Multichannel Success Podcast Season 4 Episode 4 - Transcript

Why do Software vendors oversell - with Jamie Hancox

Mark pinkerton [00:00:05 - 00:00:10]

Hello and welcome to this episode in season four of the Multichannel Success Podcast.

David Worby [00:00:13 - 00:00:41]

In today's episode, we're taking it up a notch. Well, that's the plan anyway. And I can't imagine anyone better to do that with than this week's guest. He's been called a guru of all things digital. He's the founder of Commerce Futures and the MD of buying time. And as an advisor to the Mac Alliance, if that's not enough, he's heavily intertwined with all things Mac. If you're listening to this and haven't had the pleasure of meeting our next guest, you really need to. We're delighted to welcome Jamie Hancox.

Jamie Hancox [00:00:42 - 00:00:43]

Good morning, gentlemen.

David Worby [00:00:44 - 00:01:12]

I'm also joined this week, as usual, by my co-host, Mark, who this week has been exploring the world of SIs. More of that a little bit later. Good morning. The subject today is why do software vendors oversell? A fascinating subject, and there's lots to talk about, and in the next 20 minutes, with that in mind, we're going to talk about why do software vendors oversell? I'm joined this week, as usual, by my co-host, Mark, who this week has been exploring the world of SIs. More of that a little bit later. Good morning. The subject today is why do software vendors oversell? A fascinating subject, and there's lots to talk about, and in the next 20 minutes, with that in mind, we're going to talk about why do software vendors oversell?

Jamie Hancox [00:01:16 - 00:02:04]

It's become a slight obsession of mine, if I'm honest. We run, in the business that I'm involved in, we have a group of merchants, customers, retailers who spend their time talking to each other, and we witness those conversations. But equally, we work for a lot of software vendors and SaaS businesses, and clearly the two worlds need one another in order to behave, survive, thrive, et cetera. But it seems to me that over the 20 years of e-commerce, a lot of those relationships have become quite fractured. If you're a mature e-commerce director, you've probably been let down by quite a lot of the software that you have bought over the years, and you're maybe a bit disappointed or a little bit suspicious, a bit jaded.

Mark pinkerton [00:02:03 - 00:02:08]

David Worby, Jamie Hancox, Mark Pinkerton, David Worby, Jamie Hancox, Mark Pinkerton,

Jamie Hancox [00:02:05 - 00:02:50]

Go to www.FEMA.gov to learn more. Yeah, so a lot of those projects have sort of not failed, but maybe not done quite everything that was promised. And equally, the world of SaaS, because of the VC funding that's been behind it for such a long time, has become very acquisitive, very, you know, a little bit too aggressive sometimes. And so the temptation to over-promise is increasingly there. And I think in the market at the moment, we're in a different place. There's a bit more humility around, there's a bit less growth around, but buying the right thing for the right reasons and being sold the right thing for the right reasons is still is increasingly important for everybody, I think.

David Worby [00:02:50 - 00:03:13]

We'll come on a bit later to some of the motivations and the conflict of motivations that kind of cause some of this to be the case, but just before we do on the definition section, when we're talking about software and we're talking about vendors, are we talking about certain sectors, are we talking about certain verticals in the market, or are we talking very broadly, just so we get a sense of where we're angling this?

Jamie Hancox [00:03:13 - 00:03:50]

I suppose I'm thinking about the things that you can take in and out of your digital stack with relative ease. So starting with your search tool and your CMS and all of those things, it's relatively easy to change search tools. And so that's a very, very competitive marketplace. And the risk, therefore, of all of those vendors just trying to wedge each other out with a certain amount of, you know, mistruth, I think is very tempting. The deeper you go down, I think the less... Yeah, there's not a lot of German ERPs, is there?

Mark pinkerton [00:03:48 - 00:03:52]

Yeah, there's not a lot of gin in the E.L.P.'s, is there? Yeah, exactly.

