Monday, April 26, 2010

SaaS: Seven simple rules

The success of software at your service business is tied down to customer wins.

Cloud computing seems to be catching up everywhere. Thanks to the early success of hosted email, CRM, web conference meetings, project management, etc, we now see many entrepreneurs with fabulous ideas in technology, business change and social services, who plan to leverage the cloud or service their customers or make that extra competitive difference to change our lives.

Thankfully, there is no dearth of inspirational and useful information too. Whether you are a beginner or an expert, you can easily find fascinating thoughts, dos and don'ts, reviews, hands-on guides, free logins, blog reviews, reports and analysis available on the web about how companies should use the cloud in general and others on the areas of how best to use or launch online services.

The SaaS Venture
My experience from evangelizing for entrepreneurs/customers across the world is filled with many such exciting learnings. Truth is simple and here are my simple seven ways to make that big difference ON how you offer and breed early success with your SaaS venture.

While this new on-demand world seems quite unfamiliar to most of you, it is in fact a lot simpler than expected. Think about driving into a large shopping mall, parking your car, getting a movie ticket and paying for what you use by the quantity or on usage basissimple! This is a new method of delivering automation fit for your taste and paid as per use.

Customers love it, they get the best without being discriminated, infrastructure companies make more from their one-time investments month after month and entrepreneurs get to innovate all the time for every buck they earn more. Superior standards of service drive profitability and not just availability. This brings me to the first and most important point, I would like to address to everyone heading this way:

Small is big, business is simple: Focus on customer needs and not segments or pricing. The segmentation holds true when it comes to certain types of businesses as you evolve, but it does no good to your on-demand value driven SaaS when you are booting up. Every customer is a king and you must build relationships and not just contracts to become successful. Without them, none of us will exist. Its all about service when it comes to your SaaS business and your tiniest account will generate nothing less than $1,000 in less than two years time.

Focus on farming, stickiness is the key to success: There is an old saying in golf, your drive shot only counts for 37% and the rest 63% is left for your other strokes to par the hole. Getting a customer who has a need might be the most important task of your sales team, but in the on-demand software as a service world it is not so much about sales. Customers demand greater service, quicker response time, they want you to listen and factor their needs. If you want to succeed as a service provider, your business must be equipped to learn, adapt, release and get ready once again to reiterate as a continuous exercise.

Precipitate or perish: When you are running a small margin, horizontal SaaS applicationsuch as tax, audit, CRM or even a campaign management toola direct marketing and sales process is more preferable than a margin split channels play. But that does not mean you dont precipitate and build it all by yourself. From IP rich business solutions to generic applications, one must precipitatemix thoughts/share web services, opportunities and learn to cook half baked partial solutions into multiple offerings to drive higher solid numbers. Committing to building a shared ecosystem for higher sales, better services and towards creating newer offerings along with partners are a key recipe for success. Remember you are in this business of committed monthly recurring revenue (CMRR) and not license sales and it will take ages to hit a higher scale without multiple channels play.

Sell first to build later: One of the prerequisites of building a successful SaaS business is lowered costs with zero capital availability and the target to achieve rapid customer scale. You must have a lean-mean and loosely held passionate entrepreneurial team equipped with all the modern tools of innovation such as Twitter, Facebook and LinkedIn and customers to shape your imagination into a working solution as you sell. Whats so different about this approach? Instead of burning your cash, waiting for a lengthy period to raise capital, design, build and then sell, you dont build until you have a customer sale in place. In other words, you first sell, and then you prototype, design and buildthe other way around.

Stick & a carrot, get your trump cards right: Success of an online service is determined by customers and softer challenges such as culture play a key role in adoption. Getting the idea, functionality, usability, processes and delivery right only assures you of a good chance of a fair evaluation and not adoption. That my friend is a combination of a stick and a carrot, and bells and whistles if all goes well. You have to learn to turn and apply them both to drive sales at customer locations. It will be hard to sustain a hard sell and too painful to live with only a soft one.

Design to destroy or should we say innovate: Start with a single form and one process rather than ten. If the first one doesnt work for your customer, none will. Most often you will find genuine roadblocks in the adoption of your SaaS solution, and you should learn new things which will demand you to change your course and destroy to design another one. Keep your focus on your customer and say to yourself all izz well.

Harvesting your wins: Cross sell or up sell, partner sales or direct salesas a SaaS provider you must learn to harvest your success. That is the best way to justify your efforts and investments from your customer engagement and get to the next one sooner. How you do this is left to your budgets, but if I have to play your role, I would rather use my customers strength and worries to secure another sale!

But above all, launching and running your software at your service business is a game which can only be played and your success is tied down to your customers win. Keep your costs low, increase penetration and get ready to iterate and leverage the cloud in every possible way.

Sunny Ghosh
Director & CEO
Wolf Platform-as-a-Service

NOTE: The views expressed above are purely personal and for informational purposes only. WOLF FRAMEWORKS INDIA PVT. LTD MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

1 comment:

Anonymous said...

"sell first" - so basically selling vapour-ware this doesnt always work and depends on the clients. If its something new the client may take the risk-upfront but be prepared to break-even at best or most likely do a deal at your cost.