Benchmarks: Don't Hide This SaaS Benefit

A company may have lots of ways to know what’s going on inside their organization.  But it’s more

difficult to know what’s going on outside.  How are they doing relative to other companies.  What are others doing that they can learn from?  What mistakes are others making that they can avoid? 

During the height of the Covid-19 crisis, one of my clients asked a few dozen customers what they were doing to adjust to the new business conditions.  Besides helping some struggling customers and providing reassurance, it also let them gather a few useful insights.

Then they shared those insights, anonymously of course, with the rest of their customers.  It was sent to that large audience under the subject line: “Here’s what your peers are doing to manage through the crisis.”

Customers responded well. The advice was helpful, timely, and gave a window into what their peers were up to.

Understanding your customers is something SaaS companies can do especially well

Lots of software-as-a-service (SaaS) companies should be able to easily gather and share information like that.

In fact, they don’t even need to talk to their customers.  Because they’re hosting the data in the cloud, they can see the vital information themselves.

A SaaS HR systems vendor, for example, can find in the system useful information on sick days, turnover, or time-to-fill open positions. 

A CRM vendor can see the ratio of opportunities per lead and the average length of the sales cycle.  An ERP vendor can see average inventory levels or key financial metrics.

Vendors that sell into verticals can share industry-specific information.  A vendor that hosts a solution for car dealers, for example, can see the average sales per month, the value of extras sold with each vehicle, and the average time a vehicle stays on the lot.

Benchmarks are useful

Of course, SaaS vendors need to be very careful to share only aggregate data.  They can’t be in the business of sharing private data of individual customers.

But with proper protections, they can regularly collect and share helpful benchmark information that allow companies to compare themselves to their peers.

That information is valuable.  HR managers, marketing professionals, sales executives, supply chain managers, etc. all want to know how they stack up.

Are you forgetting the “service” part of SaaS?

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Ok, let me remind us all of the blatantly obvious: “SaaS” stands for “software-as-service.”   Yup, “service” is right there in the name.

But looking at the way most SaaS solutions are marketed, too often it’s all about the “software”, and

not much about the “service.”

On website, in videos, during customer presentations, and in every other piece of marketing communication, it’s all about the software.  “Look at this feature, look at that feature, look at another feature.”

All this hyping of features reminds me of how we used to market traditional licensed application packages.  That made sense when we were essentially selling a disc full of software.

The buyer expects service with their software

But that’s not what SaaS is, and it’s not what the SaaS buyer expects.

They’re paying a regular subscription fee for access to the software features… and a whole lot more.

They’re expecting help with implementation.  They need to get up & running with the solution.  (See “Your SaaS buyers could be afraid to buy.”)

They’re looking for help with training.  That might include training for administrators and for others in the organization that will be using the solution.

And they’re looking for support.  When they get stuck and run into a problem, they expect that someone from the vendor will help.

Beyond that, a SaaS vendor should actually be providing expert guidance on how customers can get the most from the solution.  They can share tips, best practices, benchmarks, and other help.

So, if this is what SaaS buyers are expecting, this is what SaaS marketing should be promoting.  Talk about your expert guidance and your implementation, training, support services.

Follow the software-as-a-service label: Market your services, not just your features.

Winning new SaaS customers may be easier than keeping them

I talk with a lot of new customers about how and why they bought a software-as-a-service (SaaS) solution. Here are the kinds of things I hear:

• “We didn’t spend a lot of time with the free trial.  We just subscribed.”

• “With such a low monthly cost and no long-term commitment, we figured if we didn’t like the product, we’d just drop it.”

• “We didn’t spend weeks looking at demos and trials; we just bought it.  Once we used the solution for a couple of months, we figured we’d know whether we wanted to keep paying for it.”

It’s not that these companies didn’t evaluate the SaaS solution seriously.  In fact, often they were considering it to manage a critical part of their business.

But they didn’t want to spend time looking at slick demos or inputting lots of data into a free trial - data that they’d lose when the trial expired.

