Return to Chaotic Flow home >>>

Archive for the category: SaaS Marketing

Customer Self-Service | The Holy Grail of SaaS

self-service holy grailOne hundred percent customer self-service is the holy grail of SaaS. Everyone looks for it, but it is never found. Even if your product is simple enough to provide complete self-service purchase, you are unlikely to get away with complete self-service support, because you can’t hang unhappy customer’s out to dry or you will ruin your reputation. Nonetheless, the divine power of the Internet to help customers help themselves combined with the promised land of lower customer acquisition cost and lower cost of service will always enrapture the true SaaS believers and hasten them on their quest.

SaaS Top Ten Do #3 : Accelerate Organic Growth depicts the SaaS self-service holy grail as revenue generation with zero marginal costs, because your customers can find, try, buy and use your product even if no one shows up for work. But just because your customers can, doesn’t mean they will. It’s very hard to build a product that enables one hundred percent customer self-service. In some cases it is impossible. Imagine your frustration when you finally achieve it and those pesky customers simply refuse to do it.

The Self-Service Maturity Model

The closing post of my recent New Breed of B2B Buyer series introduced the concept of the self-service limit in B2B sales. The self-service limit is that point where a customer’s desire for instant gratification is thwarted by the complexity of purchasing and using your product. Purchase complexity comes in two flavors: informational and emotional. Informational complexity arises when the buyer requires education to consummate the purchase. Emotional complexity arises when the purchase entails a personal risk to the buyer. When either or both of these purchase barriers becomes high enough, the buyer simply will not make the purchase without the aid of a salesperson.

Complexity, however, is a subjective measure that is different for every single customer. In particular, and this is the point of this post, it is very different for the novice and the experienced buyer. An experienced buyer knows your company and trusts your brand. An experienced buyer knows your product and fully understands both its value and its use. As your customer base increases, so does the percentage of experienced buyers in your market, your knowledge share.

saas self-service

The percentage of experienced buyers in the market, knowledge share,
increases as a SaaS business matures.
Experienced buyers that trust and understand your brand,
are not only capable of one hundred percent self-service,
they usually prefer it, bringing you closer to this holy grail of SaaS.

Increasing knowledge share reduces both the emotional and the informational complexity of buying your product. A strong brand reputation reduces purchase risk and Read more »

SaaS Product Marketing | Upgrade and Upsell Strategy

I think it would be hard to overemphasize the importance of upgrades and upsells in SaaS product marketing. In an industry where free trials, freemium versions, bargain basement subscription prices and simply hoping to recover customer acquisition cost with first year revenue are the norm, few things are sweeter than a customer that actually wants to spend MORE money with you. Upgrades and upsells can lead to orders of magnitude difference in SaaS financial metrics. If you can acquire customers at $100/mo and rapidly upgrade them to $1,000/mo, then you may be able turn a profit in one year instead of ten years. And. if those $1,000/mo customers have a lifetime value of $100,000 instead of $10,000, then you may also turn a $50million SaaS company valuation into a $500million SaaS company valuation. ‘Nuff said.

Hunting is not just for acquiring new customers.
If an existing SaaS customer has a value gap
that can be closed by an upgrade or upsell,
then you should hunt it down and sell it.

Upgrade vs. Upsell in SaaS

Although the terms upsell and upgrade are often used interchangeable, I personally use them to distinguish between two very specific SaaS product marketing scenarios. For the purposes of this discussion, I will use the following definitions:

  • Upgrade : Higher revenue from increased usage of current SaaS product capabilities.
  • Upsell : Higher revenue from new SaaS product capabilities.

The reason for my distinction is that the buying dynamic is very different for the two scenarios. Upgrade potential of a SaaS product depends on the customer’s need to increase consumption of a known solution to a known problem, and deepens commitment to a particular capability. Whereas upsell potential of a SaaS product depends on the customer’s need to find new solutions to new problems, and widens your SaaS product footprint. This is not to say that upgrades and upsells are completely independent, because the need for increased usage can be highly correlated to the need for new capabilities as a growing customer’s business often entails greater volume as well as greater complexity.

Now that we’ve got the housekeeping out of the way, here are 8 SaaS product marketing tips to help your maximize the potential of upsells and upgrades in your SaaS business.

SaaS Product Marketing Tip #1 | Measure Value, Not Use

When SaaS product marketers think of upgrades and upsells, their minds immediately turn to pricing and packaging. Pricing and packaging are important, but you should always keep in mind that they are just a means to an end: purchase. The most important principle to follow in designing your SaaS product offering is to align pricing and packaging with customer value, or in B2B sales lingo “customer pain,” because the more a customer values a particular capability of your SaaS product, the more a customer will pay for it. In order to price what the market will bear, you must package your SaaS product into value bundles and price them using the measures that most closely correlate to customer value. You can use features, users, usage, performance, or any measure you like to price and package your SaaS product into bundles, but never forget that these measures serve as surrogates for customer value. A hundred bucks might buy you one feature or one hundred, but if that bundle of features doesn’t equate to value, your customers won’t pay it, or worse they might pay for it and still feel cheated or manipulated in the process.

