Sunday, December 11, 2011

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.

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

Tuesday, November 8, 2011

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!"

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

Sunday, October 30, 2011

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.

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

Wednesday, October 12, 2011

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.

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

Wednesday, September 28, 2011

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.

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

Tuesday, September 13, 2011

Old marketing tools in a new marketing world

I was talking yesterday with a friend who I know from the old days doing public relations. PR back then was about preparing announcements, backgrounders and glossy photographs, arranging press and analyst tours (usually under embargo), and pitching stories over the phone.

Moderate success was a few column inches and a color screenshot in a trade publication. Big time success was positive coverage in The Wall St. Journal or The New York Times.

Things change... but not entirely.

The new PR

I work with clients who still use PR to generate visibility. Now press announcements are heavy with keyword phrases and sprinkled with links, and we send along photos as a .pdf or .gif. They're sent on to bloggers and news aggregators as well as to the shrinking pool of journalists with more traditional publications. The press announcements are also "self-published" via the company's own blog, newsletter or website.

Live events still live

Companies still do live events, too. Though there are plenty of options for people to virtually connect, sometimes face-to-face contact is better. Though events can be expensive - exhibit space, booth set-up, shipping & drayage, plus travel expenses - they can be effective if you clearly understand where events fit in the overall customer acquisition process. Though you may only talk to a handful of prospects at a regional event, if 3 or 4 of them convert to paying customers, it may be a great investment.

Events have also been infused with newer, social media elements. Nearly all of them label themselves with a Twitter hashtag, and the online conversations about the proceedings are every bit as rich as the in-person presentations. Sometimes more so.

Outbound calls are "social selling"

Even outbound telephone calling has had a social media facelift. There's a new concept known as "social selling." In contrast to the traditional cold call, outbound sales people use social media to better target and prepare for telephone conversations.

Here's my point:

Don't rule out marketing tools that you think may be too "traditional." PR, events, and outbound telephone calling techniques have all been "social media-ized," making them more "modern" and more effective. Try them, measure the results, and see if they fit into your SaaS marketing mix.

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

Saturday, August 27, 2011

Tired brains are bad for SaaS

Thinking too hard can tire out your brain.

Research has shown that our brains can suffer from "decision fatigue" after strenuous mental exercise. It's similar to the way our muscles get tired after strenuous physical exercise.

Experiments conducted at German automobile dealerships put prospective customers through a kind of mental decathlon. They asked them to choose among four choices of gearshift knobs,13 choices of wheel rims, 25 engine and gearbox configurations, and 56 color options. After being forced to make a string of decisions, the subjects/ customers succumbed to "decision fatigue" and opted for the default option. They lost much of their capacity to make choices.

Too many choices can be exhausting, and the customer quickly opts for the path of least resistance. That may mean choosing a default option or it may mean choosing to do nothing.

What applies to cars, applies to SaaS too

When prospective customers' brains are tired, it's more difficult to sell automobiles. It's also more difficult to sell technology solutions.

That's a special problem for SaaS solutions, when it's critically important to acquire customers quickly and cost-efficiently. Anything that impedes purchases is a SaaS business killer.

What hoops have you set up?

What kind of decisions do you force your prospective customers to make? How many hoops do you ask them to jump through?

Walk through the process yourself - from start to finish - and count how many decision points your prospects confront. Often we're asking them to navigate through a tortuous labyrinth of options,... even before they buy anything:

  • Which of our solutions is most appropriate for your company?
  • Which version is the best fit?
  • How many seats will you need?
  • Would you prefer the free trial or the freemium version?
  • Which payment plan works best for you?
  • How long would you like to subscribe for?
  • Would you like paper or plastic? (OK I don't actually see that one very often for SaaS solutions.)

I agree that there's a legitimate desire to steer the prospect to the best solution to meet their particular needs. But be careful to balance that against the real danger of tiring them out. And offer default options when possible.

Very few exhausted and frustrated prospects become profitable and satisfied customers.

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

Wednesday, August 10, 2011

SaaS advantages in a volatile market

For the last few years, NASCAR, Indy car, and Formula One drivers have been wearing a special head restraint, known as a HANS (Head and neck support) device. It's designed to prevent severe injuries from violent whiplash when the race car suddenly decelerates, as in a crash.

For business folks who have been whiplashed over the past few days by the sudden jolts in the stock market, this device might look attractive for more than just race car drivers.

