Two years ago while researching business behavior for my nascent company, Hubba, I made an interesting discovery. I had spent the last decade in the enterprise software world working with large companies, but now it seemed as if the concept of the company was eroding.
When people discussed their activity, it was about them as individuals and their relationships with others, not about their company. In fact, the vast majority of these relationships were with outside partners.
So how could a software company relate these findings to a technology platform? Historically software had been categorized as either consumer or enterprise depending on whether its primary function was for an individual's or a corporation's use.
But what if technology were to break free of the constraints of serving a single company? What if instead it would be used across an entire industry? No longer would this be categorized as enterprise software. I refer to this new concept as ultraprise.
There's only one way for software vendors to dominate the ultraprise world: mastering the cluster sell. With most deals, there's a linear pipeline. A salesperson moves from qualifying a lead all the way to securing a deal, then repeating the process with another prospect. The cluster sell is different. It's about setting up many pins and then knocking them all down.
The most effective way of approaching a cluster sell is by targeting a few key companies within one industry. Once several companies are on onboard, the platform's value is demonstrated to others in that industry. This company, in turn, endorses or mandates the software's use to partners, suppliers and vendors.
The new parties are onboarded and that extended portfolio is shown to an even larger company, which then endorses or mandates the software be adopted and so on. The cycle is repeated until the market is completely saturated.
This approach isn’t for the faint of heart. If a software vendor misses the mark, that company can suffer. But if the vendor nails the approach, the upside can be huge. Here are some things to learn about perfecting the cluster sales model:
1. Solve a mission-critical problem.
The cluster approach works only if the company can relieve a major pain point for people. In these cases, a broken, archaic and ancient business process, usually managed through spreadsheets and email, is in need of fixing.
The problem can be for any process, whether it’s logistics or exchanging information. It cannot simply be a problem that's merely nice to solve but should be an issue that individuals can no longer work around and that is jeopardizing something critical like sales or risk compliance.
2. Be data driven.
Without a strong base, a software vendor can’t support an industry. Determine who the best clients would be and build up an index around that to steer your sales process. This is most effectively achieved through gathering data or running algorithms related to companies in each industry. Cross-reference companies with others to determine which should be prioritized.
3. Craft a business model enabling rapid growth.
A freemium model can be a vendor's best friend. Even a $1 charge is enough of an obstacle to hinder growth and make a cluster approach fizzle. Put out a free product that’s extremely valuable to end users from Day 1 and monetize the product based on more advanced features, like team collaboration or security rights.
4. Create a platform with fast onboarding.
Users need to be able to gain immediate value from a product without the aid of any outside support. The platform needs to be easy to use (without training) and work fast.
Set standards for your platform that provide users benefits vastly superior to other software. For example, your standards could be time-based, so the product helps users solve in a matter of minutes something that could take them months on other platforms.