Turning SaaS Buyers into Satisfied Users

If you subscribe to a software-as-a-service (SaaS) solution, in most cases you can quit whenever you want.*

That's great for SaaS customers, but not so great for SaaS providers.

It puts a special burden on providers:  They need to be sure that the folks buying their solution are actually using their solution.

If buyers don't become satisfied users, they'll eventually leave.  The result: attrition, slower growth, higher customer acquisition costs, and other bad things.  (See "SaaS Renewals and the Multiplier Effect").

In this short video, produced with the good folks at Openview Labs, I talk through 3 ways that SaaS providers can turn buyers into users. 





*We'll talk about long-term contracts some other time.


 
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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License. Images obtained via iCLIPART.com.

Naming SaaS solutions and escaping the 1990s

One afternoon in the Spring of 1993 in a conference room in San Jose, California I learned that product versions for software are meaningless.

Well, not exactly meaningless, but mathematically illogical, as in 1 + 1 = 4.

The product manager for Lotus 1-2-3 and I were briefing an influential Dataquest analyst on the forthcoming enhancements to the Lotus 1-2-3 for Windows spreadsheet. It was a major overhaul of the less-than-successful version 1.0 and 1.1 releases of the product.

Favorably impressed with nifty new features like instant charting and "Scenario Manager," the analyst suggested we abandon plans to label the new product "release 1.5" or even "2.0."

If we really wanted to make an impact, to heck with arithmetic. Skip a few steps entirely and call it "Lotus 1-2-3 Release 4."

And the tagline that adorned the tee-shirt read: "It's Not Just a New Version. It's a New Vision."

Version numbers are irrelevant for SaaS solutions

Which brings me to the naming conventions for software-as-a-service (SaaS) solutions.

When it comes to sticking version numbers on SaaS solutions, don't bother with labels like 1.1, 2.0, or anything-dot-anything.

Also drop any notions about using "Winter" release or a "Spring" release. These seasonal monikers work for beer; not for SaaS solutions. (I also suspect they're confusing to customers in the southern hemisphere.)

In the old world of desktop applications and on-premise software, we made a big deal about new versions. It helped us sell more software. Our version 4.0 must be better than the competitor's version 3.0. And it must be way better than our old version, 1.1.

It worked really well for awhile and companies made a lot of money on this upgrade cycle. Every couple years we convinced people to rip out the old stuff and buy some new stuff.

An old naming convention doesn't fit a new model

But the logic of the upgrade cycle, and the version labels that went along with it, don't fit with SaaS solutions.

In the SaaS model, solutions are upgraded regularly and the upgrades are delivered as part of the subscription. The user doesn't have an installed version that's outdated, because the user doesn't have an installed version at all.

And if the prospective customer is asking "Which version release will I be buying," you need to do a better job of educating them on the basics of SaaS.

The only people who should know or care about version numbers are in your customer support group. In order to diagnose problems, they may need to know precisely which version the customer has access to at any particular time.

But that doesn't require a big, bold label a la "Lotus 1-2-3 Release 4," "Oracle 8i" or "Windows 95." Version numbers on SaaS solutions are sooooo 1990s.





Creative Commons License

This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Good news & bad news about SaaS

The good news about the SaaS subscription model: long-term paying customers.

The bad news about the SaaS subscription model: long-term paying customers.


With the software-as-a-service (SaaS) business model, vendors can build a sustainable source of long-term, predictable revenue. As long as the subscription fees cover customer acquisition expenses and other costs, the model should support a profitable, growing business.

So far, so good. But there's a catch:

Long-term, paying customers require long-term care and feeding.

In exchange for collecting on-going subscription fees, the SaaS vendor takes on substantial on-going obligations.

Some of those depend on product development and operations. They need to keep the SaaS solution up and running, protect the customer's data, and add new features over time.

Marketing's role in retention

But marketing plays a role too. Those long term customers also expect on-going communications from the SaaS vendor. They want to know how best to use the system, what enhancements are being developed, and what other customers are doing.

And they don't want just one-way communications. Customers want a way to have input into what new features are built, and they want a way to share information with other customers.

This is where marketing comes in. (I warned you that we weren't off the hook.) Marketers need to take a role in building and maintaining communication channels with existing customers.

Talk to existing customers? For lots of marketers, this could be new territory.

A confession

When I was responsible for marketing traditional on-premise applications, I usually only thought about existing customers on two occasions: once at the annual user group meeting, and second when I needed a customer reference. That's it.

Nothing personal; it just wasn't my job. My main responsibility in marketing then was to find new customers. People who had already signed up and paid weren't my concern.

In the SaaS subscription model, it's all different. Retention and renewals are an essential part of marketing's job. Marketers need to focus on existing customers as much as on prospective customers.

In fact, in the SaaS world, existing customers are prospective customers.


Creative Commons License

This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.