But along with head and neck restraints to deal with volatility, businesses should be looking at software-as-a-service (SaaS) solutions as well. SaaS offers several valuable advantages in this uncertain market, and marketers should be touting them.

No long term lock-in

Many SaaS subscriptions run year-to-year or even month-to-month. Companies don't need to lock-in a long term commitment. They can assess their need for the solution periodically and easily make adjustments.

Greater flexibility

SaaS subscriptions often give companies the flexibility to add or subtract users as needed. There's no new hardware or software to bring up or take down. When expanding the business, companies can add users. When scaling back, they can subtract users.

Faster deployment

Most SaaS solutions can be deployed fairly quickly. Though it may take some time to input data, configure the solution and learn how to use it, the SaaS application itself is already up and running. The months required to install and customize on-premise applications is cut to days or weeks.

Coping with uncertainty

The bottom line: your prospective customers are trying to manage in an usually volatile environment. Show them how a SaaS solution can help.

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

Wednesday, July 27, 2011

Feeding the content monster

Marketers beware!

There's a ravenous beast on the loose in marketing land, and it's hounding us mercilessly - days, nights, weekends & holidays - with an insatiable craving. "Feed me. Feed me. Feed me."

This beast inhales tasty blog posts for breakfast, devours hearty white papers for lunch, and feasts on entire websites for dinner. And in between meals, it snacks on a bottomless bag of tweets.

The name of this voracious beast - the Content Monster.

Cost-effective marketing requires lots of content

Cost-effective marketing, the kind that's essential for software-as-a-service (SaaS) success, demands content... and lots of it. Paid search, email marketing, PR, and other tactics can be very effective at building visibility and luring in prospective customers.

To work, though, they need a steady diet of content: white papers, webinars, video presentations, tweets, blog posts, press announcements, newsletters, presentations, comments on LinkedIn discussion groups, and whatever other bons mots that we can concoct.

There's an insatiable demand for content - a monster that needs to be fed.

A couple of ideas about how...

Watch your customers

One great advantage of the SaaS model is that you can, and in fact must, pay attention to what your customers are up to. You can learn a lot from them. See what they're doing with your solution and understand how they are using it to improve their business. You can pass along your observations and insights that may be helpful to others.

One note of caution: Sometimes it's best to share these observations about customers anonymously or in aggregate so you don't violate any particular customer's confidentiality.

Re-purpose your content

When you explore one substantial idea, make the most of it. Push it out through multiple media. An extended discussion covered in a white paper can also be presented as a webinar, which can be publicized via a press announcement. Bits of it can be doled out in a newsletter and through blog posts. Like an efficient and cost-conscious chef, let nothing go to waste.

Revisit good ideas

Just because you explored an idea once, doesn't mean your can't revisit it. If a topic was well-received 18 months ago and it's still relevant now, examine it again. Update it with a new angle, squeeze out a new insight, or garnish it with a fresh example.

OK Content Monster, you can go off and digest this tid-bit for now. I'm sure you'll be looking for more soon.

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

Tuesday, July 12, 2011

The Girl from Ipanema and the SaaS value proposition

The girl from Ipanema and Spinal Tap were stuck in my head - an unusual soundtrack that continuously looped through an entire weekend.

You know how that happens with a song. You catch a fragment in a supermarket or an elevator. And then without warning, there's a smooth bossa nova swaying through your brain and you can't turn it off.

As for Spinal Tap, an announcer on Sportscenter used the phrase, "he turned it up to 11." That set off the memory of spontaneously combusting drummers, a ridiculously tiny Stonehenge replica, and "it's such a fine line between stupid and clever."

When songs or movies pop into my mind, it's tough to get them out. Sometimes what works is to go directly to the source - listen to the whole song or watch the entire movie. Fortunately, that's easy to do now.

Thirty seconds and 99 cents later, "The Girl from Ipanema" was playing on my iPod.

A couple of clicks on two different remotes, and I navigated my way from Sportscenter to Netflix on Demand to watch "This is Spinal Tap."

What I want, when I want it. Instant gratification.

Software-as-a-service (SaaS) offers this same kind of instant gratification for information and applications.

Sales compensation information, marketing program ROI data, job applicant tracking, or an email newsletter service...all are just a click away.

Using SaaS applications like these, you can quickly get to whatever's on your mind or on your to-do list - anytime, anywhere. All you need is a browser and internet access.

There's lots of value in this instant access.

