Category Archive : SaaS sales

Drive Adoption with Billing

Billing Adoption

Promotional discounts, credits or value-add offers can be an important part of a product launch strategy. A properly timed discount, upsell or cross-sell or “bundling” can positively change the perceived product value and dramatically impact adoption of SaaS applications.

But, making on-the-fly changes according to the dynamic needs and circumstances of customers can inherently complicate your billing and pricing models. How does your billing system support the various iterations of a subscription discount, promotion or credit?

For example, how does the discount get applied? What is the duration of the discount? Does the discount apply to all subscription types (recurring, one time charges, activity)? What about conflicting offers? What types of customers are eligible for discounts?

Subscription discounting can get complex very quickly because most billing platforms use a very limited set of “price levers” (time, duration, quantity) capable of shifting the Perceived Product Value.

What you want is to have many price levers around where you dynamically configure and reconfigure services and pricing on the fly: subscriptions + sign-up/activity/event fees + bundles + add-ons + incentives + promotional products.

The ability to add and manage activities, consumption or usage-based price levers to a promotion gives a company a powerful tool for growing its customer base (recurring revenue) and maximizing lifetime value of the customer (reduce churn).

Effect of Changed Product Value

Positive changes in the product – or its perceived value proposition – have the potential to drive improvements in ARPU. Product differentiation can lead to short or long-term market advantages, depending upon how quickly the differentiation can be continued.

Effect of Changed Product Value

 

As stated earlier, with the simplest subscriptions, a business only has control over the price, the term of the offering, and the product mix of the relationship. Because choice is limited, tweaking price levers in those three categories provides limited results.

For example, if a $10 per month subscription is the MSRP, reducing the price to $7 to attract more users may simply cannibalize the existing customer base.

For this reason, it is important to add additional pricing levers around consumption or usage parameters to evolve the relationship with the customer. For example, the consumption or usage price lever can be implemented as a limit or as a set of charges that are generated by ongoing use. For example, as a person consumes, reward him with a discount or promotion every time he reaches a certain threshold, thus enticing him to continue to consume (along the lines of airline “point” systems.

When charging for different classifications of the good or service, customers paying the set amount for unlimited access will have a different value equation than those paying a lower price for limited access.

Over time, customers can migrate from an unlimited ($10 per month) to other price segments, depending on the customer experience or the changing perception about a subscription’s value – especially to those initially not interested.

Customers that do not see value in paying a set amount for unlimited access to a good or service may become interested if offered a chance to pay a nominal per piece price. For those subscribers, the value comes in the flexibility to consume the good or service at will. In a SaaS application, for those not willing to pay for a $10/month for unlimited access to articles may be willing to pay a $7/month plus a discounted price of $0.25 per activity such as time entry, project, download, computing cycle, contact, or any other measureable activity.

In this scenario, the customer who does not see value in paying $10 for unlimited access may become interested when he can pay $0.25 for only the activities that have value. At $0.25 per activity, the customer has a low barrier to trying out the new content, and the business succeeds in making money on content that previously would not be monetized. But the real value for the business is the opportunity to convert the customer to different subscriptions over time, as the subscriber’s situation and interests evolve.

Billing: A Strategic Asset & Enabler of Innovative, Sustainable Business Models

In a subscription business model, it is the relationship with a person that matters most, and no customer touch point is more important than billing, as it connects businesses with customers on an ongoing, personal basis.

Though not the sexiest topic, “billing” is the medium by which companies can truly drive and capitalize on customer usage patterns and preferences.

Billing is, therefore, central to improving adoption. Product management and sales strategies that focus on long-term relationships and maximizing customer lifetime value must address billing models.

Utilizing any one of those practices requires sophisticated billing that goes beyond a cookie-cutter approach for maximizing volume and per-unit profits. Now, billing has to boast real-time intelligence, the type of which is derived only from sophisticated rating and charging engines built to dig into data about actual usage (as opposed to forcing business people to pore over enormous reports after the fact, when opportunities have slipped away).

The next generation of billing has to enable business users to dynamically implement, enforce and change parameters on the fly. By implementing activity, usage or consumption-based billing, companies create more opportunities to innovate and drive new sources of revenue.

