Sales Advocate Newsletter

Inside Sales: The Best Sales Strategy for On Demand Software

June 2006

Whether we call them Hosted Applications, Software as a Service (SaaS), On Demand Software or “ASP model” products, everyone is talking about delivering technology through an internet connection. It is a recent priority for companies who once only offered software through traditional, perpetual licensing to incorporate a hosted product into their business models. And forward-thinking companies like Salesforce.com, RightNow Technologies, Everdream, and other start-ups have launched with “on demand” as their primary strategy.

But changing or adding software delivery models requires re-thinking of distribution strategies. Without the right sales approach, properly implemented, all the benefits of the On Demand Software delivery model to both the vendor and the customer can easily be lost.

Telesales and On Demand Software: a Match Made in Heaven

There are certain characteristics of software products that put them in the “sweet spot” for the telesales channel. Many of these characteristics also exist for software sold as a service, including:

Small and medium-sized businesses are key market, driving growth
Large number of geographically dispersed customers
Product benefits can be easily demonstrated on-line
Products significantly differentiated by ease-of-use
High number of transactions and interactions
Monthly or annual subscription pricing
Lower average deal size
Shorter sales cycle
Recurring, renewable revenue stream
Trial license often offered initially as “hook” or to seed an account
Easy, quick installation and maintenance
Decentralized, departmental purchasing, line-of-business decision makers (not just IT)

Given these factors, Telesales is an ideal and complementary sales channel for On Demand software. While Field Sales is still appropriate for large or strategic accounts, it is not cost-effective for the majority of lower-dollar, high-transaction SaaS sales models. Without a well-planned, professionally-managed Telesales force, On Demand Software vendors will face missed opportunities, increased cost of sale, and ultimately decreased revenue and profit.

Telesales and On Demand Success Stories

Salesforce.com is arguably the most prominent success story for the On Demand model, with its bold “No Software” logo and rapid growth. It is certainly the role model for anyone launching an On Demand business today. Salesforce.com’s founder, Marc Benioff, learned the power of the Telesales channel first-hand in his first sales job, where he, along with the founders of Phone Works, was part of the team that pioneered Inside Sales at Oracle. Benioff launched Salesforce using Telesales as the predominant sales channel and the inside groups remain key drivers of the company’s continued market leadership.

Similarly, Everdream’s management team knew that they would have a major strategic advantage by creating both lead generation and telesales programs that could jump-start the company’s success and provide a scalable, repeatable model for revenue-generation as the company grows. Though they understood the necessity of building inside sales processes, they knew that they lacked the expertise and time to focus on this detail-oriented function, so they brought in Phone Works for assistance. In just a few months, Phone Works designed Everdream’s inside sales programs, including goals and objectives, compensation plans, and training programs.

Additionally, Phone Works designed Everdream’s customized salesforce.com implementation to support the processes, and hired and managed its start-up group, which exceeded objectives its first quarter. Says Everdream’s VP of Sales and Services, Mike Minnelli, “Because of its lower cost of sale and faster sales cycle, Inside Sales is a necessary channel for our Software as a Service business model. Phone Works helped me achieve better sales results in a faster timeframe than what I could have produced by trying to build Inside Sales on my own.”

Bottom Line Message

Telesales is a primary sales channel for most vendors of this newly-embraced delivery model for software. But like any Inside Sales program, it requires planning, discipline, process, and management to be effective. Simply “hiring some phone people” won’t cut it.

Founded in 1998, Everdream Corporation is the market leader in on-demand desktop management services that enable greater visibility into hardware and software assets, better and more uniform desktop protection for unparalleled business uptime, and superior end-user satisfaction – while significantly reducing the total cost of ownership of corporate PC’s. www.everdream.com

This newsletter is provided as a complimentary service from Phone Works, LLC. Phone Works is the San Francisco Bay Area leader in building high-performance inside sales teams, helping technology firms increase revenue, shorten sales cycles and implement successful, repeatable sales models. In addition, Phone Works is a salesforce.com Certified Partner and provides implementation services for the salesforce.com online CRM application.

Contact Phone Works at 510.749.9073 or info@phoneworks.com.