Sales teams in 2023 face a new challenge — expenditure is being scrutinised more heavily than ever before, win rates are dropping, and sales cycles are lengthening.
Winning By Design analysed their clients performance from 2021 to 2023 and have seen that win rates in enterprise deals (i.e Avg Contract Value of $100,000+) have dropped from an average of 26% to 17%.
Meanwhile, the average startup saw a 24% increase in sales cycle from early 2022 into 2023. 60 day sales cycles are now 75 days. This increase in the time taken to close a deal was most prominent at either end of the ACV spectrum, with both the very smallest and very largest of deals most impacted.
One of the reasons for these adverse effects on selling is the more complex decision-making process companies are now going through before committing to any spend. With widespread reports of a much more prominent role of the CFO, or financially minded COO.
For those still establishing their Go-To-Market Fit this increased complexity of sales process, and need to get buy-in from multiple stakeholders makes getting to commercial repeatability even harder.
Despite the macro headwinds making selling more difficult, needing buy-in from multiple stakeholders during a sales process is not something new to commercial organisations selling B2B.
In fact, as far back as 2017 Hubspot published data which showed that there were on average 6.8 stakeholders involved in a B2B purchasing decision, with this figure on an upward trend. It’s also safe to assume this skewed higher for higher contract values.
One of the big challenges when dealing with multiple stakeholders is when there is a significant gap between the budget holder (this could be a CFO, COO, VP or Head of Department) and your user.
With the latter typically the individual or group of individuals acutely feeling the pain your problem solves, but needing to convince (with your help!) the budget holder that the investment into your product is worthwhile and ROI positive.
Bridging the gap between this buyer (or budget holder) and your user, appealing to them both, is critical in your pursuit of go-to-market success.
Bridging the gap
Given the heightened role of the CFO in 2023 startups are coming up against this scenario even more frequently, and I encourage every startup I’ve supported through this challenge to work through the following set of questions.
Throughout I will use the example of Kernel, a company I worked through this with whose product allows creative teams to design with real-world data.
1. What are your value propositions
It’s vital to understand your high-level value propositions:
For Kernel they boiled down their high-level value propositions to the following:
Often your value propositions will be about improving the efficiency and/or quality of an existing process or system of a potential customer - similar to the above.
2. Who are you personas (buyers & users)?
With clarity on your value propositions the next set of questions are around your personas.
When you have users across multiple departments, you enter the realm of multi-stakeholder selling. Needing to understand the needs & requirements of each group, and convincing each you are the solution for them.
Equally, when there is a gap between your buyer and user(s), again there’s a need to convince multiple stakeholders during the buying process.
Today we’re focusing on how to overcome the latter.
For Kernel, their user was the “designer”, and their buyer was typically a “CPO” or “VP Product”. There was slight variation depending on the size of org in question, but in each instance we had a gap between the individual contributor (the user), and the manager (who owned the budget but wouldn’t interact with Kernel day-to-day).
3. How do those value propositions relate to personas?
Having established your value propositions and personas, we need to consider how these relate to one another.
Regularly, your user will be experiencing the pain your product solves each and every day. It’s the user having to endure an inefficient workflow, or poor outcome. Your buyer is typically less acutely aware of the problem at hand. They may understand there is inefficiency, but don’t have to feel the pain in their day-to-day work.
In Kernel’s case, our user knows the pain of manually inputting data into mockups & prototypes and how many hours p/w are wasted enduring this inefficient process. Additionally, this same user may have shipped designs in the past not using real-word data, and have had to roll-them back and start again when production-level data broke their design.
Whereas the buyer will likely experience this from a different perspective. They may see a design team needing to linearly scale with the amount of work that needs to be shipped, they may see the time taken to ship increasing, or similar. They’re aware of inefficiency but aren’t experiencing the problems directly.
4. This informs your messaging
With an understanding of our value props, our personas and their perspective, we can more effectively message to each stakeholder during our sales process.
To the user, we want to talk about removing an inefficient task for their day-to-day, and how they deliver higher quality work with real-word data in their designs. You can see this reflected in the quotes on the Kernel site, which marketing are directing at the user:
“Live data plays a big role in my design process. Thanks to Kernel I can now use it without any hassle and shorten my process which makes it a key tool for me”. - HeyGo
“Kernel is a huge timesaver and gives you a better picture of how your designs will look with real content”. - Papier
“Kernel is an essential part of my daily workflow as a product designer. Viewing my designs with real content is essential for creating the best products possible.” - Tilt
Equally, messaging to your buyer should reflect their own needs & perspective. In this case when talking to our buyer we may want to talk about…
The buyer is looking to make an informed decision on whether to invest in your product, focusing on the ROI your product will drive. Messaging which reflects this will help them along the way.
