No Country for Old Sales Reps

Software sales is not the most venerable vocation in the enterprise content management (ECM) industry. In fact, it might be the least. Really good reps are few and far between.

You know the old saying, “No man can serve two masters”? It takes an exceptional human being to cope — week-in and week-out — with the frontline pressure of delivering revenue to their company, while at the same time thinking strategically about their customers’ needs and serving their best interest.

The Salad Days

The heyday of ECM sales saw the best reps selling expensive and margin-rich contracts to the large banks and pharmaceutical companies and then buying houses on Malibu Beach with their take. I know of insides sales reps who made well into the six figures just for setting meetings with new clients; they had no sales quota at all.

But there is precious little white space in the marketplace these days for core ECM technologies. Sales figures from all of the big vendors point to stagnation in the traditional stack, and growth in the cloud and mobile spaces. ECM firms will also continue their growth through acquisition, but sales reps aren’t making any money on that.

So what? Why should we care about the sales guys? Haven’t they been the ones filling up our voicemail and email boxes with nagging messages until the contract got signed? And once it did get signed, they vanished.

All true. But consider this: The ECM sales ecosystem has stayed pretty small over the past 10 years. A sales rep who started at FileNet likely moved onto EMC Documentum, back to IBM, and then finally to OpenText. Some took the management route and climbed the ladder, or they became part of the leadership team at smaller organizations like Hyland. Very often the good reps have matured in their knowledge of the ECM space and their understanding of how to help clients meet objectives.

But resources like these are expensive, and now the sales model is changing. As we shift from large multi-year contracts for on-premise software, to smaller cloud deals with monthly or annual renewal cycles, the take-home pay for a sales rep decreases. Most sales compensation plans have shifted from paying the entire commission at the front of a deal to paying a percentage of the contract on a monthly basis.

At first you might think: “That’s great! Now my sales rep will pay more attention to me!” But sales reps are not being paid to keep you happy; they are being paid to grow the firm. The only thing that's changed now is that they are being paid less, and it takes longer to get the money.

A Vanishing Breed

What all this means is that the best men and women in this industry, the ones who really did try to serve their clients’ interests and grow their own firm, will move to industries with larger growth potential. The people who stay will have less experience. They will be true transactional sales people, focused exclusively on monthly numbers. They will sell you products they don’t care about to get you hooked on the ones they do. And as soon as they have the clout, they will join the old sales reps selling Big Data, the Internet of Things, or whatever the next growth market becomes.

But increasingly those growth markets will employ sales models that are less and less dependent upon the skills of a traditional sales rep. And the move toward decreasing the margin that a software or services firm spends on sales commissions will gather greater momentum, as the terms of the sales contract become more and more flexible.

Maybe that’s good for the product, the software (as a service) firm, and the client. It certainly could be. But I’m interested in hearing your thoughts. Do you care if your firm is being served by an entry-level sales person? Does it improve the profile of a service provider when you have a long-term relationship with your sales person? Has the shift toward cloud and mobile impacted your own sales experience, and if so, how?

I’ll be following up on this post with thoughts on how the shift toward cloud and mobile has the potential to wipe out a much larger portion of the ECM ecosystem. (Bonus points for readers who can guess what the force behind that shift is.)

Rich Medina
Lane Severson
I’m a Practice Leader, managing relationships with Doculabs’ West Coast clients to improve information management and security.