Free trials don't always make sense

Free trials are one very popular technique for marketing software-as-a-service (SaaS) solutions, especially for relatively inexpensive ones. Think Constant Contact, salesforce.com contact manager, or Carbonite.

But before you take the leap and offer your own free trial, think carefully.

Free trials can't work without follow-up

For a free trial to work, it needs to be part of a overall customer acquisition plan. A free trial without a well-constructed follow-up effort to convert the free trialers into paying buyers isn't worth much.

You should also have a plan for people who tried but didn't buy. They should be part of your target audience for on-going marketing programs.

Free trials do cost money

With a free trial, you are essentially extending the sales cycle by the length of the free trial. Most buyers won't pay you until they need to. That will require more working capital.

Depending on your infrastructure and hosting platform, it will cost you money to host and deliver your solution to free trialers. The cost of computing and storage may be low, but it's not free.

If your solution requires support to get the free trialers up and running, in the form of telephone or chat help, or online tutorials, factor those costs into your calculation.

For some applications, a free trial could essentially give away all the value of the solution. If it's a solution that helps manage a task done once per year, for example arrange the annual user group conference, why would the prospect actually pay for the solution once that task is done?

Does a free trial really show the value?

Consider whether the free trialer will truly see the full benefit of your solution during the course of the free trial. If you're helping them manage a process that takes 6 months, for example, the trialer might not see much value in a 30-day free trial.

Just because a trial is free doesn't mean that the prospective customer will put in the time to learn how to use it. In fact, if it's not immediately obvious how to use your solution, a free trial might actually deter prospects from buying it. "Free" does not compensate for a poor product that's difficult to learn. (See "If it's hard to use, it's hard to sell")

"Free" might not really matter

A trial might show prospects the solution's features and functions for free, but it won't necessarily address concerns about security, reliability, deployment, and integration. For buyers within large enterprises, these other issues may be more important than price.

Alternatives to a free trial

Before you automatically opt for a free trial, think about alternatives:

• A "sandbox" demo would allow the prospective customer to work with the software in a controlled environment. It might provide access to all functionality or it might limit the user to certain features. For example, it might not allow printing or emailing reports.

• Videos could be used to show off the key features of the solution, explain how it would be valuable to the prospect, and demonstrate how easy it is to use.
  

• A money back guarantee would allow someone to purchase the solution and, if they are not satisfied, cancel their subscription after some period of time to get their money back.

• A no-obligation contract would allow a paying customer to cancel their subscription at any time without penalty. They are under no long term commitment.
  

With these alternatives, prospective customers can get some experience with your solution. And you might avoid some of the downsides of a free trial.





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

SaaS solutions for business are not an impulse buy

I don't know who first thought to put gum, candy and Slim Jims next to the checkout aisle, but it was a stroke of genius. While I'm standing there waiting to unload my shopping cart is the perfect time to tempt me to toss in a few inexpensive items that aren't on my list. I give in to the impulse.

Software-as-a service (SaaS) solutions for businesses are not gum, candy or Slim Jims. People do not buy them on impulse.

Most business software is bought after careful consideration. Sometimes it requires input from several decision-makers. Even buying a relatively inexpensive SaaS solution - if it's important to the business - usually takes time and follows a deliberate evaluation process.

A long term purchase process requires a long term sales & marketing process

Your marketing and sales process should match this deliberate evaluation process. If it requires several weeks or months to make a purchase decision, build a customer acquisition process that extends over several weeks or months. If a decision requires buy-in from people in several roles, build a process that reaches people in each of those roles.

Who hasn't heard a story like this? A gung-ho marketing team posts a compelling white paper on its web site. Dozens download the paper daily, providing their email address to do so. The happy marketers call those email addresses "leads" and shove them off to sales folks.

The overwhelmed sales people sort through this pile - gmail addresses and all - desperately trying to find a speck of gold among the dross. Good luck with that.

Getting from "downloader" to buyer is not a one-step process

A lot of these white paper downloaders probably are prospective customers... but not yet. They're still at the front-end of their decision-making process, just getting familiar with the options available to them. They have a long way to go before they're legitimate leads or qualified opportunities.

Next step for the "downloader" might be to look at the experience of others with this product and with alternatives. They'll want to hear customer stories. Then they may need to go through a technical assessment to answer questions about security and reliability. Next perhaps they'll download a trial or work with a freemium version if one's available. And after that... well you get the idea.

Don't waste expensive sales talent

Marketers should build a nurturing process that keeps prospects engaged and committed throughout this entire, multi-step process. Emails, webinars, white papers, blogging, customer stories or events might all be part of the program. Try some out and see what works best for you.

Be careful not to push the names of prospective customers over to sales executives too quickly. You don't want expensive sales people to do all the work to move "downloaders" into "qualified leads." You'll have a tough time keeping your customer acquisition costs under control, and you'll end up with an ugly finger-pointing marketing vs. sales battle. Who has the time or stomach for that?




