How to make Money from SaaS #3

 This is the final installment on my series, "how to make money from SaaS". (Links to Part 1 and part 2 , this series also carried on Cloudave.com)

 

Step 7 Think about your channel model

How are you actually going to sell your service to end customers is something you need to think long and hard about. A lot of it will depend on what service you have and who you are actually targetting.

There are several models going at the moment, all with merit, all with one thing in common. You are going to spend loads on sales and marketing (if you didn't click through to, check out this graph from McKinsey's on my original post)

There are ways around this, all classic marketing… well actually not classic but well known marketing principles. Things like;

  • Know your customer inside out
  • Know who you won't sell too (just as important, avoid elephant hunting if it's not right for you)
  • Using the Internet, get some viral marketing going.
  • Think about how your service can help another company out. Think about leveraging their marketing spend to your benefit, here is a good example

In terms of actual sales channel, the way I see it they aren't any different from traditional channels.

  1. Be an Internet company – have a really really slick website that gives customers everything they need. Do all the right things in terms of online advertising, customer referrals, social media etc. I would also strongly emphasise giving free trials as a proof point in the sale
  2. Be a face to face sales company – get leads (somehow) but send in the sales guys to close the sale.
  3. Have a channel – think Microsoft, build a brand and let others sell the product for you (and perhaps wrap services around it too)
  4. Some hybrid of each of these based on who the prospect or segment is (salesforce.com)

The key element here is getting the mix right for your product and understanding your costs and how new sales translate into profit. A good post from Phil Wainewright details one providers experience.

I would also say that you have got to understand sales remuneration models and the impact on the business you drive and the costs you are incurring.

Step 8 Know thy customer

You have to stay close to your customers in any business, but SaaS (supposedly) is much easier to swap out. To me that means involving customers in your product development and enhancements is vital. If you can make a tweak based on sound feedback and have it out in a day or a week, imagine how powerful that is. But to do that, you have to be listening and you have to have the ability to include such feedback into your build.

Step 9 Be open to all clouds

At a fundamental level it seems to me that one of the major irritations of on premesis software is its proprietary lock in. Why replicate that?

But it's much more than that. These 'clouds' have thousands or millions of potential clients, why exclude yourself? Actually take this openness one step further and aggregate, try to be a traffic hub. I believe that aggregation is power. The reason for this is that others who are later will use this aggregation power for their benefit, that means you entrench yourself in their value chain…and that means money.

Step 10 It's a never ending journey

This service you have is never complete, technology doesn't stop changing and neither do your customers requirements.

The technical stuff will come when it does, the marketing stuff is up to you. Things like

  • Think about other ways you can sell your service. Niche's that can be addressed if you change your proposition and tweak your offering.
  • Think about roles within your existing customers. Who else can you sell the too within clients who have made the leap
  • Think about your customers channels, can you federate up or down the channel. What does that mean to your

So, that's the end of this series. Hope you enjoyed it. Merry Christmas

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