SaaS Entrepreneur

EXCERPT FROM CHAPTER THREE

SaaS Entrepreneur: The Definitive Guide
to Succeeding in Your Cloud Application Business

Sales Organization and Compensation in SaaS

SaaS Sales Force Organization

Sales Engineers in SaaS

Sales Engineers (SEs) in the software industry have traditionally been technically oriented individuals with good social skills. They are typically assigned to work in the field alongside a direct sales force (the author’s first job in the software industry was as an SE), often on a one-on-one basis, especially in major sales scenarios. SEs are typically paid a base salary with a variable component that ranges from 10% to 25% of their base. This variable compensation is often tied to sales team overall performance, as well as such measurements as customer satisfaction ratings, technical proficiency and other criteria.

In SaaS, the SE title is surviving, but the function they play in your organization is changing (as the upcoming Varicent case study helps illustrate). In the future, the SaaS SE will:

Hunters and Farmers in SaaS

Traditionally in software (and other industries), sales forces are often divided into two types of personnel, ‘Hunters’ and ‘Farmers.’ In this model, sales force hunters are charged with tracking and closing new business. After the customer prey has been bagged, the supine corpus is handed over to farmers — friendly types who presumably mulch and compost the corpse, then grow new revenue flowers from the remains. (This colorful interpretation of the model was provided to us by a friend who works in IT in New York. He told us he never much cared for being hunted.)

We suggest that this model is going to be obsolete in SaaS. There are several reasons we reach this conclusion:

As already noted, many customers are educating themselves about SaaS systems and services in advance of contacting your company. Traditional methods of contacting customers, such as cold calling, are falling into obsolescence (though there are still industries in which a person will pick up the phone if they do not recognize your caller ID). But the question arises of ‘who is hunting whom.’

The method of engagement and interaction with both potential and current subscribers is very different in SaaS. As we have learned, SaaS creates a persistent relationship between a company and its subscribers. If a SaaS company has created and nurtured a vibrant customer community, up sells and cross sells will most likely come from community interaction and promotions managed by community managers. And in such an environment, the concept of ‘passing off’ a customer from one person to another seems off the point.

The best SaaS sales people do not seem to be a good psychological match to the profile of the on-premise hunter. The stereotype of an on-premise sales person is best exemplified by an old high tech joke: “How do you tell the difference between a car salesman and a software salesman? The car salesman knows when he’s lying.” But in a SaaS environment, good sales people often have to mix strong product knowledge with good people skills. A good SaaS sales person is often also a strong business problem solver and can develop a trusted relationship with a customer. It is not an asset that can be handed over to another person or group easily.


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