Blog post

Sales Tech Mayhem: 39 Observations From a Scorching Hot Tech Market

By Craig Rosenberg | July 28, 2021 | 5 Comments

Sales

This post has been co-authored with Dan Gottlieb

The sales tech market is an absolute blast to cover right now. The recent $575 million acquisition of Chorus by ZoomInfo was a terrific reminder of the exciting times happening in this space. (See Impact of ZoomInfo’s Acquisition of Chorus – Gartner subscription required).

We have a lot to say about sales tech, so to cover as much as we can, we created a list of points. We hope to continue to report back from the sales tech analyst trenches going forward so prepare for….more listicles.

And here we go…

Sales Tech Mayhem 

  1. We are in a period of time that we are calling: Sales Tech Mayhem.
  2. The market is fast moving from a wide set of categories into a narrow list of vendors with wide portfolios of capabilities.
  3. ZoomInfo’s acquisition of Chorus is a perfect example of mayhem. A massive data provider buying conversation intelligence. Welcome to mayhem.
  4. This started roughly a year ago and will likely continue over the next couple years. The game is moving FAST.

The Business Drivers of Mayhem

  1. The mayhem is a result of the bull market in sales tech. See the data below.
  2. Chief Sales Officers are reporting a 5% increase in sales tech budgets from 2020 to 2021.
  3. 93.6% of sales leaders surveyed are investing some kind of sales tech (see CSO Actions to Navigate the Pandemic Gartner subscription required)

  1. Anecdotally, we have seen the amount of digital transformation conversations we are having with sales and sales operations leaders growing literally by the week
  2. Remember martech? Martech had famous technology landscape supergraphics with 1000’s of logos. Yes, Martech continues to be the largest expenditure of the marketing budget – 26.6% in 2021. However, marketing budgets fell precipitously from 11% in 2020 to 6.4% in 2021 meaning the amount available to spend has gone down. Translation: Sales tech is up and martech is neutral to down. (Author’s note: we still very much love martech) 

Factors fueling Mayhem

  1. The push for digital transformation comes from the top down and is a major factor in driving sales tech buying particularly in non-tech verticals. (see below)
  2. 69% of board of directors report that their companies have accelerated digital business initiatives as a result of Covid. (Data from Executive Leaders Should Align to Board Priorities for 2021 – Gartner subscription required)
  3. Keep in mind, sales tech has actually been around for a while and there were a fair amount of companies that didn’t make it.  Yes, the pandemic and ensuing acceleration of digital transformation has been huge, but there are also really interesting sales-tech specific factors that are driving the market.
  4. Factor #1: Creating products the reps actually like/love/have-to-have versus products that help management.
  5. For example, sales engagement platforms help reps easily accelerate and optimize email activity and eliminating work like cutting and pasting, etc. To the sales rep, that is a win for them.
  6. The flip side of the coin, the CRM can be perceived as extra clicks and data entry that largely benefits management not them. 
  7. Factor #2: The rise of the invisible UX in sales tech, that is, a user experience that is seamless to sales reps processes. Conversation intelligence has absolutely skyrocketed. Of course, the tech has been hugely valuable but another factor is really important – it can be launched easily and the reps don’t have to change their process to use it. 
  8. Many of the early contenders in sales tech faded away because they forced sales reps into new processes (having to login to a new app, etc). That has changed.

VCs and Wall Street Love The Mayhem 

  1. There are 6 sales tech unicorns ($1 billion-plus) valuations — Outreach, SalesLoft, Gong, HighSpot, Seismic and Clari.
  2. There are two aggressive martech vendors transforming into cross-functional applications: 6Sense (unicorn) and Demandbase (acquisitive, especially in the sales tech space).
  3. Rolling that up – that is 6.5 unicorns in the sales tech space. 6 sales tech unicorns + 1 cross-functional unicorn = 6.5.
  4. There are two publicly traded cross-functional vendors: ZoomInfo ($20 billion market cap) and Dun and Bradstreet ($9.2 billion market cap).
  5. These numbers are strong as is and don’t even include LinkedIn and the CRM players.
  6. We are working on our new revenue tech stack and we anticipate following 43 distinct technology categories. 
  7. In that number, we also have included some solutions that are critical to driving revenue but not exclusively sales tech like visual collaboration or account based advertising.
  8. This long list of categories will contract as many categories become capabilities in a larger vendor’s feature portfolio – that is the very definition of mayhem.
  9. M&A activity is clearly a/the major contributor to mayhem.
  10. Sales Tech is frothy (see #5,#6, and #7). 
  11. Sales tech is so frothy that the vast majority of vendors in the space are having some level of success and a fair amount are blowing out their numbers (see below)
  12. At the end of last year, we polled sales tech vendors on their Q3 and 32% said it was their best quarter in company history.
  13. In less frothy times, many smaller vendors might disappear. In this market, someone will acquire them…and that someone is likely an Alpha Platform. (see below)

Alpha Platforms Roam the Mayhem Landscape and Eat Everything They Can

  1. Alpha Platforms are hyper-aggressive vendors who are broadening capabilities at a breakneck speed.
  2. It’s not just M&A, some companies will evolve into alpha platforms by building capabilities. This is totally doable, they just have to be able to work fast.
  3. Alpha platforms aren’t necessarily buying competitors in the same category – they are buying into adjacent categories.
  4. As a result, sales tech categories have a short lifecycle.
  5. This makes it very difficult for buyers to understand which companies do what anymore.
  6. ZoomInfo is an example of an alpha platform. ZoomInfo (formerly DiscoverOrg) has not just acquired competitors in its core data category. It has acquired capabilities into adjacent categories. 
  7. The acquisition of Chorus is an example of leaping into a category.
  8. When Sales Tech Mayhem settles, it’s likely a set of Alpha Platforms left standing.
  9. Before a whole new set of innovation comes up and disrupts them.

Welcome to Sales Tech Mayhem.

Stay tuned for installment #2 coming to a Gartner blog near you.

Leave a Comment

5 Comments

  • Mary Shea says:

    Its all about the Alpha platforms! We agree! Excited to lead the charge as @Outreach extends capabilities horizontally (all types of IC market-facing team members) and vertically IC, Manager and Leaders to help organizations drive efficient, predictable growth.

  • Anna Baird says:

    Love this Craig and thank you for summarizing so well! This market will continue to converge! It is all about creating a platform that Go-to-market teams enjoy using and can help them run their entire workflow… From the reps to the leaders and from activity to forecasting.

  • David Kirkdorffer says:

    With so many vendors, and so many capability categories, it’s a very confusing marketplace for buyers to navigate.

    This gives a natural advantage to vendors with better brand awareness with their intended ICP, and better integrations with the salestech/martech leaders (like SFDC, Hubspot, etc.)

    New vendors in new categories should leverage partnerships with larger vendors, perhaps as a first step toward eventual acquisition as an exit strategy.

    A key measure of company viability / success will be to track CHURN rates.

  • Mark Poynton says:

    Fantastic article, the market is converging and the companies that develop a true platform covering the total lifecycle, benefiting the whole Go To Market team have an opportunity that has never been seen before.

  • While CRMs are the natural ‘alpha’ platform in salestech, it is surprising that they haven’t been as pro-active in replacing smaller tools. E.g. most CRMs today include Sales Engagement capabilities, but Outreach, Salesloft and a multitude of other vendors continue to grow.
    Thoughts on why this has been the case and what’s in hold for the future?