Return to Chaotic Flow home >>>

Archive for the category: B2B Marketing

The PR 2.0 ethical dillema – The Medium versus the Message

If there are two areas of cross-disciplinary study I would recommend for every Web PR and Marketing professional it would be linguistics and postmodernism.   The reason is that Internet marketing (and branding/marketing in general) is driven by forces described by these disciplines…and the ideas have been around for 50 years, so there is no need to reinvent the wheel by figuring it out for yourself.  I’ve seen a number of blog posts triumphantly delcaring that The Medium is the Message, and while true, I personally didn’t learn much from them that I didn’t already know from postmodern theory.

I’d like to try and clarify an idea that I think is creating great turmoil for most PR firms and media outlets in general, from blogs to wikipedia to cnet.  The difference in Web 2.0 is not that the medium has suddenly become the message, the medium and the message have and always will be fundamentally inseparable, the difference now is that a) anybody can create a message and b) anybody can modify the media.  This change is blurring the lines between PR and marketing, and IMHO to be successful in PR 2.0 and Marketing 2.0 you have to get these two fundamental shifts.

Old school PR adhered to a certain set of ethical rules designed around a certain media structure.  News was FILTERED by experts in the form of reporters and editors who controlled access to FIXED media channels, e.g., a magazine, a newspaper, a TV show, etc.  This was the world of broadcast media.  The ethical PR person followed this model by making sure the message being offered was newsworthy and by pitching this newsworthy story to these ordained few.  While this paradigm still exists, it is being rapidly eroded by user generated content and the Web’s inherent fungibility.   Now there is a spectrum of credibility caused by variable filtering that extends from MySpace to Wikipedia to the New York Times.  And, the medium itself changes every nanosecond with each new link that is created.

Depending on your product or service, your news credibility requirements take on different flavors.  Read more »

B2B SaaS Flies in the Ointment – Old enterprise habits die hard

The software/Web/Internet industry is a tight community and SaaS vendors routinely recruit sales, marketing and engineering executives because they possess unique experience, knowledge and relationships within an industry sector, e.g., ERP, CRM, BI, retail, supply chain, etc. While this may often be a valid decision, every SaaS CEO should be aware of its pitfalls: old enterprise habits die hard. Knowledge and experience with the high volume, low cost approaches required to build a successful SaaS business, e.g., telesales, Web marketing and multi-tenant architecture, often hold greater importance, depending on the skills and experiences of the overall management team. Read more »

B2B SaaS Flies in the Ointment – Not enough leads – Part 2

Many B2B SaaS businesses will succeed or fail based on the volume, cost and quality of inbound leads. The reason for this is straightforward: subscription price. If you are like most SaaS vendors, you are probably offering an annual subscription price that is 5%-25% of the equivalent upfront perpetual license of a traditional enterprise software vendor. There is a lot of analysis by VC firms etc. regarding what the real benchmarks for these numbers should be, but I’ll suggest we just go with the theory that you have to generate leads for A LOT LESS. If your subscription rate is $5000/year, then you need to acquire customers for anywhere from $2,500 to $7,500 total absorbed sales and marketing cost (the lower value if you don’t have a lot of cash, the higher if you can absorb a three year payback timeframe).

Therefore, you can’t afford expensive lead generation efforts in the $1,000/opportunity range, or direct selling costs in the $10,000/deal range, which are the bread and butter of traditional enterprise software, i.e., outbound telemarketing, print advertising, direct mail, trade shows, and heavy field marketing backed up by field sales reps making $200K/yr on $2M/yr in quota. While you may be able to apply some of these methods selectively for concentrated, high-need, high-value market segments, most SaaS startups will find them unprofitable. You must strive to develop marketing campaigns that bring customers to you and a sales model that can close a deal for around $1000. What are you to do? Read more »

B2B SaaS Flies in the Ointment – Not enough leads – Part 1

There are many roadblocks that can get in the way of getting leads in the door. But, before we consider these, ask yourself this: “Is my market really big enough?” You would be surprised at the number of vendors jumping on the SaaS bandwagon without a real handle on the size of the market they are really addressing, or the impact market size will have on their ability to deliver their service profitably.

Given that most of the Fortune 1000 IT departments are still trying to swallow the alphabet soup of enterprise software (ERP, CRM, BI, RDBMS, WMS, RFID, ASP, .NET, J2EE, etc.) they have purchased over the last fifteen years, you are unlikely to make much headway with this group as early adopters. For this reason, most B2B SaaS vendors have been honing in on the small to medium-sized business (SMB) market and small, independent functional groups within larger companies. This is the tried and true model of the companies that have been successful securing customers, such as and NetSuite. However, many SaaS applications are not as generic as CRM or ERP, and even these applications can have dramatically different requirements across SMB segments.

Most SMB’s do not consider themselves “SMB’s,” but instead identify closely with a specific, and generally highly fragmented industry sector such as retail fashion, toys, food distribution, hospitality, moving and storage, plumbing, HVAC, instruments manufacturing, and software startups to name just a few. Therefore, careful market segmentation analysis is often required to identify those customers with sufficient business need-ROI and business process-product function alignment with your SaaS offering to drive a purchase at a low enough acquisition cost that is profitable for your business model. In addition, all these “sweet-spot” segments must add up to a big enough mass market for you to achieve the inherent cost advantage of SaaS. It is your cost advantage that ultimately will motivate your prospects to switch over to your SaaS from their current way of doing things, be it manual processes, simple desktop applications, or a traditional enterprise application.

B2B SaaS Flies in the Ointment – I can’t turn a profit

The overriding problem with most B2B SaaS vendors today is their inability to reach profitability. Customer acquisition costs in particular often run 50%+ of revenue, and while logic says that one day subscription revenue will overtake this as the market matures (i.e., all prospects are now customers, so they just pay maintenance and we collect the cash), this plan is not playing out in practice. Welcome to the Silicon Valley world of VC-backed software where growth is EVERYTHING. You will never reach a time where you have all the customers. Even if you do, no one will recognize it and there will be unrelenting pressure to spend MORE on acquisition and new product development to gather up that one last customer to increase top line revenue. You can do all the break-even and NPV analysis you like, the psychology of the industry will not let you follow through on this strategy.

A paradigm shift is required in the minds of both SaaS executives and VCs if on demand enterprise software is to reach the level of success of traditional licensed software: growth follows efficiency, not the other way around. Read more »

« Previous Page