The State of Software Buying From SMB to Enterprise with G2's CMO, Amanda Malko

Hi, this is pretty cool in person, and hi to everybody online as well. I'm Amanda Malkow. I'm the CMO of G2. I joined G2 about 6 months ago from Mailchimp, and before that I worked for a number of software and services companies serving small businesses and enterprises. And one of the reasons I was so excited to join G2 is because of the wealth of data that G2 has on software buyers. There are tremendous learnings and insights from 60 million software buyers on G2.com every year. And so that's what I'm going to talk about today is sharing some of those key takeaways and what they mean for you, whether you sell to small business or enterprise companies. So thanks for joining us. Um, with that, I promise you this is my only methodology slide, but I want to give you some insight into where these insights came from. So again, 60 million buyers on G2.com. We take that and we're looking at insights and key trends. Trends in buying behavior as well as spend across 1.4 million reviews on that software. And then we also did a survey, the findings of which we just released this morning. So you're seeing this for the first time of 800 software buyers around the world. So this is the summation of all of that insight and knowledge. I'm going to start with the good news. You made it. The last year has been tough. We saw dips in software spend immediately following COVID. And now in Q2, we just surpassed the highest software spend per employee that we've seen at G2 to date. So that should feel pretty good. Even better, in our survey, 55% of buyers said they're going to spend more next year as well. And the total number of unique products, which you're looking at here, is the number of products that a company buys on average. Just in the first half of this year, it's higher than we've ever seen, on average 124 software products per company. Tremendous opportunity for all of you and all of your companies. But with this growth, what we're seeing is that the way software buyers buy is fundamentally changing. Software is becoming a reflection of our everyday lives. So this is the top trending categories on G2.com in the past year. I love the first one, because clearly we're all at home in our pajamas trying to figure out how to make a buck on cryptocurrency. I have not figured it out, so if you have tips, please come see me after the presentation. We're also trying to figure out how to work from home better together. So video conferencing, marketing automation, project management. This is the zeitgeist of our culture. Is reflected in software. The other thing that's changing is the way we go about buying it. And so in the rest of this presentation, I'm gonna share 3 key trends and hopefully some examples of things that you can be doing to capitalize on these. I don't think any of these are gonna be revolutionary, things that you've never heard before. So what my hope is, is that this is a distillation of the top 3 things to focus on, a blueprint for how you can go to market. And the first is that software buying is happening faster and becoming more frictionless. I think we all know about the frictionless part. We've talked about product-led growth. How can you create a delightful customer experience? But the happening faster part surprised us, particularly given how dramatic it is, especially as we've all heard that there's more people involved in software buying decisions than ever before. All true. But 55% of buyers say that they need less than 3 months to make a decision of $20,000 or more. 85% of buyers say, I don't need more than 6 months to make a decision. And you may be thinking, enterprise, my company, they take forever, right? It's like 12 to 18 months. They can't make a decision. 82% of enterprises, 1,000 employees or more, are saying, I don't need more than 6 months to make a decision. This really surprised us. We think there's a couple of things happening here. The first is, is that there's friction— frictionless experiences in how we buy. So over half of buyers say that they're using credit cards to make their purchase decisions, to make their purchases, and 48% for enterprise. So they're using credit cards more readily and using trials more often as well. The other thing we're seeing is that there's more ways to buy. 1 in 5 buyers prefers to buy from someone other than you. A third-party marketplace, a VAR, a value-added reseller. This is key to thinking about how we go to market. More frictionless experiences means they can make them faster. More convenient ways to buy and places to buy means that they're more likely to make those decisions faster and give you a try. Perhaps more startling, 67% of companies usually engage a salesperson after they've already made a decision. So how can you influence them prior to them reaching out? This stat is troubling. You have to think of ways to sell before they contact sales if you're a sales-led organization. So what can we do with this? Faster, more frictionless decisions, making decisions and educating themselves before they even reach out to sales. Adopting a product-led growth mindset is key. We all talk about product-led growth. I've seen many, many great panels on product-led growth here at SaaStr already. But a lot of times we think about it as a destination. Once I get the free trial, I'm going to be doing PLG. It's really a mindset. How can you reduce friction to try and buy? A great example is a free trial, but not everybody is there, and free trials can often be very limiting for the buyer. I'm going to stop and give you a non-software example. I had a baby during COVID and about a year in, He's about a year now. I had a realization