Jamie Hancox [00:03:50 - 00:04:13]

Yeah, exactly. So ERPs is a case where you admit, you know, that it's the lighter end of the market where the problems are really light. And the places where there's real competition. So think about those sectors where there are old categories, DAM, Search & Merch, the ones that have been around for a long time, where they're real competitive. That's where I think all the pressure lies.

Mark pinkerton [00:04:29 - 00:06:09]

I'm not sure the vendor aspects of it were still pretty developed at the time because they had to sell the monolith to somebody, so they had to cover all of these different aspects of what their platform can provide. You know, you think how successful Dan Wagner was with vendor, it was extremely successful with slightly questionable technology, it has to be said, in retrospect because it was the Boo.com code that he bought and then brought forward to market. There were some aspects of it that actually were okay, but there were frustrations that all of the clients that I ever worked with on vendor, which was about seven or eight, expressed the same frustrations, like you can't change the way the checkout works or you can't change the way the basket works and so on. So their ability to sell that was as a, you know, single relatively small payment every month. with a big promise of, oh, we'll change it, we'll make it fit. But that bit never really happened. And then you had a wave of other people coming along in the UK, and certainly in my experience, where you had the Portatex selling Hybris, but they packaged that up in a nice, simple way. And actually, some of those solutions were pretty good and pretty robust, and we worked with them not that long ago. So it's a bit horses for courses, I think. There has definitely always been a slight tendency to oversell. When it's at the monolith end of the market,

Mark Pinkerton [00:06:07 - 00:06:09]

Monolith end of the market.

Mark pinkerton [00:06:09 - 00:06:28]

it is harder to get people to tweak their product, for sure, which means you might end up going down, in those days, the Fred Hopper route for search or something else to replace functionality that isn't quite as good as you need it to be. But it was always incredibly painful.

Jamie Hancox [00:06:30 - 00:06:56]

The key word here is the promise, isn't it? Yes. So what is the promise that, as a software vendor, you're making to your client? Same thing. We all make promises to our clients when we're consulting or services businesses. We make a promise. We will fill the room with perfect delegates at the event that you're about to sponsor. So the promise comes in three flavours, doesn't it? It's what does the product do now that is out of the box? That's a promise that we've all set.

Mark pinkerton [00:06:56 - 00:06:59]

And we can see it working on these other sites, so yes, take a look.

Jamie Hancox [00:06:58 - 00:07:34]

So out of the box is definitely a promise that doesn't always come true. Level of effort I think is a big issue. It won't take that long. It will give you this 5% uplift and it won't take you very much effort to do. That's never true and that's always an area, that's the grey area. And I think the biggest grey area is always this is what is coming in the roadmap because that's the single biggest thing that no salesperson, no AE ever has control over because it may not be. It may be in the roadmap but the roadmap will change.

Mark pinkerton [00:07:33 - 00:08:09]

But you do expect to have visibility of the roadmap, and you've always expected to have that. I mean, we've had conversations with some people who provide e-commerce outsourcing, shall we say, where they were completely unwilling to share their roadmap. And that just destroys the confidence that you have in that platform. So we actually advise that client, don't go down that route because they can't share the roadmap. What they're doing now is barely adequate, and they're not prepared to share their roadmap. Therefore, we don't have the confidence that you can succeed and get your commercial gain out of that product.

David Worby [00:08:10 - 00:08:57]

So the component in negotiation, that's critical, but I would venture that there's another component that often doesn't get talked about, and that is at the point at which a vendor is making a commitment to a potential client, they are confirming what's possible without the presence of a very important component called the SI. And I don't want to label this too much right now because we'll come back to it, but when we look at why projects fail, rarely is it not because the SI has done something, it is often because there is a breakdown or there is a miscommunication or there's a misunderstanding with the component that's not in the room when the deal is made, and I think that's got to be a component part here of why things fail.

