Three ways software companies can align their go-to-market model with changing buyer behaviors

How companies can keep up with the evolving market for software-as-a-service offerings.

In brief

• As more companies move to the cloud, they are finding a fundamental need to change the way they market and sell their solutions, according to an EY-Oxford Economics survey.
• Software companies can adapt by redesigning the sales model, enhancing marketing with digital capabilities and building fit-for-purpose customer success functions to optimize potential.

As more companies introduce subscription and software‑as-a-service offerings, they are finding they must transform their go‑to‑market approach to achieve expected growth prospects.

Where the traditional on-premises model has relied heavily on sales representatives and personal relationships, subscription and software-as-a-service (SaaS) solutions are empowering customers to be more autonomous as they try, buy and use the software. This is changing the relationship between software sellers and buyers, and it’s creating attractive opportunities for both.

2. Make better use of digital tools to improve lead and demand generation

Companies can reinvigorate lead and demand generation using digital tools and techniques such as campaigns that focus on buyer personas, supported by business development teams to develop qualified leads. Lost time with low-potential prospects can be a significant productivity issue. Companies can address this through better targeting and lead-qualifying. Sales teams can use social media to improve targeting by educating customers, nurturing leads and understanding customer needs. Many companies are using tools such as artificial intelligence, machine learning and predictive analytics to increase lead generation, promote upselling opportunities and grow sales. Most of our survey respondents cited outdated technology and lack of useful data as significant barriers to success, and over 80% said they have implemented or plan to implement new data analytics to improve insights and sales effectiveness.

3. Rethink customer success and talent

Successful companies are developing dedicated customer success functions to enhance customer experience, with metrics focused on adoption, use and expansion. The link between customer success (CS) and revenue is evident, as organizations continue to prioritize investments in dedicated CS functions. Nearly half of our survey population has also begun changing their recruitment approach to look for talent with SaaS sales experience. Coupled with this, adjustable sales compensation is an effective lever to promote subscription and SaaS sales, with 62% of companies citing total contract value as the most important sales metric, followed by cross-selling, upselling and renewals. More than 80% of companies use compensation incentives, such as sales performance incentive funds and cloud-deal multipliers, to help transition their business models.

During the transition period, significant change is needed in the sales and marketing function, even as customers may continue to use legacy processes in purchasing. Many software companies find it necessary to manage legacy and new processes in parallel, especially in cases where there have been acquisitions of SaaS start-ups that have not invested significantly in large account coverage and channel partners.

Traditional, in-person sales aren’t dead. In fact, as the online experience empowers customers with do-it-yourself capabilities, the customer relationship remains paramount. Companies navigating the change successfully are learning to combine low-touch, online capabilities with a steady, ongoing customer relationship approach.

Vikram Rao, Shane Odegard, Ranjan Rath contributed to this article.