We are well into a major shift in how software is consumed. This necessitates changes to how software is developed and sold. Customers used to spend millions of dollars to buy a solution, and millions more to implement it. Vendors recognized most of that money before the customer had a chance to ever use the solution, and then had little to worry about because of the huge switching costs of large sunk capital.
Today, such switching costs are gone. Customers aren’t buying software to own and they aren’t writing a big check to close the sale. Instead, they are buying subscriptions to use a service and paying monthly, annually, or for every transaction. When they are subscribing to a service, switching to a different vendor is only a few mouse clicks away.
And when the customer doesn’t renew, the cash flow stops. Sustainable growth is dependent on ensuring your customers are being successful in what they set out to do. Consequently, these changes have far reaching implications for product development, marketing, pricing and sales.
There are several steps companies can take to prepare for success in this new world for enterprise software:
- Develop right product: Your solution needs to address high value and high priority needs for your users. It should be packaged and licensed in a way that facilitates adoption. Companies often address the need for SaaS solution by recasting existing technology to deliver it via the cloud. SAP went down this road with its SAP ByDesign product line and failed.
- Acquire the right customer: Overcome the temptation to pursue every deal and focus on customers who are best suited to derive value from your solution. Sales teams offer large discounts sell as many licenses as possible, because their incentives and compensation is structured to drive such behavior. This often leads to dis-satisfied users and poor adoption.
- Drive adoption: If you have put the right solution in the hands of the appropriate customer, getting them to use it should not be a challenge. And because of the fit, customers will likely have a great experience and be more successful.
- Stay engaged: Staying engaged involves proactively addressing potential customer service issues, etc… Follow up with them, discuss the results from using your product, and why they bought from you.
- Expand your footprint: If you create a great customer experience that delivers continuous value to users, early adopters become advocates for driving further usage across their teams and the organization. As users’ needs mature and evolve, expansion will come from adding new functionality. Nirvanix, a highly touted storage as a service vendor failed because they could never evolve beyond offering basic storage as a service and lost out to Amazon
- Renew: This step is the moment of truth in a SaaS business. It’s the validation of everything you have done so far. If you have done enough to show value and make your customers successful, they will continue to want to use your solution and renew.
- Make them evangelists: Customers that realize value from your solution and succeed in achieving their objectives become your success stories. If you have serviced them well, they will become advocates for your solution.
How are you driving customer success?
Ashwin Somakumar 