“The cost of renewing a customer is significantly lower than the cost of signing up a new customer. If your churn rate is high, no matter how successful your sales and marketing organization is, you will never be able to achieve a significant growth unless you add new customers on top of renewing your existing customers. To minimize churn rates, you need to ensure that existing customers see a good value in your offering once they go live. Their perception of your value will be influenced by the following key factors:
Does the software do what they thought the software would do for them before they bought it?
If the answer is “yes,” the next question is whether the software allows users to do what they need to do in an easy and intuitive fashion.
If the answer is “yes” too, the next question is whether the software can be easily configured via the setup console to accommodate changing business requirements. If the amount of effort needed to make the necessary setup adjustments is perceived to be too difficult or time consuming, the value of your product offering diminishes. Of course, if the software is addressing business processes or industry requirements that do not change, this point is irrelevant.
To ensure you are meeting your customers’ “Value Gauge” you need to ensure the following:
Monitor the usage level, which is typically a good indicator whether “yes” or “no” is the answer to the first two questions above.
Provide a mechanism for your customers to give you feedback or easily request new features. This feedback is also a good indicator of answers to the first two questions above. Indeed, if there are lots of new feature requests, you either have a poor training documentation and/or product’s intuitiveness, or your product ultimately does not do what the customer expected.
If your professional services organization needs to be heavily involved even after a customer goes live, this is typically a red flag that your software is not very well designed to keep up with the ever-changing customer requirements.
As a CEO of Webcom, I am all too familiar with the above issues. We offer two SaaS products. The first one, WebSource CPQ, is used to automate the sales process (configuring, quoting, proposing, and ordering of products, including even SaaS offerings themselves), while the other one, ResponsAbility, is used to automate any kind of business process, such as handling product returns, issues, software bugs, new feature requests, engineering change notices (ECNs), etc. Both our products must by their nature meet all the three criteria outlined above, as our customers are always introducing new products, introducing new and changing existing pricing schemes, introducing new promotions (to improve their top line) as well as constantly changing and optimizing their processes to improve their bottom line.”
“For a 'pure SaaS' offering you can’t adapt old products – you need to develop specifically for the SaaS environment.
A multi-tenanted design is essential – since volume is critical to success, you need a scale, and this can only be achieved by a multi-tenanted approach (that’s why SAP has gone back to the drawing board with SAP Business ByDesign).
There are three key areas of focus – Security; Security; Security. If you can’t demonstrate that you have that 100 percent locked down, you are sunk. See issues around SageLive’s security flaws, recently exposed yesterday by a competitor and then broadcasted in the blogosphere.
Unless you’re in the business of building infrastructure, then consider the PaaS approach – by building on a leading, proven platform like Force.com from Salesforce.com, CODA has saved time (two years of development); We can focus 100 percent on delivering our domain expertise of accounting rather than building platforms and hosting; Also, security isn’t an issue (see our recent blog post).
Moreover, customers, depending upon their circumstances, want a “spectrum” of approaches to SaaS that would meet their different needs:
Many clients simply don’t want to manage the IT infrastructure for their software systems -- they just want to use them when and where they need them. Hosting their software solutions will satisfy their requirements.
Often clients’ interest in SaaS is the financial side – the ability to rent rather than buy, pay as they go, or grow and shrink the cost of their systems depending on the need or size of the organization. That is really just a financial discussion around different approaches to paying for access to the software – and we are always prepared to explore innovative ways of helping organizations pay for services in the way that best suits them."
"Basically all of the above, though the principal methods will be:
It is on AppExchange, and also one of the first solutions on Salesforce.com’s Checkout service;
We are building a telesales team working out of centers, currently in the United Kingdom (UK) for Europe and the United States (US) for the Americas;
We plan to build enterprise sales operations as this becomes necessary.
We are building a network of services partners to deliver implementation consultancy, and it is likely that these will also deliver support for “verticalization” through market specialists.
Expansion of the new underlying design principles used to create the new SaaS-focused and SaaS delivered product. Coda did not simply re-write CODA Financials; it is all new DNA optimized to the new platform, but with the same guiding principles that made CODA Financials a success."