From 2020 to 2021, we saw a renaissance in sales technology. COVID-19 forced sellers to work from home, leaving no choice but to adopt new technologies to do their job. In addition, low interest rates provided an almost unlimited supply of funding to help sales technology companies solve this challenge. Investors funneled almost a billion dollars a quarter into this segment in 2020 and 2021. This funding went to companies that had innovative solutions built to meet this moment. Next came the sharp rise in inflation and the interest rate tightening required to combat it. Money almost immediately stopped flowing. In Q3 2022, only $60 million was invested in sales technology companies. In the last Forrester Wave™ evaluation I completed, there was a noticeable shift in focus from having the most innovative product to building a profitable business. This has caused three noticeable changes that put greater emphasis on delivering value for customers over having the most innovative product.

  1. A shift to customer-driven innovation. Prior to 2022, there was a focus on product innovations to drive investor funding over adding value to customers. An innovative vision for the future was required to get the funding needed to grow. Customers also played their part in this by racing to buy the next cool sales technology, rather than investing in the tools that added the most value to their users. In 2022, there has been a renewed focus on delivering customer value. Vendors have prioritized closing gaps in capabilities over having the most advanced AI capabilities. For example, Salesloft and Gong added forecasting. Groove, Mediafly, and Clari added conversation intelligence.
  2. Support for better utilization of current capabilities. Sales technologies now have impressive ranges of capabilities. Still, many features go unused. When I talk with end users of sales tech, I find that most are using these tools to solve only the most basic use cases. For example, companies are buying conversation intelligence platforms but only using them to listen to recorded calls. Vendors have noticed this, and they are realizing that adoption and consumption of their full set of features is essential to increasing the value that their customers gain from their solutions. Of course, value realization leads directly to greater customer retention and growth for these vendors, so vendors are now investing in resources to help users take full advantage of all the features in their platforms. This is especially important in a tight economy where companies are increasingly more cost-conscious and canceling services that do not add clear and demonstrable value.
  3. An aggressive push to become the platform of choice. Over the past two years, there has been a convergence in technologies (see Sales Tech Convergence And Confusion). This type of consolidation is natural in a market where providers have expanded capabilities to the point that there is significant overlap in technology. Vendors are aggressively pursuing this but using different approaches. Gong continues to build organically, while Clari recently acquired Wingman (see Clari’s Acquisition Of Wingman Signals A Deeper Push Into Revenue Intelligence) to quickly fill its gap in conversation intelligence. Others have an aggressive acquisition strategy, such as Mediafly, which has used acquisitions of InsightSquared and ExecVision to evolve from a sales enablement company into a full revenue platform. This consolidation will have significant benefits for customers, as these platforms will reduce the cost to acquire new capabilities and provide better integration of workflows.

With this perceived shift in focus away from innovation, should companies be concerned that their sales technology partners will no longer be innovative? Absolutely not. The shifts we are seeing are a good thing!

Users today are barely scratching the surface of the capabilities available to them. This change in focus is closing the gap and leading to more customer value at lower prices. Feature-led innovation without adoption ignored the validation that these new features were adding value to end users versus driving market attention for providers. The renewed focus on customer value will drive sales technology vendors to innovate in areas that are truly useful to their customers. This will push the market forward and improve the lives of the sellers on the other end of these systems.