About the Author

Christopher Couch - COO and co-founder of TransverseChristopher Couch is COO and co-founder of Transverse, LLC. TRACT, from Transverse LCC, is the all-in-one activity, rating and subscription-billing platform that can bill for anything. SaaS, cloud, MSP, ISVs, telcos or wireless providers with TRACT’s pricing levers to rapidly build and evolve any business model: if it can be metered or measured, TRACT can bill for it. Learn more at www.tractbilling.com

Presenting – the SaaS Resource Center

Resource Center Screen Shot

This week we’ve added a section into our website which I believe would add value to the SaaS Community – I present our SaaS Resource Center!

The Resource Center is a place where we update the most important/informative/valuable articles on 7 of the hot categories that are most current these days in the SaaS industry and I believe this knowledge base would assist many beginners as well as veterans in this industry to learn on new trends in their fields.

Resources Print Screen

Here are the categories the Resource Center approaches:

  1. SaaS Best Practices – Will consist our latest SaaS business models and SaaS best practices and is updated with the hottest topics facing SaaS software and Cloud app vendors today.
  2. SaaS Sales Tips – B2B sales tips on different sales models such as low touch or zero touch, sales metrics and the best practices to build the ultimate sales machine.
  3. Lifecycle Marketing – Drive the usage and adoption of your application and maximize customer lifetime value. Nurture existing customers based on their specific needs and wants and their use of your application.
  4. Customer Analytics – Perform customer, conversion, cohort, funnel, usage or churn analysis. Discover how big data and customer intelligence can increase SaaS revenues.
  5. Free Trial & Freemium – Free trial tips, benchmarks and best practices and the way to optimize trial conversion and freemium conversion.
  6. Customer Engagement – Increasing customer/user engagement and customer lifetime value and reduce churn through lifecycle marketing and other techniques.
  7. Customer Retention – New strategies to increase customer lifetime value and reduce churn for SaaS businesses, how to identify customers at risk and how to implement customer retention strategies.

If there is a topic that we haven’t addressed and you think is worth mentioning, please don’t hesitate to comment on this post with the subject and we promise to consider it.

Also, if you’d like to guest-post in one of our categories, please feel free to contact me through this form and I’ll get back to you as soon as possible.

Cheers,
–Guy

Top 6 Quotes on Software-as-a-Service Sales and Marketing

SaaS University

I was at the SaaS University conference in Austin this week organized by Rick Chapman from Softletter. This is really one of the only conferences in the United States that focuses on the business side of running Software-as-a-Service and cloud application companies.

These are my six favorite quotes on the sales and marketing of cloud applications and what I learnt from them:

1. “Software-as-a-Service is about Service (not Product)”

In the cloud you are selling a service, not a product. What does this mean? It’s often the best practices and business process around the code that matter most to clients. Chuck DeVita from the Growth Process Group shared how adding a design review methodology and implementation with conventional software products allowed one vendor to lift pricing from $15,000 to $100,000 per customer. The best practices and business processes were worth more than 5x the code itself.

2. “Products are evaluated, services are experienced”

Moving from a product to a service has implications for your marketing strategy as well. Ken Rutsky, an independent marketing consultant who used to run Marketing at Netscape and Secure Computing, pointed out that: “products are evaluated, services are experienced”. So for your marketing, forget about white papers and instead focus on creating experiences such as self-service demos and a self-service trial which give prospects a taste of your service experience.

3. “The CRM system of the future is your website (CRM is dead)”

Zach Nelson, CEO of NetSuite CEO said in his keynote: “the CRM system of the future is your website”. I would like the quote even better if it wasn’t so self-serving but there is still a lot of truth in his statement. The SaaS service itself is becoming the primary platform for communications with the customer. Rick Chapman added that a SaaS service should also embed community elements and become the primary channel for communications for customers amongst themselves.

4. “Product management is dead”

A surprisingly large percentage (about half according to an upcoming study by Softletter) of SaaS companies have integrated requirements management into their service: this means that customers can submit feature requests from within the application. Patrick Fetterman shared that Plex Systems has taken this one step further: they give customers a “budget” which can be used to “buy features”. Beyond the assigned budget, customers can also pay extra to get even more features. There are no product managers at Plex, just developers and community managers.

