Advice on Exposing the Roadmap: Relax

I advise companies marketing and selling SaaS solutions to enterprises that they need to disclose their roadmap to prospective customers. Remember this fundamental precept of SaaS marketing: You're selling a promise, not a product. You need to earn the prospect's confidence that you'll deliver valuable enhancements over the life of the subscription.

Of course, even in the on-premise world, vendors typically need to show their product direction as well. It's doubly important with SaaS solutions.

An analogy from the publishing world illustrates the differences. An on-premise application is like a book. Whatever words and pictures are bound between the covers as you walk out of Borders or open the package from Amazon is what you've bought.

A SaaS solution, by contrast, is more like a magazine or newspaper subscription. As a customer, you're not exactly sure what stories will be covered next week or next month, but you're paying for the publication based on the expectation that it will provide you with valuable content over the life of your subscription.

Any lessons that we can borrow from the publishing world that can help us?

Some publications prepare an editorial calendar. They identify the general areas they'll be covering over the coming year. They usually don't provide much detail - a paragraph or two - but enough to convey where they'll be focusing their editorial resources. SaaS vendors can do something similar. Show the prospective customer the general direction of your solution, and given them a sense of where you're applying your development resources. There's no need to provide many details, especially as you get further out on the calendar. In fact, in an agile development environment, you're not likely to have many details far in advance in any case.

A second idea borrowed from publishers is to show your back issues. Let the prospective customer see that you have a history of delivering valuable content quarter after quarter. Show the timeline of product enhancements over the last few years. Establish a pattern.

One final thought on this topic for now. Don't obsess over the potential hazards of disclosing your future plans. Some of that deeply-seated caution is a remnant of the on-premise world. When companies introduce products every 18 months, if you could bring out a differentiating new feature, you could truly steal a march on your competitors. In the SaaS world, competitors should be able to respond much more quickly.

Moreover, the whole notion of springing a surprise usually doesn't sit well with your large enterprise customers. Think about it. Before the latest enhancements get rolled out to hundreds or thousands of people in their organization, the folks who are responsible need to carefully understand it and prepare for it. They'll expect advance notice, not a surprise.

For people like me who have spent lots of time in the traditional on-premise world before the SaaS world existed, I understand that this reticence about disclosure is a tough habit to break. NDAs and embargoes were all standard fare. Of course, in some cases they're still required. But it might be better to leave much of that behind.

The "War of the Words:" SaaS, Paas, Cloud, etc.

One sure sign of an emerging technology and market is the proliferation of monikers and acronyms to label it. And the truly promising markets are even further blessed with a "war of the words," a controversy over competing labels.

By this standard, the markets you and I follow are indeed promising. Though "grid computing" and "utility computing" have been cast aside, and "hosting" and "ASP" have been more clearly defined, there's still an active debate over the proper use of "software-as-a-service," "cloud services," "cloud applications," "platform-as-a-service," and other labels.

Lots of smart people have weighed in with well-considered arguments in favor of one label or another. I'd recommend, among others, Jeff Kaplan's thoughts on this at THINKstrategies. No need for me to jump in with yet another entry.

But I will note that the label the industry does finally settle on, and the debate itself, does have an impact on what we do in marketing.

For one thing, never underestimate the power of a label. Government officials knew exactly what they were doing when they dropped the term "bailout" when referring to the $750 billion rescue plan for banks, preferring the label "recovery plan" instead.

With that in mind, I like the imagery of the "cloud," and envision cumulonimbus clip art formations emerging on Powerpoint decks everywhere. But clouds don't exactly convey stability and reliability. Winning the confidence of the CIO may get a bit more difficult when you explain that the applications vital to running their business are "running in the cloud." They're looking for "hardened data centers," not vaporous masses that blow away or evaporate.

A second issue is the name game debate itself. Anytime there's confusion or a lack of standards, marketing needs to work that much harder. Besides the name we use to describe our offerings, we're still lacking standards around pricing, contract terms and conditions, enhancement procedures, and any other number of other vital elements. Explaining and negotiating each of these issues with the prospective buyer extends the marketing and selling process.