Too often though, the SaaS value proposition is focused on the cost advantages. But there's so much more to SaaS than that.

Make instant access part of your value proposition. Explain the benefits and advantages of solutions that are easily available anytime, anywhere.

Instant gratification... customers will pay for that.

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

Wednesday, June 29, 2011

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.

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

Wednesday, June 8, 2011

SaaS marketing, baseball and the batting order

I recently read "Three Nights in August," a wonderful book about the "game inside the game" of baseball. The author, Buzz Bissinger, shadowed St. Louis Cardinal manager Tony La Russa through a three game series against the Chicago Cubs. Bissinger chronicles in detail the manager's thought processes and decision making through 27 innings.

It's not a story about dramatic home runs, sparkling pitching, or spectacular defensive plays. It's more about how La Russa decides when to put on a hit-and-run, who to intentionally walk, and when to go to the bullpen.

Which players and in which order?

A portion of the book describes La Russa putting together the line-up for each game. He analyzes who's hit well against the opposing pitcher, who's injured and needs rest, and which pitch hitters he wants to match up against certain relief pitchers late in the game.

Among these decisions, La Russa gives a great deal of thought to the batting order- who bats where in the line-up. It's a complicated process: who can take a lot of pitches and work a walk, who can steal a base, who can bunt, who can hit for power, who's right-handed, left-handed, a switch hitter, etc.

The challenge for the manager is more than just putting guys up at the plate who can hit. The goal is to construct a complete line-up, in the right order, that produces runs. It's runs, not hits, that win games.

Don't get lost in individual tactics

I hope I haven't lost the non-baseball fans among you, because there's a lesson in here for software-as-a-service (SaaS) marketers. It's about the customer acquisition and retention process.

What matters isn't just the performance of individual marketing programs or campaigns. What matters is whether the overall process produces long-term customers.

There's a tendency to focus too narrowly on individual pieces of the customer acquisition funnel or even more tightly on particular tactics:
  • Does this individual keyword draw more traffic?
  • Does this particular white paper attract more leads?
  • Does this version of the email convert more trialers into buyers?
Given all the sophisticated marketing analytics tools available, it's easy to see how marketers can sometimes get buried in the numbers.

Yes, you need to know which tactics are working and which are not. I encourage SaaS companies to try different things, measure their performance and make adjustments. Marketers trying to do their job without metrics will struggle.

Certain tactics fit certain roles

But it's also important to know the particular role of each tactic and each campaign. Some programs, for example, are designed to build visibility early in the buying process. Others are designed to retain existing customers. These are two different objectives calling for two different kinds of campaigns. If your goal is to reduce attrition, implementing a pay-per-click campaign, no matter how well-executed, probably won't help you.

It matters what happens before and what happens after

It's also important to know what activity precedes each individual marketing tactic and what follows it. Understand the entire customer acquisition and retention process from building initial visibility and attracting leads, through to converting leads into opportunities and into customers, and then retaining and up-selling existing customers. There's not much value in generating lots of leads from prospects if you have no process in place to convert those leads into buyers.

To go back to the baseball analogy (sorry I can't resist), there's no point in stealing a base and getting a runner into scoring position, if the batters behind him can't drive in the run.

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

Tuesday, May 24, 2011

Marketing numbers can lie

I barely passed an accounting course in college. The only thing I remember was a joke about "debits by the window and credits by the door."

I didn't understand the joke then, and I'm still confused by T accounts now.

Thankfully, in a stint as a bank credit analyst, I did finally gain some fluency with business numbers. I learned to cope with, if not exactly love, current ratios, inventory turnover, and return on equity calculations.

This experience with numbers can come in handy in marketing.

Measure, measure, measure

There's plenty of room in marketing for creative designers and copy writers. But if you're managing a marketing group, you'll also need to know your way around a spreadsheet too. Measuring is a big part of the job.

Marketers, and software-as-a-service (SaaS) marketers in particular, can't afford to make decisions based solely on gut feelings or anecdotal evidence. They need hard, quantitative data:
  • Which marketing programs are driving the most traffic?
  • What keywords are producing?
  • What's the free trial-to-purchase conversion rate?
  • What's the return on social media?
Proceed with caution

Yes, gather and analyze quantitative data, but proceed with caution. Be careful in how you measure and what you measure.

