The State of Software Buying: From SMB to Enterprise with G2's CMO
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Today’s software buyers possess consumer expectations. They are conducting more independent research and move quickly through the buying process, making the buying cycle shorter than ever. The growing consumerization of software buying presents new opportunities for software marketers and salespeople alike. G2 CMO Amanda Malko will discuss findings from the software marketplace’s annual buyer behavior study, which details buyer behavior and trends across SMB, mid-market and enterprise buyers represented on G2.com. Amanda will unveil the data and discuss these new findings: - How to adapt the marketing playbook when buyers are in the driver's seat - Why sales and marketing teams must focus on education before selling. - How software buying is evolving to be a team sport - How the influx of new products and resources makes trust more difficult to establish, while expectations for software companies remain high.
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The State of Software Buying: From SMB to Enterprise with G2's CMO
- 2. 60M+ Buyers Visiting Each Year 1.4M+ Trusted Customer Reviews Insights from the world’s largest software marketplace 800 Software Buyers Surveyed
- 3. Source: G2 Track software spend data from 800 customers with 50- 2,000 employees Annual Spend per Employee Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 $15,475 $15,846 $13,372 $14,253 $15,344 $15,521 $15,825 Shock Re- acceleration SaaS spend dipped in the first half of 2020 but has since re-accelerated
- 4. More SaaS spend than ever as companies accelerate digital transformation Year # of software products by company Software App Growth 59 77 84 110 115 Source: G2 Track software adoption data from 800 customers with 1-1000+ employees 124 ~55% of companies plan to increase software spend in 2022 H1 21
- 5. Software is becoming a reflection of our everyday lives Traffic Surged YoY in These Categories Rank Category 1 Cryptocurrency Mining 2 CRM 3 Video Conferencing 4 Cryptocurrency Wallets 5 Marketing Automation Cryptocurrency Mining 6 PDF Editor 7 Project Management 8 Audio Editing 9 Cryptocurrency Exchanges 10 Sales Intelligence Video Conferencing Marketing Automation Project Management Source: G2.com
- 6. With this growth, software buying is fundamentally changing
- 7. Takeaway #1 Software buying is happening faster, and becoming more frictionless
- 8. Source: 2021 G2 Software Buyer Behavior Report, September 2021 Buyers are making their purchase decisions faster 55% need < 3 months to make a decision of $20,000+ 85% of all decisions are made in < 6 months. Including 82% of decisions at Enterprise organizations.
- 9. Source: 2021 G2 Software Buyer Behavior Report, September 2021 Speed is enabled by growth in new ways to buy 53% of buyers most often purchase on a credit card 48% for Enterprise Credit card payments
- 10. Where do you prefer to buy software? Source: 2021 G2 Software Buyer Behavior Report, September 2021 1 in 5 buyers prefers to buy software from a third party
- 11. of companies usually engage a salesperson only after they have already made a decision. 67%
- 12. What to do about it Adopt a product-led growth mindset
- 13. What to do about it Reduce friction to try & buy Adopt a product-led growth mindset
- 14. Pendo product tour simulates real user experience
- 15. What to do about it Reduce friction to try & buy Design for multiple front doors Adopt a product-led growth mindset
- 16. Vimeo is driving trial (and ultimately sales) through Asana
- 17. Miro’s ready-made templates give users an easy way in
- 18. What to do about it Reduce friction to try & buy Test your way into it Design for multiple front doors Adopt a product-led growth mindset
- 19. Takeaway #2 Building trust is more essential, yet harder than ever
- 20. Traditional forms of trust and influence are fragmenting... 4% of buyers trust traditional market research firms and analysts the most. 38% consider a provider’s website the most trustworthy resource and/or rely on it the most. Source: 2021 G2 Software Buyer Behavior Report, September 2021
- 21. ...while B2B buyers increasingly rely on peers 86% of software buyers use peer review sites when buying software. Why? More confident in the decision (60%) Better educated (55%) More confident in the product `(53%) Source: 2021 G2 Software Buyer Behavior Report, September 2021
- 22. A lack of credible, customer-led content is holding back buyers Top Obstacles to Making Good Software Purchasing Decisions Inability to get credible content Lack of knowledge of vendor offerings Customer references difficult to find Not enough (or no) reviews on review websites 1 2 3 4 Source: 2021 G2 Software Buyer Behavior Report, September 2021