many parents have, which is car seats are huge and I need a bigger car. So I decided to go get a test drive. And I filled out the form to like schedule a test drive. And I heard back about 24 hours later and delighted, we schedule it. And it turns out it was routed to the wrong dealership. And I was like, you know what, forget it. I'm just going to march down there and to see what's there. And that reminded me like, that's what it feels like when a demo request is routed to the wrong person, right? That's not a delightful frictionless experience. So then I get down there and I went to two different dealerships and the first one said, I'm sorry, we don't have any inventory. Can I show you some pictures on the website? No, thank you. There's a chip shortage, I get it. And the second dealership said, come on in. The car that I wanted was literally sitting in the dealership inside. And they said, "Why don't we drive it out and let you, give you the keys, let you take it for a spin?" Within 10 minutes, I was sitting in the car. Of course, it was the top-of-the-line model with bells and whistles I did not know I needed, but absolutely felt like I had to have, you know, after I was doing it. Disco lights, like who needs that? I don't know, but I wanted them. And it just reminded me that if I hadn't gotten in the car and tried all the bells and whistles, There's no way anyone could have sold me that I needed those things. And so a free trial is a great example of product-led growth, but it's only one way. Pendo is a really best-in-class example, I think. They released a free trial last year around this time. But they went a step further because a Pendo, if you're familiar, it's kind of hard to really experience Pendo, especially in the limited version on the free trial. and it really is something you kinda wanna experience for yourself within the product to get. And so they went a step further and they said, you can request a demo or you can just put in some basic information and why don't we just show you what it's like and let you take the keys and drive it around. And so this is a demo experience directly on the homepage of Pendo that allows you to see any aspects of Pendo that you want and it feels like you're driving. I didn't even know Pendo did half this stuff. And I've used Pendo. This is a great way to reduce friction, to try and get people to hopefully buy things they never even knew they needed. Another example of product-led growth is designing for multiple front doors. I'm not gonna tell you about marketplaces. You know that. We talked about that. We saw 1 in 5 buyers is preferring to buy from a marketplace or a bar. Not everybody can be in a marketplace. But there are other ways to think about multiple front doors. It used to be that we thought of ourselves as a product company. I'm one product. How do I make sure I get as many people to come to my product as possible? But what if you're a franchise? What if you can franchise your product and get it in more people's hands for more use cases and think about different front doors to your product experience? So I love this example from Vimeo. And if you're here, you're missing the CEO of Vimeo, Anjali, so you should watch her presentation later. Uh, but Vimeo just released a trial, uh, of their product within Asana. And what I love about this is obviously product integrations, nothing new. This is enhancing the functionality of Asana, but what it's doing for Vimeo is it's actually allowing people to use the product in a really interesting use case example within Asana. And if you wanna use it outside of Asana, guess what? You have to pay for Vimeo. So this is a great front door for Vimeo. Miro, if you've ever used Miro, great experience for creating templates and really thinking visually, really a visual collaboration tool for your teams, but it's used in so many different ways by so many different personas. One of the things they've done is actually think about all the most common use cases for Miro and then created actually a paid search campaign that just, if you're looking for, in this case, a service blueprint, they have paid search ads that'll bring you directly to a template. That's a front door, right? A different use case for the product drops you right into use the template. You're gonna use it, find it delightful, and hopefully upgrade in your product experience. So think about yourself as a franchise. How can you actually get your product into more use cases? In people's hands. And test your way into it. I like thinking of PLG as a mindset as opposed to a destination. You test your way into it. You're always working on that journey. You're never sort of done. And I think it also prevents the sort of feeling like, if I don't have a free trial, I'm not doing it right. That's great. You should work towards that. There are other things you can do as well. So that's the first takeaway. Buying is happening faster. And more frictionless than ever before. The second takeaway is that building trust is more essential, but it's harder than ever to do. We all know that trust matters, but who can you trust? Our survey shows that traditional forms of influence are fragmenting. This doesn't mean they're going away. It just means our jobs as marketers— if you're a marketer in the room, sorry— Sorry, it's harder because there are more places that people are looking to make their decisions and inform their buying. Only 4% of buyers trust traditional analysts and market research firms the most when they're making decisions. That does not mean they're not looking at the report. It just means that if you're in the quadrant, your job is not done. Right. Only 4% are going to say that's what's going to help me make the decision. 