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

Where to start with SaaS marketing

So you say you want to launch a software-as-a-service (SaaS) solution. And you need to find some customers.

So where do you start?

If you're like a lot of folks, your first thought will be about a web site, search engine optimization, and adwords. Or maybe a webinar series or a social media campaign.

Any of these tactics might work in your customer acquisition plan, so they may be the place you end up... but they're not the place to start.

Why not?

Think a step ahead for a moment.

• If you decide to build a new website, what will you say?

• If you want to implement an SEO or pay-per-click campaign, which keywords will you target?
  

• If you opt to host a webinar series, what topics will you cover?

• If you want to blog or tweet, what about?

The place to start then: Figure out what you want to say and who you want to say it to.

To be more precise:

1. Who needs your solution?

2. What problem do they have that you can solve?

3. And why is your solution better than alternatives?

Until you can answer these questions with confidence and clarity, you're not ready to start.




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

SaaS Marketing Lessons from ShamWow!

I've never bought a ShamWow!, but I love their TV ads. The hyper-enthusiastic pitchman, Vince, tells me precisely who should buy the product, what it does, why I desperately need it, and how to buy it... all in 60 seconds!

And what's true for super-absorbent towels is often true for software-as-a-service (SaaS) solutions. Sixty seconds may be all the attention you're likely to get from a prospective customer in your first encounter.

If a prospect finds their way to your website, blog, booth, Twitter feed, Facebook page, press announcement, outbound call, or whatever other form of marketing communication you use, figure that they'll give you about a minute to introduce yourself.

Use that time wisely.

Who should buy the solution?

First make it clear who should be using your solution. Explain, for example, that it's for" K-12 school administrators in Michigan," "property managers with less than 1000 properties" or "auto loan processors." The more specific, the better.

I know companies hate to narrow their market, but something that claims it's "useful to everyone," usually isn't appealing to anyone in particular. (See "Please don't sell me stuff I don't need")

What is the solution?

Give the prospective customer a "handle" to quickly grasp what the solution is. Put it into a recognizable category, for example, "it's a document back-up system," or "it's an inventory management solution." Of course, your solution is better than everybody else's in the category, but first you need to get the prospect thinking about the right category.

Once you get them in the right ballpark, then you can differentiate, as in "we're like Groupon, but much less expensive for merchants to participate,"or "we're a marketing advisory firm that specializes in SaaS for enterprises."

Why do you need this solution?

In classic marketing-speak, this refers to the axiom: "Talk about benefits, not features." Pitchman Vince tells me that ShamWow! will save me time and money cleaning my car, my boat, or my house. There's no mention of how it works or what it's made of, except to say that it's engineered to soak up lots of liquid.

Technology companies, SaaS companies included, often fall into the trap of rambling on about their technology - lots of talk about architecture, platforms, development languages, etc. that describe how the product works. Better to focus on the problems it fixes. At least in their first exposure to a product, most customers care about what it does, not how it works.

Why do you need to buy it from me?

Tell the prospect why they need to buy the solution from you. Explain why yours is better than alternatives. For SaaS solutions, the advantages are often that they're less expensive, easier to maintain, lower risk, easier to use, and faster to deploy. (See "SaaS advantages in a volatile market")

Don't focus only on product advantages, narrowly defined. In subscribing to a SaaS solution, the customer is buying into a long-term relationship, a promise that you'll reliably deliver a service over the life of the subscription. So talk about your reliability, security, and customer service. (See "Winning customer trust.")

And don't forget that the alternatives aren't always other automated solutions. The competition may well be home-grown Excel- or paper-based solutions.

How do you buy it?

Provide a clear path to action. ShamWow's directions - "Call now. Operators are standing by"- may not work for most business-to-business solutions. But your website should make it crystal clear what you want the visitor to do: "Download this paper," "Sign up for a free trial," "Contact us for a demo."

Selling an enterprise SaaS solution is usually a multi-step process. During the first engagement with a prospective customer, you want them to take the next step forward in the process. Make it very obvious where you want them to step.

Other ShamWow! techniques have already been adopted

Though you may not have thought much about lessons from ShamWow! for marketing a SaaS solution before now, some techniques have already been embraced. "Sign up now. Get two months free. No credit card required," isn't much different than "Buy now and we'll give you two mini-ShamWows at no extra charge!"




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

Get your SaaS customers off to a healthy start

I recently switched to a new health club. It's better maintained, friendlier, and less crowded than my old club. I also like that there's no up-front membership fee, just a monthly subscription.

But making a change from my well-worn routine, set in place over 12 years, could have been a difficult jump. New location, new equipment, new people.

But all worked out well. Here's why.

On my first visit to the new club, the manager introduced himself, gave me a card with his contact information on it, and introduced me to an assistant manager who was at the front desk.

Then the manager showed me through the facility. He explained how to sign up for spin classes, where to find the jump ropes, and how to adjust the steam room controls.