Just do it

They took a different approach:  Just buy it and try it.

After all, subscription pricing is one of the great advantages of SaaS solutions over traditional on-premises software.  Monthly fees are much lower than up-front license costs, deployment expenses are lower, and often there’s no long-term commitment.

For customers, it’s just easier to evaluate and buy SaaS solutions.

That’s good news for SaaS solution vendors, too.

Solutions that are easier for customers to buy are also easier for vendors to sell.  Converting prospective customers from “opportunities” into “paying customers” is faster and simpler.

But there’s a catch

But it’s not all good news for vendors.

For most SaaS companies, they need a customer to stay for at least several months, even 2-3 years, to recover the cost of acquiring that customer.  If the customer leaves too early, the vendor will actually lose money, not make money.   (See “Acquiring Customers Ain’t Cheap.”)

For the SaaS sales and marketing team, this means even when they’ve brought in a new customer win, their work’s not done.

Now they need to convert those new customers into committed users.  Success requires more than converting prospects into paying customers.  It also means converting new customers into long-term customers.

Their responsibilities now include helping with on-boarding, training, expert guidance, or whatever else it takes to convert a new buyer into a committed user.

To fill that role, I’ve seen marketing teams add all kinds of “post-sales” activities to their programs:

• Host webinars for existing customers to pass along advice on using the solution more effectively  

• Publish customer success stories that share best practices

• Support online forums where customers can share ideas with their peers

• Communicate with customers on new features that they should be taking advantage of

• Establish a “VP of Customer Success” role with responsibility for keeping existing customers happy.

(For more thoughts on effective on-boarding, see “Get SaaS customers off to a healthy start.”)

Another step in the customer acquisition process

I know this isn't the best news for sales and marketing folks - adding more work to the customer acquisition process.  As it it wasn’t tough enough already to build visibility, capture leads, convert them into qualified opportunities, and finally into paying customers.

Now you need another step: retaining new users.

Sorry, but that’s the cost of SaaS.  It may be easier to win new customers, but it’s tougher to keep them.

Don’t talk techie to SaaS buyers

No matter how wonderful your proprietary algorithms, the priceless virtues of your state-of-the-art

platform, or the brilliance of whatever other sophisticated technologies you’ve got under the hood of your software-as-a service (SaaS) solution, here’s an unpleasant truth:  Lots of your customers don’t really care.
 

Most of your them only want to know what your solution does, not how it works.

In fact, sometimes all that techie talk just goes right over their heads.  They're experts in whatever field they're in, but they don’t necessarily have a technical background. 


Limited IT input

After all, one of the key attractions of SaaS is that it usually requires no technical background.  The buyer isn't responsible for on-premises hosting, deployment, on-going maintenance, or periodic upgrades, so the folks in IT with a technical background play only a limited role in evaluating solutions.

When IT does have a role in evaluating SaaS solutions, it’s usually in a secondary, review capacity, not in the lead.  They need to ensure that the solution adheres to certain standards for security, reliability, and performance, and that it can be integrated with other applications.

And if those issues are likely to come up at some point in the purchase process, you’ll certainly need some marketing material that addresses them.

But that kind of technical detail usually won’t have much impact on the people who take the lead in the evaluation and purchase process.  These folks typically have responsibility for a particular business function:

• It’s a sales manager that needs to manage deals in the pipeline
• It's a recruiter that needs to track applicants
• It's an accounts payable manager that needs to process invoices, and so on.

Speak in the decision-makers' language

Don’t talk techie to your buyers.  Instead, you need to talk to them in the language of a sales manager, a recruiter, or an AP manager.  (See "Your customer has a day job.")

If they’re in a particular industry, you need to speak the language of their industry.  Hospital administrators talk about patients, real estate managers talk about properties, and commercial bankers talk about borrowers.

You need to show that you understand the unique needs of their particular industry.  They’re the ones buying and using your solution.

