PLM sales is a fascinating thing. I can hardly find a product or technology that was so much oversold and misinterpreter like PLM. The history of PLM recorded so many stories about over-promising and under deliveries that you can write a book just about it. On the other side, I can belong it to some other categories of enterprise software and, actually, to enterprise software category as a whole.
I’ve learned one interesting fact about selling products and services. You can differentiate everything into two groups – “bought” and “sold”. Usually, products in “bought” category are defined as “necessities” – food, clothes, etc. These days, computer and internet connection are belonging to “bought” group as well.
When it comes to software, I found classification more vague. There are certain group of software we cannot live without – internet browser, email, text editors, spreadsheets. Most of them are either free or relatively inexpensive these days (thanks to open source, new business models and advertising options).
Opposite to necessities, products and services need to be “sold”. I can hear some of you can ask me a question about some categories of engineering software that clearly necessities these days (e.g. CAD package and accounting software), I still see them as something that needs to be sold in certain way.
I think, software vendors must be honest before thinking to put their software packages or services in a category of necessity. It helps to define right marketing strategy.
In my view, in PLM business, everything must be sold today. Depends on your role PLM “food chain”, you can be selling PLM strategic advisory, PLM product or PLM services. Don’t think life is complex on the side of companies selling PLM products and/or services.
In my view, it is equally complex for manufacturing companies and engineering services firms trying to implement PLM. I can see a clear absence of knowledge and information. In this part of my book, I want to discuss potential situations that companies on both sides of the PLM table can face when they embark to PLM journey.
PLM saving calculator dream
Let start from obvious. PLM is a value selling. PLM brings value to customer and you better show this value. It can make you life so much easier. However, it is not always easy. Few years ago, my attention was caught by Google Apps Saving Calculator.
I found this device in my mailbox. Not sure Google does it now. But back in 2010, I found it very cool. I wrote a blog post – PLM saving calculator dream.
Despite overall craziness, the Out-Of-The-Box functionality of this device is very simple. You select number of people in the organization on the top and see how much $$$ you are going to save when you move to Google Apps.
It made me think about how often we make thing too much complex. Ask average PLM consulting person how much you will save after adopting PLM system or strategy. It is very hard to get a straightforward answer. For example, if your organization is 200 people, you can save $1 million dollars or single digit % out of your IT budget. Current PLM systems and environment are very dependable on many pre-requisites, characteristics, options, etc. At the same time, PLM became mature in many organizations. Now is a good time to come with some Bayesian prediction about what PLM can save. Maybe even to use Google predictive analytics API.
PLM, Viral Sales and Enterprise Old Schoolers
Let me go first to my enterprise sales fellows. Enterprise sales was long time a place with little change. It was heavily ruled by the joke that “nobody ever got fired for buying IBM service or equipment”. But, I think, changes are coming to the place called enterprise sales as well. The technology influence from consumer business space is coming to enterprise. The world is changing very fast. The technology is a primary driver of all these changes. Think about the internet, mobile, cloud, social networks, consumerization, BYOD (Bring your own device ) trend… The list can be extended. It is hard to find a place where people are not talking about technological disruption these days. However, speak to enterprise sales people and you can find yourself in a different world.
The best place to see changes coming is to watch startup company. I was reading TechCrunch article Forget Virality, Selling Enterprise Software Is Still Old School. The author, Roman Stanek is CEO and founder of GoodData company selling enterprise software. The author is discussing challenges technological companies are facing when trying to apply modern B2C principles of technological startups to enterprise world. He explains the different between consumer and enterprise market software:
There is much talk in the Silicon Valley community of lean startups and pivoting. The idea is that you get going, learn from your mistakes, and then evolve toward what the market needs. In the B2C space, this process can work because the marketing costs are low or nonexistent and there is an efficient path to massive scale. The goal is that the uptake happens virally and the figuring out takes place with a safe cushion of huge numbers of users… This model just won’t work in the B2B space. New products, especially those aimed at IT, must usually be sold. Gaining a toehold in the enterprise is a separate swim lane from engaging consumers or startups who never pay for support or consulting.
So, enterprise software must be sold and not bought. At the same time, world is not standing still. The move from selling to buying is one of the most visible trend in consumer space, but not only. We don’t like when somebody is hard-selling us stuff. One of the most popular new marketing models these days is called freemium model.
In software industry, the roots of these idea is going back to 1980s and mostly driven by low cost of manufacturing. Software vendors distributed free floppy discs or CDs with promotion of full version. Internet and SaaS software provided additional boost to freemium model. Very often, freemium is combined with another new trend – viral marketing. In a nutshell, it is a technique combining usage of social network and online materials to increase brand awareness and achieve marketing objectives and product sales.
The discussion about about freemium and viral marketing in B2B and enterprise software is trending online and offline. You can find slides, materials and presentation about that. Established enterprise software vendors, consulting firms, enterprise IT, new enterprise SaaS vendors, startup companies are trying to understand if a new model will change the rules of enterprise.
