Sunday, April 25, 2010

Are you sure you want to offer a SaaS solution?

Often when I'm talking to vendors about transitioning from an on-premise model to software-as-a-service (SaaS) and there's an opportunity for Q&A, I get questions that go like this:

"How do I market a SaaS solution that doesn't lure away my on-premise customers?"

Or, "Can I structure the contract for my SaaS solution to guarantee the same large up-front license fee and on-going maintenance stream that I have with my on-premise offering?"

Or, "How do I stuff this SaaS genie back in the bottle?"

OK, I'm paraphrasing that last question, but that's really what some of these vendors are asking. They're happy with their current on-premise model, thank you very much, and they'll gladly migrate to SaaS...but only if it doesn't really change their business.

I understand their concerns. They've built successful businesses that generates cash and profits. The last thing they want to do is to kill the golden goose.

Here's what I tell those folks: If you really don't need to move to SaaS, don't.

Moving from on-premise to a SaaS model is difficult. You'll need to make radical changes that will be challenging to your entire organization. It will change the way you do development, finance, operations, support, sales and marketing.

Why you might need to move to SaaS

Given these challenges, what would impel a company to move to SaaS? I've seen a few compelling reasons:

- Competitive pressures require it: Your competitors offer a SaaS solution that has significant advantages over your on-premise product.

- Customers demand it: Your existing or prospective customers expect and demand the benefits that can only be delivered via a SaaS solution.

- Investors require it: Moving to a SaaS model is a requirement to secure funding to grow your business.

- Your current on-premise model isn't really as successful as you think a SaaS model could be: There are advantages that you can gain - faster time to market, lower costs, new opportunities, etc.- only by moving to SaaS.

Don't get me wrong. The SaaS model can deliver many valuable benefits and advantages. And fortunately for me, given my line of work, there are a lot of companies that need to move to SaaS for the reasons I've referred to.

But if your company doesn't want to, or to be more accurate, doesn't need to make the transition from on-premise to SaaS, don't. Because if you think you'll navigate that change without making tough decisions and profound adjustments throughout your entire organization, think again.

Thursday, April 15, 2010

Understand what's connected to what

We renovated our house a few years ago. The larger kitchen, new family room and the extra bathroom we love. The process of getting it built... not so much.

Though resurrecting "construction nightmare" stories might be entertaining for you and even therapeutic for me, I'm actually prohibited from revealing any details of the experience per order of a legally-binding agreement with the original contractor. Yup, that's how well it went.

Beyond the obvious "home renovation can be hazardous to your financial and mental health," I did learn an important lesson:

"Everything is connected to something else."

As in, "Sure we can extend the deck another two feet, but that's connected to the sub-floor over the new basement, so you're looking at <insert big dollar amount here> and another <insert big number of weeks here> tacked on to finish the project."

Or, "Of course, we can put in central air, but that system needs to be connected to an upgraded electrical system. Figure on < insert bigger dollar amount here> and another <insert even more weeks here> to do the work. And, by the way, we'll need to pull another permit."

When you're doing construction, if you don't understand the connections between different elements in the process, things can get very costly, very quickly.

The same applies to marketing SaaS solutions. In particular, you need to understand the connections within the "lead-opportunity-win" funnel. A couple of examples will illustrate the point.

"Sure you can quickly generate leads with a more aggressive pay-per-click campaign. But your system for generating leads needs to be connected to your system for nurturing leads, opening opportunities, and closing business. If you don't have the complete process in place, you're wasting your money on lead generation."

Or, "We'd be happy to add more inside sales people to convert opportunities into paying customers. But that process is connected to the proposal and contracting process. But if you already have a backlog of qualified prospects waiting for approved contracts, pushing more volume into that bottle necked connection won't yield more paying customers. The investment in new inside sales reps will be wasted."

I would suggest that much of the waste in marketing spending is due to folks not recognizing the connections between the individual elements in the marketing program. An email campaign, telephone qualification programs, or a webinar series may appear to be very effective by themselves. But unless they're measured in the context of the overall marketing program, they may not really be effective in achieving your strategic objectives. Things get clogged up as they move across the connections.

Given that marketing and sales expenses will likely comprise the largest on-going expense for SaaS companies, and a poorly devised and executed customer acquisition strategy is as likely to sink a SaaS firm as a poorly developed product, marketing people need to know how the entire program fits together. Understand what's connected to what.

Wednesday, April 7, 2010

A dancing lion and the value of departing from the script

I was planning to write a blog post on how to capture the attention of prospective customers. The usual fare of practical marketing advice: How do you cut through the clutter to build visibility, establish credibility, and generate leads, etc?

But I'm not going to write about that.

Instead, I want to talk about a dancing lion. This particular lion is, or more likely was, a dancer in a Russian ballet troupe. In a complete departure from the choreographer's direction, not to mention the orthodoxy of classical Russian ballet, he pranced out from his supporting role and completely upstaged the prima ballerina and her danseur partner. And instead of quietly shuffling off-stage with the other stuffed animals, he made a glorious departure.

And the audience loved it!

Best of all, someone captured it on video and posted it on YouTube. It's been watched more than 227,000 times. I imagine the vain and disobedient lion was fired, but he sure did get attention.

Let me discretely slip in my main point here: Departing from the script can be effective.

It can grab people's attention and hold it. It can give them a "hook" to remember you with. It can cut through the clutter. Done well, that's usually good stuff for marketers.

You don't want to be inappropriate. But you don't always need to pound your prospects with a jack-hammer:


Sometimes taking a detour from the expected and making a few taps to the funny bone works even better.