5. “Your customers know more about your solution than your sales guys”

This is another quote from Ken Rutsky. With so much information available on the web, propsects now have more knowledge and expertise about your product (and your competitor’s) than your sales guys. So why not get out of the way and create a friction less sales model? Most SaaS companies are moving towards a self-service discovery and self-service delivery model. In Softletter’s 2012 SaaS Report 51% of SaaS companies report to use a direct sales force. It is still high but down from 60% last year. Indirect (zero touch) selling on the other hand jumped to 25%.

6. “Don’t get people to buy, get them to use your app”

It is much easier to sell if prospects already love your service. The imperative to drive usage and adoption doesn’t stop after the initial sale. Most SaaS companies now use a “land and expand” sales strategy. In Softletter’s survey, the dollar-based renewal rate for SaaS companies ranges from 70% to 140%. Larry Cates from KeyStone On Demand, an online training application, analyzed the main reasons why customers cancel: low organization adoption, not enough customer stakeholders or the app is not utilized properly to gain full potential. These all relate to “lack of usage”. App reliability, competition or budget were reported much less frequently.

Freemium, Free Trial and Pricing Models in 550 SaaS Companies

Pie Image

The way that enterprise products are being bought and sold is changing rapidly. Customers are increasingly demanding instant access to all information about your product, including pricing and a Freemium or free trial version of your application. We call this trend the consumerization of B2B sales.

Totango recently conducted a research studying the Freemium, free trial and pricing practices of 550 Software-as-a-Service (SaaS) companies.

Infographics-Main Conclusions from our 550 SaaS Businesses Research

 

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How Zendesk is Successfully Utilizing Their Sales Team

Zendesk-Zack

Today I’ve interviewed Zack Urlocker, Chief Operating Officer at Zendesk.
Zendesk, is the leading cloud based help desk customer service software which uses a low touch sales model.

Low touch sales model companies usually keep small and focus sales teams, which saves a lot of money for their organizations, but can naturally contact fewer customers. How would these sales teams know where to focus on?

Zendesk, for example, have 10,000 customers and many new prospects are signing up for their service every day and they still very successful SaaS company as it intelligently using tools to help them figure out which users are more likely to buy. Those users are being referred to their sales team and the rest are being pushed for their self-service model which doesn’t require human resources.

Watch the full interview with Zack below to also learn what Zendesk use to keep their subscription customers using their service (hint: customer engagement)

The App Stores Effect on Customer Engagement

App-Store-iStock_000016976501XSmall

Last week , I had several interesting meetings with people who don’t want to spend marketing dollars on paid advertising and prefer to put all of their investment into product offering, as they believe their products will market and sell themselves.

This got me thinking in what is the nature of these applications and the changes in the delivery models which makes this all possible. The new SaaS delivery model enables new channel and distribution models.

Viral Adoption
Some B2C applications take advantage of the network effect to go viral. A very good example is Dropbox, a file sync service, which became extremely successful by allowing people to share files with one another. Now Dropbox has no need to invest in marketing – get people to download Dropbox, they need to make sure their application continuously creates value to their users and the product will ‘sell itself’.

App Stores
Not all applications out there share the same characteristics, especially applications which are business facing. For those apps, the emerging concept of App Stores is an excellent fit.

Much like Apple changed the landscape of music industry forever with iTunes music store, the emerging app store market on Google Apps Marketplace, Salesforce.com AppExchange and new and other enterprise marketplaces are making new applications visible and accessible for end users to try them out. That and a SaaS offering model, makes the entire experience of looking for new solution and evaluating its applicability to your business need a very simple experience.

A very good example of a company which is rapidly growing without any marketing dollars spend is myERP. I’ve met with Francois Nadal built the fastest growing ERP business by focusing on building a great and easy to use product (Nadal, is a UX guy) and channeled it’s adoption through the Google Apps Marketplace.