One common measurement flaw is assigning a lead to one particular source. and other systems have wonderful mechanisms to identify the source of each individual lead. It will tell you tell how many leads were generated by each source. And using that data, you can calculate the cost per lead per source and then make decisions on which programs to continue funding and which to stop funding.

The problem is that identifying a single source for any particular lead isn't really as simple as that. The fact is that over the course of the purchase process, most business customers are likely to touch your company through multiple sources, not just one.

The first contact may be through a keyword search, but later they'll read your newsletter, download a white paper, attend a webinar, and perhaps meet you at a tradeshow. How do you identify which single one of these activities is the sole "lead source?"

Leads are just the start of the process

The focus on leads and lead sources can also distort your view of what programs are really having an impact on your business. "Leads" are only the entry point in the sales pipeline. "Leads" need to be nurtured into "qualified opportunities" and then converted to "closed wins" in order to generate revenue.

If your entire focus is on counting "leads," you may be missing the bigger picture. Besides calculating "leads per campaign" and "cost per lead," marketers should also be tracking "cost per qualified opportunity" and" cost per closed win." You may find that campaigns that generate few leads actually produce many qualified opportunities and paying customers.

Remember, the goal of marketing isn't "leads," "followers," "friends," or "contacts." The goal is revenues.

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

Monday, May 2, 2011

The Amazon outage and SaaS marketers' response

I'm sure the recent service outage at Amazon Web Services (AWS) had lots of engineers scurrying around, looking for a fix. I've been at a software-as-a-service (SaaS) provider when the solution's gone down. The operations and support people work through the night and weekends.

Marketing people aren't completely off the hook, though. They should be doing some scurrying around too.

It's not all bad news

First, though, some good news on the reaction to the AWS outage. There's concern, but not panic. The SaaS and cloud market seems to be mature enough by now to withstand this kind of episode. People understand the risks, but they know they can be managed. Occasional downtime - as long as it is only occasional - can be tolerated.

Marketers' role

But there's a reminder here that prospective SaaS customers are legitimately concerned about performance and reliability. Good marketers should be prepared to address those concerns, especially in light of the AWS outage. If they don't ask, CIO's and IT people aren't doing their jobs.

For one, SaaS marketers should clearly explain their company's reliability and performance policies and procedures. A comprehensive document explaining security procedures, data back-up, redundancy, and other processes should be readily available. You might even prepare a short version that covers the highlights.

CIO's and IT professionals should be educated early in the sales process. The IT group might not be the entry point for your solution, but if it's to be deployed broadly through the organization, assume that IT will eventually be a part of the evaluation. Educating and gaining their confidence early on in the process can be very helpful.

By involving the IT people early, you may, in fact, find that the prospective customer can't or won't deploy a SaaS solution for this particular application. There are applications or organizations for which SaaS simply isn't a good fit. Better to find that out sooner rather than later.

Communication is essential

In the midst of the outage and after, AWS has been communicating with its customers about the problem. They reported regularly on system status and provided post-mortem reports to explain what went wrong. and other large enterprise SaaS providers do the same.

Publicly exposing our companies' mistakes is not a natural act for marketers. But in the SaaS world, it's vital to building the trust required to win and keep customers.

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

Sunday, April 24, 2011

SaaS, Flexibility & Office Furniture

I learned something recently about software-as-a-service (SaaS) from a table.

This isn't just any table. This is a bivi table made by Turnstone, a division of Steelcase that specializes in office furniture for small, innovative organizations.

This table starts as a work surface. With an add-on "back pocket," it becomes a workstation. Drag two of them together and it's a shared work area. Push four into a group and it's a conference table.

As the good folks from Turnstone explained, it's all about flexibility. Their research shows that small, innovative organizations are trying different things all the time, which means they're constantly re-arranging their working relationships. When the relationships are re-arranged, the furniture needs to be re-arranged as well. Fixed cubicles or walls just don't suit fluid organizations.

SaaS offers this same kind of flexibility, in at least two ways.

The SaaS model gives vendors the ability to respond flexibly to customer requirements. Combining agile development with SaaS delivery, these companies can more quickly deliver product enhancements to all their customers.

Companies using SaaS gain the benefits of flexibility as well. They're not locked into expensive hardware and software that become obsolete over time. And they can flexibly scale their usage of the SaaS resources to fit their needs. There's no need to buy what's required for peak capacity and let it sit idle the rest of the time.

