Software buying is undergoing a transformation, as is the case with many industries in the post-pandemic market. The process of purchasing software is increasingly complex – the choices for products and services are endless, and customers have a harder time parsing which companies to trust and which product will better cater to their needs. Instead of reaching out directly to a sales team, customers are taking matters into their own hands and looking to trusted peer reviews for guidance. And by the time they make their first contact, the decision has likely been made.
That’s why, for the past five years, Amanda Malko has been thinking about how marketplaces change the way people buy software, helping B2B SaaS businesses find reputable software that can help them grow their business. First at Mailchimp, where Amanda led their partner program and marketplace business, and now at G2, the world’s largest software marketplace, where she is currently the Chief Marketing Officer.
Amanda, who’s always worked at the intersection of marketing and technology, is, by her own admission, a data geek. And working at G2, she has access to a lot of data about what people are looking for. But G2’s Software Buyer Behavior Survey doesn’t just give us a glimpse of the market situation or the next high-growth company to look out for. Sometimes, it can even tell us something about the world we live in. After all, says Amanda, “software is on the leading edge of change.”
In today’s episode, we chat with Amanda Malko about her love of software, the trends she’s seeing in the industry, and how they’re affecting the way businesses operate.
If you’re short on time, here are a few quick takeaways:
- Despite the pandemic, companies are buying more software than ever, with over half of buyers anticipating increasing their software spending in 2022.
- There is an acceleration in technology adoption, which Amanda believes is a result of an increase in self-education and the ability to try products before purchase.
- Customers are looking more and more to their peers before considering a purchase. But once they’re happy with a service, they can help build trust with new customers as well.
- With high expectations on ROI and the consumer’s ability to quickly buy new software, a focus on retaining existing customers is more critical than ever.
If you enjoy our discussion, check out more episodes of our podcast. You can follow on iTunes, Spotify, YouTube or grab the RSS feed in your player of choice. What follows is a lightly edited transcript of the episode.
The age of the marketplace
Liam Geraghty: Amanda, thank you so much for joining us. You’re very welcome to the show.
Amanda Malko: Thanks for having me. I’m excited to be here.
Liam: To kick things off, could you tell us a little about your career up to this point? You’ve had such an interesting journey.
Amanda: Yes, I have. It’s been really fun. I’ve had three stages in my career, if you will, thus far. I actually started in sales. It’s been a bit of a journey, but I started in sales. I did that throughout college and ended up joining a startup, as you do. I became employee number 13 at an early-stage startup and realized as a salesperson I really needed marketing and we didn’t have marketing. So I moved into marketing and became our first marketer. Two years in, we got acquired by Microsoft. Little did I know that’s quite an unexpected outcome in two years. It was a really fun run, and I got the itch for real startup and digital marketing.
In my second stage, I joined a SaaS business and an agency. And we were getting into a little something called Search. In the earlier days of Google, we ended up moving into search marketing and social marketing. I stayed for eight years, wore a lot of different hats, and helped run the business, running both marketing and helping with some of our M&A deals as well as Operations and New Business. So I got to do a little bit of sales there, too. I have a passion for helping companies adapt to the way technology is changing and the way we communicate, both as people and as businesses. That’s really been the core thread ever since for me.
“I’ve been spending my time helping businesses think about how marketplaces change the way we buy software and connect with technology”
In the third stage, one of the things I think is transforming the way we connect is marketplaces, so that’s been my last five years or so. I’ve been spending my time helping businesses, particularly software businesses, think about how marketplaces change the way we buy software and connect with technology. That led me to Mailchimp, where I worked on their services marketplace. And now, here at G2, we help tens of millions of software buyers all over the world to find software and learn how to use it successfully. We help software companies figure out how to grow their businesses, often from very early stages.
Liam: I was just going to ask you, what does G2 do?
Amanda: We are an online marketplace and review site that helps people discover, learn, and decide on software and services that can help them with that software. That’s what we do. And then, for software companies like the Intercoms of the world, for example, we help them build their reputation on g2.com and leverage data to understand the types of customers you should be going after who might be in the market for your software. I have to give a shout out to Intercom, which has thousands of reviews from very happy customers on G2 and is a leader in our grid, including for live chat.
Liam: Always great to hear.
Amanda: It really comes from having happy customers, and then what we do is enable those customers to speak about what they love and maybe what they want to see more of for your business.
A transformation in software
Liam: I wanted to talk about spending on SaaS and how it has dipped in the first half of 2020 and then accelerated and increased by the end of last year. We’re now halfway through 2022. What does the state of software buying from SMB to enterprise look like now?
