With contribution from Craig Nelson
The B2B sales and marketing landscape is experiencing a shift in 2023, as Frugalnomics and economic uncertainty cause buyers to become more cautious and cost-focused. Several trends that dominated the market in previous years are now broken, and B2B sellers and marketers must adapt to the changing landscape to avoid serious consequences.
The Tech Stack is Full
Customers are feeling overwhelmed by the plethora of solutions added to their tech stack in recent years. Too many point products consuming too much budget means that buyers are now being asked to defend their purchases, which can be challenging for them to do.
Our Advice: Over the next 12 months, B2B sellers and marketers must articulate how their solution fits into the customer’s tech stack and justifies being a key element in it. Solution providers should focus on partner ecosystems, marketplaces, and integrations to deliver a 1+1=3 solution for customers. Instead of consolidations and roll-ups, solution providers should consider reconciling their collection of solutions to help customers who are already dealing with overflowing tech stacks. All-in-one solutions and bundles could be one potential path to assist customers.
SaaS is No Longer a Panacea
While Software as a Service (SaaS) was previously seen as a panacea for digital transformation and automation, it has fallen from grace and will face a big hit this year. Companies raced to innovate, and SaaS solutions made it easy to add and experiment. Now that these solutions have been in place for a while, many customers are disillusioned with their adoption and outcomes. As a result, SaaS solution providers will face canceled renewals and licensing downgrades in 2023, which is a serious challenge for their survival, as most rely on land-and-expand strategies for growth.
CFOs and executives have taken notice of the growing cost of SaaS and are pushing back hard on buyers during renewal time. However, most customers have experienced change management struggles, adoption issues, and failed to realize the proposed outcomes. Even if the buyer is happy with the solution, they will struggle to quantify the savings and benefits of SaaS solutions to their execs and financial gatekeepers, making it difficult to deliver the justification to stave off cancellation or shrinkage.
Most SaaS organizations invested heavily in Customer Success, creating a new group and dramatically staffing, to improve the situation. However, these investments are not delivering as expected. Most customer success organizations still focus on triage, adoption, and usage, failing to add the most crucial element in the face of Frugalnomics: connecting the SaaS investment to the value the solution delivered. As a result, the vital ROI information the customer needs to financially justify renewal and fend off cancellation and shrinkage isn’t available.
Our Advice: B2B sellers and marketers must focus on quantifying and communicating the realized value and ROI of implemented solutions to their customers. Quantifying the impact on key performance indicators, comparing before and after, and tallying the tangible financial impact this has delivered is key. Value consultants, engineers, or customer success specialists (with some structure and automation) can assist with this process.
Services: No Longer a Dirty Word
In a race for valuation, many SaaS providers deprioritized services, thinking that this type of revenue wouldn’t yield big valuations, as service revenue was heavily discounted in multiples compared to recurring SaaS revenue. Unfortunately, many customers failed to properly deploy the solution, manage change, gain adoption, and optimize operations around the solution without professional assistance and best practices help. Ultimately, they fell short of improving their capability and maturity and failed to achieve the proposed savings, business benefits, and ROI.
Our Advice: To ensure success and achieve renewals, growth, and expansion, B2B sellers and marketers should recognize the importance of delivering more than just the solution itself. Buyers need a comprehensive approach that includes hands-on management consulting and professional services, not just periodic QBRs.
To achieve this, it is essential to understand the customer’s desired capability and maturity improvements, and provide them with the necessary support for proper change management and continuous optimization. This approach not only ensures the customer’s success but also fosters long-term relationships that can lead to increased sales and revenue growth.
Therefore, B2B sellers and marketers should prioritize a consultative approach that emphasizes ongoing support, education, and optimization to enable their customers to achieve their business goals. By providing this level of support and service, sellers and marketers can differentiate themselves from competitors and establish themselves as trusted partners in their customers’ success.
In today’s business environment, frugality is a key consideration for many customers as they look to reconcile their past spending and right-size their tech stack. As a result, B2B sellers and marketers will face tough questions over the next several months about which solutions should stay and which should go.
The trends that worked in the past are no longer sufficient to succeed in the current market, and sellers and marketers must adapt to new realities. To do so, solution providers must go beyond selling solutions and proactively help buyers optimize their tech stack investments with hands-on management consulting and professional services. This approach ensures that customers can successfully adopt and implement new solutions and achieve their desired business outcomes.
Moreover, solution providers must quantify the business value and ROI outcomes of their implemented solutions to assure renewals, stave off shrinkage, and promote expansion. By doing so, sellers and marketers can demonstrate their value to customers and establish themselves as trusted partners in their customers’ success.
In conclusion, B2B sellers and marketers must embrace the new reality of frugality and adapt to new market trends by providing comprehensive support and delivering quantifiable business outcomes to their customers. By doing so, they can position themselves for success in the years ahead and establish themselves as trusted partners in their customers’ success.