38%. Consider your website the most trusted place. That's not great, right? They're looking at other things beyond your website and sort of thinking about this as a holistic picture to say, let me look at this, but let me look at 10 other sources as well to educate myself. By the way, before I ever talk to your sales team, what they do unanimously say, 86% of the people we surveyed look to peers and peer reviews to inform their decisions. I've heard people say, yes, but that's probably only small business customers. 85% of enterprise buyers look at peer reviews. And they say it makes them more confident in their decision-making process. It is a critical tool to market to your customers. How many people here, just as a show of hands, sorry for those online, use reviews in your personal life? It's close to 100%. You probably all have your strategies for it, right? Like I'm the, I go to the one-star and I'm like, how bad is bad? Some people are like, I wanna know what the average is. Everybody has their way. What makes us think that then we go into our professional lives and we're like, I'm gonna buy a totally different way, this doesn't matter. Right? So think about that experience. What does that look like for your buyer? And the final thing about trust is that when we asked buyers what would hold them back from making a purchase decision, the top 4 most common reasons shared one thing in common: a lack of credible customer-led content. Your buyers want to hear from your customers. They want customer references, credible content, which by the way probably means that has some content or source that's not you, and not enough reviews on review websites. That's a key one too, because they're looking there and they want that credible content. So what can you do? If the first takeaway was all about frictionless experiences and product-led growth, trust is all about customer-led growth and customer-led marketing. What if your customers were actually your best marketing partners? What would that look like? How can you incentivize advocacy? Sindoso has a program called the Sindoso Supercenter Program. It's an advocacy program designed to drive reviews as well as case studies, testimonials, and other kinds of advocacy. In the reviews on G2, some of their customers actually cite how much they love this program as a reason for them loving Sindoso, which is very meta, and I love that. You can tell that they have invested time in building advocacy. You can see that it shows and how far and away on the grid on G2.com they are in their category. HubSpot, long known for community, great community program at HubSpot, just launched their advocacy program last week. HubFans is a program designed for people— maybe you don't want to participate in the community or answer forum questions or become a partner. Maybe you just want to share your love of HubSpot and be rewarded for it. HubSpot just did this in part in recognition of the fact that advocacy counts, and you can do small things to incentivize that among your customers and drive up your reviews as well as advocacy in other ways. The second thing you can do to really earn trust and share it with your prospects as well is to build community. I debated calling this community because I feel like it's a very loaded term. We use it to mean a lot of different things. At its core, if you've got advocates, you can work your way towards building a community, which I define as having a really high value exchange. The value for your end customer in that community should be higher than the— what they deliver to you. And let me give you an example. The best one I can think of is Shopify. Shopify had almost $3 billion in revenue in 2020. And over $12 billion is what Shopify partners generated for themselves through the Shopify Partner Program that same year. 42,000 partners in their community referred at least one new customer to Shopify that same year. That's value exchange and building a community. Now, not every value exchange has to be monetary, but if you've got advocates, think about how can you harness them and really even elevate the value exchange that you have with them further. [FOREIGN] And once you have that community, or maybe this is your way into community, how can you create more customer-driven content and co-marketing? Really treating your customers as your best marketing partners. If you know your buyers wanna hear from your customers, how can you put your customers on a pedestal and let them help market for you? You'd be surprised how many customers will actually embrace this and want to do it. Airtable is a great example. They have Airtable Universe. So they actually just created a platform and said, hey, you're using Airtable in really cool and inspiring ways. Why don't you throw up your project and share it with the community? There are so many thousands of examples on Airtable Universe. It's really fun to check it out. Figma launched their community, which is actually, again, customer-driven marketing and content. And they saw 3 million plugins really shortly after, I think like a few months after they launched from what I read. Incredible asset for both their prospects who are trying to figure out how can I use Figma as well as their customers to be inspired in new ways to use it. And then Mailchimp actually created a partner community and then went a step further and said, what if our partners actually do our marketing, some of our education and training for our customers? There's a templates commerce store where you can buy templates created by their customers. And there's actually partners, again, some of their best customers doing workshops and trainings. A lot of times we think we know