With such powerful distribution channels available, business owners should focus their resources on creating compelling product offerings which are easy to consume and sell themselves. This emphasizes even further the need to put the right infrastructure in place to monitor and manage customer engagement within the applications.

Totango Analyzed Engagement and Optimized Sales with Over One Million Businesses

over half don't use their saas paid service

Today, I’m happy to announce that Totango has analyzed the customer engagement and optimized the sales and customer success interaction with more than one million prospects!

We sure learned a lot from our beta stage and this is the place to thank all our wonderful customers who were taking part of our beta stage.

Out of the massive data we’ve gathered, here are 4 main conclusions that could help sales and customer success teams to understand where to focus in order to increase revenues: from new sales, expansion sales and renewals.

  • Free trial users who are still active during day 3 of their trial were 4 times more likely to convert into paying users than the average customer

What can I do with that information?
SaaS sales teams could use this insight by focusing their time and close more deals

  • Active trial users who were contacted by a sales rep were 70% more likely to buy the paid service than those who weren’t

What can I do with that information?
This proves that timely and contextual engagement with prospects results in more sales

  • A full half of paid SaaS customers log in less than once a month or do not use their paid service at all. Another 19% is using their paid service less than once a week. Only 14% of paid customers use their service weekly and only 17% use it daily

PR-Usage-Frequency

What can I do with that information?
Have customer success team focus on the non-active paid users and the sales teams to focus on the frequent users to increase upsell

  • Most cancellations were preceded by a period of non-use

What can I do with that information?
SaaS customer success teams could use this insight to configure alerts for inactive users and to pro actively reach out to these customers and offer help

PR-Infographics

 

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Embed this infographic on your site

More than one million businesses optimized and analyzed

Today, I’m happy to announce that Totango has analyzed the customer engagement and optimized the sales and customer success interaction with more than one million prospects!

We sure learned a lot from our beta stage and this is the place to thank all our wonderful customers who were taking part of our beta stage.

Out of the massive data we’ve gathered, here are 4 main conclusions that could help sales and customer success teams to understand where to focus in order to increase revenues: from new sales, expansion sales and renewals.

  • Free trial users who are still active during day 3 of their trial were 4 times more likely to convert into paying users than the average customer

What can I do with that information?
SaaS sales teams could use this insight by focusing their time and close more deals

  • Active trial users who were contacted by a sales rep were 70% more likely to buy the paid service than those who weren’t

What can I do with that information?
This proves that timely and contextual engagement with prospects results in more sales

  • A full half of paid SaaS customers log in less than once a month or do not use their paid service at all. Another 19% is using their paid service less than once a week. Only 14% of paid customers use their service weekly and only 17% use it daily

PR-Usage-Frequency

What can I do with that information?
Have customer success team focus on the non-active paid users and the sales teams to focus on the frequent users to increase upsell

  • Most cancellations were preceded by a period of non-use

What can I do with that information?
SaaS customer success teams could use this insight to configure alerts for inactive users and to pro actively reach out to these customers and offer help

 

PR-Infographics

Embed this infographic on your site

Customer Engagement WebinarLearn How to Convert Free Users into Paying Customers in a 30 minute webinar
Register here!

 

 

About Totango:
Totango analyzes in real time customer engagement and intention within SaaS applications to help you grow your business

 

Increase your sales revenue!
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2012 Year of Freemium Business Model in B2C and B2B

Free Button

It started in gaming – 57 out of top 100 app store games are freemiums.
huge companies like Zynga, Electronic Arts and Capcom or from startups like the makers of 2011 Nimblebit (Tiny Tower) and Spry Fox (Triple Town), the free-to-play model is attracting players, making money and, in some cases at least, making good, enjoyable games – it looks like Freemium has won!

