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Are You Experienced? - Transforming SaaS Go to Market

For SaaS providers to win, they must show the goods to customers

Many ISVs are making dramatic shifts to become SaaS providers. This requires a shift in mindset from product to service and in organization from linear to circular. Once these shifts are under way, in order to succeed and stand out, ISVs we must now bridge their go-to-market strategy, objectives and tactics from Evaluation to Experience.

Today's customer has little patience for white papers, datasheets, detailed feature function product specs and the like. They may attend a webinar, but the next step is experience. Even for large organizations with complex buying behavior, the expectation of SaaS is an easy, accessible and meaningful experience of the service, either through demonstration instances, trial or freemium models.

In a post in November 2010 entitled, "Meet the New Enterprise Customer, He's a Lot Like the Old Enterprise Customer", Ben Horowitz of Andreesson Horowitz concluded:

"If you are selling to consumers or companies that behave like consumers, then moving away from the old channel models may make perfect sense. However, if you plan to sell to a large enterprise, keep in mind that the new boss is the same as the old boss."

And while Ben's point on having to manage a buying process is spot on, others have bandied about this blog as evidence that we should cling to the old enterprise sales and marketing model. This interpretation is just wrong. It ignores the fundamental shift from product to service.

Service organization knows this firsthand; services are evaluated via experience, not spec sheets, RFPs and lab evaluation. SaaS providers who replicate and cling to today's software Go-to-Market model are doomed to long sales cycles and missed opportunities.

One infrastructure ISV that launched their SaaS offering experienced this dramatically. Initially, they continued their sales and marketing model of stringent business and lead qualification before trial approval. For every 100 trial requests, they approved less than 10, with an average qualification period of two months. This stringent qualification gave them a close rate of about two in 100 trial requests, as 20% of trials closed.

When they experimented with a much loosened qualification, where ~30% of the 100 requests were granted in an average of two weeks, an amazing thing happened. Their conversion rate per 100 request shot up from two to six, an incredible result, meaning the "less qualified" leads that experienced the product actually converted at the same rate as the previous model. This means that for every 100 leads in the old model, they were throwing away four deals!!! Not only that, they shortened their sales cycle and are now leveraging their SaaS trials to sell their on-premise solutions as well.

The mindset and tactical shift from Evaluation to Experience marketing and selling can pay off like this in any market segment. However, to reap the full benefits and scale of a SaaS model, providers must take a long hard look at all pieces of the marketing mix, from pricing to channel to promotion and messaging, to competition and company organization.

Summary: Bridging to Success
This brings me full circle to our blueprint for success. In order to be a successful SaaS provider, organizations must not only build a great service, but they must bridge their:

  • Mindset from product to pervice
  • Organization from linear to circular
  • Go-to-market strategy and tactics from evaluation to experience.

With that, the bridge to SaaS success can generate revenues, share and valuation that meets and exceeds our most aggressive goals.

More Stories By Ken Rutsky

Ken Rutsky is a Product and Service Marketing Consultant, and has spent 20+ years in the industry, launching his first Internet services while at Netscape from 1995-99. Since then, he has been CMO at several start-ups and ran Network Security Marketing at McAfee. Ken launched McAfee's Secure Web Protection Service, and his time as a consultant has included the launch of Nimsoft's Nimsoft On Demand service. Today, he is laser-focused on helping ISVs and start-ups understand how to bridge from the world of products to SaaS Services with their mindset, organization and go-to-market tactics. Follow him on Twitter @jayrutz, on Linkedin at http://www.linkedin.com/in/kenrutsky, and on Facebook at http://www.facebook.com/home.php#!/pages/KJR-Associates/224894750772.

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