Jamie Hancox [00:08:57 - 00:09:59]

I think that's absolutely true. And it's been especially true in the composable world. He said deliberately not using the word Mac. But in that world where, which has, you know, obviously been de rigueur in the enterprise retail space for the last three or four years, in that world where a lot of these composed projects were undertaken, a lot of them were, I don't think it's the fault of any of the component software parts that some of those projects just haven't gone live. It's actually the fault of the client who's possibly thought we were going to get everything that we wanted out of demand where all Salesforce seven years ago, we're now going to get out of this composable stack. And so we're going to create this requirement list that is just, we want a shiny, beautiful thing and we're not going to prepare to compromise on it. So there's a client issue there over specifying, but equally there's a massive problem with some of the systems integrators in that world learning how to do it on the job,

Mark pinkerton [00:09:58 - 00:09:59]

Good job, partner.

Jamie Hancox [00:09:59 - 00:10:00]

with a client paying for it.

Mark pinkerton [00:09:59 - 00:10:01]

Yeah. Thanks for the info. Yeah.

Jamie Hancox [00:10:00 - 00:10:02]

Yeah, that's the client paying for it.

Mark pinkerton [00:10:01 - 00:10:08]

Yeah. Yes, so actually the people who've done it two or three times before are actually the experts in the field. Yeah, and it's not even that actually.

Jamie Hancox [00:10:07 - 00:10:44]

Yeah, and it's not even that actually, you know, I won't name any names obviously today, but you know, we are, I'm very aware that there are four or five in Europe absolutely brilliant systems integrators who've got engineering creds and probably will always deliver on time and on budget. In fact, a couple of MDs of SIs that I know very well have said to me in the past, really it doesn't matter if it's a fixed price project, we're going to work until it's live and it's good because our reputation is so important to us. Our reputation is the next job. They don't really do any marketing, so their reputation is the next job.

Mark pinkerton [00:10:44 - 00:11:05]

Oh yeah, I mean, I well remember running an RFP for a client where one of the SIs refused to pitch because they said, we are too busy, we do not have the capacity to do this piece of work. So they automatically shot to the top of my list for any future RFPs because I've never had anybody actually say, we can't do it, we don't have the capacity.

Jamie Hancox [00:11:05 - 00:11:47]

Well, there's an SI called E2X that doesn't exist anymore, it's now applied, but our first engagement with them was probably 12 years ago, and I remember being in the room when Tesco were asking them to get ATG live, and I think they'd failed for two years to get it live, and they wanted E2X, who were easily the best engineering crew around at that time. They wanted them to get it live in nine months, and James Balding, the owner of the business, said, can't do it, won't do it, and Tesco said, how big do you want the check to be? And he said, the check's big enough, it can't be done, and lo and behold, somebody promised they could do it, didn't get it live, litigation followed, et cetera, et cetera.

David Worby [00:11:45 - 00:12:30]

That's a good story. Before we come on to some of those motivations, I just want to pick up one thing, though. The concept of overselling in the software world has always fascinated me for a number of reasons. Not least because, theoretically, almost everything is possible. And therefore, a client who has the audacity, as I did many times, of course, to say, I want all these wonderful things, to be told by a vendor that it's all possible, doesn't seem entirely incredulous. Because with software, provided we're not trying to put a man on the moon or take a rocket ship to Mars, which increasingly seems possible as well, all of this is theoretically possible. It just takes time.

Mark pinkerton [00:12:29 - 00:13:21]

It just takes time and cost. It does, and the ultimate way of looking at this from my perspective as a consultant is to say, where are the compromises going to be made in here? So yes, it is possible to do X, Y and Z, but it's probably going to have an impact somewhere else on the system. You know, maybe, I don't know, trying to think of something randomly, doing some extra special tagging on the website could well be possible, but it takes a long time to set up, or it takes a lot of code to set up, and it therefore slows the page down. Or, you know, you're trying to integrate three different warehouse systems, two of which are understood, one of which isn't understood, and that one integration with that one warehouse gives a significant issue.

