Tuesday, July 27, 2010
Too many choices aren't necessarily a good thing
Because of the unusually warm weather here in the Northeast, my neighbor's farm has already started harvesting corn this summer. They plant different varieties throughout the season, carefully timing each planting to ensure that one or another variety is available from mid-summer into October. Earlier this month, they were harvesting a butter & sugar variety called "Temptation." This week, they started bringing in "Montauk." I don't know what's they'll bring in after that.
Whatever they're picking at the time, I buy it.
Not so with the lettuce, though. All the varieties seem to come in at the same time. Standing in front of open crates of green leaf, red leaf, oak leaf, romaine, buttercrunch, bibb, Boston, black-seeded Simpson - never mind the escarole, dandelions and other roughage - I'm stumped.
Too many choices. It's not always a good thing for farm stands... or for software-as-a-service (SaaS) providers.
Too many choices makes it more difficult to buy
SaaS is confusing enough as it is. In case you doubt this, peak into the over-heated debates about the precise definition of SaaS that erupt every few weeks on discussion boards. Adding to that confusion with lots of options doesn't help.
When prospects are confused, they usually don't buy. Or at least they don't buy until they are educated and not confused.
Collateral that explains the basics of SaaS to uninitiated procurement professionals can be very helpful. (See "Getting deals unstuck from legal and procurement.")
Better yet, keep it simple. Avoid the temptation to create a multi-page menu enumerating every possible permutation of feature, delivery mode, support option, installation method, ad nauseam.
Revenue now beats revenue later
Delayed purchases aren't good for any vendor, but they're especially harmful for SaaS providers. Under the SaaS business model, the costs of acquiring a customer are paid up-front, while the revenue comes in over the life of the subscription. The wider that gap between up-front payments and stretched-out revenues, the greater the strain on cash flow and the need for deep pockets.
Besides delaying purchases, too many options can also make it more difficult to support a SaaS application. If each customer has a unique configuration, it's more difficult and costly to maintain each customer. Upgrades, conducted one at a time, are a nightmare. The potential advantage of maintaining a standard deliverable, deployed to all customers, is squandered.
With too many options, something is likely to fall through the cracks for some number of customers. The result: customer dissatisfaction and lower renewals. Most SaaS providers can't survive low renewals. (See "SaaS Renewals and the Multiplier Effect.")
Believe me, as a marketer, I understand the appeal of "choice." Thirteen varieties of freshly-picked lettuce, displayed side-by-side, are beautiful. But I usually end up just buying the corn.