Episode 141

Chris Heard - How sales software has created a biased approach to buying software

Posted on: 04 Jul 2024

Chris Heard is the CEO of Olive Technologies, providers of an AI powered platform that streamlines supply chain management software selection. We have an interesting topic for you today, namely - how sales software inevitably entails a biased approach to buying software. We discuss the impact of the halo effect, and what we should do to empower users & customers in the right way.

Links & mentions:

Transcript

"By forcing that sort of halo effect onto the buyer and making that the most important thing, that this decision is all about this one differentiator you have, you can cut out the competition pretty quickly, even though you may have significant drawbacks, which you can hide elsewhere."

Intro:Welcome to the Agile Digital Transformation Podcast, where we explore different aspects of digital transformation and digital experience with your host, Tim Butara, Content and Community Manager at Agiledrop.

Tim Butara: Hello everyone. Thanks for tuning in. Our guest today is Chris Heard, CEO at Olive Technologies, providers of an AI powered platform that streamlines supply chain management software selection. In today's episode, we'll be discussing how sales software has created a biased approach to buying software and what this means for SaaS purchasing.

Hey, Chris, welcome to the show. Very happy to have you here. Anything you want to add before we dive into the conversation?

Chris Heard: I think it's good. You wrapped it all up. I appreciate it. Great to be here.

Tim Butara: Okay. Awesome. Happy to have you here, as I said. And maybe let's start with a question that relates to a little bit of your personal experiences to set the stage.

So Chris, how did you discover that it's possible to bias people into purchasing software that's not a good fit, so purchasing poor-fit software?

Chris Heard: Well, Tim, I don't think it's just possible. I think it's necessary as a successful salesperson. In order to hit quotas, you, there's a few, some people are going to be a perfect fit.

Don't get me wrong. And they just come to you, they land on your desk and you say, okay, this is the perfect fit for my software. But a good portion of deals that get closed throughout your career, a result of you biasing that decision. So it's not just possible. I think it's, it's important to have that skill as a salesperson.

And, you know, for me, that was why we built Olive was, you know, I found more and more that we were having to leverage bias to win, to win deals and meet quotas. And, you know, I think it's, it's different when you're selling, if you're a reseller or you're selling multiple different technologies, you can really choose the best fit for the customer.

But if you're just selling once, if you're a salesperson at one company, you only have one product to sell. There's no way you're going to hit quota by just selling the perfect customers. And every time being like, oh, it doesn't, it's not perfect for you. We'll move on. It's just not realistic. I think when.

I noticed the biggest bias that we would use typically in sales is something called the halo effect. So the halo effect is when one positive aspect of something. is used to justify a decision, right? So there may be one positive aspect of the software that you do really, really well compared to other competitors.

And so by, by forcing that sort of halo effect onto the buyer and making that the most important thing that this decision is all about this one differentiator you have, you can cut out the competition pretty quickly. Even though you may have significant drawbacks, which you can hide elsewhere, typically just the way that buying processes happen, you know, you're not going to spend.

Months and months really evaluating deeply 10 different vendors, right? You maybe focus on two or three over the course of a few months and really the first one to speak and the first one to get in the door, the one to earn a champion, that's the one that the buyer ends up working with the most and they can build that halo effect.

So it was really when I discovered that halo effect bias was when we started to realize, okay, we just use this and we can essentially bias everybody's decisions into what we want to do, right?

Tim Butara: Do you maybe have a great example of the halo effect in practice? Like maybe something that everybody knows. I'm thinking like the first thing that comes to mind is something AI related. Obviously. And I don't know, do you have anything?

Chris Heard: Unfortunately or fortunately, you know, AI does not become a differentiator anymore. I think it's AI is definitely a tool that can be leveraged by most companies. I think that there's differentiators within.

AI offerings, right? Like, you know, Amazon's offering has differentiators against Microsoft's, et cetera, et cetera. But AI as a differentiator, I don't think it's particularly effective. I can't give you a very specific real world example without, you know, maybe diminishing some of my previous companies. So what I'll do is I'll just give you some generics.

Okay an integration would be a great example, right? So let's say you've got a specific ERP that you're working with at a company and one of the vendors has a really native integration with that ERP, with whatever it is, Workday, NetSuite, whatever your particular ERP is, they have a really good native integration with that.

But a lot of the other functionality isn't great. If you can come in early as a vendor and make that integration, just the core piece, like imagine the amount of work you're going to have to do to take things from this system and put it into another system, imagine the amount of effort it's going to take and the potential human error.

If we've got two systems running now, you're going to maintain these two systems with our native integration. You can skip all of those steps, make sure that the, the, whatever it is you're purchasing from us, it's fully integrated into your workflows. There's no need to change any workflows. Now we can lean on that.

And leverage that where our competition might not have that native integration. It might be really good at lots of other things and way better than us at even the core functionality you're trying to buy. But if we as salespeople can make the buyer think, well, this is the number one thing you need to make this decision.