Freemium apps to continue flourishing in 2012 (IntoMobile)

Freemium apps are obviously working both for consumers and developers/publishers, and the trend will continue in 2012. Already of the top-ranked 250 iOS apps across all categories, an average of 88% are free to download, monetized with advertising and in-app purchases. In that sense, the research company says that at this time next year in certain categories all relevant iOS apps will be free
>> Read more

Other big consumer apps like Evernote already freemium or moving there like LogMeIn, which is an interesting case because they were already successful:

LogMeIn Remote Control iOS App Goes Freemium (TechCrunch)

The once paid — and quite expensive app is now migrating to a freemium model. That said, users who paid for LogMeIn Ignition won’t have to cough up the dough for a LogMeIn Pro subscription, but they will get the added premium features including HD remote control (and HD streaming) from their computers to their iOS devices
>> Read more

We can see this trend spreading also to the B2B market:

Yammer’s Freemium Model Creates a Viral Effect Inside Companies (CIO)

Yammer, who was picked by Apple as 2011 top app, also has a freemium business model, which creates a viral effect inside a company that can spread like wildfire. Once the business value has been proven, organizations can choose to purchase Yammer for the entire organization. By having employees validate whether a product works or not prior to the sale, the company can see if it will be of value to the company. Evangelizing a product is a powerful force, more powerful than ads or sales pitches
>> Read more

Jive Gets Boost Following Billion-Dollar Cloud Deals (Bloomberg)

It’s interesting to see how Jive, who’s Yammer’s competitors which sells mostly to corporate clients and is using a high-touch sales model, had also come up with an offering of cloud services to reduce their client’s operational costs. It seems to be that the cloud advantages and business potential has found its way to all types of businesses – some of the world’s biggest technology companies, including Microsoft Corp., Hewlett-Packard Co. and International Business Machines Corp., are moving to the so-called cloud, where customers can save money by renting software delivered over the Web and accessing it anywhere, instead of installing it on their own machines.
>> Read more

However, we should also keep in mind, that for freemium to work it needs to engage users! In order to succeed, a business first priority should be in adding value to users and not earning money.

Matt Gilman, pocketgamer.biz writer said: “The biggest issue for me, in mobile gaming, is the concept of freemium vs premium. It’s hard to discuss it without using the term ‘ethical’ but in a recent conversation with Applifier CEO Jussi Laakkonen, he pointed out to me that what we should be really talking about is ‘fun’.

At the moment, people are making a lot of money, and it’s hard to pinpoint many freemium titles that would deliver ‘fun’ to traditional gamers through a freemium model. Hence, 2012 needs to be the year that freemium truly delivers fun, not derivative rehashed versions of financially successful twaddle, but legitimate gameplay to be proud of.
And of course you need to put compelling offers for upgrade or in app purchase in front of engaged users if and when they have fun”
>> Read more

B2B Sales Predictions for 2012

Computer Mouse Shopping Cart

Lately there is an obvious increasing demand for user friendly cloud based apps and a tendency to prefer low touch and zero touch sales approaches, where there are as little sales involvement as possible.

In my latest article: 8 ways digital will improve b2b sales in 2012, published in Mashable lately, I tried to predict what would be the customizations that B2B sales would need to embrace in order to survive in this competitive and evolving market:

  1. Social Selling Will Go Mainstream – Sales executives will substitute the cold calls with nibbling into the social media networks follow by conducting warm introductions
  2. Companies Will use Facebook as a Sales Channel – Facebook ceased to be perceived as a personal communication channel only and more and more sales people will start using it as a sales tool
  3. Sales Executives Will Adopt Big Data – Wide funnel could increase leads volume, allowing your researches on users behavior and performance during the trial period in order to later focus on the most profitable ones
  4. Customer Engagement Becomes a Top Priority – Since customers nowadays can choose their service on a subscription basis, customer engagement and customer success become a key player in this game
  5. Outside Sales Rep Will Use iPads – Tablets will become a vital working tool as outside sales reps can start using them for shipping, product documentation, demonstration, capture leads at trade shows and quickly research a prospect before a meeting
  6. Most Sales Tools Will Move to the Cloud – The average sales organization is using more than 24 software tools to complete a sales process – most of these services will be available in the cloud in 2012 and that will increase the sales process fluency
  7. Sales and Marketing Will Converge – The boundaries between those roles is becoming obscure as outside sales are becoming inside sales and inside sales is being replaced with self serving website resources
  8. More Companies Will Offer Free Trials – this way the customers could evaluate the service before they decide to purchase and that will also produce more word-of-mouth referrals which are much cheaper than live touch points