We'll make it through this. But in the words of Bette Davis in "All About Eve," "Fasten your seat belts. It's going to be a bumpy night!"

Digesting the Pig in the Python

I suggested in my last post that to cope with the accelerated product enhancement schedule for SaaS solutions, marketers should distinguish between those enhancements that deserve first class treatment and those deserving only coach or baggage class treatment.

If I had enabled the audio feedback function of my blog, I suppose I may have heard derisive remarks along the lines of, "Very clever, but what if I really do need to manage a significant enhancement? And what if I have 3 or 4 or 5 in a row? What then?"

Actually, this situation is common early in a product's life. You introduce big chunks of functionality, one right after another in short order, as you put your basic product into the market. This is aptly labeled, the "pig in the python" phenomenon.

Dealing with this phenomenon requires a well-ordered and repeatable product enhancement introduction process. You'll need to develop a standard checklist of activities, a consistent set of messages, and assigned roles for all the marketing support functions: PR, web managers, event coordinators, etc.

I won't guarantee that you won't suffer some heartburn, but if you establish and follow the process, you will finally digest the pig.

All Product Enhancements Needn't Travel First Class

I promised in my last post to offer suggestions to the beleaguered product marketer on how to survive "the wheel of death," that is the accelerated product release schedule for SaaS solutions.

One suggestion is to be aware that all product enhancements are not equally important. They don't all deserve first class treatment: press announcement, analyst briefings, emails to all customers, and a company party with balloons, tchotchkes, and a large sheet cake.

Some enhancements can go coach. Others, in fact, can go in the baggage hold. Minor product updates may only warrant a notice on the splash screen or, for true ignominy, a posting to the technical notes section of your user community website.

Keep in mind that there are only so many opportunities to ride in first class. Save them for the really important journeys.

Product Updates and Surviving the Wheel of Death

One of the advantages of the SaaS model is that it allows vendors to respond more quickly to customer requirements, competitors, or other demands to update the application. A great example of this, one of this blog's readers remarked that the SaaS model is the only way for them to keep their application for managing Medicaid/Medicare billing up-to-date with the ever-changing rules and regulations in that market.

But pity the poor product marketing manager who needs to keep up with these on-going product updates. New presentations, new collateral, new web site copy, new press announcements, maybe even new tee-shirts every few weeks! When I was managing this process at a large SaaS provider, introducing enhancements every quarter, I used to think of one of those wheels that people put into the cage to let their gerbils exercise. Once it starts moving, the gerbil needs to run to keep up, which makes the wheel move faster, which means the gerbil needs to run faster, etc.

I recently saw Cirque de Soleil's KOOZA, which features one act with a giant version of this gerbil exercise wheel, appropriately named, "The Wheel of Death." One impossibly fit acrobat on the inside of the wheel runs, causing it to spin, while another, also impossibly fit, is on the outside of the wheel, somehow amazingly staying staying on top of the wheel... at least for awhile.

More than the relatively tame gerbil wheel, this "wheel of death" even better describes product marketing in the SaaS world. Think of the development team inside the wheel, spinning it faster and faster, while the imperiled product marketing team frantically sprints on the outside of the wheel, desperately trying to keep up. You might want to play the KOOZA video clip next time someone asks what product marketing's been up to.

I promise I'll post a few ideas on how product marketing can survive this "wheel of death," but right now I'm exhausted just thinking about it.

Will SaaS Solutions do Better in a Tough Economy?

In this tough economy, I'm sorry that I can't point to any bright islands of refuge in the technology market. However the outlook for SaaS applications may be a bit less gloomy than for technology in general. That may be true in particular for applications that can have an immediate impact boosting revenue, cutting costs, or lowering risk.

(Jeff Kaplan at THINKstrategies, Phillipe Botteri of Bessemer Venture Partners and others have offered their insights on the impact of the economy on SaaS.)

SaaS solutions do offer the advantages of a quick ramp-up and, presumably, a faster return on the investment. In some instances, SaaS solutions also offer the flexibility of no long term commitment and an ability to quickly bailout if needed.