- 23. Treat your customers as your best marketing partners What to do about it
- 24. Treat your customers as your best marketing partners What to do about it Incentivize advocacy
- 25. Sendoso’s advocacy program drives WOM
- 26. HubFans rewards Hubspot’s community for advocacy
- 27. Treat your customers as your best marketing partners What to do about it Incentivize advocacy Build community
- 28. Shopify’s ultimate competitive moat Shopify Partners $2.9 billion ~$12.5 billion 2020 Revenue 42,000 Partners referred at least one merchant in 2020, up 72% YoY
- 29. Treat your customers as your best marketing partners What to do about it Incentivize advocacy Support UGC & co- marketing Build community
- 30. Airtable Universe lets customers inspire each other
- 31. Figma saw 3M+ plugin installs shortly after launch
- 32. Mailchimp partners develop templates & trainings
- 33. Takeaway #3 More than ever, retention is your foundation for growth
- 34. Expectations for software companies are higher than ever 5. When making a software purchase decision, how important are the following considerations. N = 756 of respondents believe it’s important to receive a return on investment within six months 81% 80% Source: 2021 G2 Software Buyer Behavior Report, September 2021
- 35. Renewals are closely watched 60% conduct research and consider alternatives before renewing. Source: 2021 G2 Software Buyer Behavior Report, September 2021
- 36. Renewals are closely watched [but there’s good news…] buyers prefers to buy complementary products from the same company. 60% conduct research and consider alternatives before renewing. 1 in 3 Source: 2021 G2 Software Buyer Behavior Report, September 2021
- 37. Invest in retention marketing Focus on NRR > ARR What to do about it
- 38. Look for the signs Invest in retention marketing Focus on NRR > ARR What to do about it
- 39. Look for the signs Invest in retention marketing Celebrate your ROI Focus on NRR > ARR What to do about it
- 40. NRR at time of IPO 115% 139% 168% “Retention is your best friend.” - Bessemer Venture Partners
- 41. 3 Key Takeaways 1 Software buying is faster, more frictionless Adopt a product-led growth mindset 2 Building trust is essential, but harder than ever Treat your customers as your best marketing partners 3 Retention is your foundation for growth Focus on NRR > ARR
- 42. Download your free report Reach more software buyers Discover and review software research.g2.com sell.g2.com g2.com
Notas del editor
- First, I want to take a moment to celebrate that we’re all here - in person and virtually. You made it. And as an industry, software spend has rebounded to the record levels we saw prior to Covid, after a dip after the pandemic took hold last year.
- Even more impressive is that the average # of products by company is at record levels - G2’s data shows that 124 software products are used by companies on average in just the first half of 2021, which is higher than we’ve seen previously. Perhaps more promising for the future, of the buyers we surveyed, more than half said they plan to increase their software spend next year. And on G2.com, we see growth happening in nearly all categories, from IT to Sales and Marketing. Source: https://docs.google.com/spreadsheets/d/1h27HgbTsaNzp1w3nund0G8h5umhbOegMI3y6zwU5Fw4/edit#gid=107897007
- Yet buying is fundamentally changing. Fastest growing (“momentum”) categories change often - take a look at our hottest categories on G2.com over the past year and you can see how software is a reflection of our everyday life.
- Our research also shows that the way we buy software is changing. The goal of this presentation is to arm you with the insights and 3 keys to taking advantage of the software boom.
- The first trend we’re seeing is the software buying is happening faster, and becoming more frictionless. The first part of this really surprised us, because it also held true with enterprise companies.
- 55% of buyers need less than 3 months to make a decision of $20,000 or more. And 85% of all decisions are made in under six months.Even among Enterprise organizations, 82% say it takes less than 6 months to make a decision.
- ...aiding this expedited buying process is a rise in more ways to buy: 53% of software purchases were made on credit cards, including 48% for Enterprise. Track data shows 57% of purchases made on credit cards
- ...aiding this expedited buying process is a rise in more ways to buy: More than one in five buyers, 28% of small business buyers, prefer to purchase tools from a third-party marketplace, giving sellers less opportunity to engage.
