Biggest mistake made by software firms and how to fix it

Would you drop an American solider (like the man on the right) into the rugged mountains of Afganistan, armed only with a small pistol and knife, asking him to do battle and defeat the heavily armed and native Taliban?

Solider photoThat man would have no chance at all.  Of course you wouldn’t.   But software firms do it every day.

But that’s the lesson that John Keenan, former Global Accounts VP for Oracle and current board member at several software companies shared with me in an interview.  Software firms have been doing it for years.

They hire salespeople, throw them into battle poorly armed, and when they fail after about six months, they fire them.  Of course, in a real battle, soldiers die — they don’t get fired.  But companies are doing this all the time.

Even now, CSO Insights found that most companies froze or reduced their marketing budgets, but almost all B2B sellers increased quotas.  The battle is growing tougher as we disarm.

It’s not a good time to be in software sales.  Unlike the US Army, business leaders keep using the techniques that worked years ago, but not longer do.

John believes companies need to use a much more strategic process, one which he calls CARE, which stands for Customer Acquisition, Retention and Expansion.  Companies spend an enormous amount on customer acquistion, but often have little to show for it.

CASE picture

“Using the software industry as an example, the 174 publicly traded companies spent $45 billion on sales and marketing (S&M) in their most recent fiscal year, making it, by far, the largest expense category (2).  Those high costs directly impact capital efficiency, especially for growth-stage companies where S&M spend often exceeds 50% of revenue.”

John states clearly “CARE in the high tech software industry is broken.”

“Far too many companies do a poor job of building brands, developing markets, managing deals, exploiting the installed base, solution delivery and optimizing spend levels, all of which are essential elements to continually attract new customers and expand account control.  I consistently see two root causes that span vendors of every market, size and stage in their corporate lifecycle – fundamental buying shifts have been ignored and CARE is neither viewed nor managed as integrated, end-to-end business process.

Powerful market, competitive and economic forces have fundamentally changed how customers buy and deploy technology.  Simply stated, vendors are marketing and selling to a customer model that no longer exists.  Two critical shifts have occurred:

  • IT spending has shifted from large, upfront deals to a multi-year period that spans the project’s lifecycle
  • IT spending is consolidating with the largest vendors at a stunning pace”

John also believes the siloed processes of the past — R&D, Marketing and Sales — need to come together and work as a cohesive unit.  He states flatly that these problems are fixable.

John’s concepts dove-tail perfectly with the content found at Find New Customers, my business.  That’s where one will find the highly regarded white paper, How to Find New Customers.

For companies looking to optimize each marketing campaign in b2b lead generation who wish to improve the way they acquire customers, Find New Customers is the place to go.  CSO Insights says companies need to improve the way they generate leads through great marketing campaigns and implement processes for business to business lead generation.

Jeff Ogden, the Fearless Competitor, is a demand generation expert and sales leader, as well as the President of Find New Customers, a lead generation company, who helps businesses leverage database marketing to optimize each marketing campaign for their lead generation campaigns and continually publishes the best lead generation ideas, so his readers can determine the best lead generation strategy to find new customers.