The open source sales cycle
I was ordering Mother's Day flowers tonight to the tune of Ozzy Osbourne's "Waiting for Darkness." (Don't ask.) I haven't heard it for years, and I started to smirk at the lyrics. Like most song lyrics, they're lame.
Playing with fireBefore the smirk set in, the head was banging. Great music. In my more lucid moments, I smirk. The rest of the time, I just enjoy.
But they're screaming
When they're burned
Out of the sunlight
Hasn't anybody learned
The myths around open source are much the same. I've heard them so often that I rarely take time to critically evaluate what is being said. Heck, I'm as often as not the one regurgitating them. Open source developers and vendors mime the words, singing along to the catchy tune, because it serves their interests. Anything that smacks of a contrarian opinion is hounded out of the room.
The more time I spend with IT buyers, however, the more I realize they just want objective information. They like open source, in part, because they don't need a sales guy to tell them why a product is great - they can immediately download it and see its strengths and weaknesses for themselves. This doesn't necessarily lead to quick sales, however, as I note below. Open source, as I've said before, is a marathon and not a sprint. A download might take months to germinate into a sale - or it might wither on the vine.
This fact, incidentally, calls into question one of the great myths about open source business. The rhyme goes something like this: "Open source drives down sales and marketing costs, because customers download the product, love it, and then gladly throw money at the author of the code. They just set up an online cashier to collect the mountains of cash."
The only problem with this line is that nearly everything in it is untrue.
in my experience, it is true that open source has lower sales and marketing costs. But not forever. At some point, as Red Hat continues to hire direct field salespeople, it will be as bloated as IBM, Novell, or Microsoft in its sales force. But it was much cheaper to start, when cheap matters most.
Where my experience diverges from the myth is in the trial-to-buy process. I think it is absolutely true of small deals: SugarCRM has, in addition to the larger deals it does (and it's doing an increasing, healthy number of these), a fantastic base of small deals that make up a very broad, healthy revenue base. Not "clumpy" at all. Alfresco has those, but we also sell a lot of big deals, more akin to ActiveGrid and SourceLabs' revenues than MySQL's traditional revenues (though MySQL is seeing bigger and bigger deals in the past year).
Guess what? No one pays $50-100K over the web. They almost never pay without meeting you. In other words, these big deals always cost more money to close, open source or proprietary.
One other hitch in the story is the idea that permeability of source code makes for quick sales. Sometimes, sure. But just as often it either turns off the buyer ("This product stinks!") or slows them down, as they get to see all the warts upfront. If I'm buying Siebel, I really don't get to see it until I've signed the check. All the warts become horribly apparent at that point, but not really until then. Until then, I'm trusting an untrustworthy sales guy to tell me the truth. What choice do I have? :-)
In open source, then, the trial/pilot cycle is almost definitionally longer than in the proprietary world. (I must hasten to say, however, that open source dramatically shortcuts other aspects of the trial process, like actually getting one's hand on code in the first place.) It's all for the better, in my view, because when a buyer does sign up, they know exactly what they're getting and are able to look past the problem areas. They're able to quantify the risk and make an intelligent decision. A better decision. But it's not necessarily a quick decision.
So, if you're getting into open source and your deal size is expected to be north of, say, $15,000, you need to learn patience in the sales cycle. A download doesn't mean immediate intent to buy. And even when it does, the intent will generally be well out in front of the action to do so.
I frankly am still experimenting with the best way to qualify interest post-download, and would love to hear others' experience on the matter.
3 comments:
I think there are a lot of little projects in hundreds enterprises where open source is used, and they don´t pay at all to the software vendor.
There is to give more value to the product for them to spent money, as usually they can get a simple support in open forums.
We have tried to get email of downloaders to know if it´s possible that they would be interested in events about the software, learning courses,... (paid, of course ;) )
I think it´s also quite important to know how many people that downloaded your software are using it several months later. But this is difficult.
I did a work for an MBA about bussiness models of "free software", and the more I read your posts, the more I think it´s quite poor :D
Very interesting your appreciations.
You are right. Sales with Open Source products is complex and challenging. It is possible, however. I've met a number of sales folk who couldn't make the transition, however.
The above comment exhibits that kind of thought which implies that if Open Source doesn't work out for the world it can somehow be rewound and removed from every customer's memory. It's here... and it is warping the software business for both open and proprietary vendors.
It's not a question of IF you need an Open Source sales strategy. You do.
I agree; marketing, of some sort, is always needed. I certainly won't fork over the dollars for a large purchase (e. g. an automobile) without meeting company representatives face-to-face and then actually trying it out first. Free Software (often called "open source") gives people the opportunity to kick the tires. I like that.
Google, the world's most popular search engine, and Firefox, an open-source Web browser, got popular due to word-of-mouth marketing. That's the best type, because it happens on merit. But you don't have to pay Google or the Mozilla Corporation to use the browser.
At my place of work, I am the major Free Software advocate. I downloaded GNU/Linux and (very quietly) installed it on several boxes. After some time in our data center (yes, I'm a Yankee), and a lot of underground work on my part and that of another guy, Red Hat's Enterprise Linux distro is now "tolerated" reluctantly. That's an improvement; a year and a half ago, it was absolutely forbidden. But only RHEL is (again, reluctantly) sanctioned; all others are still verboten. That's the power of marketing. But I still welcome it as improvement in this area, and Red Hat, JBoss, SugarCRM, and MySQL AB are doing excellent work here.
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