I've talked before about the hazards of selling SaaS on the advantages of price alone. Marketers have many more benefits and advantages to talk about than that: rapid deployment, remote access, regular enhancements, etc. Flexibility should be on that list too.

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

Sunday, April 3, 2011

Explaing SaaS and the Cloud on TV

Microsoft is running an ad on television that I think may be trying to demonstrate the value of software-as-a-service (SaaS) and cloud computing.

It shows a mother who's having a problem composing a family photograph. To cut and paste different images into the photo, a la Photoshop, she appeals for help "to the cloud."


You know the story of the blind men, each touching a different part of an elephant. One touches the leg and insists it's a tree. Another one touches the tail and claims it's a rope. A third one touches the elephant's trunk and is convinced it's a snake, and so on.

If we added the woman from the Microsoft "cloud" ad into this story, she'd be touching a discarded peanut shell that the elephant dropped a long way back on the trail. In other words, not even close.

It's sometimes difficult to explain SaaS and the cloud. One of the challenges confronting SaaS marketers is to educate all the buyers in the decision making process about this new mode of computing. Education is essential to winning the prospective customer's trust, and winning their trust is essential to winning their business.

In this effort to educate prospective buyers, the Microsoft "to the cloud"/photo-editing/discarded peanut shell TV ad doesn't really help. Sorry.

"It's bigger than the application"

A different ad running on television is actually more helpful to SaaS marketers... and it doesn't involve SaaS, the cloud, or even technology. It's from Starbucks.

The ad shows the process of creating a single cup of coffee for an individual customer, all the way from the plantation to the cup labeled with the customer's name, "Sue."

It closes with the tag-line: "You and Starbucks: It's bigger than coffee."

The message here: Starbucks is not just about the coffee. It's about the entire experience. They're marketing a relationship with the customer that goes beyond the product. In fact, they've even gone so far as to remove the word "coffee" from their logo.

That's a useful lesson for SaaS marketers. When it's done well, SaaS is marketed as more than just the application. It's about the entire customer experience: it's easy to purchase and deploy, simple to use, and painless to upgrade and maintain.

In addition to the features and functions, SaaS is about a commitment to deliver an increasingly useful solution reliably and securely over the life of the subscription.

It's bigger than the application.

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

Sunday, March 27, 2011

Building connections to your SaaS customers

I'm one in a million.

Actually, I'm number 172,370 in a million. So says the thank you note I recently received from Reid Hoffman, Co-founder and Chairman of LinkedIn, as a way of showing his appreciation to me and the other first million LinkedIn users. His note says, "I want to personally thank you because you were one of LinkedIn's first million members (member number 172370 in fact!*)"

The company just added its 100 millionth member and it wanted to celebrate the milestone by recognizing and thanking the first million LinkedIn early adopters.

Believe me, I'm not one of the most high-profile LinkedIn users, nor am I one of the most sophisticated users. And I'm definitely not one of the users spending lots of money with LinkedIn. But I've been recognized nonetheless.

OK, it's not exactly personal. My notification came via a mass email, over Mr. Hoffman's electronic signature, and with my name filled in via that "automatically fill in name here" function.

But there's something in this recognition gimmick that I like.

For one thing, I get to brag to you that I'm LinkedIn member number 172,370, and I can lord it over all of you who are 172,371 and higher.

But besides that, there is a lesson here that could be useful to software-as-a-service (SaaS) marketers.

It's about how to treat your customers. Remind them that they matter to you. Recognize them as special. Look for excuses to say "we know you're out there and we appreciate you."

With some thought, you could surely come up with a list of reasons to recognize them for some special achievement: people who use your application in an unusual way, most active users, newest users, users from places we'd most like to visit... whatever.

And you could probably find more personal ways to convey this recognition and appreciation than a mass email to one million of them.

There's the tried & true annual customer conference - always a great excuse to get to Orlando or Las Vegas.

But there are things that you can do besides these annual events to build an on-going relationship. For example, many SaaS companies find it valuable to host online customer communities, a place for the people using a solution to share ideas, ask questions, suggest enhancements, and interact with each other and people inside the company. See Constant Contact or Concur for examples.

Why do they bother setting up and maintaining these online communities? Because it helps the company. It builds an on-going connection, a stronger relationship between the company and the customer. The result - deeper loyalty, more positive referrals, a better understanding of customer requirements, higher renewals, and fewer defections. These are essential ingredients for a successful SaaS business model.