Jamie Hancox [00:13:21 - 00:13:30]

The challenge, the story I've heard a number, 15 times, enough that it's definitely true

Mark Pinkerton [00:13:27 - 00:13:32]

We'll be right back.

Jamie Hancox [00:13:30 - 00:14:40]

is, and I think this is the real conundrum, Salesperson X, who I was always going to come out of this as the criminal, right, Salesperson X knows that if he's making a promise to head of econ prospect, he knows that in two years' time, the period it will take to get this done, or a year's time, the year it will take to get this done, A, he'll have had his money and his commission, but more importantly, B, that the person that's bought the software is then invested and has told the rest of his business and his board and everybody else that this is what he's bought and this is the new shiny toy, and in a year's time when it doesn't work or doesn't quite deliver or isn't live, he's too late. It's long gone. That person has made an internal promise that this product will give us the 55% uplift I've been promised by whoever and that these other customers, what I haven't necessarily been told is how much effort it will take us to get there, which is, to your point, the idea of... Everything's possible, yes, but I haven't got 10 people to get all that tagging done.

Mark pinkerton [00:14:40 - 00:14:55]

Yeah, and the other piece in here is that the person that you sold that piece of kit to, certainly historically, less so now I think, will probably not be in that job anymore because they were churning every two or three years. I think things have settled down in certain sectors a bit more now.

Mark Pinkerton [00:14:57 - 00:15:25]

Maybe we should take a break here for a message from our sponsor, Shopline, the first e-commerce choice for over 600,000 merchants globally. Shopline empowers merchants with the best solutions for online, offline and social commerce, from budding entrepreneurs to thriving global brands. So if you are looking to unlock the power of modern commerce, make it easier to manage and save money in the process, find out more at shopline.com.

David Worby [00:15:26 - 00:15:47]

One of the areas here is the tension that exists between selling something and customer success. And lots of vendors now have an element of customer success in their programme of work, which one assumes does many things, but helps the possibility of overselling at the front end. Do you see that tension, Jamie, in your experience?

Jamie Hancox [00:15:48 - 00:17:22]

So I think I think that particular area has been on a journey in the last four or five years. So we we didn't really see much customer success. We didn't see those departments for a long time until we wanted to get vendor X to give us a speaker for an event that we were running with them. And that that's a job of the customer success team. And then you realize that three, four years ago, in these very high growing, fast growing SAS businesses, the customer success team was in a cupboard locked away, not anywhere near any of the rest of the business because they had to wrap those customers that they owned in cotton wool. And they actually really kept them in the dark. They weren't really behaving particularly well. And they definitely weren't going to give us a customer to speak at X event that was being purported. So that was when it was like then customer success was a problem. I think what's happened maybe in the last 18 months is people have started to get those customer success departments to be more open. They're running regular get togethers of customers. They're starting to go back to the 90s and build customer user groups, which is an incredibly healthy thing to do. But you've got to get through a couple of really hairy first or second meetings where the customers all want to go and another thing. This doesn't work. But if you can get over those first two meetings, actually it's an incredibly healthy place to have them. I know commerce stores, for example, have a very, very healthy customer engagement with their, because these are complex projects.

Mark pinkerton [00:17:22 - 00:17:46]

The vendors need the client success teams or the customer success teams to ensure that they retain the client for the next round. So they might have a five-year contract with Salesforce or whatever, but then when it comes to the end of that contract, they need to make sure that they retain that because that is far cheaper for them than it is Conquest.

David Worby [00:17:46 - 00:18:09]

And I think in that point lies a conundrum. In one sense you can see this on an axis of having a success team versus not having a success team. It's a hedge between short-termism and long-termism. And let's be honest about it, all markets have people who win it for the short-term gain and people who win it for the long-term. And there's a tension there.

