From a business model perspective, the evolution of enterprise software towards Software as a Service (SaaS) has definitely happened - and moved from niche status to mainstream popularity. But after reinventing themselves, software vendors now have to address new business challenges with critical organisational changes. The most successful SaaS have understood these challenges and tackled internal transformation - while the others are condemned to a slow death. Which one are you?
1/ Good software is getting harder and harder to hide from employees...
For years, the enterprise sales process had essentially been a game of hunters: a top-down selling approach, based on sales rep personal relationships to C-level decision makers (CIOs, VPs, or other executives), who were buying thousand, and sometimes million dollars software licences for their organizations. Decisions were made at the top and employees had no control over the software they used on a day-to-day basis. Newly-bought softwares were mandatory, and its users bound to new processes.
Over the past two decades, however, employees have become more familiar with online solutions - both at work and at home - hence starting to build their own expectations and demands. Consequently shifting the decision-making power from top management to employees. This bottom-up approach is both fueled and enabled by new product-led business models centered around free trials or freemium models built by SaaS companies as optimum acquisition (and promotion) channels delivering value to thousands prospective users.
That way, employees can easily test solutions and promote products that fit their needs and likings instead of wasting time with crappy processes and bad interfaces. Ultimately, as adoption grows from team to team and more champions start using the software within an organization, vendors come in and attempt to upsell the organization on an enterprise deal...
2/ SaaS subscription model: the cost of convenience
“In the SaaS world, that initial win is just the beginning of your journey with the customer. Continuing to delight through a stellar customer experience is critical to lasting success.” Yamini Rangan, Chief Customer Officer, HubSpot.
Because they are no longer bound to a proprietary solution the subscription and pay-as-you-go models hold a strong appeal to companies. Without the need to drop expensive licences investments paid upfront, the cost of switching solution providers has significantly decreased. Thus creating a real jungle-like competitive environment for BtoB SaaS, in which customer captivity strategies are inadequate if not driven by the product’s ability to deliver real, instant, and lasting value.
In addition, the cost of acquisition has become so high that it is cheaper to retain or upsell an existing customer than to acquire new ones. And with a Gartner estimate of 80% of future revenues coming from 20% of existing customers - it is definitely time to start investing into that relationship!
As of today - pushed by the delivery model, employee demands, lowered switching costs and increased cost of acquisition - the main challenge for SaaS vendors has become retention and customer loyalty.
3/ Grow your own garden
The most successful SaaS companies have reorganised their sales, support, and sometimes marketing and product teams, around customer success as to create more customer centricity and teams’ proactivity.
Most customer success departments now include account management and support teams. They should follow the customer journey from its onboarding to conversion and paying, renewal or up-sell.
“At HubSpot, we created what we call the Flywheel Team. It represents our entire motion of attracting, engaging, and delighting customers; and the Flywheel Team covers the entire customer experience.” Yamini Rangan, Chief Customer Officer, HubSpot.
The old heroes of the distribution of software were the hunters, the new ones are the farmers.
Who are the farmers? The product-led teams. The farmers mission? Create a personalized experience for each individual customer.
Problems should be proactively addressed and satisfaction constantly monitored. Farming revenue is a process and a state of mind, aiming for the long run, but necessitating daily care and a good dose of fertilizer: the insights pulled-out of your customers' behaviour in your product.
And that’s the “raison d’être” behind Salesmachine: analyzing behaviour to score customers' health and satisfaction in real-time as to identifying those who need attention at the right time.
In a word, giving the farmers (your product-led teams) the right insights and tools to fulfill their mission, and eventually harvest customers revenue and happiness.