What Amsterdam’s Prostitution Taught Me About B2B SaaS Sales

What does Amsterdam’s prostitution have to do with B2B SaaS Sales? Good question. Let me tell you. First, some context.

Our dev team just came back from Rails World in Amsterdam. It was fun! A great conference, and Amsterdam is a great city. It’s always a nice change of scenery to visit a city which is friendly, well-organized and clean. (I flew in from Berlin)

Now, being tourists in Amsterdam, we obviously had to check out the red light district. And, being software developers at a profitable startup, we obviously had to observe how the prostitutes had set up their sales funnel.

Henceforth, after some Spotify-sponsored drinks at the conference closing party, we donned our beer goggles and headed over there.

We arrived. Here’s a quick walkthrough on how it works.

The Prostitute’s Sales Funnel

• The prostitute is standing behind a door which also is a full-size window. I call it a window-door. This enables passersby to take a look at the prostitute, and it enables the prostitute to take a look at passersby.
• The window-door can only be opened from the inside. A good safety mechanism.
• If the prostitute is currently working with a customer, a curtain is drawn behind the window-door. This prohibits passersby from taking a look.

Here’s an IKEA-style illustration:

So that’s the setup. Next, the sales funnel:

1. An interested pedestrian walks up in front of the window.
2. The prostitute looks at the pedestrian.
3. The pedestrian looks at the prostitute.
4. The prostitute opens the window-door.
5. A negotiation begins (<– most important step).
6. If successful: The pedestrian is invited in. The curtain is drawn.
   If unsuccessful: The pedestrian walks away and the window-door closes. Goto step 1.

Now, let me tell you that we had to hang around in one spot for an uncomfortably-long period of time to properly observe this process. You see, most people in the red light district are walking around, so it’s just slightly suspicious if a group of three programmer-dudes keeps standing in one spot for 20 minutes. It also doesn’t help that one of them (me) was staring at his phone all the time, prompting ChatGPT for additional context and explanations. But it could have been worse, right – at least we weren’t wearing our conference badges..

One of the prostitutes, understandably, gestured towards us to not take pictures. Apparently this is a common behavior of clueless tourists. Luckily, we had been briefed by ChatGPT to not take pictures, so we were not quite clueless tourists. Less luckily, the prospect of explaining to the prostitute that we were currently doing “prostitute sales funnel analysis” sounded like a very tricky task. So I just threw my hands up and said we’re not taking pictures, with a briefed-by-ChatGPT-tourist-face. That seemed to work.

Now, back to topic, the interesting part was that the sales leads of the prostitutes could be grouped into two distinct categories:

• Dudes who convert very quickly: A dude by himself who walks up, the door opens, he asks a few questions, everyone nods, he’s invited in, the door closes, the curtain is drawn. Happens so fast you almost overlook it.
• Dudes who never convert: A dude with a group of 3-5 “friends” behind him, looking very interested and very insecure at the same time. The door opens, he asks way too many questions, at some stage the prostitute runs out of patience (understandably), the dude is told to leave, the door is closed.

Suffice to say, this was interesting. Pondering this further:

• The dude who converts has clear “buying intent”: He is looking to procure this sort of service tonight. He might still want to figure out some details, e.g. from which provider and at which price specifically, but all in all, he’s here to buy.
• The dude who never converts doesn’t have any clear buying intent at all: His objectives are all muddled together. He’s here with friends. Maybe he wants to appear courageous in front of his friend by talking to a prostitute. Maybe his friends forced him to talk to a prostitute to appear courageous. Whatever the motives, he’s not here to buy.

And here’s an interesting thought experiment: If the prostitute were to lower her price to, say, 1€, would the dude who never converts change his mind and buy? I’d wager that, no, he wouldn’t buy, because he’s not here to buy in the first place.

Which brings me to our B2B SaaS sales.

