Buying software has changed significantly over the past 27 years. Despite the economic headwinds we’ve seen, buyers still buy a lot. The average mid-size company has 111 SaaS applications. By next quarter, that’s estimated to rise to 119.
Of course, companies are experiencing some economic impact, and average spend is coming down slightly. Chris Perrine, the Vice President of G2, Asia Pacific, shares what’s holding up buyers in today’s economy and how you can meet them where they are.
A Blast From The Past
Perrine has been in tech for almost three decades. His first software-buying journey at age 24 involved researching in magazines, calling companies, and receiving demo CDs in the mail. He’s been through several economic crises, and the good news is they’re often shorter than people anticipate.
What we’re experiencing right now is a hangover. We’ve indulged ourselves for the past 5-10 years, and now we’re pausing a little as the headache passes.
What did software buying look like in the ‘90s?
- Very little choice of vendors. There wasn’t a shortlist of five options. There were only five options.
- Software was physically shipped to you after purchase.
- Software wasn’t important, and CRM was new, so websites didn’t provide the information buyers needed.
It was definitely a simpler time, but frustrating for buyers.
Fast-Forward 27 Years To Current Software Buyers
What is a software buyer experiencing today? G2 has pulled data from a global buyer behavior study they conducted. Here is what they discovered.
What are the top three attributes driving buyers’ decisions year-over-year?
- Simple to implement
- Easy to use
- From signing a contract up to the first six months, clients want a positive ROI.
Those can be tough for vendors, especially the last one.
Buyers are overwhelmed by the sheer number of vendors with solutions they’re looking for. There’s so much competition in SaaS that it can feel confusing to figure out where to start and compare solutions.
Most categories have anywhere from 50-100 products, and that’s a challenge for buyers.
The Biggest Impediment To Software Buyers
Buyers are struggling to find content to help them choose the right vendors. It’s the single largest impediment for buyers today.
From G2’s study, they found five major issues holding buyers back, and all of them relate to content.
- 35% said an inability to get credible content.
- 36% said a lack of knowledge of vendor offerings.
- 7% said vendor websites are unreliable sources of information.
- 14% said content is not specific to their industry.
- 7% said a lack of independent reports/content to support the decision process.
Industry content is moving on up. People want to know you’re serving their industry, and you can show them through case studies, reviews, and in-depth data.
People want to see other people who look like them finding success with your solution.
But there’s one significant problem…
Software Buyers Struggle To Trust Vendors
Everyone claims to be the best. Every fancy website has an interactive demo and pushes studies and stories of their work. This can make it difficult for software buyers to determine what is real and what is marketing.
Only 1 in 3 buyers consider vendor websites the information source they trust the most. That’s a big challenge for vendors because your website is your channel to the market, and how can you add value when buyers don’t trust you?
60% of people cite a lack of credible content, references, or reviews as their top obstacle to making decisions.
To make matters more complicated, 71% of those buyers say stakeholders are always or frequently added to the buying process. This means keeping track of even more peoples’ opinions during the evaluation process.
Be Ready For Constantly Changing Circumstances
As a software buyer, your boss is probably going to change. There’s a 60% rate where decision-makers are frequently or always changing, resulting in a constant need to educate new decision-makers.
As a buyer, you need to convince someone who makes the final decision, and there’s a very good chance that person might change in the near future.
Revolving door decision-makers impact the length of time it takes to complete a project and create a longer sales cycle.
Another shift in the history of software buying is CFOs and management teams pressing buyers to negotiate short-term contracts. They’ve seen software turn into shelfware, so a shorter contract helps to mitigate risk if the project doesn’t work out.
Buying Direct Isn’t The Only Way
Software buyers no longer need to buy direct. This is the biggest trend in SaaS. People are looking at alternative channels, and people are stepping up to meet that need.
Some questions buyers are asking are:
- Should you buy directly from the vendor?
- Should you purchase through a third-party marketplace?
- Do you need extra services that a Value-Added Reseller can provide?
The VARs of old are no longer — the ones who just implement software. Now, they’re service providers bringing SaaS into their portfolio of products and services to serve their customers better.
If you’re buying from a 3rd party, is a cloud marketplace a better option?
It depends on what you’re buying and your organization. According to the data, though, buyers are increasingly experimenting with cloud marketplaces, increasing from 22% in 2020 to 61% in 2021.
With all of these challenges, buyers can still transact quickly and with a credit card. 55% of software buyers buying software of $20K or more can transact in three months or less.
5 Tips For Software Vendors To Find Success With Buyers
We’ve talked a little about the buying journey and what challenges buyers face, and now it’s time to look at how software vendors can meet them where they are.
Great content helps you stand out, communicates your value, and shows why you are unique.
The biggest mistake vendors make is writing and creating content for what they think the buyer needs to know instead of what they’re actually consuming.
You can leverage “The Trinity of Content” — vendor content, expert content, and customer content – to understand how your buyers are consuming content.
As vendors look at this content, determine what will meet the buyer’s needs and not just what you want to tell them. You’ll need a deep understanding of the obstacles faced by buyers and a well-planned content strategy to address them.
- Delight users with easy setup and use and deliver fast ROI.
Traditionally, many customers looked at ROI at the end of the sales process. Now, they’re looking at it in the beginning. Customers want to understand the ROI they’ll get from the vendor, yet many vendors are failing in this area.
They can provide big-picture ROI, but they don’t have hard ROI metrics, benchmarks, and success stories. If you have an in-depth ROI figure, talk to customers very early about this value. You’ll build trust and differentiate yourself in the market.
- Evaluate how you can make purchasing more flexible.
Today’s buyers demand more flexibility in their purchasing decisions, but it’s essential to find a balance between their expectations and your financial goals.
How can you make purchasing easier?
Simplify contracts. G2’s finance team took a 12-page contract and made it three pages. This meant less legal review, quicker deals, fewer deals dying at the legal stage, happier customers, and a happier sales team.
To maximize your success, consider taking a long-term approach. Utilize the benefits of flexibility to increase acquisition, build trust with customers, and ultimately convert them to longer-term contracts.
- Look at alternative channels and leverage the global marketplace where buyers are increasingly shopping.
We’re seeing a growing trend of buyers making SaaS purchases through global marketplaces such as the AWS Marketplace and Azure Marketplace.
Few people sold direct back in the day. SaaS changed that. Perrine’s biggest tip is understanding who is influencing your buyers.
As you consider your SaaS distribution strategy, it’s important to evaluate whether these third-party marketplaces are the right fit for your products.
It’s worth noting that VARs (value-added resellers) are making a comeback, offering value-added services alongside your solution.
Evaluate the global marketplace and understand how that can juice the growth you see for your SaaS business.
- SaaS is still growing quickly, but the market is incredibly competitive.
- Most buyers can’t find good content — fill that gap to build trust.
- Focus on measuring ROI — it sounds simple, but most vendors don’t do it.
- Look at ways to take friction out of the purchasing process.
Published on March 17, 2023