropriate solutions to remedy the problems. Making small gains in stage-to-stage conversion is transformational for the profitability a self-serve business due to the low cost of customer acquisition.
But some key differences still remain between software sales and media sales
I still see 3 key differences between software sales and media sales, however they too are changing:
The buying process is still a side project for software buyers
Software companies still have very broad ideal customer profiles
Software companies still use a lot of sales automation
The buying process is still a side project for software buyers
Software buyers are busy executives running departments, functions and entire companies, who make maybe a couple of purchases a year and are often unfamiliar with their own company’s purchasing process. Buying software is a side project for them. This is very different from media buyers, whose primary job responsibility is buying and evaluating the performance of media and are used to working with vendors within a framework of industry norms and standard terms.
This is why a clear sales process and a customer-centric sales methodology are so important in software sales because great software salespeople know that getting their champion excited is just the start of the buying journey and that they have to help their champion navigate their own procurement process.
Will this change as software budgets continue to grow? Will software buying become a full time job? Will companies like Vendr and Vertice become buying agents who evaluate and select products for their clients in addition to running the procurement process? I can absolutely see it happening in the next 5 years.
Software companies still have broad ideal customer profiles
My own recent survey of software startups showed that 60% have a broad ICP that lacks precision. Yet the same survey showed that startups with a precise ICP are more likely to connect with their prospects and to convert meetings to opportunities.
Media companies figured this out a long time ago. 10 years ago I built a $30M media business with just under 500 customers in a very specific customer segment. At one point a well-credentialed software sales VP approached me looking for a new job. When I mentioned these numbers to him he was shocked and couldn’t wrap his head around it. “There must be thousands of businesses that you could sell to!”, he said.
Will this mindset change as customer acquisition costs continue to rise and capital remains constrained? Or will old habits die hard? With the cost of starting a company continuing to drop I do think we’ll see a new generation of bootstrapped software companies succeed with super niche ideal customer profiles.
Software companies still use a lot of sales automation
I’ve always been fascinated by how little salestech is used in media sales. Ask your typical media sales rep if they use tools like Salesloft, Outreach or Gong and chances are strong that they won’t know what you’re talking about. Out of 80 case studies on Gong’s website, only 1 is a media company (LinkedIn).
Maybe its because media sales teams know who has money to spend on advertising and can do the outreach manually — media sales teams generally have full cycle AEs doing both prospecting and closing and rely on warm introductions and networking to build their pipeline instead of cold outreach to large lists. Maybe it’s because software companies’ ideal customer profiles are broad and the process is still a side project for software buyers so getting their attention is harder.
Will this change? A lot of people who have grown up in software sales love these tools and can’t imagine life without them, so I don’t see it changing. But I do think we will see automation used more for multi-threading existing accounts and demonstrating recurring impact to multiple stakeholders, rather than for desperately trying to acquire new customers.
Makes so much sense. Great comparison.