The Changing Face of Enterprise Sales: The Slow Death of the Bottom-Up Approach
The last decade saw many technology companies adopt up-selling and product-driven growth (PLG) strategies, rather than traditional enterprise sales, to fuel their go-to-market strategies and overall growth. However, as enterprise technology buyers are keeping a closer eye on spending these days, they are also tightening restrictions on self-purchasing. This means that founders who have become highly reliant on the bottom-up need a stronger and faster business sales strategy.
In this article, we will delve into the changing face of corporate tech spending, the slowdown of PLG and upstream adoption, and explore how companies can pivot to a successful business sales strategy. Let’s get started.
The Downside of the Bottom-Up Approach
Many software startups loved (and still love!) the bottom-up approach. What’s not to like about designing a software product to “sell yourself” through viral adoption and word-of-mouth marketing? Bottoms-up and PLG promise a faster sales cycle at a much lower cost: no more golf or expensive steak dinners on the expense account. However, relying solely on the bottom-up approach can have its limitations, such as:
Limited organizational reach and influence
Lack of control over customer acquisition
Short selling cycles and low customer retention rates
Difficulty in scaling sales revenue
Limited ability to sell higher-priced products
PLG and Upstream Adoption is Slowing Down
According to Battery Venture’s Cloud Software Health Expense Report, there is a growing trend among enterprise software buyers to become more conservative and change priorities. While nearly half of the survey respondents (46%) expect to increase their total technology budgets by 2023, companies are becoming more conservative in their approach. Many plan to standardize spending, consolidate vendors to save money, and streamline SaaS licensing.
Additionally, bureaucratic governance systems within companies may run slower in the coming months as organizations across industries work to become more efficient and increase oversight of spending. The report also quantifies these findings that PLG and upstream adoption is slowing down. For instance, just 46% of respondents now allow individual engineers to install tools in a “sandboxed development” environment, a 76% decline from the last survey in September 2022. The drop in engineer-selected tools deployed in production is also significant: Only 11% of companies now allow this to happen, down 27% from September 2022.
Moving towards a Successful Business Sales Strategy
So, how can companies pivot towards a successful business sales strategy that complements traditional enterprise sales? Here are a few key approaches to consider:
Invest in Sales Enablement
Effective sales enablement can bridge the gap between the sales and product teams, creating a streamlined process that accelerates deals’ motion and closing cycles. By understanding customer needs, preferences, and pain points, sales enablement teams can help develop better messaging, pricing models, and sales plans. Companies can also leverage sales enablement tools, including sales automation software and automation platforms.
Focus on Addressing Customer Needs
By addressing customer needs, you can build trust and credibility with your prospects and customers. This approach can help you differentiate from your competition and position your product or service as the ideal solution to their needs. Companies can also improve customer interactions through personalized engagement and targeted messaging, resulting in a more efficient and effective sales process.
Consider Alternative Pricing Models
Alternative pricing models, such as consumption-based or value-based pricing, can help companies align their pricing with customer needs and usage patterns while driving sales revenue growth. By moving away from legacy pricing models, companies can also boost their competitive advantage and customer acquisition rates while optimizing their pricing strategies.
Conclusion
The bottom-up approach is not necessarily dead, but it looks pretty moribund. The ‘pure’ PLG also needs to change quickly. Today’s PLG needs to inform both the product and sales teams so they can seamlessly work together to close the next deal. However, the slowing of PLG and upstream adoption highlights the need for companies to pivot towards a successful business sales strategy that leverages effective sales enablement, addresses customer needs, and considers alternative pricing models to boost sales and revenue growth. By doing so, companies can navigate the changing face of corporate tech spending while continuing to innovate and thrive.
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The last decade saw many technology companies adopt up-selling and product-driven growth (PLG) strategies, rather than traditional enterprise sales, to fuel their go-to-market strategies and overall growth.
Many software startups loved (and still love!) the bottom-up approach. What’s not to like about designing a software product to “sell yourself” through viral adoption and word-of-mouth marketing? Bottoms-up and PLG promise a faster sales cycle at a much lower cost: no more golf or expensive steak dinners on the expense account.
PLG also offers other strategic advantages: By shortening the feedback loop between users and product teams, it enables early-stage and growth-stage technology companies to land and scale the use of their technology within corporate accounts, with champions. internal driving sales.
However, as enterprise technology buyers are keeping a closer eye on spending these days, they are also tightening restrictions on self-purchasing. This means that founders who have become highly reliant on the bottom up need a stronger and faster business sales strategy.
It’s too early to declare bottom-up dead, but it looks pretty moribund. And the ‘pure’ PLG also needs to change quickly. Today’s PLG needs to inform both the product and sales teams so they can seamlessly work together to close the next deal.
Enterprise software spending: slower deal cycles, increased scrutiny
Some clues about this changing face of corporate tech spending can be found in our latest Battery Ventures Cloud Software Health Expense Reportwhich consulted 100 CTOs, CIOs and other large technology buyers in industries ranging from financial services to healthcare and manufacturing.
Collectively, those surveyed represent $30 billion in annual technology spending. Our respondents include a healthy sample of companies that are consuming software through a PLG/upward movement, as indicated on the next slide.
Bottom-up adoption buying patterns Image: Q1 2023 Cloud Software Spending Survey
While nearly half of our respondents (46%) expect to increase their total technology budgets by 2023, companies are becoming more conservative and changing priorities. Many plan to standardize spending, consolidate vendors to save money, and streamline SaaS licensing. Companies are re-examining pricing models to determine whether consumption-based or seat-based pricing makes more sense, given the way the software is used, and they choose vendors partly on that basis. base.
Today’s PLG needs to inform both the product and sales teams so they can seamlessly work together to close the next deal.
Sometimes bureaucratic governance systems within companies may run even slower in the coming months as organizations across industries work to become more efficient and increase oversight of spending.
The next slide quantifies our findings that PLG and upstream adoption is slowing. Case in point: Just 46% of respondents now allow individual engineers to install tools in a “sandboxed development” environment, a 76% decline from our last survey in September 2022. The drop in engineer-selected tools deployed in production is also significant: Only 11% of companies now allow this to happen, down 27% from September 2022.
Have enterprise buyers finally soured on ‘bottoms-up’ tech sales?
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