Jamie Hancox [00:18:08 - 00:18:32]

Well, case in point, obviously everybody knows that Shopify is on a massive roll at the moment, right? So I was talking to a Shopify Plus salesperson a couple of months ago, and they said it's incredibly difficult, nigh on impossible, to go and sell Shopify Plus to a Shopify customer. It's a great deal easier to sell Shopify Plus to a Magento customer. So it's easier to go Greenfield as a Shopify Plus seller

David Worby [00:18:29 - 00:18:30]

It's easier.

Jamie Hancox [00:18:32 - 00:18:36]

than it is to go to your install base.

David Worby [00:18:35 - 00:18:41]

Why is that? Is that because Shopify customers can do it themselves?

Jamie Hancox [00:18:36 - 00:19:10]

Is that the nature of the product? I think Shopify, if you're a Shopify customer, you'll probably sit there going, this is fine. I don't need to. I don't need to. Why would I? Right. There's a lot. I think you could waste a huge amount of effort. So that trigger point from going from free, not free, but free to plus, is entirely an internal decision on behalf of the retailer, you know, the merchant. And I don't think there's much Shopify can do about it. It's a trigger point. It's complicated.

David Worby [00:19:09 - 00:19:13]

Well, that might be tied up in the kind of componentry of the different products.

David Worby [00:19:13 - 00:19:18]

Maybe Shopify itself is becoming enterprise, therefore, what's plus? Yes.

Jamie Hancox [00:19:18 - 00:19:28]

Yes, well you look at the releases, yeah, and I don't think Shopify sees a huge amount of churn compared to, you know, and there's very little service on it.

David Worby [00:19:18 - 00:19:21]

Well, you look at the releases. It's targeting a different market.

Mark pinkerton [00:19:25 - 00:19:27]

You know, compared to...

Jamie Hancox [00:19:28 - 00:19:40]

If you're a Shopify customer, not plus, I bet there's no service. I mean, I think the support's pretty good. I would completely agree, particularly given the way that the market is right now.

Mark pinkerton [00:19:34 - 00:19:39]

We'll be right back.

Jamie Hancox [00:19:40 - 00:21:04]

It's interesting because when you look at the journey we've all watched, you know, those early years where our client, Javelin, made a fantastic living out of platform selection jobs, and that service, especially in the enterprise, was very definitely needed, right? You know, those were journeys that nobody had ever taken on before. Then you went into this period where really there were only two choices. It was Magento or Demarco, wasn't it, for a while. And that service, the requirement for that service, sort of went away for a while because you had one of two choices and people sort of felt like they knew what they were talking about. Now, the requirements are much more complicated. The stack is much more complicated. We just talked about how competitive the selling environment is. So people are tempted to misrepresent what they have. I agree completely. I think that the independent consultancy at the moment is of tremendous value to the customers equally. I think we were just talking about it prior. I was talking to a merchant last week about a vendor who they've had lots of experiences with over the years. And this person said to me, I'm never going to buy that software because I hate them. Now, you can't buy like that. People need to buy based on the facts that are in front of them rather than the emotion of, I don't like the way that I've been dealt with over the last five years. Yeah.

Mark pinkerton [00:21:03 - 00:21:04]

Yeah.

Mark Pinkerton [00:21:03 - 00:21:05]

Yeah.

Jamie Hancox [00:21:04 - 00:21:11]

So, yeah, I agree. I'm not saying that because I've seen what you do, but I think it's really important.

David Worby [00:21:08 - 00:21:29]

I don't know what you do, but you know, I think... No, I think the splintering of the technology, or the fragmentation of the technology, has only meant that the complications have multiplied, and therefore having someone that's got some experience of having done something very similar to what you think you might be going to do has got to be useful.

Mark pinkerton [00:21:28 - 00:21:46]

But then you've also got the sort of next door industry, if you like, of Martech, which has gone from having, what, 40 or 50 recognisable vendors to about 18,500 in the last decade.