SaaS Product Marketing Tip #2 | Bundle Purchase Scenarios, Not Features

While customer value is the proper measure of your SaaS product bundles, it won’t tell you where to draw the pricing and packaging lines between your subscription plans. Read more »

SaaS Marketing Tips | The Truth Shall Set You Free

In SaaS, it’s virtually impossible to sell someone a lemon, because SaaS customers typically get to try before they buy, and they can walk at any time simply by canceling their subscription. In contrast, traditional enterprise software vendors are notorious for obscure product capabilities and pricing, because up-front purchase creates a short term financial incentive to avoid disclosing any more information than the minimum necessary to close the deal. The enterprise customer thus enters a long and intricate dance with the enterprise sales rep in order to develop the trust required to overcome the risk of signing that fat license check. When combined with the uncertainty of buying a business critical application over the Web, most SaaS startups quickly find themselves between a rock and a hard place by the need to engender an even higher level of trust than their enterprise competitor, while simultaneously having nowhere to hide their shortcomings.

saas marketing open
A SaaS marketing strategy of complete and total business transparency
removes constraints to unleash the volume and deal size of online transactions.

So don’t! The best SaaS marketing strategy for building trust is complete and total transparency. With the right attitude, this apparent weakness can be deftly turned into a competitive strength that accelerates growth by streamlining SaaS adoption costs and risks. When you apply the SaaS marketing tactic of public online disclosure of your product capabilities, pricing, terms, service level agreements, support process, performance metrics, platform security, privacy policy, company history, customer satisfaction ratings, etc., you remove constraints to unleash the volume and deal size of online transactions by simplifying the buying process, preempting risk-related objections, and building a reputation of the highest integrity.   Moreover, you ensure high rates of customer satisfaction and success by avoiding the project failures that have historically characterized enterprise software by only signing customers that are a good fit for your service.

Ask yourself how much you spend right now on Google AdWords without ever having spoken to a sales rep. How does this compare to your own average selling price for online transactions?  Now, ask yourself why.  The answer is transparency, from company reputation to cost-per-click.

PS Trish Bertuzzi from Bridgegroup asked for specific examples, so please see the comments if you are interested in the response. And, feel free to add your own examples of SaaS vendors that are doing a good job at transparency.

More posts in the SaaS Marketing Tips Series:

SaaS Marketing Tips | Metrics that Make a Difference

Most marketers are obsessed with metrics, and this is particularly the case for online marketers. Metrics not only demonstrate performance, they often form the basis for decision making, creating buy-in and defusing politics. But, for the life of me I can’t recall ever seeing a decent presentation on metrics in any marketing book or course. In this post, I’m going to present a simple, process-centric approach to metrics that will help you develop the specific metrics that are right for your particular business and provide insight on where and when each metric makes a difference. This approach to metrics owes more to statistical process control (total quality) and activity-based costing than to marketing, but the the concepts are considerably (over)simplified. The goal is to achieve a comprehensive, integrated, insightful process view with as little math as possible.

Three simple concepts to master for developing great metrics

Process
A process is a stable, repeatable set of dependent activities
Process = Activity 1 > Activity 2 > Activity 3 > … > Activity N

Activities
Activities consistently turn inputs into outputs at a certain efficiency and speed
Output = Input > Activity
Efficiency = Output Volume / Input Volume
Speed = 1 / Cycle Time

Resources
Activities are produced by resources that have a certain cost and capacity.
The bottleneck resource constrains overall output, therefore maximizing output
and minimizing costs amounts to improving throughput at bottleneck resources.
Total Cost of Output N = Resource1 Cost +…+ ResourceX Cost + … + ResourceN Cost
Unit Cost = Total Cost / Output Volume
Max Output N == Max Activity X == Capacity of Bottleneck ResouceX

Kinda theoretical right? OK, so here is a concrete example that I think will be useful to many readers. Below is an inbound new purchase process model for a typical B2B SaaS company.

saas metrics

General process metric model applied to a top-level B2B purchase process.
For a lower level process example, click here to see the model applied to email marketing metrics.

Chances are you’ve heard or seen most of these metrics before, but they were probably jumbled around on a spreadsheet in random order with a few critical metrics missing and few irrelevant ones thrown in for…uh…good measure. However, when you see them laid out as they relate to the purchase process, their meaning and inter-relationships become much clearer.