Marketers should tune their value proposition to highlight these advantages. Focus on the rapid deployment benefits and the short term impact on revenues and costs. Quantify these benefits if possible, putting them in terms that a CFO can support. "Nice to have" projects or those with "soft returns" are a non-starter these days.

Marketers should also talk about the benefits of no long-term lock-in if they're not getting value from the application. I've talked elsewhere about showing prospective customers the "escape chute." Of course, this means that you'll need to work that much harder to keep these customers once they do come on board.

If Customers Don't Use It, They Won't be Happy to Pay for It

In the on-premise application world, when customers bought , but didn't use the software, it didn't much matter to the vendor. In fact, there was an apt name for that stuff - "shelfware."

In the SaaS world, it matters a lot. If customers aren't using the application, they're not likely to be happy about paying for it. And the chances of renewal... slim to none.

This " buy and do nothing" behavior throws sand in the whole SaaS business model. For many vendors, success depends on the notion that the upfront costs of acquiring and provisioning a new customer will be recovered over time. If there's not enough time, there's a problem.

Marketing can help here. Get the solution off the "shelf" and into production. For example, they might educate customers on the best practices for introducing a new application into their organization, preparing material and sample documents that guide users on the value and use of the new solution. "Getting started" tutorials serve the same purpose: help new customers broadly deploy the solution and realize its value.

This kind of marketing activity is part of the overall requirement for success in the SaaS environment. Marketing to your existing customers is just as important as marketing to prospective customers.

The Value Proposition Goes Beyond Product Features

I've talked about marketing the full value of the customer experience with your SaaS application. The value isn't limited strictly to the feature set, narrowly defined.

I was reminded of this last week when I submitted a rebate claim to Apple on a new printer. Unlike the usual runaround - forms, coupons, bar codes, etc. followed by an 8-week wait - Apple asked for two pieces of information, clearly identified on my receipt. The entire process was easy, straightforward and entirely consistent with the entire Apple and Mac experience. I'm delighted to report that my rebate check arrived yesterday.

I don't know if Apple actively promotes this easy rebate capability, but the experience certainly reinforces their brand and builds loyalty. They clearly see it as part of the overall value proposition, along with the solid operating system, elegant user interface, and other features.

Similarly, SaaS providers selling to enterprises should look to promote these "non-product" elements of the solution: rapid deployment, no-hassle rebates, or whatever else enhances the overall customer experience.

A Marketing Response to the Fear of an Outage

Jeff Kaplan at THINKstrategies commented on the recent outage at Salesforce.com and its potential impact on the SaaS market. "Will Salesforce.com's Outage Derail the SaaS Market?" It presents particular challenges for SaaS application marketing and sales people.

An outage and disruption of service is never a good thing, but it’s a problem that’s hardly unique to SaaS applications. On-premise applications go down too. As a CIO friend of mine once explained, “When my phone rings, it’s usually bad news. No one ever calls to thank me that their email is up and running!”

SaaS application marketers can’t promise 100% uptime. But to gain the confidence of CIOs they might consider showing the uptime stats for their application and inviting those CIOs to compare them to the uptime of their on-premise applications. Realistic CIOs will understand the value of the comparison and should appreciate the candor.

Is "Try & Buy" a Good Idea?

“Try & buy” has been widely used as a marketing technique for SaaS applications, especially consumer applications. The customer signs up for a free trial of some limited duration, gains some experience with the solution, and, if satisfied, subscribes once the trial period expires. Is this technique appropriate for enterprise applications?

It might be, but companies should think through a couple of issues beforehand.

For one, in many cases the concerns of enterprise buyers extend well beyond price. They’re just as concerned about issues such as performance, security, integration, etc. That’s not to say that large companies - with professional procurement departments - won’t negotiate aggressively on price, but that other equally important concerns will factor into the process of purchasing a critical application for enterprise-wide deployment.

