SaaS buying is broken: Why you need to make the process more transparent
SaaS buying and selling is broken.
Why are we still selling like it’s 2010? When I started my sales career in ‘10, times were tough. 90-day sales cycles, extremely low close rates, negotiations that often felt more like a game of hardball—yet, here we are 12 years later and all of those issues still exist.
You would think that with global SaaS spend growing 20% year-over-year, the way companies sell software would have evolved to match buyers’ changing needs—it hasn’t.
Traditional B2B sales is broken, and in order to change how people sell, you first need to change how people find, buy, and manage SaaS. With recent demands from software buyers, that’s exactly what we’re solving for at Vendr.
The challenges that come with a growing SaaS stack
Companies face more challenges than ever before: the war on talent, rising inflation, and market volatility, to name a few. The biggest expenses for companies in a post-pandemic world are people and technology. Equipping teams with the best SaaS tools as soon as they’re needed gives people superpowers, which results in a material competitive advantage.
Whether it’s automating manual, repetitive tasks, simplifying project management, or streamlining communication amongst remote colleagues, SaaS done right empowers workers to focus on high-value, strategic initiatives that directly drive bottom line growth.
However, the problems Finance, Procurement, and IT teams face to procure the right SaaS at a fair price are consistently holding them back, for example:
SaaS pricing is negotiable
We believe SaaS pricing should be variable, not negotiable. It’s understandable that companies have different rates based on who they're selling to—big company vs. small, one industry vs. another, etc. That’s logical.
Where things start to break down is when the price someone pays is almost wholly dependent on the salesperson they’re working with, or how close it is to quarter or year-end.
Fairness should be table stakes, and software buyers deserve clarity. Buyers deserve to know that they are buying the right product, with the right SKUs, at the right time, and at a fair price. No one should feel doubt after a purchase, wondering whether or not they got a fair price.
As it stands, buyers have limited access to understanding what SaaS should cost, outside of peer recommendations or static, non-contextual benchmarking services that only capture five to six of the top suppliers.
Price benchmarking is a challenge, and with the proliferation of SaaS tools and SaaS consumption, buyers have too many options at their fingertips with no easy, accurate way to compare them.
Manual SaaS stack management takes time away from valuable work
A growing SaaS stack should excite companies. The upside: software exists to support people and allow them to do more than they ever could on their own. In this way, SaaS gives employees superpowers and companies a competitive advantage.
The downside: bottoms up adoption leads to SaaS chaos—wasted money, disjointed systems, security risks, and lower productivity.
Companies are using more SaaS than ever, yet still rely on multiple disjointed systems to try and manage it all. With a lack of organization, process, and automated management, SaaS waste is becoming one of the most pervasive issues in modern organizations. The average company wastes around $135,000 annually on SaaS tools they no longer use or need.
To make matters worse, a lack of centralized SaaS buying processes leads to spend happening behind the scenes, on credit cards, and through auto-renewals. Unsurprisingly, getting all the data you need for full transparency and making informed future SaaS buying decisions can take months.
A buyer’s market: SaaS buying demands and changes
Without transparency and automation, too much time is spent going through approvals, negotiating with sales reps, and manually managing entire SaaS stacks. That time could be better spent on more strategic, impactful work, and here are a few of the things software buyers are starting to demand:
Transparent pricing with recommendations based on data
Fairness is the minimum a supplier can and should bring to the negotiation table with potential customers.
One observation from my experience working in and selling SaaS is that it’s easy for sellers to become addicted to revenue shortcuts in a fast-paced, high-pressure environment. As a result, there’s a lack of transparency in pricing models that put the vendor first, such as bundled pricing, sneaky auto-renewals, and pricing model changes with limited notice.
The end result of shortcuts to growth? Short-term inefficiencies and long-term churn. Software sellers think that negotiable prices are a tool to speed things up and close deals faster. I think it’s the opposite.
Negotiable prices mean buyers are left with uncertainty, so they go to great lengths to validate that the price they are quoted is fair. They play the negotiation game and waiver until the eleventh hour. In sales, we know that time kills all deals and inconsistent pricing is a recipe for extending sales cycles.
The buyer and their unique needs must come first.
At Vendr, we help our customers find the right SaaS at the best price, overseeing approvals and negotiations to ensure pricing and terms are set up to benefit the buyer long-term, and free up their time to focus on more critical work.
We’ve learned that forward projections are key. Insights into what similar industry and stage companies are using and how they’re future-proofing contracts to align with company growth are the recommendations buyers need and deserve.
Software buyers need insights to make better decisions. Better decisions lead to happier customers with greater lifetime value. Win/win.
A single source of truth to accurately manage the SaaS stack
For teams that are spread thin across many spreadsheets and systems, getting full visibility is time-consuming and complicated. Stakeholders and functional admins aren’t meant to be procurement experts, and procurement teams have more strategic work they could be doing.
To streamline this process, there needs to be a single place that accurately and automatically stores and tracks all SaaS data; a centralized system of record. Information standardization and data integrity is key across many different aspects, such as: which departments are using which tools, how much do they cost, when do they renew, who is the primary owner of each app, how often is each app being used, verification that each license purchased is being used, verification each feature in a given tier of service is needed and used, etc.
Spend optimization requires spend visibility. To operate at the highest level, the entire SaaS buying and management process—from request for purchase to spend approval, security and legal review requirements, purchase order, receiving, invoicing, and payment—requires a single, centralized system of record.
By aligning the software purchasing and management processes, companies have the ability to scale systems, streamline spending, and ultimately save money on their entire tech stack.
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The future of SaaS buying
We need to stop selling like it’s 2010. Instead of 90-day sales cycles, we need shorter timeframes for buyers to make faster and better buying decisions.
How? Transparency. Software should be variable, not negotiable.
Sellers need to shine a light on transparency, starting with identifying appropriate SKUs, getting to a fair price, immediately, and streamlining the procurement process.
And, at the end of the day, the best products will always win. Best-in-class products and companies want buyers to know they have nothing to hide. They share everything up front, from who’s using their product to sentiment to price.
The software industry is evolving rapidly, and perfecting the selling and buying process will give companies a competitive advantage as SaaS proliferation continues.
With transparent pricing, centralized buying processes, and automated software management tools, the next era of SaaS buying is going to look a whole lot better, and I can’t wait to see it come to life.
