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The SalesLoft Funding and What It Means for Sales Technology

SalesLoft announced that it has raised $10M in venture funding this morning. SalesLoft CEO, Kyle Porter, published a post that provides a lot of details on SalesLoft’s fundraising process. It’s a major milestone for a company that is seeing tremendous growth in annual recurring revenue (ARR)  – the holy grail of successful SaaS businesses. The SalesLoft funding, however, isn’t the only major sales technology event of the last few months. Over the last quarter, we’ve seen a spike in sales technology investment, both in terms of total capital invested and number of deals. Most importantly, the TOPO Analyst team has noticed a significant uptick in sales technology adoption by end-user sales organizations. This uptick is seen in the data we collect from sales (and marketing) organizations, as well as the number of client inquiries our Analysts are fielding.

We believe the SalesLoft fundraising is yet another indicator that the sales technology market is experiencing rapid and accelerating growth. There are dozens of dynamics that are driving the sales technology boom. To simplify things, we group these drivers into three categories:

  • Changing buyer behavior
  • Modernizing sales organizations
  • SaaS technology vendors

These drivers are converging to create a perfect storm for the sales technology market. In this post, we’ll analyze each of these categories and explore what they mean for the sales technology market.

Changing buyer behavior makes sales’ job harder than ever

If you work in sales and marketing, you know that buyers are changing. More specifically, an abundance of digital information makes it harder than ever for sales to successfully engage buyers. To manage this shift, sales organizations need to account for a handful of dynamics when it comes to targeting and engaging prospects:

  1. The abundance of digital information means that buyers have less time to spend with sales. Many really smart internet-thinker-types call this “attention scarcity”. It just means that buyers are harder to reach and have less time to spend with sales people.
  2. Buyers have access to an unprecedented amount of information thanks to the internet. Whether it’s product reviews or comparison pricing, the internet has vested power with the buyers. Furthermore, in most markets, buyers now have access to more product options.
  3. Finally, buyers are predominantly online and demanding high quality digital experiences from sales organizations. We’ve seen this shift take place in marketing over the last 10 years, but now it’s about sales as well. In fact, a growing body of data shows that buyers don’t want to meet sales in person.

To overcome these challenges, sales organizations must use technology to create high quality, predominantly digital experiences that will attract and engage buyers. It may sound obvious, but what the buyer wants is a key driver of sales technology adoption.

Sales is modernizing and striving for scalable growth

Sales is modernizing. Sales modernization is really about a shift from non-repeatable growth (we call it “hero sales” when a company’s revenues are growing, but can’t repeat the sales patterns and behaviors that drive that growth) to scalable, predictable growth. The modern sales movement is everywhere:

  1. No where is sales modernization more evident than in the move from field sales to inside sales. By 2017, we predict that of the 14.4 billion hours sales reps will spend selling, 12.4 billion will be spent on inside sales. That’s nearly 2X increase in inside sales time and a 65% reduction in field sales time.
  2. The data we collected as part of our recent sales benchmarking survey shows a tidal wave of standards being adopted by sales organizations in areas like sales process, plays, metrics, and organizational design. You can learn more about these sales standards in this post, but they are a key driver of the scalable, repeatable growth that modern sales strives for.
  3. Finally, modern selling is also about using data to measure and optimize the performance of the sales organization. The gut instinct of the sales leader or sales rep is no longer sufficient given the amount of data that’s now available to sales teams.

inside sales hiring

Technology is a key enabler of modern sales organizations. It allows companies to move to an inside sales model, adopt and enforce sales standards in areas such as sales process/plays, and provides data to make better decisions.

The cloud changes everything about how sales uses technology

Cloud computing has experienced significant growth in recent years. In March, The Bessemer Cloud Index was tracking 42 publicly traded cloud computing companies with approximately $175 billion in aggregate market cap. In the sales technology market, SaaS is changing how sales teams adopt and use technology:

  1. Sales technology isn’t just about CRM anymore. Vendors are shipping products that automate key plays in the sales process and allow sales to deliver experiences that drive revenue. The market is rapidly moving from using technology to capture data to using technology to accelerate revenue.
  2. SaaS vendors are building products that sales people actually want to use. Historically, sales rep usage has been the third rail of sales technology adoption. High quality user experiences are becoming the norm with sales technology products and helping to drive day-to-day usage by reps.
  3. SaaS delivery models and economics are also making it easier for sales organizations to trial and adopt technology. It’s easier and less costly than ever for companies to run small pilots and track results over a multi-week or multi-month period to see if a specific technology delivers a measurable business result.

In a nutshell, technology vendors are building products that sales people actually want to use. That’s in stark contrast to the last 20 years of sales technology adoption, when the vast majority of sales people viewed technology as an encumbrance, rather than an enabler.