Talking techie to them is a waste of time.  In fact, it may get you routed to IT, a place you don’t want to be.  An executive selling SaaS solutions to healthcare companies told me recently that when their sales people get passed to IT, he knows the opportunity is heading toward a dead-end.

Focus on business goals

Instead of hearing about your super fantastic technology, the people buying your solution want to hear about how you can help them reach their business goals.  What can it do to:

• Boost revenues
• Cut costs
• Satisfy customers
• Retain employees
• Or attain other business goals.  

Of course, your technology is behind all of that.  It’s what makes your solution go.

But the primary evaluators and decision-makers don’t always need to look under the hood.  Talk to them about what your solution does, not how it works.

Your prospects have a day job

Just because you may be spending all your time trying to market and sell your solution, doesn’t mean your prospective customer is spending all their time evaluating it.

These prospects have other things do to.  In most cases, the person looking at your software-as-a-service (SaaS) solution isn’t assigned full time to evaluate and buy new software for the business.

Instead, they're accountants working in Finance, recruiters working in HR, or sales managers trying to hit their quota.

Or if you sell into a particular vertical market, they might be property managers dealing with tenants, consultants working with clients, or dentists treating patients.

Evaluation is an on-again, off-again process

Rarely do they have days or weeks to pore over every feature and function.  And their research is often interrupted, so they can only focus intermittently.  One minute they’re carefully considering your solution, and the next minute there’s something more pressing that’s grabbed their attention.

Even when they sign up for a free trial, most prospects will only spend a couple of hours actually trying out the product.

It's not that they don't care.  They know the solution may be critical to their business and that making a bad choice will be painful.  The problem is that they simply don't have a lot of uninterrupted time to do a thorough evaluation and make a purchase.

With so little time, in fact, they often end up doing nothing.  When I talk to “lost prospects,” many of them aren’t really “lost” at all.  They’re just “on hold” and haven’t made any decision at all yet.

I’ve learned a few lessons on how marketers can reach busy prospects like these.

Stay in front of prospects over a long period

Because your prospects can only focus on your solution in a bit of time here and a bit of time there - and you’re not really sure when exactly when that bit of time will be - you need to stay in front of them over a long period.  When they’re ready to refocus on finding a solution, you want them to remember you.

By the way, when I talk about staying in front of your prospects, I’m not saying deluge them with spam.  Educational material on best practices or industry trends will usually make a better impression than a stream of promotions.  And of course, offer an easy way to opt out.  (See "Content:  More isn’t always better.")

Provide a clear path for them to take the next step  

In your communications, make it easy for the prospect to signal that they’re ready to take the next step.  Provide a form, put up a “Chat Now” box, or post a toll-free phone number.  Lead scoring and other techniques can help you know when prospects are ready, but sometimes they’ll just tell you themselves.

Do it cost-effectively

To make this “stay in front of them for a long time” approach work, you need to keep your costs under control.  SaaS companies need to pay close attention to the cost of acquiring customers.  Staying in contact via email, newsletters, and webinars might be more cost-effective than other means. 

Save the more expensive outbound calls for prospects who have already signaled that they’re ready to talk directly with someone.
 
Be ready when they’re ready

When prospects do signal that they’re ready to talk about a purchase, make sure you’re ready too. If you drop the ball here and ignore prospects that are eager for attention, that’s frustrating for them and lost sales opportunities for you.

Someone should be available to quickly answer their email, pick up the phone, or respond to the “Tell me more” form.  The window of opportunity is open for only a short while.  (See "SaaS buyers are quick to buy.") 

Selling solutions to busy people is a challenge, and for most SaaS solutions, you’re always selling to busy people.  I’ve found, in fact, that when a prospect does have lots of time on their hands, they’re usually not very a good prospect.