One more thing: To all you LinkedIn users who aren't in the first million, maybe you'll get your "thank you" note when the company adds its 200 millionth member.

Note: SaaS Marketing Strategy Advisors provides marketing services to Constant Contact.

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

Thursday, March 10, 2011

Please don't sell me stuff I don't need

My regular readers can skip the next two paragraphs. I need a minute to talk to my brethren in the PR community... privately.

To the PR folks who have been pitching me on stories about computer viruses, streaming music to cars, online advertising solutions, and 3D mice, please stop. If you've read my blog or newsletter, you'd know that I do not write about these topics. While I appreciate your generous invitations to talk with the CEO, download screen-shots, or receive a review copy of your client's book, they're wasted on me.

Let me pass along some advice that I was lucky enough to get from a seasoned PR pro and mentor early in my career. "Read the papers!" Read what the editor, analyst, pundit, or blogger writes about before you pitch a story to them.

Identify your buyers

OK, regular readers, you can come back now. I was just asking PR folks to please stop sending me stuff I don't care about. Actually, that's a good practice for all marketers. Know who your prospective buyers are and identify them explicitly. Skyward, for example, does a good job of this:

This item sits on the top of their home page. If you're not responsible for student, finance, or human resource administration for K-12 school districts, you're in the wrong place.

And what about companies that have multiple audiences? They can try to sort out each audience and direct them each down the right path. Concur, for example, asks on its home page whether visitors are a "small business" or "medium & large business."

Coupa takes this a step further and asks visitors to identify themselves by their needs, their company's size, and their role in the organization:

Why we "spray & pray"

Targeting is much more effective than a broad, undifferentiated approach, where you blast your offering out to anyone with an email address. But the 'spray & pray" approach persists. Why?

For one thing, it's cheap and easy. The marginal cost of adding 1000, 10,000, or 100,000 email addresses to your distribution list is insignificant. That's the secret behind spam.

Another explanation is poor metrics. If marketers are rewarded for "impressions," "visitors," or "contacts," they're more likely to focus on activities that cast a wide net. This, despite the fact that most of the "catch" has no use for the product and will never turn into a paying customer. Rather than rewarding marketers by "how many people walk in the door" or "visit the web site," measure "qualified opportunities" and "wins."

There's also the fear that marketing to a well-defined audience will scare off some prospects who are excluded from the explicit target. Marketers don't want to rule anybody out.

The truth is, though, there really aren't a lot of enterprise software-as-a-service (SaaS) solutions that can be used by everybody. When someone tells me that "this product can be used by anyone," I'm skeptical.

My advice: Find the people who truly can benefit and focus your marketing efforts on reaching them.

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

Thursday, February 24, 2011

Social media is a good fit for SaaS

NPR's Fresh Air host, Terry Gross, recently interviewed Biz Stone, the co-founder of Twitter. She asked him, once the founders created Twitter, how did it catch on.

Stone's candid answer, "Well, it didn't at first."

He explained that for the first nine months of the product's existence, the only people using it were friends and family. Most people they talked to about it decided that "Twitter is not useful" and "it's the most ridiculous thing we've ever heard of."

Now that the small group of "family and friends" has grown to about 200 million user accounts , it appears that somebody somewhere has found something useful to do with Twitter after all.

Besides letting followers know that you've just ordered pepperoni and pineapple on your pizza, your flight from SFO to Logan is stuck on the tarmac, or that you're heading to Tahrir Square to protest against the government, Twitter and the other social media networks can be useful for businesses as well.

And they're an especially good fit for software-as-a-service (SaaS) businesses.

Social media allows back & forth and side-to-side

For one, social media is interactive. Unlike more traditional outbound broadcasts, it allows conversations that go back & forth, and side-to-side. Companies can talk to customers, customers can talk back to companies, and customers can talk to other customers. In fact, it's possible that customers can talk to prospective customers.

This fits the SaaS model, which benefits from close proximity to customers. When companies stay close to customers, they're better partners: more responsive, more engaged, and better able to deliver what the customers want. This is essential to the long-term relationship and high renewal rates that are required for most SaaS businesses to be profitable.


Social media communications tend to sound more human, less corporate. That's usually good for a long-term relationship. If customers sense that they're dealing with real people, not an anonymous corporate entity, they're probably more likely to renew. Even though you're marketing a business-to-business solution, you're still communicating person-to-person.