At TOPO, we believe the sales technology market is just getting started. We’re on the front end of a wave of sales technology adoption and investment that will transform how companies sell over the next 10 years.

About the author:  Scott Albro is the CEO and founder of TOPO. TOPO is a research and advisory firm that helps companies grow revenue faster. We do this by identifying the patterns, plays, and behaviors that drive exceptional revenue growth. It’s this data that helps our clients (the world’s fastest growing companies) enable their sales teams to drive more leads, higher conversion rates, larger average deal sizes, shorter sales cycles, and lower churn rates. The result? Our clients grow 2X faster than the competition.

  • Scott,

    This post is really helpful in describing the groundswell that is advancing sales tech.

    Perhaps we will see an explosion in SalesTech like we are seeing in MarTech? (callout to Scott Brinker’s marketing tech landscape).

    Given that your philosophy at TOPO is to focus on the alignment of sales to the buyer’s journey, I am wondering if you are concerned about the risk of the ‘shiny new toy’.

    The concern that the sales organziation rapidly adopts the flavor of the month sales app, accelerates sales velocity but does not advance the buyer’s agenda. For example, I am thinking that following up faster on a weak buying signal like a whitepaper download through SalesTech risks aggravating prospects.

    Robert

    • Scott Brinker has done a great job analyzing and framing the marketing technology landscape. It’s informed a lot of the research we’re doing on sales tech right now. There are, however, a couple of notable differences between the two markets. First, we don’t believe the total available market for sales tech is as large as marketing tech, given that marketing tech had consumer application. Second, we don’t believe there will be quite as many sales tech vendors given the smaller number of experiences sales (as opposed to marketing) can deliver to buyers.

      Regarding your question about aligning technology with what the buyer wants, winning vendors in this market will build products that increase conversions, average deal sizes, sales cycle length, revenues… In many cases, improving these metrics aligns nicely with a better experience for the buyer. But, to be totally clear, we see data where these technologies aren’t delivering what might be classically characterized as a high quality buying experience.

      • Thanks for the extra detail Scott.

        The other limiting factor for sales technology is the upside for automation within the job function.

        Marketing has the potential to completely automate their interactions with buyers.

        With a complex sale solution there will likely always be a need for some degree of human interaction between the buyer and seller.

  • Manuel Medina

    Great post Scott.

    I would like to offer 2 additional data points

    1- Sales productivity is declining
    To add further weight to your point on sales standards and process, this Accenture report (http://www.accenture.com/us-en/Pages/insight-five-imperatives-power-profitable-sales-growth.aspx) points out that “only 51 percent of sales organizations use a formal step-by-step selling process, only eight percent have a formal sales methodology implemented, sales teams spend less than 40 percent of their time selling “.

    The effect of this is that “just six in 10 (59%) sales representatives are expected to achieve his/her quota, down from 67% in 2013”. This is the first year of a decline in sales performance in almost 10 years!

    Adopting sales standards will no longer be an initiative but an imperative. It can only be expected that this huge market pull will spawn software that allows you to codify and automate the whole sales process. The current rounds of funding are merely the opening salvo of what I expect to be a singularity in sales.

    2- Sales as marketing
    I have no hard evidence here so would love to see additional data or wholesale disagreement, but more and more clients are telling me that their inbound funnel is converting at increasingly lower rates.
    My hypothesis here is that the old framework of creating a ton of generic content and waiting to be discovered or hawking it up to syndicates or social networks is hitting diminishing returns.

    Marketing automation activity scoring as a measure for sales engagement does not seem to be an efficient proxy any longer. Sales engagement is the best metric for sales engagemet – ie a connected call or an email reply. And sales automation tools will bring that – along with the choicest features previously available only to marketers such as A/B testing, scoring, and retargeting. And that is when it gets interesting because sales teams will be able to join their marketing comrades and attack accounts together, a la ABM, and create very targeted funnels per account that more directly correlate to revenue

    • Louise Harris

      You’re right Manuel. Sales productivity is down. It could be due to a number of factors, such as who is hired. Some sales representatives use technology to be lazy and not really go after the right target market for the service. With Invisume, an SaaS company, you are guaranteed to get salespeople who are the best in the country.

    • Louise Harris

      You’re right Manuel. Sales productivity is down. It could be due to a
      number of factors, such as who is hired. Some sales representatives
      use technology to be lazy and not really go after the right target
      market for the service. With Invisume, an SaaS company, you are
      guaranteed to get salespeople who are the best in the country.

  • Sangram Vajre

    Love the story and what Kyle and the SalesLoft team has been able to accomplish. For me the most striking thing is the culture that it has created in Atlanta – culture of winning, culture of being strong, and culture of helping customers see success in everything they do. Big fan of SalesLoft’s team and mission.

  • Powerful post that hits all the major points about the state of sales technology in 2015, and in condensed fashion. Great stuff, Scott.

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