Over the 10 years since salesforce.com went public, a few things have changed in the way we market software-as-a-service (SaaS) solutions.
For one, companies are getting more comfortable with the idea of running critical business functions in the cloud.
Not too long ago, people marketing SaaS solutions spent a lot of time trying to convince prospective customers that putting key applications and data on the cloud was OK.
We put together plenty of documents - white papers, fact sheets, policy and procedures documents, and more - explaining that SaaS solutions were reliable and sensitive information stored there would be safe.
Fewer concerns about "the cloud"
I don’t hear many of these concerns anymore.
Companies have grown more comfortable with the idea.
Maybe the hosting companies have earned more trust, building a solid record of security and high-availability over the years.
Or maybe the benefits of cloud-based solutions now simply overwhelm the possible downsides.
Of course when companies evaluate SaaS solutions, the IT professionals still care about security, performance, and integration issues. They need to do their due diligence and ask the tough questions. And solution providers need to have solid answers. (For more on addressing these concerns, see "SaaS Security: Don't Ignore It.")
As the SaaS market has matured, buyers have become more knowledgeable. In some markets, they are now on the second or third generation of solutions. These companies are often replacing existing systems, not adopting automation for the first time.
With this experience, buyers have a much better idea of what features and functions they really need, and what they’re willing to pay for.
To package and promote their solution effectively, SaaS marketers need a much better understanding of these more sophisticated buyers. There's no point in highlighting features and benefits that prospective customers don't really care about and aren't willing to pay for.
“SaaS” by itself isn’t a selling point
In many markets such as HR or CRM software being “SaaS” doesn’t, by itself, distinguish one solution from others anymore. The benefits - faster deployment, no local servers, access from anywhere, regular enhancements, lower cost, etc. - are now simply “check box” items for prospective customers. They expect them from all the solutions they’re considering.
Of course, vendors should include the benefits of SaaS in their marketing messages, but it may not make sense to put them at the top of the list.
(A brief commercial interruption: Contact me if you need help understanding your prospects and preparing your marketing messages.)
Some things stay the same
Though there have been some changes, some of the challenges of marketing SaaS solutions have stayed the same.
When a company’s evaluating a SaaS solution, there’s still a broad mix of folks involved in the process. Along with IT and procurement, there’s the business owner, the department head, and the end user. In fact, it’s often the department head - the executive responsible for Sales, Marketing, or HR, for example - that initiates the process.
We folks marketing SaaS solutions need to reach each of these audiences and address their particular concerns. The head of HR or the head of sales needs to hear different messages than the IT executive.
SaaS marketing is still expensive
Another constant is the high cost of acquiring customers.
In its most recent financial statement, salesforce.com reported it spent 53 percent of annual revenues on sales and marketing. By far its largest single expense, sales and marketing costs have kept it from net profitability. And this is for a SaaS company that is already well-known and well-established.
Yes, there are ways that SaaS companies can keep their customer acquisition costs under control - inbound marketing tactics, low-touch sales models, etc. - but sales and marketing is still going to be a substantial expense. (See "Customer Acquisition Spending: Lessons from Workday")
It takes a lot of work and money to build visibility and credibility, generate leads, nurture leads into qualified opportunities, convert them into paying customers, and then retain and up-sell those customers.
That's an effort and an expense that hasn't changed for SaaS companies.