Let current customers help acquire new customers

Social media's viral nature is also a good match for SaaS companies. At its best, social media lets current users "sell" the service to prospective customers. One user loves your product and tells ten other Facebook friends, Twitter followers or LinkedIn connections. They in turn tell their friends, followers and connections. All of this holds down your customer acquisition costs and accelerates your sales cycle... both very important to the SaaS business model.

It's not just about technology

If you've not already adopted some of these social media tools to help market your SaaS solution, pick one and give it a try. You can find lots of resources about how to use these tools.

But don't just adopt the tools. Adopt the attitude. To engage with customers, nurture a long term relationship, and act and sound like a real person isn't just about technology; it's a state of mind.


Photo of the week

I know some folks liked the photo from my neighbor's farm taken over the summer. Here's what it looks like in February.

Monday, February 7, 2011

How not to calculate a SaaS marketing budget

I hear this question often from software-as-a-service (SaaS) providers: "How much should we spend on marketing?"

If these marketers have experience working in the traditional, on-premise licensed software world, they're usually familiar measuring marketing spend as a percentage of annual revenue.

That metric is often used to allocate and track marketing budgets for licensed software companies, and they typically spend somewhere between 5 and 8 percent of annual revenues on marketing.

Unfortunately, in most cases neither that metric nor that benchmark are very useful for SaaS providers.

SaaS marketers are usually better off with a metric more appropriate to the unique SaaS business model: marketing spend as a percentage of the lifetime value of the customer.

That measure better accounts for the fact that revenues extend over the life of the subscription, and they aren't recognized in a large up-front license fee. (I've written extensively on this topic and the impact on marketing. See, for example, "Three deadly SaaS marketing mistakes.")

But what if you choose to stick with the old standard marketing as a percentage of annual revenue? What are the consequences of using the wrong metrics and benchmarks? A few bad outcomes are possible:
  • Under-funding: A business fixated on measuring marketing as a percentage of annual revenue is likely to under-fund marketing and choke off the fuel for customer acquisition.
  • Over-pricing: To bump up annual revenues to better cover customer acquisition expenses, the company may over-price their solution relative to the value perceived by the customer.
  • Over-promising: A business plan that shows artificially low spending on marketing relative to annual revenues may be attractive to investors on paper, but disappointing in reality.
  • Under-funding: A plan that expects an unrealistically rapid return on marketing spend is likely to be under-funded and unable to sustain marketing activity over an extended period of time.
  • Inadequate attention to renewals: A SaaS company focused on annual revenues vs. lifetime revenues may be ignoring existing customers and securing renewals in favor of attracting new customers.
  • Swinging for the fences: A focus on high short-term returns may lead companies toward magic bullet, quick-fix marketing solutions and spending a burst of money on programs that will likely flop.
Bottom line: If you measure the wrong thing, you'll probably do the wrong thing.

Sunday, January 23, 2011

SaaS makes a mess of the org chart

SaaS messes up organization charts. It takes those boxes that represent separate departments and it smushes them together.

Let me give some examples.

Marketing & Sales: The marketing organization and the sales organization used to work separately, though they'd occasionally meet to cast blame back & forth. "Your leads are worthless; Your sales guys don't follow up," ad nauseam.

But the SaaS model requires an ultra-efficient customer acquisition process, and there's a penalty to pay for that kind of friction. SaaS companies can't afford to run marketing programs that generate leads that the sales force can't or won't follow up on. A disconnect means wasted leads, lost sales, squandered resources, and lots of nasty finger pointing.

Customer Support and Sales: Customer support and sales were also once considered neatly separated on the org chart. Sales brought in new customers, tossed them over to the customer support people, and moved on.

Not so in the SaaS world. Because SaaS customers can leave once their subscription expires and the company's success depends on renewals, the customer support organization is selling as well. Their ability to deliver quality support and a positive experience is critical to renewing customers and reducing churn.

There's no point in sales working hard to bring new customers in the front door only to have an inadequate customer support organization lose them out the back door. Given the high cost of customer acquisition, SaaS companies usually can't afford to win customers more than once.

User Experience and Marketing: I'll add one more example of org chart boxes getting scrunched together in the SaaS model: the user experience (UX) team and the marketing group.

Those clever and creative UX folks who make solutions usable share the same goals as the marketing team: clarity and simplicity.

The UX designers are trying to make applications easy to use. This is especially critical for broadly-deployed SaaS applications such as expense reporting or talent management.

