What is the background behind Atlassian’s sales model?
The first time I heard of Jira (from Atlassian), it was around 2005 when I was a part of a project at a small IT service company. The project manager had used Jira at another company. He made the claim that the entire project team could be set up on Jira for less than the cost of two off the shelf issue tracking licenses of another software. Instead of having to convince the IT service company’s Managing Director and CFO (which would have taken days) and then spending thousands on some elaborate package, the Project Manager ordered Jira online with his department credit card right then.
By the end of the day, the team downloaded Jira on a server, and all of the project team was set up.
That team would later move to a “hosted” version and not have to manage updates. The company was sold to a larger company, bringing a lot of Jira fans with them. Since they had produced so much data in Jira, it was adopted in the new larger company.
The ease of purchase, implementation, and usage drove a new world in enterprise software. Customers began to discover that you did not need to have sales and local support staff in every country to sell to them.
By 2009, Atlassian’s customers were spread across the globe, even though their country footprint was tiny. But it was not until the “hosted” version took off that Atlassian began to grow so rapidly. As a sales guy, I have to admit, I was pretty fascinated about how hands-off Atlassian was during the pre-sales. But at those prices, I can see why they had “no salesforce.”
Selling Enterprise Software without a sales team?
Atlassian was the first to claim that they couldn’t afford a sales team when they first started. Word of mouth generated most of their sales. IT project people moved around to different companies a lot, and the ones that experienced Jira would gladly suggest it to their next employer. Later, companies like Box and Slack would join them in selling their products to enterprises without an aggressive salesforce to drive new account acquisition.
But is it true that they have no salesforce? To understand the answer to that question, we need to reverse engineer the business model rules to get a perspective on why and how this seems to work. These are the basic rules of the low touch sales model:
Basic Rule #1: Create a product that needs no help.
If the product is a “completely new” idea, it will likely need some degree of explanation. Also, something that needs the customer’s IT team to help implement will complicate the pre-sale to the point that you could need a sales rep. In the case of Slack and Jira, collaboration applications are not new. What makes them seem innovative is the UX, their easy on-boarding, and the fact that they do not require IT help to integrate their products with other products.
The user gets the feeling that the applications are solid and not buggy. Innovative, but again, the concept of collaboration need not be sold. Slack has this wonderful pitch about killing email. This concept of killing email is not hard to understand and is certainly greeted with joy of potential customers.
On the other hand, if you are selling a product that is so innovative or disruptive it could be a different story. A new innovative concept needs to be explained to the customer even before you talk about your product. That is very difficult to sell without a salesperson.
Basic Rule #2: Understand what your customer has to do to buy stuff, and remove ALL hurdles. (Buying Process)
Make it easy and painless for the customer to buy your product. Since most companies have buying and approval processes, if your offering is so expensive or strategic that the customer cannot purchase it with a corporate credit card, then you will likely need a P.O. and other approvals. If your customer needs a P.O. to purchase your products, the customer’s normal purchasing process will be triggered. Approvals, thresholds? What a pain. Most customers love to avoid that.
If you can keep your enterprise offering so simple (and small, at first) that a department manager can purchase it under the radar, then your strategy has a good chance. Freemiums and free trials are great to help the customer reduce risk. But you should have a well thought out plan for the customer life-cycle when offering freemiums. Slack is converting 30% of its freemiums. That is phenomenal.
Basic Rule #3 Your brand needs to be lovable to the person who will get you in the door.
In the case of Atlassian, their focus is on the IT manager / professional. The entire approach (including not harassing them with aggressive salespeople in the pre-sales phase), is bent directly around that persona. Atlassian has always given the IT manager the feeling that they are one of them. Winning over coaches to help you expand is pretty vital. Winning over internal evangelists is awesome. Your targeted branding will help.
Basic Rule #4 Be able to say “No.”
You have done everything to make it easy for a customer to do business with you. But what happens when a customer contacts you and wants changes in your T&Cs? The entire customer acquisition model needs to be “as is.” You are already making it very easy on them. By saying yes to things outside of your model, you are risking spending too much time on that customer. Stand your ground.
Basic Rule #5 Lead Qualification is after they pay.
Now the salesy part. In this customer acquisition model, you are not trying to get subscribers to a newsletter or nurturing leads. Your focus is to get the customer to try your product, then start paying for it. By lowering all hurdles for the customer to buy, including eliminating a customer’s risk through the trial or freemium, you have the perfect lead qualification.
If you follow how Slack and Atlassian engage with the customer, the people to people engagement starts after certain customers buy. The act of low-risk buying allows the selling company to get a “beachhead” on the account. At that point, the seller can see how the account develops, who they are, what is their potential, etc. At this point, you can address the complications of the customer buying process. The difference is that you are already an incumbent supplier. Both Slack and Atlassian have functions like an “Enterprise Advocate” that have the role of “helping” the customer find new applications, cross-sell, up-sell, and expand. Remember, you landed there by being low key and under the radar. Suddenly, you have proven your concept and have an account coach without even having direct contact with them. Now you have to sell and expand your beachhead. Otherwise you are in danger losing the account. It is easy to get in, it is just as easy to lose it.
That is right, the salesperson is not dead, it is just that sales begins later in the customer life-cycle.
It is slightly misleading to say that these companies do not have salespeople. It is accurate to say that the classic account acquisition sales person is not there. But this selling model is brilliant for sales where you can get in under the radar on accounts, then use that presence to expand.
Not for everyone, but certainly for some.