Commentary
Murray Pratt is president & CEO of Tailwind Transportation Software. The views expressed here are those of Maron and do not necessarily reflect the opinions of FreightWaves.
As I listen to Montel Jordan’s hit song from 1995, ‘This is How We Do It’ – that now seems an eternity ago – I am writing this article about the new model emerging for the way transportation management software is being sold, or perhaps more accurately, being bought today.
The issue was brought top of mind to me recently when I attended a luncheon put on by Salesforce where they shared some research on how customers make purchasing decisions. They presented a sea change in how customers buy software these days. The availability of information on the Internet – product details, customer reviews – are fundamentally changing the buying journey. Customers arrive at websites much more informed than ever before. The research showed that the buying decision is influenced by four key factors, weighted accordingly.
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Brand 19%
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Ability to deliver 19%
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Product capabilities 9%
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Buying Experience 53%
As I scan the landscape of software, and TMS software, it is becoming increasing clear that a new sales model is emerging, one that it isn’t so much ‘WHAT’ you do anymore, as much as it is about ‘HOW’ you do it.
As logistics customers demand more responsive, and more affordable, technology, it is placing pressure on TMS software companies to rise to the challenge and become more innovative with their approaches to the market.
So, what was most illuminating from this research is the weight placed upon the customer buying experience itself – some 53 percent. It was weighted higher than all the other factors combined. And, just as surprising is the fact that the product itself now represents just under 10 percent of the weighted decision.
Now, I don’t think for a minute that the product doesn’t have to work, or work quite well, for that matter. Rather, the research is showing that a product working, delivering the promised benefits, is in the expectation set of the customer. It is now table stakes, the price of entry into the game, if you will. But what the research is clearly showing is that now the product itself, the very thing around which a company is constructed, is less and less the differentiator in the customer buying decision.
Building a better mousetrap doesn’t necessarily mean that people are going to beat a path to your door anymore.
Today, everything about your business – your brand, all your customer sales and service interactions, your transparency and accessibility – are part of the consideration set of the customer.
So, what did this mean to a Transportation Management Software company?
Well, it means that all aspects of a company’s engagement with their customers – the interactions and dialogue that it has with customers – must adapt. To net it out, it means that overly controlled, and heavily contrived sales processes and tactics are out, and customer-centric activities designed to help the customer make an informed buying decision are in.
The big change
It is not easy to go from the traditional client-service license model over to a software-as-a-service platform. It exacts a tremendous toll on your business – demands placed on cash-flow, your company structure, the way your train and reward your employees, the way you measure your business. And it challenges some of the fundamental assumptions you have about the buyer-seller relationship – how you communicate and message your customers about your product/service.
Many TMS providers are trying to mimic this transition, trying to ‘put more lipstick on the proverbial pig’ – hosting their old client server software in the cloud – and trying to convince their customers that this is a long-term solution. We realized three years ago that this is not a viable model over the longer term, and set out to re-define our company in the new subscription-based model – becoming a truly cloud-based application.
In looking back on this journey – one that continues unabated today – we found five activities were required to make the pivot from client-server over to Software-as-a-Service; five activities that likely translate well into a variety of industries:
1. Choose the customer segment/archetype that you CAN best serve. I say CAN, not WANT, to serve. You have to be honest with yourself about this. Don’t fool yourself. Not every deal, not every customer, is a good opportunity for your business. Don’t stray too far from the bona-fide value that your application provides for a particular group of customers. Trying to serve a vast market of 1.5 million businesses with a watered-down offering doesn’t work anymore. There are scores of market segments with specific needs that can be addressed by a unique approach and offering.
2. Price your product so that you the customer can make an ‘appropriate-sized’ decision – NOW. By appropriate, I mean smaller, but not always. Being SaaS completely now, I am amazed at the resources and time needed to generate a larger sale. We eschew this approach. We don’t want our customers to have to go through a long deliberative and laborious process. They have to run their businesses. Often these sales processes have been put in place to serve the needs of the seller – finding some way to create and highlight value because the value of their TMS software isn’t that readily available or understandable at the outset – with the lack of fit being covered over by large implementation projects. If it’s not obvious, then maybe it just isn’t a fit, and is now being forced.
3. Make it Accessible – Offer people a FREE Trial. I have always said to potential customers, ‘how the heck can I assume from a few phone calls and the odd demo how our enterprise software is going to work in your particular environment – a business that you spent the last 5 to 20 years building?’
We are honest in telling them that we can’t be certain that it’s a fit, but more importantly, that we have a mechanism for them to figure that out for themselves. A free trial gives customers access to not only the application, but also to a set of services and resources, so that they can get a feel for what it would be like to be a customer.
4. The New Sales Model – ‘WITH’ and not ‘TO’ – Be Transparent. This doesn’t mean that we are saying that the sales function should be consigned to the slag heap of history, but what is clear now, the old model of doing things ‘TO’ customers is long gone – doing things ‘WITH’ customers is very much at the forefront of the modern approaches to software sales. It is the customer’s journey – a buying experience – not a sales process. It requires a fundamental shift in attitude and openness.
5. Change your company culture. It’s not just the product that has to change. Your entire company must adapt. Everybody will tell you that it’s all about the customer. But the deeds do not always match with the words. If you sell software on a month-to-month subscription basis, effectively you are ‘joined at the hip’ with your customers. You have to earn your keep – prove your value – every 30 days.
You need to get your staff to embrace customer feedback – to not only accept it, but to actively solicit it. You need to understand that it is this very feedback that is the lifeblood of your organization – the fuel that drives the truck down the highway of continuous improvement.
A New Game
Today, the new currency of business revolves around the ability of a supplier to render their product, or service, in a way that helps the customer make an informed decision more easily, more quickly, than the next guy.
It was a difficult transition for us, and it will be for any other TMS provider yet to embark upon this journey to the Cloud. But we felt that it was better to forge ahead than suffering through a long lingering death as our client-server software, and our company, became less and less relevant in today’s marketplace, as customers moved on.
In fact, it got us to a point today where we now add more customers in a month than we did during an entire year with our old client-server software. We release monthly updates on our application, averaging over a dozen improvements each update, based entirely on the feedback that customers give us through our application, over the phone, and in one-on-one feedback sessions.
You see, we learned that we couldn’t just throw on some new clothes, twist our cap, put on some fake bling, and hope that people were going to like our new song.
We knew that we were going to have to live on the streets for awhile and earn some ‘street cred’, before we started to produce some good music.
This was how we had to do it.
And, ‘this is how we do it’, now.
And, that’s a rap!