Trying to patch over a confusing UX by providing lots of training and customer support is very expensive and doesn't fit the SaaS model well. Just a handful of long support calls might suck up whatever profit would be gained in a monthly subscription fee.

Similarly the marketing team is striving for clarity and simplicity. Confusing messages that target the wrong audiences will miss the most likely prospects. Worse, they'll bring in inappropriate prospects that won't eventually purchase your product. These bad leads cost you money; they don't make you money.

But the connection between UX and marketing goes beyond the fact that they share common goals. They actually depend on each other.

It's a waste to hide an elegant UX behind a heap of marketing mumbo-jumbo. If prospective customers are unable to quickly grasp how a solution could be helpful to them and why it's better than alternatives, they're not likely to go beyond the company's home page, brochure, or announcement to actually look at the product.

By the same token, no amount of clear messaging can save a complicated UX. If the product is hard to use, it's hard to sell... and even harder to renew.

Good UX demands good marketing and vice versa.

Wednesday, January 5, 2011

2011: More of the same... only worse

What's new for 2011?

Not much, really.

If you were looking for my "top ten" list of dramatically new trends for the new year, sorry to disappoint you.

What I expect is that we'll see many of the same things we've been seeing for awhile in software-as-a-service (SaaS) marketing... only more of it.

More confusion

Customers will confront more confusion about SaaS, PaaS, IaaS, cloud computing, private clouds, public clouds, hybrid clouds, etc. Much of that is a natural consequence of a still-emerging market, with every vendor, analyst, pundit, and guru trying to put their own spin on things.

For SaaS marketers that means you should continue to educate prospective customers. To put a twist on the old Sy Syms maxim, "an uneducated consumer isn't likely to be a customer at all." Help prospects to understand the basics of SaaS and you'll gain their confidence and accelerate the sales process.

More noise and distractions

It will be even more difficult to cut through the clutter this year and capture prospects' attention. Speaking from my own experience, there's ever more stuff coming at me through my email, phone, mobile device, web browser and TV screen. And at the same time, I think my attention span is getting shorter.

Marketers will need to get their messages across with laser-sharp clarity. If prospects can't figure out in less than a minute what problem you solve and why they should pay you money for it, they'll move on.

Over the course of the year, I'm planning on doing a "one-minute drill" on selected SaaS vendors' marketing messages to assess how well they articulate their benefits and advantages in under 60 seconds. Stay tuned.

More pressure on marketing costs

Companies learned a lot about cutting costs in the past couple of years, and many learned to do marketing on a shoestring. Be assured that our friends in the finance group noticed that marketing folks could do more with less. Or at least we could do something with less.

Bottom line, don't expect a huge marketing budget windfall in 2011.

If they haven't already, marketers will need to put processes in place to regularly measure the success of each program. The cardinal rule still applies: the cost of acquiring a customer can't exceed the lifetime revenues that the customer will generate.

And keep in mind that programs and tactics that worked well last year may not work so well this year.

More competition

One great thing about SaaS is that it's getting easier and less expensive for new companies to build an application. One terrible thing is that it's getting easier and less expensive for new companies to build an application.

I've seen a handful of clever developers build an application on top of in a matter of months. Easy access to outside platforms and infrastructure at "pay-as-you-go" costs makes it lots easier, cheaper and faster.

For existing SaaS solution providers, expect a continuing influx of start-up competitors who think their solution is a little bit better than yours.

Add to this that more large, on-premise application vendors won't ignore the SaaS challenge any longer, and those that have been dipping their toe in the water will likely take the full plunge soon. If they do it well, these deep-pocketed vendors can make a big splash.

For you existing SaaS vendors, prepare yourselves: sharpen your value messages, hone the customer acquisition process, and engage your existing customers.

More engagement with existing customers

With the growing use of social media, customers expect more interaction with their vendors. They want to know more about what features are available, how best to use them, and what's coming in the future. And they want an opportunity for a conversation, not a one-way outbound broadcast.

SaaS marketers should communicate regularly with customers through all appropriate channels. For SaaS businesses that rely on renewals (and that's most of you), existing customers are also prospective customers.

In addition to email, newsletters, events or whatever else has worked in the past, try out social media. Facebook and Twitter are becoming more widely used, even for business-to-business companies. Though you want to be careful not to be too casual, you may find that the more "human," less "corporate" tone of social media is refreshing.

Have a happy and prosperous new year.