- And the rise of the user-educated buying committee means prospects are more savvy and often self-reliant: The average number of people involved in a single purchase decision increased by 20% over the past year, and over a quarter of companies expect the number of people involved to increase in the next year. A growing, shifting buying committee requires a many-pronged approach. 67% of companies usually engage a salesperson at a software company only after they have already made a purchase decision.
- Product-led growth is typically synonymous with a product experience becoming an essential part of the buyer’s acquisition and expansion journey. Companies who embrace PLG reduce friction for the customer to understand, try, and eventually buy their product by putting more of the experience in their hands as early as possible. And we’re seeing more appetite and engagement among buyers in this direction, including among Enterprises.
- Not every company can do a free trial or do it right away, or even take online payment. Great example is Pendo. While Pendo has a free trial, they don't share pricing and you have to talk to sales to buy. But they've created this amazing product tour that simulates what it's actually like to use the product with an interactive guide. Great way to reduce friction to see and try all of the features without going through a lengthy process of talking to sales and getting a trial set up.
- "Asana users can record, share, and manage high-quality video inside of Asana using Vimeo 100% for free, without upgrade gates. The play here is ultimately, if they want to use that content outside of Asana, they may pay to upgrade there."
- "Asana users can record, share, and manage high-quality video inside of Asana using Vimeo 100% for free, without upgrade gates. The play here is ultimately, if they want to use that content outside of Asana, they may pay to upgrade there."
- Customeras trust their peers 86% of software buyers, across segments, use peer review sites when buying software. Typically happens early on and again later in the purchase process, both for information on the short-list and to validate a decision. 60% of those surveyed, across company sizes, said they were more confident in buying decisions as a result of using online review sites.
- Buyer’s claim their primary obstacles are inability to get credible content, lack of knowledge of vendor offerings, and lack of customer references -- all up significantly from our last report. Customer-driven content, whether testimonials, references, case studies, and the like are all shown to be credible, trusted, and provide the validation buyers are looking for.
- Your existing customers can be your best marketing channel, and your biggest marketing asset. Their stories of success, their advocacy, and word of mouth referrals are very likely to have the highest ROI of any marketing campaign or tactic you produce.
- Your existing customers can be your best marketing channel, and your biggest marketing asset. Their stories of success, their advocacy, and word of mouth referrals are very likely to have the highest ROI of any marketing campaign or tactic you produce.
- They are doing this really well and it shows in their position on G2
- Your existing customers can be your best marketing channel, and your biggest marketing asset. Their stories of success, their advocacy, and word of mouth referrals are very likely to have the highest ROI of any marketing campaign or tactic you produce.
- Your existing customers can be your best marketing channel, and your biggest marketing asset. Their stories of success, their advocacy, and word of mouth referrals are very likely to have the highest ROI of any marketing campaign or tactic you produce.
- shortly after they launched their plugin platform last summer, more than 700+ third-party plugins have been built for the platform with over 3M plugin installs.
- Expectations are higher than ever Over 80% of respondents, from small to enterprise scale, believe it’s important to receive a return on investment within six months—time to value has always been important, but buyer expectations about the speed with which it is achieved are clearly accelerating
- Renewals are closely watched 60% of buyers always conduct research and consider alternatives when a product is up for renewal. The good news? Customers want to grow with you 1 in 3 buyers prefers to buy tools and complementary products from the same company.
- Renewals are closely watched 60% of buyers always conduct research and consider alternatives when a product is up for renewal. The good news? Customers want to grow with you 1 in 3 buyers prefers to buy tools and complementary products from the same company.
