These are my six favorite quotes on the sales and marketing of cloud [...]]]> 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.

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Totango recently conducted a research studying [...]]]> 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.

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An account’s Engagement Score is calculated by looking at the aggregate amount of time spent, by all users of the account, [...]]]> Engagement score is an at-a-glance metric which Totango adds to each account.
Its purpose is to give you a sense of how active and engaged a particular account is with your cloud application.

An account’s Engagement Score is calculated by looking at the aggregate amount of time spent, by all users of the account, with the application in the last 14 days.
This number is then normalized across all accounts of the same life-cycle stage to produce a number between 0 – 100.
Accounts with an engagement score of 0 were the least active during this period, whereas those with a score of 100 were the most active.

Example: For a setup with three lifecycle stages:

• New Trial
• Activated
• Paying

An account in the Paying stage with an Engagement Score of 99 is the most active Paying customer (together with any other accounts with the score of 99)

An account in the Activated stage with an Engagement Score of 50 is more active than half of the current Activated accounts

A New Trial account with an Engagement Score of 0 is the least active at this stage (usually reflecting a period of 14 days of no activity)

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Some of the insights you can get from Totango Executive Reports

Low touch sales model companies usually keep small and focus sales teams, which saves a lot of money for their organizations, but [...]]]> 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)

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Over the past couple of years, a new position has been showing up in the open job listings throughout the SaaS/Cloud community.

The new role reflects the growing awareness [...]]]> A White Paper / Report of the Customer Success Management Initiative

Webinar: Thursday; February 23rd 2012 10: AM PST

Over the past couple of years, a new position has been showing up in the open job listings throughout the SaaS/Cloud community.

The new role reflects the growing awareness that customer retention is a core requirement.
The signing of the first contract with a customer is a only a milestone, not a resting place. “Shelf-ware” or underutilized products are no longer an option. As a result, software vendors are now realizing that they must take a far more proactive role in ensuring the success of their customers.
But understanding that customer retention is a year-around effort, a commitment that requires a dedicated executive is only the beginning. There is much more to Customer Success Management than just establishing a new box in the overall corporate organization chart.

The work of the Customer Success Management Initiative, opened with two focused surveys. Further insight was gained through extensive interviews, ongoing online conversations in the CSM Forum and from in-depth review of a wide range of published content. The webinar presentation will include the research findings to date on the current-state of what SaaS/Cloud firms are doing in the areas of the Strategy, Process, People and Technology of Customer Success Management.

Attendees will receive a complimentary copy of the white paper when it is published in March.

Advance registration for the webinar is required, and space will be limited.

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Dropbox no-touch sales model is a very good example to emphasize how important it is to increase customer value using different types of user approach activities (nurturing campaigns, application, etc.)

Those activities, if done correctly, would naturally [...]]]> Today I’ve interviewed Steve Bartel, Head of Analytics Team at Dropbox.

Dropbox no-touch sales model is a very good example to emphasize how important it is to increase customer value using different types of user approach activities (nurturing campaigns, application, etc.)

Those activities, if done correctly, would naturally increase customer engagement rate and are easy to perform when thinking of the customer’s life-cycle stage at any given time.

The most efficient way to conduct those activities is by performing them based on the customer life-cycle stage, rather than time based (as many companies still do) as the first approach refers directly to the user’s life-cycle stage in the application while the later assumes where they’d be at this time statistically.

If we refer to our users knowing their current stage in our application (instead of assuming that), we increase the chance users will be mature enough and be able to address our call and implement our suggestions.

See the complete interview with Steve to find out which other activities Dropbox is using to increase their customer engagement:

To read the full transcription of the video, click here

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Video Transcription:
My name is Steven Bartel. I am responsible for the analytics team at Dropbox. And Dropbox is just a way to have your files wherever you you are, it also makes it really easy to share them. So dropbox does a lot of different things to increase user engagement. We use some of the more standard techniques.

For example, we’ll have tip e-mails, so early on in your Dropbox life, you’ll get an e-mail, saying “Hey, you haven’t tried out this feature. It might be useful for you.” We also do things around promoting our different features on our website. For example, in the top left corner when you’re browsing your files online you might see something that prompts you to share a folder with a friend, and maybe your photos.

Lastly some of our features our viral and they help help our users promote user engagement across each other. For example, we have shared folders, so when I put something into a shared folder, I’ll invite my friend to it. And, you know, they’ll start using DropBox again. We have a sales team. And what they’re looking into is how to sell DropBox for businesses.

The consumer product is entirely driven word of mouth and automated through our website. But we find that it’s, you know, very useful to have people to help explain the use case of DropBox for businesses. It might be, you know, if that’s a thing that will put more into this product, and we have a bunch of tools around, sourcing those leads, and figuring out who exactly might be the best fit for our sales team.