Where Up-Selling Goes Wrong

Up-selling can be a very good thing for software-as-a-service (SaaS) companies. It’s a winner on two counts:

1. It boosts revenue per customer
2. It usually lowers the cost of customer acquisition. 

According to one critical SaaS metric - Customer Lifetime Value/Cost of Customer Acquisition - up-selling is a formula for success.

But selling to existing customers isn’t always easy and there are few ways it could go wrong.

Unhappy customers

Before you can sell new services to an existing customer, they need to be happy with the old services.  That sounds obvious, but it’s easy to see how companies can get it wrong. 

Imagine a sales team that’s not connected to the support team.  In that instance, the sales person may have no idea that a customer is in the midst of a long unresolved support issue.  When the sales person calls on that account to sell add-on services, that might not go so well.

Bad timing 

Sometimes the up-sell effort is simply mistimed.  There's both a good time and a bad time to try sell new services.

I purchase services from one particular SaaS company that insists on pitching me new services every time I call in to their support people about a problem I'm having with their service.  I’ve just called with a complaint, and you want me to buy more stuff?!  Not right now, thank you.

Hidden cost

Customers don’t react well when the additional service you’re offering really ought to be part of the standard subscription fee.  If it's something that’s fundamentally necessary to make the solution function effectively, the customer rightly expects it to be included... not an add-on that they need to pay extra for.

I’ve even seen SaaS companies that charge extra for an add-on service... and then require the customer to buy it. That doesn't sound like the way you want to treat new customers.

Wrong offer

Offering to provide an add-on service to an existing customer is usually most effective if it’s targeted to their particular needs.  If the add-on is best-suited to your larger customers, for example, focus the up-sell effort on your larger customers.  Offer something else to your smaller customers.

This is one of the advantages of offering a SaaS solution.  You actually do know quite a bit about your customers and how they use the solution.   You should be able to target precisely those that might be most interested in particular add-on services.

In fact, trying to up-sell everything to everyone can backfire on you.  When you present them services that aren't appropriate for them, your customers get the impression that you really don’t know much about them.  That's not good for a long-term relationship.

SaaS Marketing is About Promises, Not Products

If you’re a software-as-a-service (SaaS) marketer and you think you’re marketing a product, think again.

What you’re really marketing are promises.  You’re promising to customers that you’ll deliver value over the life of the subscription. 

Though part of that value includes making available a certain set of functionality on day one - features to track a sales pipeline, manage inventory, handle HR, etc. - it goes way beyond that. 

You are also promising that you’ll deliver:

• Hassle-free deployment
• Reliable performance and instant access
• Security for the customer’s data
• Expert customer support
• An ongoing stream of enhancements

Earning trust means more than showing features

That’s a lot of promises, and marketing them requires that you win the prospective customer’s trust.  They need to believe that you'll make good on them.  There's a lot more to it than just showing that the features work.

You need to show customers that you’re committed to a long term relationship… something that extends beyond a one-time transaction.

You need to show them other customers that you’ve kept satisfied over a long period. 

You need to show proof of reliability and security, and a track record of enhancements.   

In short,  you need to show them you’re a company they can trust.

There are several critical differences between marketing SaaS and traditional on-premises software:  different buyers, different messages, and different processes.  Marketing SaaS requires a different strategy, something fit for selling promises, not just a product. 

Turning SaaS Buyers into Satisfied Users

If you subscribe to a software-as-a-service (SaaS) solution, in most cases you can quit whenever you want.*

That's great for SaaS customers, but not so great for SaaS providers.

It puts a special burden on providers:  They need to be sure that the folks buying their solution are actually using their solution.

If buyers don't become satisfied users, they'll eventually leave.  The result: attrition, slower growth, higher customer acquisition costs, and other bad things.  (See "SaaS Renewals and the Multiplier Effect").

In this short video, produced with the good folks at Openview Labs, I talk through 3 ways that SaaS providers can turn buyers into users. 





*We'll talk about long-term contracts some other time.


 


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

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.





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

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.





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

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."

Huh?

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.




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

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.



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

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.

Speak"humanese"

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.

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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.