If it doesn't integrate natively with NetSuite, then you can't buy it. Let's make that an absolute must have. And this is, I think, what's really interesting with RFP creation is A lot, I would say 70 to 80 percent of the RFPs that I've ever been involved in prior to Olive, I wrote for buyers or my company wrote for buyers.

Like we, as the vendor would write the RFP for the, for the buyers in so many cases, or at very least we would write some of the must have. So we'd get in early. We would say, Hey, you must have native integration with NetSuite. Otherwise you can't even talk to these people. And then as long as you're in early and you've set that as a ground, as a, as a must have buyers will often completely dismiss.

Some vendors that could be absolutely perfect simply because, you know, that they've really focused on that. So that a bit of a generic, I couldn't give you a very specific example, but hopefully that gives you an idea.

Tim Butara: Yeah, that was a very good example actually. And so returning back to what you said initially.

So it's, it's basically necessary, as you said, for, for a good salespeople to be able to take advantage of this bias.

Chris Heard: A hundred percent. And I, and I think that, you know, what we're trying to do is we're really trying to help. Empower the buyer a little bit more through technology because I do believe it's not just It's not just necessary for the, for the salesperson to learn as a person, how to bias these decisions.

But also if you look at the investment in technology over the past 10 years for this process, for buy versus sell, procurement versus sales, sales enablement technology just dwarfs the amount of investment that's gone into buyer enablement technology. Sales enablement is huge. I mean, you look at Salesforce obviously is, is one of the biggest behemoths out there.

I mean, Salesforce is one of the biggest tech companies. And it's definitely one of the biggest B2B tech companies in the world. And it's just a CRM for salespeople. And then you look at everything else, right? You call recording software, marketing automation software. The list goes on. In fact, most of the AI B2B that came out, the very early use cases of AI in B2B, it was just hounded on by sales technology.

By automated BDRs, content writing for marketers, it was very much lent towards the sales side. And because of that, not only now we're reinforcing the bias, right? We're now giving people more tools. to enable the bias and less on the other side. I have seen some uptick in procurement software over the last sort of three to five years.

It definitely has seemed to seem to pick up a bit, but it's, you know, there is an absolute dearth of, of procurement software when you compare it to the wealth of, of options available for salespeople.

Tim Butara: So procurement software would be basically tech that empowers buyers and minimizes these risks of biases impacting purchasing decisions.

Chris Heard: Yeah, exactly. You have large procurement suites that are more, that have a lot of focus around contract negotiation and contract management. That's one area where we can, we can help out for us. We focus on making it easier to do due diligence. Due diligence has been really challenging. So what we're doing with this bias naturally is we're trying to help We're trying to get customers to skip due diligence, essentially, is what you're doing as a salesperson.

So, when you, when you enable a buyer, what we've got to remember is put ourselves in the shoes of the buyer. Most of these buyers, their job isn't buying software. Their job is, if they're in IT, their job is maintaining a network. If they're in HR, their job is, you know, getting the most out of the people and making sure, you know, the, the culture is is enabled and supported.

There's just other things that they're focused on that are not buying this software. The software will be nice, but evaluating it is not their job. And so, so many, you can understand why they will just go, I'm just going to pick whatever top right of the analyst report, right? But that's just natural for them, for them to try and skip some steps.

And so it's very easy there. for salespeople to take advantage of that desire to skip steps because this isn't my job. It's a salesperson's full job. It's often a sales team's full job just to sell this. Sales engineers, VP sales, sales rep, BDRs, marketers, all to sell you stuff. And so if you think about that scale, right, you got like five people selling it.

And a third of a person buying it, it's very natural that a, there's going to be more tech sold to the one with all the people it's going to be more built for them. And B I'm going to try and skip steps. So we've tried to do is make it easier to do the due diligence, writing an RFP, gathering requirements, understanding, interviewing vendors, becoming an expert in a given space, and then comparing 10 different options against each other on a feature function and use case and business impact basis.

That is a lot of work. That is a, it's a lot of work. It's as much work as the sales cycle is. And so you can understand why people skip these steps. So what, what I think will happen as we move forward into what looks like it's more, we're, we're starting to swim a pendulum back slightly, we see now sort of 70 percent of sales interactions are happening without a salesperson now.

So there's a lot more online evaluation. There's a lot more research being done by the buyer, which is great. As we shift towards that, I think we need some technology to support. Honestly, their ability to skip steps, like we need to allow buyers to skip some steps, but still have the due diligence available to them.

And that's, that's really where we, I think we'll see some growth in the, in the procurement world.

Tim Butara: So this is kind of a way of balancing the empowerment of sales with the empowerment of buyers and not have it be so skewed towards the sales side.

Chris Heard: Yeah. And by the way, I'm not doing this out of some sort of moral quest to help buyers be, you know, really what it's about, I think is, I've worked for a few software companies and so has my co founder.

So we both work for multiple startups and we've seen that the ones with really amazing products that don't invest in sales and marketing because they invest everything in building the best products don't do very well. And the ones that have okay products that are kind of whatever but they invest loads in sales and marketing they do phenomenally well and What I don't think any founder or owner or CEO of a company wants Their customers to just buy their software and then leave them.