Tips for Defining and Using Great Metrics

Keep it simple

So, the reality is that since we are talking about sales and marketing, and not manufacturing nuts and bolts, our processes are never as clean and predictable as this little model appears. It will at best be an approximation to reality. But, you have control over that approximation. Read more »

SaaS Marketing Tips | Don’t Be CRUD on the Cloud

In this post, I will offer up two SaaS marketing tips to help you achieve Do #3 Accelerate Organic Growth of the Top Ten Dos and Don’ts of SaaS Success where organic growth is defined as revenue generated with zero marginal acquisition cost. In other words, customer self-service. The first marketing tip is to map out the purchase experience from the customer’s point of view from beginning to end: awareness to trial to purchase to use. The second is to let go of any pre-conceptions you may have about the separateness of your SaaS product from other Internet content, yours or otherwise. It’s a mashup world! My reason for combining these two SaaS marketing tips into a single post is that much, if not most of your customers’ online experience related to your product happens outside your product, and even off your website.

SaaS Marketing Tip: Map Out the Purchase Process from Your Customer’s Point of View
In most online businesses, marketers focus on impressions, click-through rates, registrations and leads, while the sales team organizes itself around a pipeline. Each of these metrics provides an important snapshot at a particular stage in the customer lifecycle. However, functional divisions within the company often prevent a integrated view of the entire process. And, metrics are often seen as a measure of business efficiency as opposed to customer success, i.e., marketing converts a visitor to a registered user as opposed to a customer consciously decides that in order to get closer to solving a problem it is worth giving up personal information in exchange for the value received on the other side of the registration form. Create a table that depicts the detailed stages your customers go through before, during and after purchase with particular attention paid to their likely online location and intent at each stage. Then, map out the information they require to progress successfully to the next stage and get closer to achieving their intended goals. Finally, put in place metrics to track end-to-end progress that can be portrayed in a single, integrated view.

SaaS Marketing Tip: Create a Seamless Internet-Product Experience
At its core, the Internet doesn’t really care if you are distributing a Google Ad or an ERP application, it is all just information. Read more »

SaaS Marketing Tips | Search Is About People, Not Engines

You have to understand why and how your customer uses search if you want to be successful at search marketing. Unfortunately, ninety-nine percent of what you read about search are tips on how to work the system, attract the engines and increase rankings. Alot of it is good information, but it doesn’t provide solid direction to your marketing programs, because without your customer a search engine is simply a mindless algorithmic tool. You will often see this shortcoming with PPC firms that focus exclusively on trial and error to develop your programs, the proverbial throwing of the spaghetti at the wall to see what sticks. Experimentation is fundamental in exploring and optimizing alternate search strategies, but without a firm grounding in customer buying needs and behavior, this approach is simply garbage in, garbage out. The SaaS marketing tips below are designed to help you turn your thinking about search inside-out by considering the experience from customers’ perspective.

SaaS Marketing Tip: Honor Customer Intent
One of the most interesting descriptions of search fundamentals can be found in Jon Battelle’s book, Search. In it he describes the sum total of keywords and click streams captured on the Internet as the “Database of Intentions.” I really like this word: intent, and I recommend to every search marketer to stop thinking about keywords and start thinking about intent. Or, more specifically to think of keywords as a shorthand for intent. How do you use search? How do you select keywords? If you think about it,you’ll quickly see that the process goes something like this: I have a problem that I need information to resolve. To get that information, I need to clarify my intent in my own mind and distill it down to the simplest possible set of keywords, otherwise I don’t get the results I want. Your potential customers may sit down in front of a search engine with a wide range of problems and associated intentions: exploring entertainment options, looking for a job, or finding your product. If you don’t honor their intent and provide help with the specific problem they are trying to solve, then your ad is no better than a billboard. Sometimes they may very well be looking for exactly the product you offer, these are the highest value intentions(keywords) to capture, and identifying them should be your first order of business, i.e., your first set of keywords should always be those that prospects type into a search engine when they are specifically looking for your product category. To identify them, at a minimum you have to think like your customer and at a maximum do some market research. Throwing spaghetti is weak. Beyond this set of keywords, you cannot offer your product in your search ad. You must offer alternative content that is useful to solving the searchers problem at hand, but establishes a relationship that you can nurture to a future purchase.