- The best way to create predictable revenue is to protect the revenue that you win. Don’t wait for the leaky bucket to start investing in retaining and growing your customer base. It’s critical to your future success. Take these examples from recent IPOs (will share Snowflake and other top tech company NRR vs IPO results). Here are 3 things you can consider: Invest in customer marketing Retention requires providing continuous engagement, education, and value to your customers. This may seem really obvious to you. But how many of us are excelling at this? Most CMOs I know can easily state what they spend on acquiring new customers, but I find far fewer that can share what they’re investing in retaining their existing customers.This isn’t just something to check off, or to host a customer event once a year and consider it done. This requires a strategy, a plan, and a budget. Look for the signs Today there are so many data-driven ways to spot trouble signs. You can create a health score based on a variety of factors, or look at adoption rates and their correlation to churn. Or you could use buyer intent data, such as from G2, and create alerts when your existing customers are looking at other software company’s profiles. Yes, that’s real, and it’s a fantastic tool in any sales or marketer’s toolbox. Celebrate your ROI My final advice on retention is to stop and celebrate the ROI. I don’t mean just creating a case study with your customer, or providing a ROI calculator alone. I mean really celebrate your customers’ success. Your customers took a risk in using your software, and if they’ve succeeded, make them feel great about that. This could be a formal awards program, but I’ve seen some really fun things - from framed case studies or plaques, to custom shoes and jackets made for a customer, or even just sharing data on how they are doing relative to benchmarks. This can be automated but will allow them to show off their success with their boss and team. Make your customer feel like a hero, and I guarantee renewal season will get easier.
- The best way to create predictable revenue is to protect the revenue that you win. Don’t wait for the leaky bucket to start investing in retaining and growing your customer base. It’s critical to your future success. Take these examples from recent IPOs (will share Snowflake and other top tech company NRR vs IPO results). Here are 3 things you can consider: Invest in customer marketing Retention requires providing continuous engagement, education, and value to your customers. This may seem really obvious to you. But how many of us are excelling at this? Most CMOs I know can easily state what they spend on acquiring new customers, but I find far fewer that can share what they’re investing in retaining their existing customers.This isn’t just something to check off, or to host a customer event once a year and consider it done. This requires a strategy, a plan, and a budget. Look for the signs Today there are so many data-driven ways to spot trouble signs. You can create a health score based on a variety of factors, or look at adoption rates and their correlation to churn. Or you could use buyer intent data, such as from G2, and create alerts when your existing customers are looking at other software company’s profiles. Yes, that’s real, and it’s a fantastic tool in any sales or marketer’s toolbox. Celebrate your ROI My final advice on retention is to stop and celebrate the ROI. I don’t mean just creating a case study with your customer, or providing a ROI calculator alone. I mean really celebrate your customers’ success. Your customers took a risk in using your software, and if they’ve succeeded, make them feel great about that. This could be a formal awards program, but I’ve seen some really fun things - from framed case studies or plaques, to custom shoes and jackets made for a customer, or even just sharing data on how they are doing relative to benchmarks. This can be automated but will allow them to show off their success with their boss and team. Make your customer feel like a hero, and I guarantee renewal season will get easier.
- The best way to create predictable revenue is to protect the revenue that you win. Don’t wait for the leaky bucket to start investing in retaining and growing your customer base. It’s critical to your future success. Take these examples from recent IPOs (will share Snowflake and other top tech company NRR vs IPO results). Here are 3 things you can consider: Invest in customer marketing Retention requires providing continuous engagement, education, and value to your customers. This may seem really obvious to you. But how many of us are excelling at this? Most CMOs I know can easily state what they spend on acquiring new customers, but I find far fewer that can share what they’re investing in retaining their existing customers.This isn’t just something to check off, or to host a customer event once a year and consider it done. This requires a strategy, a plan, and a budget. Look for the signs Today there are so many data-driven ways to spot trouble signs. You can create a health score based on a variety of factors, or look at adoption rates and their correlation to churn. Or you could use buyer intent data, such as from G2, and create alerts when your existing customers are looking at other software company’s profiles. Yes, that’s real, and it’s a fantastic tool in any sales or marketer’s toolbox. Celebrate your ROI My final advice on retention is to stop and celebrate the ROI. I don’t mean just creating a case study with your customer, or providing a ROI calculator alone. I mean really celebrate your customers’ success. Your customers took a risk in using your software, and if they’ve succeeded, make them feel great about that. This could be a formal awards program, but I’ve seen some really fun things - from framed case studies or plaques, to custom shoes and jackets made for a customer, or even just sharing data on how they are doing relative to benchmarks. This can be automated but will allow them to show off their success with their boss and team. Make your customer feel like a hero, and I guarantee renewal season will get easier.
- https://www.bvp.com/atlas/state-of-the-cloud-2019