Are you building something folks are willing to buy?
Often the above process will start to raise some red-flags. As founders, we’re very good at spotting a problem, an inefficiency, an itch that needs to be scratched. Regularly, we’ve experienced that problem ourselves and we’re building to solve the problem for ourselves then others.
We’re often solving from the perspective of the person experiencing the problem, not from the perspective of the individual who has to sign off on the expenditure.
If your buyer doesn’t perceive the pain to be as great as your user, or the value you’re driving to be a worthwhile consideration - you will run into issues. Your solution needs to solve your users' pain, but be seen as equally valuable to those who need to sign off on purchasing your product.
Regularly there will be a painful, manual, inefficient process taking place in an organisation that drives those having to execute that process mad. But to the owner of the process, perhaps the costs are negligible, or there are more important inefficiencies to be focused on elsewhere in their department.
A technique I encourage folks to run through to help buyers recognise value is through building an understanding of both implicit and explicit costs.
What are the explicit costs of status quo? eg. tooling, salary of staff performing the action, etc. Next, what are the implicit costs? eg. the value of the gains your improved solution will deliver.
In Kernel’s case, explicit costs could be the contractors used to fill mockups with real-word data, implicit costs could be the time taken re-designing experiences that break when shipped to production.
Build an understanding of the implicit & explicit costs of status quo, and the improved savings/efficiency/gains your alternative solution offers will help your buyer better understand the value your product is bringing to the table.
Top-down or bottom-up
How much emphasis you put on your user or buyer, in marketing material, messaging, even the building out of your (product’s) value proposition can be informed by your GTM motion.
Regularly, those pursuing product-led growth are executing a “land & expand” motion. Typically the company is selling a product with a lower price point, where a user (like Kernel’s designer) can purchase the product on a company card with very low friction.
Thereafter, the goal is to increase the number of users purchasing the product by internal worth of mouth and championing your user. At some stage, the number of users of a tool in an organisation is so great you can begin to direct your attention towards a more strategic buyer or budget holder around the value in rolling up into an annual contract, with the benefit of explicit team plans & team functionality.
In this case, you will often see messaging, value propositions and more initially targeted at users. Nonetheless, you will need to ensure there is value later down the line to convince the buyer to commit to your annual contract.
In the sales-led motion, you are often selling to multiple-stakeholders from day one, one of whom is typically the buyer or budget holder. In this instance you sometimes see a much greater emphasis on the needs of the budget holder and buyer rather than the users of the product.
A great example of the above is CRMs, particularly the success Salesforce have had over the years. Salesforce is the best CRM on the market for sales managers, CROs and those who typically own the budget and buying decision around what CRM is used.
The configurability, reporting capabilities, integrations and more that the tool offers have surpassed competition for a long time.
Does the product offer the best experience for the day-to-day users of the CRM (your BDRs, Account Executives, etc) compared to its competitors? Probably not. But SFDC have excelled in positioning to the buyers of the CRM and solving their needs, vs. being best-in-class at user experience.
When selling business software its inevitable you’ll have to bridge the gap between user & buyer at some point during the buying lifecycle.
Once you have established your personas, and feel you have value propositions and messaging that will hit the mark with each - we move into execution mode.
You’ll see the greatest success working both your users & buyers concurrently during the buying lifecycle. (NB. In the land & expand model there may be a slight delay before working your buyer).
As you begin to establish an understanding your product can meet the needs of both personas, I’d encourage you to bring them together. Have your user(s) explain in detail to the buyer the problems they’re facing day-to-day, and how your product drives greater productivity & efficiency for them. Creating this shared perspective is often the tipping point to get your deal over the line.
In 2023 budget holders are harder to convince and more influential in buying and selling processes than ever before.
Ensure you’re prepared not only to articulate the problems you're solving for users to these buyers, but also the ROI your product will deliver for them as owners of their budget.
Deeply consider whether you have value propositions suitable for these buyers, and messaging to suit. While creating a shared understanding and forum for discussion around the problem your product solves will help mitigate the negative impact a gap between buyer & user can have on your sales process.