Jamie Hancox [00:21:46 - 00:22:44]

And we're seeing the same thing. I think the same thing is about to happen in customer service. So we've watched, we've all watched Zendesk and Gorgias sort of tough it out for the last few years. There's about to be an explosion in customer service because AI, that's the first place that AI will really add value. And we're seeing vendors like eDesk and loads and loads of others appear. LimeChat I met last week. You know, this stuff is is really beautifully made, very inexpensive, much lighter weight than the stuff. You know, you can see the change happening. And also it fixes a problem in a retailer, in an arm retailer, which is a real problem. You know, tickets don't get closed. Tickets get sort of fudged out there into the ether. And then it's a big manual effort to get them fixed. And your customer service score goes to the floor. And that's a real problem. Getting that fixed. That's going to be a big fine. It's interesting.

David Worby [00:22:43 - 00:23:06]

Well, it's interesting, Jamie, that you've mentioned customer service, because one might argue that in the world of overselling software, anything that's got AI attached to it could be seen as ripe for debate. Do you sense that there is more overselling in AI-related things, or is it just as bad as everything else?

Jamie Hancox [00:23:07 - 00:23:13]

I actually think it's probably the bit that's been least oversold, in a weird sort of way.

David Worby [00:23:11 - 00:23:13]

Oh, well, that's refreshing.

Jamie Hancox [00:23:13 - 00:24:09]

I think what everybody's done, all the vendors have done, is they've put an AI tick box. They tick the box, it says, you know, the description says we've got AI, this is how it works. Most of it's quite shonky, which is my lovely favourite word for shit and wonky. Shonky? Shonky. You should put that in your email. I can, yes. I think they've just sort of ticked the box. What I do think, though, is we tried to run an AI conference with lots of customer AI solutions in it earlier this year, and what we found is that nobody's doing anything. Nobody is building AI internally. Ikea had a go, gave up, realised that their version was never going to be as good as something they could buy. So at the moment, I would say all customers are leaning on vendors, and vendors are leaning on LLMs and just ticking a box, and it's all relatively passenger-ish. The place it's changing is the box in customer service.

David Worby [00:24:17 - 00:24:26]

How the industry might clean itself up beyond what we've talked about. Are there any words of wisdom or advice that we would give to the industry?

Mark pinkerton [00:24:26 - 00:24:37]

I would say listen to the customers and make sure that what you're selling is truly a good fit for the customer.

Jamie Hancox [00:24:37 - 00:25:50]

This might feel like a bit of an ad for what we do, but I'll try not to make it not. So we've been doing this stuff. We've been helping vendors sell their services and their technology for 20 years. So we've seen people do it well, and we've seen people do it badly. We were trained by Javelin, who only wanted to sell their services to the biggest 200 retailers in Europe. Why? Because only those people would pay their fees. And they had an ICP of 210 accounts in Europe. For nine years, we worked with them. We got them into 140 of those accounts. They closed 75. That's amazing. And when you're doing those programs, be patient. If WX Smith are in the program, they stay in the program forever because they're still a target account in three and a half years' time. So you get to know that account, and you don't rely on just the salesperson. You rely on the exact sponsorship, sales engineers, all of the people that are involved in that sales process. They all want to have a relationship at certain points with our customer so that you end up selling the right thing to the right person to solve a particular problem.

David Worby [00:25:51 - 00:26:17]

I think that's fantastic advice and I can see for anybody out there who wants to develop the concept of a certificate of suitability is the answer, however that gets defined. Maybe that's something we should talk about, Jamie. But look, we're out of time. We've filled up our time with a fantastic conversation. So my thanks to Mark. Thank you. And my thanks to Jamie. Thank you. Thank you for listening and we'll see you again on the next one.

Mark Pinkerton [00:26:20 - 00:26:30]

Thanks to our sponsor, Shopline. Trusted by over 600,000 merchants worldwide to unlock the power of modern commerce. Find out more at shopline.com.

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