How SaaS Marketing has Changed

Over the 10 years since went public, a few things have changed in the way we market software-as-a-service (SaaS) solutions.

For one, companies are getting more comfortable with the idea of running critical business functions in the cloud.

Not too long ago, people marketing SaaS solutions spent a lot of time trying to convince prospective customers that putting key applications and data on the cloud was OK.

We put together plenty of documents - white papers, fact sheets, policy and procedures documents, and more - explaining that SaaS solutions were reliable and sensitive information stored there would be safe.

Fewer concerns about "the cloud"

I don’t hear many of these concerns anymore. 

Companies have grown more comfortable with the idea. 

Maybe the hosting companies have earned more trust, building a solid record of security and high-availability over the years. 

Or maybe the benefits of cloud-based solutions now simply overwhelm the possible downsides.

Of course when companies evaluate SaaS solutions, the IT professionals still care about security, performance, and integration issues.  They need to do their due diligence and ask the tough questions.  And solution providers need to have solid answers.  (For more on addressing these concerns, see "SaaS Security:  Don't Ignore It.")

Smarter buyers

As the SaaS market has matured, buyers have become more knowledgeable.  In some markets, they are now on the second or third generation of solutions.  These companies are often replacing existing systems, not adopting automation for the first time.

With this experience, buyers have a much better idea of what features and functions they really need, and what they’re willing to pay for.

To package and promote their solution effectively, SaaS marketers need a much better understanding of these more sophisticated buyers. There's no point in highlighting features and benefits that prospective customers don't really care about and aren't willing to pay for.

“SaaS” by itself isn’t a selling point

In many markets such as HR or CRM software being “SaaS” doesn’t, by itself, distinguish one solution from others anymore.  The benefits - faster deployment, no local servers, access from anywhere, regular enhancements, lower cost, etc. - are now simply “check box” items for prospective customers.  They expect them from all the solutions they’re considering.

Of course, vendors should include the benefits of SaaS in their marketing messages, but it may not make sense to put them at the top of the list. 

(A brief commercial interruption:  Contact me if you need help understanding your prospects and preparing your marketing messages.)

Some things stay the same

Though there have been some changes, some of the challenges of marketing SaaS solutions have stayed the same.

When a company’s evaluating a SaaS solution, there’s still a broad mix of folks involved in the process.  Along with IT and procurement, there’s the business owner, the department head, and the end user.  In fact, it’s often the department head - the executive responsible for Sales, Marketing, or HR, for example - that initiates the process. 

We folks marketing SaaS solutions need to reach each of these audiences and address their particular concerns.  The head of HR or the head of sales needs to hear different messages than the IT executive.

SaaS marketing is still expensive

Another constant is the high cost of acquiring customers.

In its most recent financial statement, reported it spent 53 percent of annual revenues on sales and marketing.  By far its largest single expense, sales and marketing costs have kept it from net profitability.  And this is for a SaaS company that is already well-known and well-established.

Yes, there are ways that SaaS companies can keep their customer acquisition costs under control - inbound marketing tactics, low-touch sales models, etc. - but sales and marketing is still going to be a substantial expense.  (See "Customer Acquisition Spending: Lessons from Workday")

It takes a lot of work and money to build visibility and credibility, generate leads, nurture leads into qualified opportunities, convert them into paying customers, and then retain and up-sell those customers.

That's an effort and an expense that hasn't changed for SaaS companies.

SaaS Security: Don't Ignore It

Remember all those concerns about the security of software-as-a-service (SaaS) solutions?  When SaaS was still a new idea, at some point in the sales process you'd get the same questions:  Who's got my data?  Who can see it?  Is it safe?

As SaaS has matured, maybe you thought those concerns were dead and gone.

You'd be wrong.

SaaS security is still an issue

Yes, SaaS solutions have been widely adopted by enterprises, and in many cases they're preferred over on-premises applications.