Enterprise buyers may, in fact, be more interested in the “trial” portion, than the “free” bit. They may want that ability to pilot the application in a “sandbox,” configuring and testing it before deploying it widely.

A second issue to consider is whether the “try & buy” model fits your business model. ”Try & buy” is really part of the broader issue of the cost of customer acquisition. Can you recover the cost of the acquiring a new customer over the life of the customer’s subscription? If acquiring a customer through “try & buy” or whatever other customer acquisition programs you use cost $1000 and the customer can be expected to yield $10,000 over the life of the subscription, it may make sense. If the total subscription value is $800, you’ll probably want to rethink your customer acquisition programs.

The Unique Challenges of Marketing SaaS Solutions

As executives at many companies are quickly learning, marketing and selling SaaS solutions to enterprises presents certain challenges that differ from their approach with traditional on-premise solutions. The techniques may be similar - search, pay-per-click, webinars, shows, email, etc. - but there are fundamental strategic differences:

• It’s about more than features: Marketing and Sales need to promote the entire customer experience, not just the product features. Speed of deployment, ease of purchase, access to support and other benefits not strictly part of the “feature set” are just as important to the purchase decision.
• You’re selling a promise, not just a product: Customers are buying into a stream of deliverables, not a fixed set of capabilities. Marketing and Sales need the prospective customer’s confidence and trust in your ability to deliver over the course of the entire subscription.
• The target market includes existing customers, not just prospects. Market to the existing customers to take advantage of new features delivered over the life of the subscription. If they’re satisfied, they’re more likely to renew.
• Pay attention to customer acquisition costs: The costs to acquire and maintain customers must be carefully tracked and sales and marketing programs optimized to fit your business model.
• Win over the CIO: For any enterprise application to be widely deployed, the CIO will almost always be involved in the decision-making process. Work to gain their confidence and support. Don’t assume they’re all comfortable with the SaaS model.
• Build an agile marketing machine: In most cases, you’ll be delivering product updates much more frequently - perhaps, once a quarter - than you did in the traditional on-premise world, where major updates every 2 years might be more common. Adjust the marketing practices accordingly.

Companies that can make these adjustments will be in a position to benefit from the increasing adoption of SaaS solutions across a broad range of applications and enterprises. Those that don’t adopt a “SaaS marketing mentality” and simple port over their traditional on-premises practices will likely struggle.

Show Prospective Customers the Escape Chute

I fly often enough that I can lip sync the emergency instructions along with the flight attendant, but I still dutifully follow the instructions and look around to locate the exit nearest to me. (”Remember, it may be behind you.”) Though I’d hope never to use it, I do get a sense of reassurance that it’s there.

Prospective SaaS application customers often need that same reassurance. Yes, they expect that they’ll love your application, will gain incalculably valuable benefits from it, and have no plans to ever leave, but just in case….

Enterprise customers for your SaaS application may decide to leave for any number of reasons. After a time, they may determine, for example that the application is too sensitive to be off-premise, it requires extensive customization, or it needs to be more tightly integrated with other systems. A retailer, for example, may decide that their e-commerce application is simply too central to the core of their business to be supported via a SaaS application.

During the evaluation process, in fact, prospective buyers typically won’t know which of these reasons, or others, might be a factor down the road. But they do know enough that they should prepare for whatever may come up that would cause them to want to leave the SaaS application.

To reassure these prospects, Marketing and Sales needs to address these concerns during the selling process. Show them the escape chutes. Talk about the “red lights leading to white lights.” Do the hand gestures pointing to the exits.

That is, you should promote the “exits” from your SaaS application. Talk about customers’ retaining ownership of their own data. Point out your policy related to returning data to the customer. (If you don’t have such a policy, that’s a separate discussion.) Market whatever other policies, practices, and features that would make it easy for the customer to walk away.

Yes, I recognize there’s something counter-intuitive here. You could even say it’s downright unnatural for marketing and sales professionals to talk about how easy it is for customers to leave. But think like an enterprise buyer, especially someone new to SaaS applications. Of course, they expect that all will go well, but just in case…. Show them the escape chute and give them the reassurance they need.