What does an open source sales model look like?
At the MySQL conference, a person who used to hold an important position in an important sales organization told us something like the following: “You know, you guys at Percona are great, but you have a big problem. You don’t have any $500,000 customers who only file one support incident per year. Those customers are where you can really make big money.”
We were well aware of the investigations this person did into which customers are the most profitable, and we had decided a long time ago that chasing huge sales without delivering matching services is flawed. I told this person as much: “that model is fundamentally broken because it doesn’t align cost with value delivered.”
Actually, we do have customers who rank in the top 50 of the Fortune 500. I’m thinking of one right now. They filed only one case so far. And they’ve paid us for exactly the amount of hours we spent on that case. And far from being a problem, this is exactly where we’re doing things right.
Some people may see us as shrinking the pie by billing just a few thousand dollars for “huge jobs.” They might think we’re silly for telling the customer that a few hours on the phone and remotely is going to be better for them than a week onsite. They may consider us small peanuts because we don’t have 10-million-dollar deals. What they are missing is what the customers see clearly: it’s good to write win-win contracts and leave something on the table. If it looks like table scraps to Mr. Million Dollar Salesman, that’s okay. Those bloated “profitable” contracts are short-term thinking, and they’re actually a serious weakness. Don’t celebrate our “problem” too much. Keep an eye in the rearview mirror. Is it a problem, or is it our secret sauce?
One problem I think we might actually have is how to get a good sales person with our model. You see, we don’t actually have any sales staff at all right now. I am not sure the math would work out the way a traditional sales person would like. But that’s because a traditional sales person is used to being rewarded for “earning money for the company,” which I think is really broken, at least in the way it’s traditionally implemented.
I’ve said before that I think one of the reasons MySQL was unable to create an open-source business model is that their sales folks pushed the company in the direction of closed source. I’m honestly not sure what the best open-source sales model is. I know that I really feel good about our services delivery model and our pricing model; right now our sales model is nonexistent. We are passive; we just answer inquiries and sign contracts. As things stand now, nobody’s doing any sales.
Still, I think this is a good problem to have, and I trust that the right person will come along and see the opportunity to create a good salary at the same time as really providing a service to Percona and the customers. That person will explain to us how cost (salary) and value (service to us and customers) can be impedance-matched too. And that will probably be an innovation, or at least unconventional. With all the other ways Percona is unconventional, I don’t expect us to create a conventional sales model either.
I think if things work for you at the moment then that’s nice; when you mention, “One problem I think we might actually have is how to get a good sales person with our model” then maybe you are that person already?
About the sales person who told you, “You don’t have any $500,000 customers who only file one support incident per year” — I think that is the natural perspective of Sales people, and in a way “Sales-101″. If you can avoid that, all the better.
Stephan
Stephan Wehner
30 Apr 09 at 1:41 pm
Unfortunately there are only 24 hours in a day, so I can’t really handle sales, consulting, and directing the consulting team very well. We spread the load the best we can to answer sales inquiries, but I’m not sure it will scale as the demand scales. We have designed most parts of the company to scale just like a distributed application, but some parts remain. All in due time!
Xaprb
30 Apr 09 at 11:53 pm
Follow Stephan’s advice and avoid sales people. Besides, I think Percona’s needs would be better satisfied by promotion and not sales. I honestly can’t imagine what a Sales person could do in your company. Instead, assume you have to pay this extra salary, and besides the group blog and Performance Conference, organize other promotional activities with the current talented people you already have using this money.
I did this with my own company years ago and it worked great (I never hired a salesman/woman so I can’t compare). Go give talks at user associations (local LUGS, enterprise associations, etc, not all the people will be potential customers but the buzz will be great and what you want to do is establish yourselves as experts OUTSIDE of the circle of folks who already use MySQL).
At this level, money spent in sales is probably useless. Money spent on talks, blogs, and open source projects, will eventually come back (in a way that’s hard to measure, but I promise you it will come back :))
That’s my 2c.
Fernando Ipar
1 May 09 at 12:35 am
Baron, great post! We followed a similar model, as you know. At some point you’ll want a sales/marketing person just to take that work off your plate. But marketing is different than sales. Getting the name out, speaking, Blogging, word-of-mouth is all you need to do. A non-salesy, salaried person to handle the logistics of contracts and scheduling projects will be well worth the investment at some point, but that’s not really a sales person.
George Michie
2 May 09 at 8:44 am
Great post! I have tried to convince many open source companies to fire sales people and just sell standardized support contracts off their website. Download, print, sign, scan-email/fax and send money. EOT.
Your post convinced me that Percona is the right mysql support consultancy for our organization. As soon as we go into production with mysql – we will contact you for our mysql support needs.
Thanks!
abitrage
3 May 09 at 5:20 pm
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