Finally, he introduced me to a trainer to set me up with a workout regimen. We didn't go through every elliptical trainer, Bosu ball, and Cybex machine in the club, but the trainer put in place a basic program for me.

Renewals are vital for both health clubs and SaaS companies

Health clubs, like software-as-a-service (SaaS) businesses, depend on renewals. And the customer's first experience with the service - the on-boarding process - is critical. Get off to a good start and it's much easier to retain customers.

How did my new health club get this right and how can SaaS companies do the same?

Create a connection to a person with responsibility

On my first visit as a paying customer, I was introduced to the club manager, his assistant, and I knew how to reach them. I now had a direct connection to someone I could talk to with suggestions, complaints, or compliments.

It also works for SaaS companies. Let the customer know who they should talk to with any issues related to the service. It might be one person or it might be two or three (for example. one for support, one for billing, etc.) but try to make a direct connection. A simple letter - "Thank you for becoming a customer. If you need anything, ask me." - can suffice.

Help the customers help themselves

The manager showed me around the club and offered specific instructions on how to take care of basic tasks myself. Of course, I'd had a tour before I signed up, but he walked me through again, this time providing more detail on where things are and how things work.

SaaS companies should do the same. Help new customers to find their way around the service. Walk them through the basics, so the next time they'll have the knowledge to manage it themselves. Better yet, they'll have the confidence to explore further and find new features on their own. A written guide on how to take the first steps, with lots of screen shots, can be helpful.

Deliver immediate value

On my first visit to the health club as a paying customer, a personal trainer got me started on a basic routine. She showed me how to use a few basic machines, adjusted the seats properly, and set a "don't hurt yourself" weight. She even wrote it down for me on "Personalized Workout" tracking sheet. This wasn't a $60 per hour personal training session... it was just part of the welcome process. Following that session, though, I had an established commitment to a new routine.

Likewise, SaaS companies should concentrate on getting their new customers to start to actually use the service. Make sure they know how to login. Help them enter data and walk them through a few basic tasks. Get them using the product and make it part of their routine.

Getting customers successfully on-board is critical to health clubs and SaaS companies. A positive initial experience likely means happy customers. And happy customers means more renewals. (See more on why retention is critical: "SaaS renewals and the multiplier effect")

By the way, on my 3-times per week visits to the health club, I've been making good use of the steam room. The spin class... not so much.





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

What do you mean by "marketing?"

I'm not always sure what people mean when they say "marketing."

PR agencies sometimes call themselves "marketing agencies." So do some graphic design firms. Even the outfits that sell tchotchkes - the stuff you give at away at tradeshows, annual sales meetings, and holiday parties - call themselves "marketing firms."

It can be hard to tell what "marketing" is or what it's supposed to do.

Here's how I think about it: Marketing's job is to help acquire and retain customers.

Marketing supports the entire customer acquisition process:

• generating awareness
• building interest
• attracting leads
• nurturing leads into qualified opportunities
• converting opportunities into paying customers.
  

And in the case of software-as-a-service (SaaS) companies, marketing is also responsible for helping to retain and renew existing customers.

Don't squeeze marketing

Yes, it's a broad scope of responsibility. That may explain why folks sometimes squeeze "marketing" into a narrower role.

For example, they call it "marketing," but they're really only talking about building visibility, and the sole focus is on search engine optimization or social media.

Or they call it "marketing," but the primary focus is on establishing credibility and thought leadership. These companies tend to rely heavily on webinars, white papers, and speaking at industry events.

Or they call it "marketing," but their entire task is to generate leads.

Of course, each one of these activities is part of the marketing function, but they are not all of it. And if companies focus solely on one isolated element, they may fail to achieve the overall goal: acquiring and retaining customers.

How can you tell when a company is confused or doesn't recognize marketing's broader role?

Counting the wrong things

For one, you'll see them counting the wrong things. If the primary assignment of marketing is to build visibility, they'll tend to focus on metrics such as "impressions," "followers" or "likes."

Counting these things might be important, but only if they're connected to the overall goal. How many impressions are required to generate a lead that can be nurtured into a qualified opportunity and eventually converted to a paying customer?

Lead tossing

A second symptom is "lead tossing." A marketing group that is tasked and rewarded exclusively for generating leads, for example, will often accumulate a long list of names, phone numbers and email addresses which they periodically toss over to the sales group.

Whether or not sales can actually close any of those leads and secure a paying customer isn't marketing's concern.

Pig in the python

When marketing's role is too narrowly confined, you'll often see a "pig in the python." That is, a large number of prospects stuck somewhere in the sales funnel. For example, marketing attracts lots of website visits, but few visitors provide enough information to become a qualified lead. Or marketing generates a lot of trialers, but the company can't convert them into paying customers.

In these cases, marketing is performing one particular task very well, but the overall process is failing.

SaaS firms in particular can't afford to pay for ineffective customer acquisition. If the role of marketing is too narrowly defined and doesn't span the entire customer acquisition and retention process, it will be difficult for a SaaS business to succeed.




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

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.







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