the product best, so let's train our users. Your users probably know the product best. Pick your best users and think about how could they actually be your marketing partners. Again, trust is harder than ever, but if you've got great passionate customers, You can build it if you treat them as your marketing partners as well. And the final takeaway is that more than ever, retention is your foundation for growth. This may seem really obvious. When I talk to CMOs, every CMO I talk to can cite how much they spend on customer acquisition. Many fewer can say how much they spend to keep and grow those customers. Retention requires a strategy, a plan, and a budget. And it's important because expectations for you and your company are higher than ever. We asked, what were the most important criteria? How important are these things to you for software buyers? We could only fit 6 on this slide. There were 12. 11 of the 12, 80% or more of people said this is important to very important. So what that looked— across all segments, by the way. So what that looked like is everything is important. That's possible bar to me. These are just the top 6. And 81% of respondents said, I need to see ROI in 6 months or less. Now many of you are like, great, no problem. But some of you, and I imagine in my former life I would have been one of them, been like, so I have to get you to sign, onboard, train you, implement the product, and you need to see tangible ROI in 6 months. Great. How am I gonna do that? Say you've got, you negotiated, hopefully you've got more than a 1-year contract. Maybe you've got a 2-year contract. Maybe you're always on. At some point when your contract is about to expire or the customer is saying, I've been working with your product for a while, renewal is coming up, 60% are gonna be watching other companies and checking to see if they should stay with you. But there is some good news, I will say. There's huge upside opportunity, not just to keeping your customers but growing with them. One in three buyers, prefers to buy complementary products from the same company. If trust is harder than ever, the upside of that is that once you win their trust, you've got a great opportunity, and it's gonna be much harder for others to earn their trust back. So how can you capitalize on this? The first thing to do is invest in retention marketing. Again, it has to have a plan, a strategy, a budget. The second thing is look for the signs. So there are many, many signs of a customer who's at risk. You might have a health score. So say you've actually thought about your product metrics and you said, okay, when they adopt, I see them log in at this frequency. Maybe you have a couple of things that roll up into a health score. That's one great way to do it. It's harder, I think, during COVID because we're all at home, we're working remotely. It's harder to have face-to-face interactions. But there are other signals you can look for. For example, intent signals. Often used for acquisition, actually great for retention. On g2.com, you could actually set up a signal to know any time one of your customers is looking at someone else in your category. That's real. You can use it for retention. Look for the signs. The final thing is celebrate your ROI. I don't mean share an ROI, like, yes, There's ROI calculators. Talk about your ROI. Celebrate is the operative word here. How many times do we actually make our customers the hero and celebrate their ROI? I really struggled. I looked for great examples of this, and I didn't have too many. So my challenge to you all is share with me your stories of celebrating your customers' ROI, because I know they're out there. Your customer took a risk to work with you and your product. How can you make them the hero? Can you have benchmarks and if they exceed the benchmarks that you're seeing for others, do you give them an award? Do you give them something that they can share with everyone in their company to make them look great? How can you make the celebrate part of this really key? 'Cause if you make your customer the hero, if they feel like they trust you and they feel great about working with you, they're gonna stay with you and there's a good chance based on this data they're gonna buy more with you. And that really is the foundation for growth. And I think the best examples I can give you as to why this matters and who's doing it well is actually in the, uh, NRR at the time of IPO for some of the more successful IPOs of the last few years. Um, Asana has a number of small business customers, and yet even with their blended NRR, it's still at 115% at the time of their IPO. Snowflake, I mean, really setting the bar for all of us. I don't, I don't know. I feel like this bar is incredibly high, but you know, very aspirational at 168%. So think about NRR, not just ARR. And with that, those are our 3 key takeaways. Software buying is happening faster and more frictionless than ever before. A product-led growth mindset is really where you need to be headed. Building trust is essential, but it's harder than ever. Working with your customers as your best marketing partners is a great way to build trust. And retention is really the foundation for your growth. Invest in making your customer the hero, and you're gonna see that your growth will accelerate well beyond just focusing on acquisition. If you wanna get the report, you can research.g2.com. You'll be able to get all of the findings. And you can also, if you're in person, you can come see us at the G2 booth and we'll be happy to share more. But with that, I wanna thank you all. I hope you found this helpful and a blueprint for, for how you can go to market moving forward. Thanks for joining us.