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On Demand Requires TeleSales

Posted on Wednesday, Jun 14th 2006

Anneke Seley, Founder and CEO of Phoneworks, is advising a number of On Demand software firms on their channel strategy, and below is her brief analysis on why TeleSales is a necessary channel for this business model.

“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 priorityfor 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, Webex, 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.

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.”

Today, with the ability to share desktops via technologies such as Webex, Macromedia’s Breeze, or Microsoft’s Placeware, selling low-ASP products and services by phone has become viable. Before, this price-point used to be in a dead-zone between very low cost shrink-wrapped software that was sold through retail channels, and the very high cost enterprise software sold through direct field sales forces. Consequently, the SME market was also out-of-reach, by and large.

That has changed. On Demand and Telesales make SME markets extremely viable at this point. But for On Demand to succeed, Telesales is a necessary component.

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