Amanda: Well, it is an interesting question and one that I expect we will see a lot of change throughout the year, but coming into 2020, we did a survey of software buyers, and we also have a technology called G2 Track, which is a SaaS spend finance management and utilization technology. So we surveyed and looked at trends that we saw through G2 Track. Over half of the companies stated they were going to increase software spending this year. Companies across all sizes, on average, are using over 120 different software products. That’s more than double just from a few years ago. I think this speaks to where we are on the maturity curve of software, where there’s still a tremendous amount of growth opportunity.
“Software is incredibly resilient. We saw a dip in the first quarter of the pandemic in software spend, but within 12 months, it had rebounded and is now at higher levels than pre-pandemic”
That said, we’re in a really volatile market, even just over the last few months, so it’ll be interesting to see how spending changes. What I would leave people with in this question is that software is incredibly resilient. We saw a dip in the first quarter of the pandemic in software spend, but within 12 months, it had rebounded and is now at higher levels than pre-pandemic. As you think about the role of software, so much of it is about helping us run our businesses smarter and more efficiently. Many businesses are still early in their digital transformation journey where software becomes really important.
Liam: I love how you talk about the importance of software. I’ve heard you say that the zeitgeist of culture is reflected in the software. I wonder if you could speak to that point.
Amanda: Yeah, I love this. It’s not something I would’ve expected when I first came to G2 a little over a year ago. But I’m a data geek, so I said, let’s look at what are people searching on G2 – what can that tell us about markets you might want to invest in or companies that are growing fast? What I didn’t expect was what that might tell us about our world. When we look at the top trending categories post-COVID, there are things like video conferencing and project management software, but cryptocurrency mining was actually the number one trending search term heading out of last year. I’m still learning about cryptocurrency. I haven’t quite figured that out, but apparently, a lot of other people are also trying to figure that out.
What I really love is that software is on the leading edge of change and what’s happening in our world. The data we have gives us a really unique vantage point. The other thing I’ll say is that there are a lot of interesting categories starting to emerge in software that maybe were industries that didn’t historically rely on software and can really benefit from it. For example, we have all kinds of categories on agriculture technology and, one of my favorites, amusement park design software. You can really go down the rabbit hole of how software can help transform and help any industry.
Liam: I was going to say there’s so much growth. Software buying is obviously going through a transformation right now.
“We’re all buying differently, post-pandemic”
Amanda: It is. Most things are going through a transformation in terms of how we buy, but I think there are a few reasons we see this in software. One is just macro trends in how people buy as people, not even just as businesses. We’re all buying differently, post-pandemic. For anybody who’s in B2B, it’s more self-serve and less sales-led and less relationship-driven. I’m hopeful that we’re going to swing the pendulum a little bit back to things like in-person events and being able to really build those deeper relationships, but there’s no denying that we’re relying more on self-education and digital buying than ever. That’s true in our personal and consumer lives, as well as our business lives.
Software buying is also becoming more mature. That means it’s more complex and there are more choices. So as software buyers, we have a harder time parsing out what we need, who we can trust, and what we should use. That’s one of the things that’s giving rise to things like G2 and peer reviews and places where you can turn to communities to help parse out what we should be using and what our peers are using successfully.
Shorter buying cycles
Liam: For people who want to go to market, I know you have three trends that might shed light, the first being that software buying is happening faster and becoming more frictionless. Why is that important?
“67% of companies say they only engage with a salesperson after they’ve already made a decision. And that’s scary, right?”
Amanda: This one surprised me in our data because there’s all this talk about how it’s getting more complex and how there are so many people in the buying committee and process. Even using something like Intercom, you might have a whole wide range of people from marketing to IT, to sales, to customer success involved in this. So why is it happening faster? I think there are a couple of reasons for this. I think a big part is the pace of decision-making and self-education. If I can go on and I can do my own homework, it’s probably going to go faster for me.
In fact, 67% of companies say they only engage with a salesperson after they’ve already made a decision. And that’s scary, right? When you think about our ability as marketers, salespeople, and businesses to educate and persuade our customers, we’re seeing that a lot of that experience happens before they ever talk to a human. So, how do you engage with them in a way that’s valuable and respectful of their time or gives them a delightful experience even before they might engage in a phone or a sales conversation, depending on how you market your business? It’s definitely happening faster, and a big part of that is how much self-education is happening on the buyer’s side.
Liam: Buyers making their decisions faster is just surprising to me.
Amanda: Yeah, I think that it is surprising. We thought, “Well, okay, maybe that’s only certain types of businesses, but even enterprise companies said they’re making their decisions faster and could make a software decision of $20,000 in three months or less. As an example, we said, “Based on how much you spend, how long would it take you to a software decision of $100,000 or more?” And they’re saying, “Six months at most.” Historically, we might have thought in businesses with six-figure software purchases, you could take upwards of a year or more, and we’re seeing that’s not the case.