This got me thinking in what is the nature of these applications and the [...]]]> 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.

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We sure learned a lot from our beta stage and this is the place to thank all our wonderful customers who were [...]]]> 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

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

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<br /> <a href=”http://www.totango.com/blog/2012/01/totango-analyzed-engagement-and-optimized-sales-with-over-one-million-businesses/” _mce_href=”http://www.totango.com/blog/2012/01/totango-analyzed-engagement-and-optimized-sales-with-over-one-million-businesses/”><img title=”4 Conclusions from Totango Aggregate Customer Analysis – Infographic” src=”http://www.totango.com/blog/wp-content/uploads/2012/01/PR-Infographics1.jpg” _mce_src=”http://www.totango.com/blog/wp-content/uploads/2012/01/PR-Infographics1.jpg” alt=”4 Conclusions from Totango Aggregate Customer Analysis – Infographic” width=”600″ /><br /> </a><a href=”http://www.totango.com” _mce_href=”http://www.totango.com”>Totango – Real Time Customer Engagement for SaaS and Web App</a><br />

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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…

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Those of you who’ve read my posts before probably know how I preach for customer success and customer value, especially in the zero-touch and low-touch sales models, [...]]]>

“For the first time, we have visibility into what our users are doing on our platform and can interact with them based on usage.”
Sacha Labourey, CEO, CloudBees Inc.

Those of you who’ve read my posts before probably know how I preach for customer success and customer value, especially in the zero-touch and low-touch sales models, where your success is actually your user’s success.

This week I’ve interviewed Sacha Labourey, the CEO of CloudBees Inc. Cloudbees is running a freemium business model with zero-low touch sales which is based on pure customer success and is using Totango for their performance measurement and level of engagement with their service.

Who are you and what do you do?
My name is Sacha Labourey and I am the founder and CEO of CloudBees. CloudBees provides a Java Platform as a Service (PaaS) for enterprises and software developers.

What is your business model?
Our business model is based on the usage of our platform for the building and running of Java applications. We also utilize a freemium business model to enable developers to try our platform for free while they become familiar with many of our core platform services and their value.

What is your sales model?
We strive for a zero touch or a very low touch selling model.

What problem or problems are you solving with Totango?
We are using Totango to gain visibility into user activities and to automate customer engagement, especially via e-mail for now. Instead of nurturing our user database based on a fixed timeline, we personalize content based on their actual usage of our product. Depending on how they are (or are not) using specific features we may be able to offer helpful tips via e-mail.

How did you do this?
We monitor how developers are using our platform. Based on their actual usage of the product, we send helpful e-mails. We have integrated Totango with Salesforce.com and our e-mail marketing system to automatically send the right e-mail to the right users at the right time. The goal is to make our users more successful with the CloudBees Platform. If our trial users are successful they will hit the paid tier of our service at some point. In this sense the interests of the customer and of CloudBees are completely aligned.

What results did you achieve so far?
We have been able to see how our users are using our platform and engage with our trial users providing them with information to ensure their success with CloudBees.

Who was responsible for the Totango implementation and how long did it take?
This integration was all very easy to perform. It took us a few days of work (over a few weeks time) to establish an initial monitoring of our platform and an integration with Salesforce.com. It took us a few more weeks of ramp-up to define how we wanted to best leverage the collected information to automate our interaction with our users and customers.”

Did you look at other, similar, services? If so, what did you like about Totango?
We considered building some of these capabilities into our platform, but decided against it. We know our requirements in this area will continuously grow and strategically prefer to rely on a partner like Totango for ongoing enhancements, as well as industry best practices.

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We would love to see more work done by analysts to size up this market.

If Paul is right and this market is going to be the natural evolution of Social CRM and Social Business, then the market will be very large indeed.

The total spend in 2010 on social software was according to Gartner, $770 million, a fraction of the CRM market which was around $15 billion in 2010, $16.5 billion in 2011 and projected to be more than $18 billion in 2012 by IDC.

According to ABI Research, the latest global enterprise social collaboration market forecasts show revenues will reach $3.5 billion by 2016 up from $898.6 million on 2010.

More market validation:

Key consulting firms like Accenture, Cognizant, Infosys, Booz-Allen, CAP Gemini, and CSC either created explicit Social CRM practices or began to compete on Social CRM and Social Business projects.
IBM’s Institute for Business Value, in its 2010 CEO study found that the most important imperative for the next five years for CEOs – 88% of them to be exact – is to be closer to their customers.

Early adopters for Customer Engagement Management solutions such as Totango are all businesses who acquire and service users online, including:

• SaaS and B2B Cloud Apps
• Consumer Web Apps
• Mobile Apps and Games
• E-commerce Sites

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Basically he writes that in 2012:

What’s the difference?

Ray Wang and wrote a great blog this week defining Customer Engagement. I am much looking forward to his expanded paper on the topic.

