The software buying experience has changed dramatically since the advent of cloud computing and more recently, because of the pandemic. As software is now an integral part of our lives, it’s worth delving into the buyer behaviors and factors that shape software purchasing decisions.
For this year’s Ascent Conference, we invited Amanda Malko, CMO at renowned software marketplace G2 to give us insight into the 2021 G2 Software Buyer Behavior Report. In her session, Amanda broke down the stats and what these data really mean for software marketers, salespeople, and the software buyer journey itself.
Just how much has the software buying experience changed?
The heightened activity in the SaaS space is further fueled by the continuous transformation of the software buying experience. These fundamental changes affect the speed and ways through which purchasing decisions are made — something that providers must be agile enough to adapt to.
Amanda shares 3 key takeaways from the G2 report:
1. Software buying is becoming faster and increasingly frictionless.
The report found that 55% of the respondents needed 3 months at most to make a purchase decision worth $20,000, with 85% of all decisions made in under 6 months. This exceptionally short time span is a result of streamlined contract and invoicing processes.
The speed by which a decision is made is enabled by new methods and practices that make the buying process easier, such as credit card payments and cloud marketplaces like AWS. In fact, 1 in 5 buyers prefers to buy software from third-party providers, or from value-add resellers who offer software-plus-service bundles.
These transactions are all anchored on one thing: convenience.
Apart from convenience as a key factor in speeding up decision-making, there’s also the self-educating buyer.
Sixty-seven percent of respondents across all segments said that they usually engage with a salesperson after they’ve already made their decision — which, according to Amanda, was both surprising and rather unnerving. She notes, “If you’re a sales-led organization, how do you think about influencing the buyer prior to sales engagement, and help these buyers who want to move fast or self-educate so that they’re more likely to choose you?”
This leads us to our next point: building trust.
2. Building trust is more essential, yet harder than ever.
The reality is that buying software is often a risk. It’s a process that takes a lot of time, money, and careful planning, with the hope and expectation that it’s going to deliver quality, long-term results. This is precisely why building trust is crucial now more than ever, but as we know, it’s no walk in the SaaS park.
The report reveals that only 38% of buyers rely on a provider’s website to gather information about a particular software, highlighting the fact that they are looking at multiple sources to verify your credibility as a company. You may be surprised to learn that 86% of buyers weigh their options based on information from peer review sites such as G2, as this makes them more confident in their decision (60%) and helps with self-education (55%).
This is exactly why fostering multichannel trust is necessary so that in return, your customers will become your best marketing partners. Amanda shares 3 ways to do it:
- Incentivizing advocacy. An example of this is Sendoso’s SuperSender Program, which rewards top customers for their advocacy of a product.
- Building a community. A comprehensive knowledge base partnered with an equal or higher value-exchange among your customers will help solidify your company’s stake to the claim.
- Co-marketing. Customer-led co-marketing can do wonders for your business if used correctly. We can all take notes from how Airtable does it — their Airtable Universe allows customers to share stories and ideas on how the software works for them, effectively engaging both prospective and existing customers.
3. Retention is the foundation for growth.
Ultimately, all efforts for product-led and customer-led growth would be useless if you won’t also focus on retention.
“Most CMOs can say how much they’re spending on customer acquisition, but very few can say how much they’re investing in resources to keep and grow existing customers,” says Amanda. And with expectations for software companies higher than ever, providers must be aware of the considerations that really matter for customers.
Based on the report, here are the top 6 responses that 80% of the respondents gave when asked about their software buying considerations:
- Ability to scale
- ROI in 1 year
- Quality of customer support
- Ease of implementation
These considerations are crucial not only in the initial stages of the buying process, but also in the stages leading to renewals. The survey found that 60% of buyers conduct research and consider alternatives before renewing, with 1 in 3 buyers preferring to buy complementary products from the same company. “This points to the importance of retention because if you can keep your customers happy, you’re not only protecting the core of your revenue base, but you’re also building a foundation for growth.”
As the software buying experience continues to change, companies of all sizes are encouraged to expand their focus to include NRR, rather than focusing on ARR alone; adopt a product-led growth mindset; and invest in retention marketing.
While mapping how businesses buy software may be challenging in itself, the key is in truly understanding customer behavior and backing it up with intent data. Check out our handy guide on it here.