Another thing I think it’s making it faster is that there is more product-led growth. Part of that is the ability to try before you buy. What does that point of purchase look like? You might have a trial. If you have the ability to try it, that could help you get over some of the trust hurdles you might have otherwise had. And then, when you go to buy, we’re seeing credit cards being a big part of that purchase experience, including for enterprise, which also surprised us. It depends on the average value of the agreement, but over half of the buyers, 53%, say, “I often use a credit card when I’m purchasing software.” That’s the continued consumerization of some of our B2B decisions.
Liam: And it’s the whole test-driving a car before you buy it.
Amanda: Yes, exactly. And actually, during the pandemic, I went to buy a car because I had a baby and car seats are huge, and I realized my car was way too small for even one kid. So I had this experience that reminded me of what it’s like to be searching for the right marketing software these days. On the one hand, I was trying to do all my research online, and of course, I narrowed it down very similarly to what we’re seeing in software. I knew what I wanted, or so I thought before I reached out to the dealership.
At the first dealership I reached out to, I filled out the form – think of it as our demo request form, if you will. One of them had chat, and I was chatting with the dealer to set up the appointment and I drove down and was routed to the wrong dealership. The appointment I was supposed to have was at a dealership 45 minutes away, and they didn’t have any of the cars I wanted to see. So I was very, very frustrated. That’s not a delightful experience at all.
“I did not know I needed the top-of-the-line model, but they were like, ‘Why don’t you take it for a test drive?’”
I went down to this other dealership down the road, I just walked in without an appointment, and they had the car that I wanted literally sitting in the lobby. It was, of course, the top-of-the-line model. I did not know I needed the top-of-the-line model, but they were like, “Why don’t you take it for a test drive?” So we get in the car and it has all these bells and whistles; these disco lights that change colors, and I’m like, “This doesn’t seem like something I need.” But of course, they were like, “Well, your son’s probably going to really enjoy this.” They’re selling me all these things I didn’t even know I needed, and by the end, I was like, “Well, this is the car for me, and of course, I’m going to get all the bells and whistles to go along with it.” It was such a delightful experience that I was willing to pay more, right?
When you think about not just the speed but the quality of our decision-making, so much of it comes from letting people put their hands on the wheel, from reducing the time to being able to feel confident in understanding our products and helping create trust from that first moment that they’re connecting with you, whether that’s a person or through your product or through your website experience. How can we make that more delightful and human? The car buying process is an interesting juxtaposition to that because I had both of those experiences in one day. In B2B, you could be the car dealership that routed me to the wrong place and had no cars, or you could be the one who just said, “Here, we’ll let you take it for a test drive right away.”
Liam: Be the car dealership with the disco lights.
Amanda: You want to be the car dealership with the disco lights, yes.
Liam: The second thread you’ve spoken about is that building trust is more essential, but it’s harder than ever. I know that’s a big hurdle to overcome. Where do you start?
Amanda: I think the first place you start is with your existing customers because one of the things we see in the data is that if you’ve got customers that are happy and growing with you, they will help you form trust with new customers as well. A lot of times, we think about customer marketing or leaning into the voice of the customer as something we do for our existing customer base. And while that’s true, they can also help create an element of trust and carry that forward for new customers considering you.
“When we asked in our survey, ‘What do you trust the most when you’re making decisions?’ everybody had a different answer”
Trust is harder not because we don’t have the elements to build it but because, as buyers, we’re looking at more sources than ever to form a picture of companies. That’s true in consumer behavior as well as in B2B behavior. When we asked in our survey, “What do you trust the most when you’re making decisions?” everybody had a different answer. A small number were saying, “Yes, I trust the analyst.” About 35% to 38% said, depending on the segment of the business, “I trust your website.” It’s not any one thing. People are looking at many things and triangulating trust across different sources. What does your website say? What do my peers say? And we do see that peer reviews and peer feedback is one of the most prevalent sources. Almost everybody is looking at that. And 86% are saying, “I’m looking at peer review sites when I’m buying software to feel more confident.”
Yeah, so it’s really prevalent. Now on the flip side, as marketers, that doesn’t mean that we can just have a great reputation. It’s critical that we have a great presence on peer review sites as marketers, but we also have to make sure we have trusted content across all of the other places where buyers are looking. If we can lean into our customers and our customer reviews and feedback and make sure that shows up in all those places, whether it’s on the website or in other sources where buyers might be looking in your category, that’s so, so critical. It’s harder because we’re looking in more places than ever before to see a good model picture of businesses.
