Direct B2B Sales Forces Are Obsolete — Do Not Invest In Direct Sales
People just expect a B2B company to sell direct, but people once expected a Blockbuster Movie site in every shopping mall. Now, even shopping malls are on the way out.
One wonders how long it took for such obsolete models to die — even when everyone knew they were on life support. When a traditional business model dies it seems to slowly decline until one day: POOF! Nobody remembers why it was there in the first place.
B2B sales forces are obsolete. Buyers have no need to be manipulated, cold called, mailed incessant emails, dragged to webinars, treated like a cog in a sales funnel, being forced to “close this quarter.”
When traditional models die, they leave behind obvious traces one ignores when in flight. Yet they are far from subtle when reviewed.
Sales reps are failing to meet quota over 60 percent of the time. Sales and marketing expenses are almost always 50 percent of revenue to over 100 percent for many VC-backed companies. Sales and marketing expenses are so high, they force otherwise healthy firms to bring in early VC money causing the founders to lose equity.
Prospects do 80 percent of their investigation on the web before they make an inquiry. Thus, vaunted “sales funnels” are far less qualified than marketing people think. Those prospects know what they want and have a short list of vendors and no selling steps are going to move them along that process.
Smart companies do their selling where a prospect wants to spend her time — on the web.
Just like McDonald’s is now making hamburgers with robots, smart sales teams are having their website do most of their selling. Prospects can learn what they need to know with short videos or cartoons. They do not have to endure endless calls about, “What’s your pain?” or, “What keeps you up at night?” They do not need to sit through the meeting in their office with a clueless sales rep, his manager, perhaps an engineer, and someone with a VP title.
Founders and first line executives can keep expenses low because if they do not have a direct sales force buttressed with a marketing department, a SPAM generation team, a logo-wear team, and a trade show team, they can live their business life without such expenses on their desks when they arrive every morning.
Take any company financial statement and remove 50 percent of the costs. It has a pretty material impact on that business. That is the typical cost of that direct sales force.
Ten years from now, few B2B companies will have direct sales forces. Even intellectual laggards such as Forrester and Gartner regularly report on how the B2B sales space is shrinking. If these guys see it, it must be obvious.
Models do not die; they are killed by a better model.
Direct sales are being killed off by other more imaginative models. There is the trusted advisor model where third parties who are not on the payroll bring technologies to their former colleagues. There is the web model where most of a sales cycle can be managed without any human interaction. There are models where a customer is rewarded by bringing in other customers. There models where one tries the technology and it is so compelling, its use goes viral.
The common denominator of all these models is no B2B direct sales force. There is no 50 percent cost of sales. There is no massive marketing department generating inbound/outbound leads. There is no logo-wear factory clothing the trade show masses.
For those looking to invest in the future, find a way to get to market without a direct sales force. There are lots of good models; try some and even if a few do not work, you will not even come close to the expenses you would have spent on hiring a direct sales force.
Reprinted from Software Executive Magazine OnLine