How Not To Sell Software in 2012

You will not go to the Oracle app store and it will not have a database of all the large corporate IPs in the world with which it can reverse engineer your available funds and likely chain of purchase decision, and it will not then just put up a few million dollar for that year figure that you can click and instantly pay with your credit card.

Strippers must be witnessed, steaks must be consumed, conferences must be attended, rounds of golf must be played, lip service must be paid to ridiculous conceptual bugaboos, the purchasing bureaucracy must be reverse engineered, the chaff must be sorted from the wheat, starched collars must be preened, ignorant men in suits must be consulted as if their opinion had worth. And this is of course only the parodied incomplete summary of the entire horrifying affair.

Oracle and their ilk are feasting on elephants. Some would even fairly say mammoths; they are big, fat and move very slowly. The entire idea that a strategy could be formulated, evaluated, shopped for signatures to the relevant parties, signed off on by the law department, agreed to and generally made in the amount of time it takes to make a purchase with the paradigm offered as an example in this scenario is likely terrifying if not utterly extraterrestrial to them.

As an example of just how ridiculous it gets, we recently drafted an RFP for a solution for licensing our custom-made software to our customers and had a vendor come in with their solution. When it came time to discuss pricing, their response was "we charge based on the amount of revenue you'll be getting from the software...so just tell us how much money you're going to make from your software and we'll get a quote over to you." Of course we told them to take a hike, but not before speaking with their other large customers who actually agreed to this model. It's frustrating to be sure, but also completely expected at the enterprise level.

  There's no software priced between $1000 and $75,000. I'll tell
  you why. The minute you charge more than $1000 you need to get
  serious corporate signoffs. You need a line item in their
  budget. You need purchasing managers and CEO approval and
  competitive bids and paperwork. So you need to send a
  salesperson out to the customer to do PowerPoint, with his
  airfare, golf course memberships, and $19.95 porn movies at the
  Ritz Carlton. And with all this, the cost of making one
  successful sale is going to average about $50,000. If you're
  sending salespeople out to customers and charging less than
  $75,000, you're losing money.

  The joke of it is, big companies protect themselves so well
  against the risk of buying something expensive that they
  actually drive up the cost of the expensive stuff, from $1000
  to $75000, which mostly goes towards the cost of jumping all
  the hurdles that they set up to insure that no purchase can
  possibly go wrong.

The second paragraph is the key. Alex, these people aren’t trying to piss you off, they’re being driven by what BigCo wants from them. BigCo won’t let a manager try some software and declare that it meets their needs. BigCo demands that vendors respond to RFPs and RFQs, and if one vendor puts no-nonsense pricing on their web site, all of their competitors will undercut them by a penny or so and they won’t get any sales.

I could go on, but Joel has made the point: These annoying vendors have evolved to sell to those annoying customers. It isn’t the vendors that need to go extinct, it’s BigCo. BigCo buys cloud services in 2012 the way it bought time sharing in 1972, so the vendors are still using 1972 sales processes in 2012.

- Edit for typos