I can recommend you 16 Ventures whitepaper – The reality of freemium in SaaS. Navigate to the following place to download the paper and see slides. Author brings examples of B2B companies that succeeded using freemium and viral marketing methods. In the slides it summarized as something called “Narrow-band Horizontal” with examples of Box.net, Yammer and Xobni.
I can see some traction of freemium and viral methods in PLM eco-system. Established software vendors and startup companies are innovating in technologies, marketing and business models. Here are some examples. Aras Corp is innovating in business model and offering so-called “enterprise open source” – you can use Aras Innovator for free and pay only maintenance and services. Autodesk, Dassault and some other software vendors are creating free mobile application that can be used by engineers and designers.
GrabCAD established free social network for engineers and now developing collaborative applications that can be used by engineers. I’m sure there are more companies that need to mentioned here. The list of companies innovating in this space is growing every day.
However, for foreseeing future, you cannot disregard existing rules of enterprise old-schoolers. Without that, you have no chance to succeed in enterprise software game. All these rules were created by enterprise software market on both sides – software vendors selling to enterprise and enterprise ITs buying enterprise software. Both sides are interested to keep the status quo. In most of the situation, I can see how freemium and viral applied to compete with “enterprise old shcoolers” from the marketing and distribution cost standpoint. However, large enterprises have no problem with money – they have problem with time. In order to change the rules of enterprise sales (PLM included), you need to look on the solution as a combination of cost of sales, value proposition, ROI and (most important) time. One of the combinations will be winning jackpot.
Why is it hard to sell PLM over the phone?
Life is transforming around us. Technology and communication are coming to our personal and business life. So, it comes to enterprise sales and PLM. The debates between new sales models and enterprise sales old schoolers are heating up. I posted about it last year and enjoyed many lovely conversations with sales people. My conclusion after that was – sales requires good organization and belief. Do you think you can successfully sell PLM over the phone? Personally, I haven’t heard about such examples. However, maybe new type of communication can help us. I was looking for some good examples of enterprise telesales to identify the pattern for success.
Mark Benioff is coming with some examples of CRM telesales in his book – Behind the cloud. The book is an easy read and fun – I recommend it to everybody if you have some free time. Play #41 from this book – telesales works (even though everyone thinks it doesn’t) was repeat in the following salesforce.com blog post. Mark brings top 5 points for a winning conversation in a successful sales call: Leverage the experience the prospect has had with other solutions; Introduce the value your product offers; Provide success stories from customers; Verify success stories by offering customer testimony; Provide a customer for the prospect to contact.
These points seems logical and simple. I was trying to apply it to my experience and compare to my notes from conversations with sales people to see and analyze how it can be applied in PLM sales. Why PLM sales conversation over the phone is hard?
I put some of my thoughts below:
1-Leverage the experience the prospect has had with other solutions.
PLM competition (as well as previous customer experience) can be separated into two large groups – existing PDM/PLM solutions and homegrown systems. The first group is usually a result of heavy investment company made for the last 5-10 years. Second group is a solution developed by internal people (often with heavy inclusion of Microsoft Excel, Microsoft Office and other non-PLM specific tools). From my experience, it is very hard for customer to summarize main pain points. Companies are looking for more functions and lower TCO. Very often customer is not transparent about the existing PLM system situation, especially when it comes to the need to retire existing system (PLM vendor shifts to another solution/version) and existing solution is draining into problem. In a generic way, experience can be summarized as high cost, complexity and absence of specific functions. If you succeed to come to the last points, it will be clearly the success in your call, since you will be able to build your sales strategy based on these missing functions.
2- Introduce the value your product offers.
As I speak in my blog about PLM differentiation, many of them are very complicated to explain. Marketing story looks great – low cost, easy implementation, streamline your company processes, etc. However, devil is in details and the story about them is long and complicated to be told to a single phone call.
3- Provide success stories from customers.
PLM companies have large set of successful implementation stories. The problem with these stories – they all look the same on the high level – “we (company) had a problem in engineering and manufacturing process, complexity of competition, bad collaboration. With XYZ PLM solution we succeeded to solve these problems and our life is good”. It is very rare (but possible) to see PLM specific examples of what process and how company improved their work environment with PLM, rather than say it is good now.
4- Verify success stories by offering customer testimony.
PLM implementation testimonial are too generic and raising too many questions from too many people in the company. It goes way beyond what is possible to answered via phone and/or WebEx session.
5- Provide a customer for the prospect to contact.
In my professional life, I never had a problem to provide reference customer to call. However, I’ve heard that on a broad scope engineering and manufacturing organizations tendency is less speak about how their working processes are organized. The diversity of manufacturing organizations plays another role and making “apples to apples” comparison very hard.
The uniqueness of existing PLM solutions and sales is high level of engineering and technical complexity. So, to maintain a successful PLM sales conversation you probably need to bring in some specific technical / functional use cases and pain points the solution you are selling can solve in a unique way. It will help you to win over the customer mind and build a foundation to continue sales process.
How to sell PLM ROI