That was true in my car buying experience too. I didn’t just look at the review sites. I went down their website, I went to some of the analysts in the car buying space to see what they were saying, I talked to friends… Somebody had a car on the street, and I was like, “Can I talk to you? What do you think about that?” It’s very, very similar.
Retention feeds growth
Liam: Retention is the third trend. I suppose more than ever retention is the foundation for growth. Are the expectations for software companies higher than ever in this regard?
Amanda: For better or worse, yeah. That’s what you see as a business – as an industry matures, the expectations certainly rise. More companies are vying for customers’ attention and for their dollars. And as businesses grow, you want to make sure you don’t have a leaky bucket. A lot of times, we focus on growth, growth, growth, but a big part of that is shoring up our foundation, making sure we’re able to retain and grow the customers we do have. Companies that lean into customer marketing, that lean into helping retain their existing customers, create a stronger foundation for new business and for their future.
One of the things that stood out in the survey was a very long list of criteria with things like integrations, return on investment, ability to scale, quality of customer support, etc. We asked, “Buyers, which of these are most important to you? Rank them.” Everybody said all of these were important to very important. And when it came to return on investment, 81% of respondents said, “I expect to see a return on my software investment in six months.” And especially in enterprise, you might be integrating the technology for several months or more, let alone have an ROI within that timeframe. The bar is exceptionally high. And in some cases, I would say it’s probably not realistic depending on what you’re purchasing.
“You want to make sure retention feeds growth in the most basic way because you can’t grow if you’re constantly trying to replenish because you’re losing customers”
I think that creates more of a need than ever to really lean into your customer success, your experience when you’re onboarding a customer, and how you’re thinking about marketing to your customers to keep them happy and growing over time. Now, the good news is that when you’ve got your customers’ trust, they want to stay with you. One in three buyers prefers to buy complementary products from the same company. This gives you a tremendous opportunity to lean into expansion once you’ve got happy customers. It makes me think that, in the car buying experience, they’re probably going to be calling me with some sort of disco light packet. Think about that once you’ve earned this trust. If I really like the experience, I’m going to be more likely to say, “What else might I be using from this company because I’ve cemented my trust in them?”
Liam: Yeah, absolutely. Does customer growth feed retention in the long term?
Amanda: Yeah, it absolutely does. And it does in a couple of ways. The first one is it gives you that solid foundation. In a former life, between stints, I consulted a number of software businesses, and they were very focused on acquisition. And you’d say, “Okay, well, let’s look at your retention numbers. If you’re not retaining and growing your existing customers, you literally have this leaky bucket.” You want to make sure retention feeds growth in the most basic way because you can’t grow if you’re constantly trying to replenish because you’re losing customers.
The second way is that if you treat your customers like your best marketing partners, if they’re happy and you can lean into elevating their success stories, making them champions for your categories, certainly through reviews, they’re going to help you form trust with new customers as well. It is core to how you can create that stable foundation for your revenue, but also how you can continue to attract more of the same types of customers who are going to be happy and grow with you.
The road ahead
Amanda: Oh, I love that you asked this question. Allyship is so important, and I think a big part of it is just championing things that you believe in as a leader and giving your team space to show up as their full selves and make space for these important causes. It’s one that’s actually very important to me and my family. I am delighted that at G2 we’re celebrating all month. We have a lot of initiatives, both internally and externally, to celebrate Pride Month. We’re partnering with an organization called OutRight Action International, which fights for human rights for LGBTQ people all around the world. We’re actually going to be, as part of our G2 Gives initiative, donating to OutRight Action International for every software review submitted in the month of June.
G2 Gives is our charitable cause here at G2. We have 11 pillar organizations that we support throughout the year. And if you leave a review on G2, we’ll donate to those. So if it’s all right, I’d like to plug this initiative – you can learn more about it and hopefully leave a review.
“We’ve got an exciting product launch later this year that’ll hopefully help many marketers and others in the software industry better understand what’s happening in this space”
Liam: Yeah, absolutely. I’ll put the link for it in the blog post to go along with this episode, so you’ll find it there as well. And what’s next? Have you any big plans or projects for the rest of the year?
Amanda: Of course, always. We will be doing another software buyer behavior report to be released this fall. It’s scheduled for September, so lots to come. This is going to be an interesting year for our industry. We’ve got some exciting things. G2 has a lot of data. We’ve got an exciting product launch later this year that’ll hopefully help many marketers and others in the software industry better understand what’s happening in this space with data from G2 at your fingertips.
Liam: Excellent. We’ll keep an eye out. And lastly, where can our listeners go to keep up with you and your work?
Liam: Brilliant. Well, Amanda, thank you so much. It’s been lovely to chat with you today.
Amanda: Likewise, thanks for having me on.