By Jim Naro, CustomerCentric Selling® Certified Business Partner & Paul Ressler, Cirrostratus Group
Software vendors transitioning from a license software model to a Software as a Service (SaaS) model have the opportunity for a more sustainable and predictable business model but face the potential for significant customer lifecycle missteps in the transition.
Current SaaS providers know that improvements in the customer lifecycle can have a substantial impact on their profitability. Selling to the right people and nurturing long-term relationships with these decision makers is a continuing challenge and is one of the keys to success. Ongoing efforts to achieve this in an effective, repeatable, and efficient manner will result in happy customers and a more profitable SaaS business.
Whether you are a current SaaS provider or are just converting here are some pitfalls in the customer lifecycle:
1. Successfully Selling to the Wrong People
A key attribute of a successful SaaS offering is how easy it is to sell and the resulting low customer acquisition costs. This is often done using self-directed online free trials and demonstrations.
The trial-and-demo approach, while easy and cost-effective, can lead to acquiring customers who aren’t really interested in the full value of your service. These types of customers will provide fewer up-selling and cross-selling opportunities, resulting in lower adoption rates of the full capabilities of your service, a much higher potential for unhappy customers and higher customer churn rates.
Limited involvement of your sales people with the customer during the trial-and-demo process may result in the real business needs never being uncovered. Consequently, the customer is left on his or her own to discover how your service addresses their needs. In this case you may very well have the right customer, but your sales people will be unable to capitalize on the future opportunities without the knowledge of the customers true needs.
Although an easy-to-setup demo and trial environment is a good thing, avoid the trap of skipping the key conversations about the potential customer’s business objectives and needs before starting a demo or trial.
2. Finding the Right Buyer
With a high number of people using your free trials, it may lead to a false hope of high conversion rates. Just because someone participated in a free trial doesn’t mean they have buying power or understands how to relate their strategic business initiatives with the value of your service. Your sales people still need to make sure they are dealing with the right business decision makers who are actually able to buy your service and appreciate its strategic value.
One way to negotiate access to the right people is to use a trial as proof of the basic capabilities that a lower-level buyer expressed they need. You can then use this fact to gain access to the real decision makers.
Remember, even though the trial is free to your potential customer, it is not free for your company so use demos and trials wisely as tools, but not a means to the end.
3. There is Always a Buying Process
Even though the SaaS model comes with a perceived reduced cost of ownership and implementation risk, sales people still must understand the buying process. Buyers always evaluate a solution based on their needs with either a defined or implied buying process. Without knowledge of this process, your sales people will not be able to effectively introduce capabilities the buyer might not be aware of, position key differentiators, or uncover what the key go/no-go steps are that can increase the probability of a win.
In addition, without knowledge of the buying process, it is difficult or impossible to qualify opportunities making the forecasting process more difficult. Once a buyer has shared their buying process and has committed resources to evaluating your service, then a trial, for example, just becomes a step in the process of buying.
It’s easy to just let the potential customer go through their evaluation and buying process but don’t fall into that trap. With a SaaS service just like any enterprise sale there is a lot to learn about a customer’s buying process which can help you more successfully show the value of your service resulting in better forecasting and a higher, more predictable close rate.
Click here to read Part Two.