They want long term partnerships that grow. They want to become the next Salesforce or the next Google or whatever, where people have an amazing experience with their product, that that's what they're pushing for. Unfortunately, the sales mindset has to be close this deal this quarter. Move on to the next.

Mm-Hmm. . It just has to be. So I think that if we were, if we can remove this bias and empower the buyer to make better decisions, we're gonna get longer term partnerships, which is just better for everybody in the company. Actually, a little bit of a moral wrap, , but you, you get it.

Tim Butara: No, but it was a good point. But also on the other hand, I'm wondering like, you know, if, if sales is tapping into this bias already, then wouldn't this urge to tap into this bias and to, to meet all the necessary sales quotas that we, that we led with in the intro, wouldn't this all lead to, to attempts to kind of incorporate these biases also in, in In the attempt to, to do the due diligence for the, for the buyer, you know what I mean?

So basically, you know, you can prepare RFPs, you can prepare articles, but these can still, you know, still, still play into that bias and take advantage of it, you know, so it's still kind of, it's still risky, I guess.

Chris Heard: So yeah, for sure. I think when you look at the traditional ways, people skip steps. We won't call out any analysts, but I think we all know who they are.

They take money from vendors, right? They're paid by vendors. And so the research that you're buying is, is supported by a vendor. And I just watched true detective night country. And it was about a it was about You know some company that was a mining company that was funding scientific research to say there wasn't much pollution kind of thing You get that sometimes I find with some of these analyst reports It's the vendors funding the research so definitely that can happen in today in the in the way that we do things today If you look at I'll take our product for example We don't charge vendors anything vendors can just use our software for nothing It's the buyers that pay and the buyers are therefore paying for that unbiased information and the way that you, you have to put, you have to do some due diligence.

You're not going to be able to skip it altogether. What we want to do is provide more unbiased data that you can then evaluate and pull, pull apart. You're still going to have to make some decisions. What I worry about the most today in our world is that a lot of RFPs are being written by ChatGBT. And by AI today, a lot of people are just going to an AI saying, write me an ERP, RFP, I guess it's a, you know, a 5 million purchase for some companies and they're just like trusting a chat dbt to write an RFP.

That inherently has some bias, right? I mean, it's taken, it's been trained on information that has been. Had a lot of sales and marketing push behind it. So it's only, again, it's going to be biased. It's not going to be tailored to you. I don't think there's a, there's a silver bullet to removing the bias. I think the main thing that we need to do is buyers do need, you're right, do need to do the work.

I think skipping steps is, is never a good idea. For sure. They need to do work, but at the same hand, they, they need to be able to do this work in a way that doesn't take up all of their time and resources. So what I think we need to do is there needs to be more investment in technology that can enable them, maybe skipping steps is the wrong way to put it, that can enable them to do the due diligence just way faster, right?

And do all the steps. But we just need to help them do it in a, in a easier, simpler way. And with less chance for human error, because, you know, frankly, everyone is always going to go the quickest route if they can, if they can blame somebody else. For making a bad decision, right? Another reason why people do this, right?

They can always say, well, they told me to do it. And you trust them, right? We've been using that analyst firm or that consultant for years. So, it was their fault. That's another reason. That's a whole other topic.

Tim Butara: What was that quote again? Nobody ever got fired for purchasing IBM or something like that, right?

Chris Heard: Yep. Yep. That's it. And it's such a negative way to look at things, right? It's just like, it's just protecting not getting fired is the reason you're here. I think it's such a bizarre, it should be nobody ever got promoted for buying IBM either.

Tim Butara: Wow. Okay. Okay. Wow. That's a very strong note to, to kind of close the conversation off. I know that we did, we opened, opened a lot of, possibilities for discussion. But I think that we probably, if we wanted to cover everything, we wouldn't have enough time. So let's just leave it a little bit open and let's see how things progress maybe in, in a year's time or a couple of years time. Thanks so much, Chris, for joining us today. Before we jump off the call, if listeners would like to reach out, learn more about you, connect with you, learn more about Olive, where would you point them to?

Chris Heard: Thanks Tim. It's been, it's been great conversation. If you, you can find myself on LinkedIn, it's, it's LinkedIn forward slash heard Chris, my name.

And then olive.app, www. olive.app. Plenty of information on there and actually we have a free trial available. So you can sign up right on the application on the website and jump right in and try it out for a couple of weeks.

Tim Butara: Awesome. We'll make sure to link everything in the show notes. And yeah, Chris, as I said, we were very happy to have you here. Great conversation. Thanks for joining us. And to our listeners, that's all for this episode. Have a great day, everyone. And stay safe.

Outro:Thanks for tuning in. If you'd like to check out our other episodes, you can find all of them at agile drop.com/podcast, as well as on all the most popular podcasting platforms. Make sure to subscribe so you don't miss any new episodes. And don't forget to share the podcast with your friends and colleagues.