B2B SaaS Sales

At OpenRegulatory, we offer so-called eQMS software, which companies use for medical device compliance. Roughly speaking, our sales leads can be grouped into two distinct categories:

• People who convert very quickly: They often come alone, and they always come prepared – they’ve already reviewed our website, FAQ, and pricing. They only have some final questions, and those questions are usually good questions. Shortly later, they purchase. Many of them don’t even schedule a call in the first place. They are here to buy.
• People who never convert: They always come in groups, and they never come prepared – their usual first sentence is “So hey, show us a demo of your software”, to which we nowadays say “did you watch the video on the website? did you try out the free trial?” – their answer to that is “no”. After politely showing them around, they ask the most superficial, ridiculous and truly stupid questions. Like “so how much does it cost?” – they didn’t even take, like, 5 seconds to look at our website. After 200+ sales calls of this sort, my conclusion is: They are not here to buy.

Here’s another interesting thought experiment: If we were to lower our SaaS price to 1€ / month, the people who never convert would still not buy, just like the dude who the prostitute never converts.

Conclusions

So drawing this parallel between prostitution and B2B SaaS sales was interesting, and somewhat amusing. But what’s the conclusion here? That’s a more tricky question.

If have two explanations: 1) High vs. low buying intent, and 2) high-touch vs. low-touch sales.

High vs. Low Buying Intent

The first and easy conclusion is that sales leads seem to have high buying intent or very low buying intent, but nothing in between. It’s not like there is any sort of “spectrum” of buying intent. No, it’s either high or very low.

That’s interesting. Taking this further, a sub-conclusion of this would be that it might be a big efficiency optimization to simply not pursue the sales leads with very low buying intent.

And indeed, we are actually experimenting with that at OpenRegulatory – we stopped offering sales / demo calls temporarily, and we are observing whether it changes our conversion rate. So far, the data is promising – there doesn’t seem to be a change.

That’s because most of the demo calls are scheduled by people with very low buying intent. Even if we do the demo call, they won’t purchase.

The people with high buying intent, on the other hand, have already done their own research, and they don’t need a demo call. If they have questions, they send an email (which also tends to be well-formatted and well-prepared).

So that’s a good conclusion, and I think it’s likely that this holds true.

But there’s more to it, I think – depending on your SaaS pricing, you might not be able to just stop offering demo calls and assume that people whip our their company credit card and subscribe by themselves. That might work for a SaaS at 99€ / month, but not at 999€ / month.

High-Touch vs. Low-Touch Sales

Patrick McKenzie (patio11) wrote about high-touch vs. low-touch SaaS sales here on the Stripe website. I recently read that article, and I must confess that the whole topic was a huge blind spot for me for a very long time (while running a profitable SaaS business – maybe I got lucky, huh).

In short, what I outlined above is the sales process for low-touch SaaS, i.e. software priced relatively low, where customers do their own research and purchase by themselves, without a whole lot of human intervention.

High-touch sales, on the other hand, includes all sorts of sales staff which do all sorts of activities which, rationally speaking, seem to make no sense at all: Doing multiple demo calls to multiple people, answering lengthy enterprise questionnaire emails which have nothing to do with product features, sitting through countless sales calls with different departments of the same company which don’t communicate with each other, etc., etc.

I mean.. when rational people (engineers) choose software, they choose whatever works best for them, and they arrive at this decision by trying it out. A self-driven, rational comparison. That makes sense.

Enterprises, on the other hand, don’t attempt to make any rational comparison. Choosing software via demo calls, meetings and questionnaires doesn’t make any sense. Maybe that’s why enterprises always purchase terrible software, and why enterprise software is always terrible.

But.. back to topic.

So the second hypothesis for the “People who never convert” in our SaaS above might be a mismatch between their expectations and what we offer: They’re expecting high-touch sales, multiple sales calls and shiny powerpoint slides, while we only offer low-touch sales calls – calls which start with “cool, so have you tried it out? what are your questions?”.

I’m not sure though.

All I can say is that I consider ourselves lucky what we don’t sell to enterprises. My condolences to any SaaS founder who sells to enterprises, those sales processes are truly irrational.

But there might be lesson here, too, about the dude with 3-5 friends behind him who the prostitute never manages to convert, just like we never manage to convert high-touch enterprise sales leads: Maybe there’s just a mismatch of expectations.

Our enterprise leads are expecting a high-touch sales experience, and the dude is actually looking for a long-term girlfriend, not a short-term prostitute.

Then again.. I don’t know. I only have 20 minutes of data.

Amsterdam was great. We’ll be back!

Photo by Metehan Kaya on Unsplash