Saugatuck Technology's Bruce Guptill released some interesting market research predicting that by 2014 the majority of new corporate B2B software purchases will be in the form of cloud software solutions (SaaS) rather than traditional on-premise software. This is a significant tipping point, after which adoption of cloud services is expected to further accelerate. What does this mean for B2B marketers selling cloud solutions and software as a service? I think it will pretty much change the rules of the game, and in ways that are somewhat unpredictable today. Here is why.
Why SaaS Marketing Rocks
After having taken to market both SaaS (starting in 2002) as well as traditional on-premise software solutions, I observed first hand some of the significant differences between the two models as it relates to marketing. And I also learned a few lessons along the way (some were learned the hard way, but I guess that’s how you learn best). You will see quickly in the following sections that I have a bias towards cloud software solutions, mostly because, if done right, the on-demand cloud model provides much faster, more direct and immediate feedback cycles on how your market is responding to your solution and marketing stimuli - a marketer's dream! In many cases, it also allows for much more compelling value propositions compared to traditional on-premise solutions. But let's take a closer look.
(1) Focus on the business buyer
One of the biggest changes in marketing SaaS vs on-premise software is the makeup of your target audience. While IT departments traditionally had a lot of influence over the software buying decirion and acted as gate keepers, cloud solutions today often allow you to deal directly with the business problem owner and end user to make the decision and subscribe to your service (this obviously depends a great deal on the complexity, integration and scope of the solution). One of the biggest factors in the adoption of cloud solutions is that business users can activate the solution quickly, often without having to rely on slow IT resources.
For many applications, this will allow you to bypass IT in the early stages of adoption or altogether, depending on your solution. This is especially true for stand-alone, point solutions that don't require integration into on-premise or other cloud solutions. Also, be aware of IT pushback. I have seen many IT departments that have a strong on-premise bias to justify keeping their budgets and headcounts required for running the entire IT stack in-house.
(2) Re-focus messaging from product to buyer
While more direct access to the decision maker and buying authority may simplify the decision process to some extent, it requires marketing to better understand the underlying business problem the cloud solution is solving. Technical specs, speeds and feeds are now much less important, even irrelevant, to the buyer as they are often entirely encapsulated and "hidden" in the cloud.
What matters to the business user is the business value the solution delivers, the process it helps automate or enable, the cost it reduces or the opportunity it unlocks. In addition to your unique business and functional message, make sure to also embed a unique version of the “generic” cloud value proposition (lower cost and complexity, higher flexibility, faster on-boarding, seamless scalability, etc) into your marketing message and make them relevant and specific to your offering.
(3) Create buyer personas
For many software vendors who have been selling traditional on-premise solutions to customers, this focus on the business buyer and their unique requirements should not be new. The move to the cloud, in combination with dramatically changing buyer behaviors, however, requires a more sophisticated approach to marketing. It requires a crystal clear definition of your target segments, target buyer personas, and the typical journey your buyers take from problem to buying decision to actual purchase. This path needs to be made painfully easy for prospects to travel along. With powerful content assets that lead, just like breadcrumbs, from problem to solution.
(4) Simplify content marketing
Content marketing (combined with robust marketing automation) allows you to scale and put much of your inbound marketing efforts on "auto pilot", and "cherry pick" the leads you want to engage with directly, when they are ready to talk to you. While there are many steps in the decision process and many buyer personas that influence it, I have found that simplification is key to success. Especially if your marketing and sales organization is new to content and buyer centric marketing, don't be tempted to build the perfect system that, for example, captures 8 granular buying stages, 5 buyer personas, across, 5 market segments. Creating compelling content for the intersections of all these dimensions, you might be looking at hundreds of assets to be produced and deployed. This will easily overwhelm even the most sophisticated marketing teams.
Instead of attempting perfection, take a simplified crawl-walk-run approach, starting with as few as three buying stages (for example: “Awareness”, “Discovery”, “Decision”), one or two key buyer personas, and one target segment. Once this pilot model is designed and implemented with all content assets and associated programs, then you can move on to more sophisticated models applying the lessons learned earlier on.
(5) Highlight pricing model advantages
Pay as you go or subscription models enabled by cloud services allow buyers to adopt your solution much more quickly as they don't have huge upfront license fees to worry about that are often Capex, require justification, and many levels of sign-off. Instead, the monthly subscription payments can often fly under the radar and get paid without the intense scrutiny of big, lump sum payments, making it easier for buyers to pull the trigger.
(6) Mind the adoption gap
In market categories where cloud solutions are disrupting the way an existing problem is solved, make sure to revisit Geoffrey Moore's Chasm framework. If your SaaS category is in its early stages of adoption (for example marketing automation) market dynamics and buyer preferences will be dramatically different from segments that are in later stages in the technology adoption cycle (for example CRM). Innovators and early adopters are willing to take a lot of risk for a potentially big payoff. Early majority buyers will want to see references from companies just like them to reduce risk and ensure economic and technical success. Late majority and laggard buyers are the most risk averse bunch and will require strong cost and risk reduction benefits to be persuaded to move away from their existing solution. Pick the predominant segment in your market and focus on growing it instead of trying to be all things to all people – that hardly ever works.
(7) Highlight SaaS trial advantages
Cloud solutions make it easy for you to showcase your solution and make Trial or Freemium versions available as an offer and call to action that can be immediately provisioned. You can, for example, make a time limited (e.g. 1 month), concurrency limited, (e.g. number of parallel projects) or feature limited (e.g. disable premium features) version of the solution available in a self-service provisioning model and upsell later.
With software as a service, you can even see what features your trial users are actually using and are most interested in, and incorporate this information into your marketing and sales response (at the individual user level, leveraging marketing automation - you can even build feature usage into your lead scoring model to indicate sales readiness).
This insight into actual usage patterns allows you to fine-tune and reality-test your marketing message in a way that was previously impossible or cost prohibitive with packaged software. These insights, by the way, also enable you to create different, more granular subsets of your offering that you can provide to different segments in a way that was economically not feasible in the traditional on-prem model. There are great solutions available that let you do that granular packaging with minimum effort (contact me at firstname.lastname@example.org if you are interested in learning more).
(8) Address SaaS related concerns proactively
Cloud applications often face objections regarding data privacy (for example with companies in Europe), regulatory compliance, legal concerns, service availability, and other issues (especially with prospects in the late majority segment). Don't gloss over these concerns in your marketing and sales engagements. Instead, address issues upfront and outline your solution for each concern, before your on-premise competitors exploit them for you.
Embrace Cloud Marketing
In summary, SaaS and cloud software solutions are a very different animal compared to on-premise software. They offer new and exciting ways to deliver value to your customers. But don't treat the cloud the same way as your traditional software offering as the dynamics are profoundly different. And you may have to unlearn some things you thought to be tried and true. Also, make sure to embrace experimentation until you find the right mix of message, offers, and tactics. This market is still very new and constantly changing. Nobody has the right answers and best practices, so try new things and see what works. The cloud environment makes it easier for you than ever to test your approach in real time and make tweaks - take advantage of it!
What is your experience with marketing and selling SaaS?
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