SaaS Marketing Tip: Every Website Page is a Landing Page
In software, we like to create these things called use cases. A use case describes how a user will use a system to accomplish a specific task. Most people design their websites for the use case of someone arriving at their home page with the intent of learning about their product, and then navigating around to learn all they need to know before making a purchase decision. However, if you’re even remotely successful at SEO you will quickly find that many of your visitors are arriving at keyword optimized internal pages after finding them in their search results. Read more »

Transform your SaaS into a Web 2.0 business

Quiz: What is the most successful enterprise SaaS application to date?
Hint: It’s not Salesforce.com

It is ironic, but the unfortunate fact is that most SaaS vendors see the Web as little more than the browser through which they deliver an enterprise software application. In fact, the phrase itself software-as-a-service, creates a subtle bias toward viewing the business as simply a piece of traditional software delivered on-demand over a network. Connecting an application to the Web unleashes disruptive economic forces that go far beyond multi-tenant architecture and reduced TCO. It enables viral organic growth, low cost customer acquisition, business productivity gains across-the-firewall, and new monetization models to augment simple license subscription. That is why the most creative SaaS vendors are realizing that the real opportunities for business innovation lie outside the firewall and are transforming their SaaS offerings into Web 2.0 businesses.

Below is a list of principles that can help you transform your low-cost, commodity SaaS into a high-value Web-based business.

Accelerate organic growth

  • Master “free” online marketing tactics
  • Streamline and automate the entire customer life-cycle

Reach out and become a hub on the Web

  • Links, links, links
  • Encourage community

Build the business into the product

  • Automate the customer lifecycle
  • Crowd-source new capabilities

Reach across the firewall to unleash disruptive economic forces

  • Re-engineer external processes
  • Integrate through the cloud

Monetize creatively

  • Leverage the network
  • Look beyond subscriptions

After I’ve had a chance to elaborate on each of these ideas in a separate post, I’ll provide the answer to my somewhat trick question above.  However, I’m hoping that the solution will emerge as obvious.

SaaS Success in Web 2.0 – Reach across the firewall

For better or for worse, I am old enough to remember the reengineering craze of the early nineties.  For those of you that are under 30, this was a monumental hype cycle throughout the technology consulting industry centered on redesigning business processes for order-of-magnitude gains in productivity by leveraging new client-server technology.  It was codified in the famous book:  Reengineering the Corporation by Michael Hammer and James Champy.

Brainstorming and out-of-the-box thinking were the order of the day, because creativity was the key ingredient to realizing the potential gains. However, creativity has not been the mantra of the SaaS revolution, the mantra of SaaS has been lowering TCO (total cost of ownership). Basically, take what you do now, make it multi-tenant, outsource it, and pay less.

While this is a great business proposition for customers, it places SaaS vendors squarely into highly-competitive, price-sensitive commodity businesses.  If you want to differentiate your offering, you must look beyond the client-server application you are replacing and ask yourself: How can I revolutionize the current business processes of my customer by connecting my SaaS offering to the larger Web? Or, more concretely by connecting it to users and applications outside the firewall. Read more »

SaaS Success in Web 2.0 – Become a hub on the Web

If you are a software-as-a-service (SaaS) provider and deliver your product over the Web, then by definition you are Web publisher, so act like one. Web publishers, whether their business is news, games, e-commerce, or a simple blog, are obsessed with increasing site traffic and converting it to registered users. On the Web, there is one and only one source of site traffic: links.

Links from search results, links from search ads, links from banner ads, links from websites, links from blogs, links from feeds, links from widgets, links from bookmarks, links from toolbars–links, links, links.  Becoming a hub on the Web means creating a nexus of incoming, high quality links to your website from sources that are relevant to your business, and most importantly relevant to your prospects’ needs. There is nothing else online as cheap or as effective in generating demand.

Links come in two categories: paid/transient and free/permanent.  The more free links you have, the fewer paid links you need.  Most SaaS vendors immediately jump on the SEM bandwagon to get paid search traffic.  They also apply SEO techniques to optimize keywords on their websites, but only obscure keywords are useful without high PageRank, and high PageRank requires (that’s right, you guessed it!) links.

What is your link strategy?  Links opportunities abound and arise naturally from your online business, but you have to be conscious of their critical improtance to captialize on them. For example, who is part of your potential online community e.g., customers, partners, investors, employees, colleagues, expert blogs, social networks, events, associations, directories, etc. and have you engaged them in a manner that generates online content and discussion that results in links? Do your traditional online marketing and PR activities generate tons of effective links?

Clicking on a link is often the first step in the online sales cycle.  Understanding and improving your Web presence is as important as (more important if you are a startup) improving your sales pipeline close ratios, because you have to get the leads in order to close them. So, are you measuring your Web visibility as acurately as your pipeline? Can you identify a qualified link as effectively as you can identify a qualified lead? Do you have a concrete plan to get more links and increase your PageRank?  If not, it is almost certain that the ROI on spending your marketing dollars to increase your organic web presence will be much higher than increasing your budget for SEM or banner ads.

This is post number 3 in a series of 5 on transforming SaaS for Web 2.0 success.

« Previous PageNext Page »