But for enterprise buyers, security is an issue that just won't go away.  CEOs and CIOs are still asking questions about how sensitive information is protected.  And with news of the recent data breaches at Target and Snapchat, they have good reason to keep asking.

I don't know how the information was stolen from Target or Snapchat.  Maybe it had nothing to do with how most SaaS solutions protect data.  It doesn't really matter.

What does matter is that some prospective customers think there are security issues with SaaS solutions.

So at some point in the purchase and evaluation process, these folks are likely to ask those nasty security questions.  They'll want to know exactly how their data will be protected and why they should trust you to do the protecting.

Be prepared to address security head on

As a SaaS provider, you should be prepared.  And the "you" I'm talking about here isn't just the operations people.  The marketing people have a role here, too.

Concerns about security can derail a purchase and they need to be addressed.

To satisfy CEOs, a short document that spells out the basics of the security procedures can be effective.

For IT professionals, though, a longer document is usually necessary.  They expect something with serious heft and full of details on server security, network security, application security, penetration testing, back-up procedures, and every other security issue. 

However you do it, if you're selling to enterprises, you should be prepared to address the security of your SaaS solution.   This issue isn't going away anytime soon.

If it's hard to use, it's hard to sell

Last week, I listened to a panel of IT professionals share their experience with software-as-a-service (SaaS) and cloud solutions. In part, they confirmed what I've heard from other IT executives: "We expect performance, we expect security, we expect fail-over." (See Rule 4 in the "Ten Essentials of SaaS Solution Marketing.")

I was surprised, though, to hear from these IT professionals about another concern: usability. After all, these folks have somehow managed to endure frighteningly off-putting user interfaces for quite awhile. SAP ERP screens are not for the faint of heart.

The IT folk's attention to usability is driven not so much from a new-found sensitivity to graphics and color. Instead, it derives from a greater appreciation for the needs of their users. They don't want to deploy applications that confuse, frustrate, and torture users.

Why IT now cares about usability

The IT professionals on the panel have found that the SaaS solutions they've acquired tend to be more widely deployed within their organizations. They're not confined to highly-trained, dedicated users with a high threshold for pain. Instead these solutions for expense reporting, recruiting, asset tracking, or sales compensation management, for example, are used broadly, not by experts and not on a daily basis.

What that means is that applications with inscrutable interfaces that frustrate non-experts cause problems for IT professionals. And even though the application wasn't built by the in-house IT group, it doesn't run in their data center, and they didn't have anything to do with the interface design, IT always gets the blame. It goes with the territory. As a CIO colleague explained to me once,"People never call me to say 'Thanks, Jamie, the email is running flawlessly today.' I only hear from them when something's broken. This is the worst job in the company."

Not only do the IT folks get an ear-load of grief from users who complain that "IT is deliberately wasting our time with this awful system," but they also bear the burden of supporting these end-users. Through a help desk or training, they spend money on to help users navigate through the application.

Lessons for SaaS providers

There are a few lessons in here for SaaS providers:
  • A poorly designed user experience will make it more difficult for you to market and sell your solution. Propping it up with specialized training for dedicated users isn't a workable solution for the broadly-deployed applications. The IT professionals won't let you get away with it.
  • A poor user interface will make it harder to renew customers. Even if you succeeded in getting an initial deployment into the organization, it will be difficult to retain those frustrated users, never mind adding new ones, if the product is painful to use.
  • A badly designed application is expensive to support. If it's the internal IT professionals who take on the support role, they'll be unhappy. You're costing them money and grief. If it's you, the vendor, who provides the support, it will cost you money... though the internal IT people will still get the grief.
Marketing professionals, fixated as we are on messages, lead generation and sales enablement tools, sometimes pay less attention to product features and functions than we ought to. Our success with SaaS solutions, however, will increasingly depend on an easy-to-navigate and delightful-to-work-with user experience. If IT professionals are paying attention to what a product looks like, marketing should too.