Basically he writes that in 2012:

• Out: Social Business and Social CRM
• In: Customer Engagement

What’s the difference?

Ray Wang and Dion Hinchliffe define this more elegantly, but in simple terms CRM Systems hold customer records, whereas Engagement Systems facilitate customer interactions (company-customer and customer-customer).

Customer Engagement is fundamentally about a customer’s 1) voluntary, 2) ongoing interaction with a company and its products or services for the purpose of 3) mutual value creation. So yes, the company should derive value (profits or other KPI), but in my mind key to Paul’s definition of Customer Engagement is the creation of Customer Value.

Customer Value is NOT measured by the time that customers spend interacting with your marketing tools or even by customer loyalty, but rather by – well – the VALUE delivered to customers through your product or service. So if you are going to measure time spent, then focus on the time spent interacting with the product or software itself, rather than with sales and marketing materials. Even better, focus on metrics that are specific to your product or service: Tracey Kaufman from Cloud9 says it all in a recent video blog Your Customer Success is Your Own Success: (in essence) “if the goal of your product is to save customers money, then customer success if defined in terms of money saved (not time spent)”.
So, when you speak about Customer Engagement next, make sure to think not just about Customer Engagement before purchase (sales and marketing interactions) but especially about Customer Engagement AFTER purchase (using your product or service).

At Totango, we can help you model your customer lifecycle and define customer actions that correlate directly with customer value created. We recommend that you segment your customers in groups depending on whether or not value was delivered to them. Your customer success team can use this information to help lagging customers along. Your sales and marketing teams can use the actual benefits customers have gotten as a tool to up sell (at Totango we prefer “up serve”).
If you focus on Customer Value, the rest, including and especially customer referrals, will follow naturally.

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In my latest article: 8 ways digital will improve b2b sales in 2012, published in 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

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Fundly is a social fund raising business which help people rase money for causes they care about. Fundly don’t charge anything to get started and rewarded only based on customer success, meaning it only [...]]]> Today I talked to Dave Boyce, the CEO of Fundly to hear his angle about Customer Success.

Fundly is a social fund raising business which help people rase money for causes they care about. Fundly don’t charge anything to get started and rewarded only based on customer success, meaning it only get paid if the fund has been successfully raised and that makes customer success the main metric Fundly measures and analyses.

In order to push for customer success, Fundly set up the “Social Ninja” Program which is basically a collection of Social Media Marketing experts that their sole goal is to bring to their customers success and by that to increase company revenue.

In today SaaS and web application world, customer success become more and more popular as the customers are in the center and they decide which service give them value and help in “relieving their pains”. Of course customers will choose to only pay for what truly give them value and this is where customer success becomes the goal of any successful SaaS business.

What about you? do you know how to measure you Customer Success?

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In low touch sales or zero touch online sales, one of the key challenges [...]]]> I’m happy to introduce the new LinkedIn connector of Totango.
This new feature helps low touch sales teams to get even more insights on prospects and accounts they are dealing with.

In low touch sales or zero touch online sales, one of the key challenges sales executives have is to rapidly go through the account qualification process – to quickly know who they are dealing with. Specifically for businesses who sell to SMB and Enterprise, inbound style, you wouldn’t expect sales rep to know by heart all of it’s inbound incoming potential buyers.

Totango LinkedIn Connector enables immediate visibility into incoming account profile from within the Totango view.

This short video shows you how:

Enjoy
Guy

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These modern sales models are somewhat evolutionary as the official enterprise sales model is just [...]]]> Are you running a B2B sales or inside sales organization?
Do you have a freemium or free trial in your service?
Are you considering a low or zero touch sales model to increase velocity of your sales funnel?

These modern sales models are somewhat evolutionary as the official enterprise sales model is just not the customers first choice anymore.

Today, in my last “Best of 2011″ post series, I’ve gathered all the videos and posts from which you could learn about low and zero touch sales models and about free trial and freemium best practices so you could go ahead and build your ultimate sales machine!

Low Touch Sales and Zero Touch Sales Tips

• 3 Essential Tips for Sales in a SaaS Model
• 4 Tips to Increase B2B SaaS Sales
• 6 Tips for Cloud Sales using Channels
• 3 Recommendations for Sales Compensation for SaaS
• Top 5 Trends in Sales 2.0
• When Not to Waste Your Time on a SaaS Sales Prospect
• Do you Distinguish Your Sales to Hunters and Farmers?
• What is the Best Sales Model for You?
• Tip on How to Reduce Churn (Even in Low-Touch Models)

Free Trial and Freemium Best Practices

• Freemium Sales Models for B2B and SaaS
• Converting from Visitors to Signups and from Freemium to Paid in a Fun Way
• Trial Conversion “The Early Days” – Lean Startup Presentation
• The Trial Flood Now Works For You
• Recorded Webinar: Free to Paid Conversion (on Totango app)
• Recorded Webinar: Measure Trial Conversion Metric

