The SaaS Buying Experience: Mapping How Businesses Buy Software
Nowhere is the buying experience changing more than in the software industry. As little as five years ago, large sales organizations and low quality products dominated the market for business software. In fact, many of the world’s largest software companies were notorious for their aggressive, in-person sales tactics and hard-to-use products.
Given the importance of the buying experience (our research suggests that companies that provide great buying experiences grow 2X as fast as their peers) and how fast the software buying experience is changing, it’s critical that marketing and sales professionals understand how buyers are purchasing software today.
Why the software buying experience has changed
In recent years, the software buying experience is much improved thanks to three factors. First, the emergence of the software-as-a-service (SaaS) model has had a profound impact on BX. While SaaS started out as a movement to deliver better products, many of its core principles have crept into the world of marketing and sales and impacted the experience that a buyer has with the company. For example, free trials are now common in the software industry – something that was extremely rare before the emergence of SaaS.
Second, there’s been a major shift in power from software vendor to software buyer. Much of this is due to the internet of course. Buyers have access to more information online, are able to more easily connect with their peers, and can identify and evaluate different options. For example, pricing information is now readily available for most software products – again, something that was uncommon a few years ago.
Third, the consumer internet has conditioned business software buyers to expect a good experience when buying software. The fastest growing software companies borrow heavily from the likes of Facebook, Twitter, and other big consumer sites when designing their buying experiences, because those are the experiences that buyers want, even in a professional context.
With this much change taking place in the industry, it’s critical that marketing and sales understand exactly how buyers are making purchasing decisions.
Key dynamics in the SaaS buying experience
A lot happens in the SaaS buying experience (you can see an example of a 27 step SaaS buying experience map below), but there are five dynamics that marketing and sales professionals should pay particular attention to.
1. The buyer is completing the vast majority of their purchase without engaging vendors. Our BX data suggests that buyers are completing a little over 60% the buying process before engaging a vendor. Sound a little scary? It is, particularly when you understand the next dynamic.
2. Vendors that have good brand recognition and easy-to-use trials have a huge advantage over the competition. That’s because many SaaS buyers won’t engage in more than one trial. Our data shows that this is particularly true in the small and medium size business market where buyers tend to comparison shop less. You need to make sure that buyers find your trial first. You also need to make sure that you don’t squander that opportunity when you get it.
3. A lot of buyers are frustrated by SaaS trials. To be certain, the free trial is a major innovation in the software industry. It’s just that many vendors have failed to make trials easy to use. They’ve cracked the code on making them easy to sign up for, but there’s still a lot of work to be done on actual usage. Setup and configuration issues continue to stymie buyers, as does ongoing usability.
4. In many cases, the real decision-maker is only tangentially involved in the buying experience. Because there’s so much information available to buyers and SaaS is a lower risk investment, many decision-makers are delegating the buying process to other people. While, the decision-maker may kickoff the buying process and make the final decision at the end, someone else is doing the vast majority of the work. It often surprises marketing and sales that a new decision-maker enters the fray in the last 5-10% of the buying experience. Often times, this person needs to be engaged, educated, and sold from scratch.
5. The improvement in the software buying experience has changed the prevailing dynamic in many sales organizations. Some of our clients don’t have sales teams – they have order taking teams. A variety of factors are contributing to this issue. The buyer does a lot of their work on their own now, obviating the need for sales involvement. Furthermore, the trial is such a dominant part of the buying experience that sales simply acts as account management for free trial users. Finally, in app ecommerce makes it possible for buyers to close themselves without any help from sales. Order taking isn’t a bad thing in and of itself, but it does suggest that these businesses could be growing faster if they were actually selling.
The 27 step SaaS buying experience
What’s the SaaS buying experience really like? Experiences vary, but it’s possible to develop maps for particular markets. For example, we recently mapped the buying experience of a small business thinking about buying customer service software for a client. We identified 27 distinct steps that the buyer takes as they move from status quo to final decision. Many of these steps can be applied to other software markets as well.
1. One person support org – there is one person handling support cases at the business – often this is the CEO/owner.
2. Using Gmail/Google Docs – the company has a single person using Gmail/Google Docs for customer support issues.
3. Workload growing – the business is growing and with this growth comes increased amount of customer support work.
4. Number of tickets growing – the number of customers/tickets/complexity of issues growing rapidly.
5. Two people now working support – CEO hires/assigns employee to work support issues.
6. New employee not self-sufficient – the assigned employee is constantly pinging CEO and other people at the company to help with support issues.
7. Two person workflow issue – this creates workflow issue where company can’t track whether issues have been resolved.
8. Assign new employee to find solution – the CEO assigns new employee to find technology solution.
9. Collects basic info – the buyer uses Google -> 3rd party sites -> vendor content to collect basic information and understand market landscape.
10. Talks to peers – the buyer collects information from peer/end-users on what requirements and vendors.
11. Core features identified – the core requirements are identified as basic ticket management and online support.
12. Gathers pricing data – the buyer gathers pricing data from well-known vendors’ landing pages.
13. Focuses on ease of use – the buyer realizes that low set-up costs and ease of use are the most important requirements.
14. Develops list of vendors to engage – the buyer identifies 1-3 vendors who seem to meet requirements at first glance.
15. Creates vendor evaluation plan – the buyer develops demo/trial-centric plan to engage shortlisted vendors.
16. Visits 1st vendor’s site – the buyer visits perceived leading vendor’s site 1st and consumes product, pricing, and resource center content.
17. Signs up for free trial – the buyer signs up for free 14 day trial on home page; wants to get started right away.
18. Just needs it to work – the primary objective for the buyer at this point is to determine how easy the software is to setup and use, as well as whether it will satisfy core use cases.
19. Starts using trial- the trial actually requires real work to start using, but the buyer perseveres.
20. No other trials – given the time that setup takes, buyer is highly unlikely to invest in a trial with a second vendor.
21. Takes call/email from sales – sales contacts buyer via phone and email to offer support thru trial. The buyer appreciates this, but given the tactical nature of the conversation, disregards most of it.
22. Able to satisfy core use case/requirements – after spending two to three weeks using the software, buyer determines that it meets core requirements.
23. Takes 2nd call from sales – the buyer receives a 2nd call from sales reminding the buyer that trial is about to expire.
24. Internal meeting on decision – the buyer holds a quick meeting with the CEO to make recommendation and the CEO agrees.
25. Buyer decides to purchase – the buyer moves forward with purchase without evaluating other options.
26. Enters credit card info – after a quick reminder from sales, the buyer enters their credit card information in the app.
27. Buyer becomes customer – at this point, the trial converts to full customer access and the buyer begins using software.
While no buying experience map is perfect, for each major step, the best marketers and salespeople will understand the buyer’s psychology, what information they’re consuming, the interactions they’re having, what’s required to move the buyer to the next step, and potential obstacles. Understanding these things as you interact with the buyer will lead to higher conversion rates and more revenue.
About the author: Scott Albro is the CEO and founder of TOPO. TOPO is a research, advisory, and consulting firm that believes in a really simple, but powerful idea – that the most important thing in business is to deliver a great buying experience. By connecting everything we do back to this core idea, we help sales and marketing organizations exceed their revenue targets. You can connect with Scott on Twitter.