>>Read other posts in this series<<

• Best of 2011: Top Videos and Blogs on Customer Engagement
• Best of 2011: SaaS Best Practices and Customer Analytics

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“The 2012 SaaS Free Trial, Freemium and Pricing Benchmark“

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

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With such a [...]]]> 2011 was a busy year! We’ve discussed a lot of important themes which are the hottest topics for any SaaS business such as Customer Engagement, Customer Success, Customer Lifetime Value, SaaS Best Practices, Low Touch and Zero Touch Sales Models, Free Trial and Freemium, Customer Analytics, SaaS Churn, Customer Retention Strategies and more.

With such a vast range, it’s easy to get lost and so I’ve decided to bind the best of blogs and videos related to each topic.

Today I’m going to review the best of Customer Engagement, Customer Lifetime Value, Churn and Customer Retention Strategies.

As you already know by now, Totango’s goal is to help other SaaS companies to optimize their free to paid conversion/on-boarding/up-sell opportunities, or in other words – increase customer engagement opportunities and by that reduce churn whereas our customer success is actually our own success and customer success will naturally increase Customer Lifetime Value (CLTV).

Below are our top posts on these topics to help you get oriented in the Customer Engagement, CLTV and Churn areas:

Customer Engagement and Customer Lifetime Value:

• Joel York: Why to Measure Customer Engagement in SaaS?
• Genuine Customer Engagement
• 3 Outright Strategies to Improve SaaS Customer Success
• Evolving from Document System to Engagement System
• Customer Engagement for a SaaS Land & Expand Strategy
• Does your SaaS Business have a VP Customer Success?
• Customer Engagement is Key for SaaS
• 6 Steps to On Boarding Software-as-a-Service Customers
• Treat Customers Based on Their Values
• Customer Lifetime Value and Customer Experience

SaaS Churn and Customer Retention Strategies:

• 3 Ways to do Cohort Analysis on SaaS Churn
• Tip on How to Reduce Churn (Even in Low-Touch Models)
• What Do Customer Success Managers Need?

Tomorrow I’m going to review the best of SaaS Best Practices for SaaS and Application Vendors

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The scheduled emails complement the real-time view provided by [...]]]> If you are using the Totango Dashboard to keep track of accounts and their lifecycle progress, you’ll love our Dashboard email subscription feature. Subscribe to reports and Totango will send you Daily, Weekly or Monthly emails with updates on the core metrics measured by the Dashboard.

The scheduled emails complement the real-time view provided by the Dashboard to help create an ambient feel for the data. That’s why we send them at 8am in the morning, so you can start your day (or week, or month) with a quick skim on the important metrics for your business, just before you have to start dealing with the grueling day to day.

Daily Report:

Summary of the number of accounts that Signed-up, activated, converted to paying or cancelled their subscription yesterday. The email also lists their names with deep links into their profile on Totango. So if you see an account of interest you can drill down to their details. Great way to keep a pulse and identify anything interesting happening in the trenches.

 

Weekly Report:

Weekly summary of lifecycle changes. In this report we also include a weekly cohort, so you can measure how this week was in comparison to past weeks. Great way to get a feel if the business is trending up or down and adapt quickly.

Monthly:

Monthly summary of lifecycle changes. Like the weekly report, this monthly update conveniently summarizes the last month’s result with those of months past. Great way to share progress with employees, management or board members

To check it out,  navigate to your Dashbaord and subscribe. Or signup to Totango if you’re not using it already and take control of Customer Engagement!

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“The 2012 SaaS Free Trial, Freemium and Pricing Benchmark“

About Totango:

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

Increase your sales revenue!
Try Totango free for 30 days

In a world where customer evaluate your offering at their own pace, and can cancel their subscription at any time, the best way to maximize your business potential is [...]]]> Take a step back and you’ll realize user-engagement is the single most important metric in any SaaS business.

In a world where customer evaluate your offering at their own pace, and can cancel their subscription at any time, the best way to maximize your business potential is to make sure users are engaged and see value in your offering.

And the best way to ensure that is to create a metric which can be monitored for change and improvement on an on-going basis.

It has been somewhat surprising for us to see that most SaaS companies (and we’ve spoken to hundreds by now) are somewhat at a loss as to how to actually measure their user’s engagement with their offering and application. In fact, when pressed many admit that, important as it is to their business, they actually *don’t* measure user engagement. Simply because they could not figure out a systematic way to!

Since we’re here to help SaaS companies do better in this area, here’s our 3 step guide to getting started.

Step 1: Segment your users into lifecycle stages

The signals engagement for a trial user that has just signed up vs. an established customer is very different. Trying to come up with an engagment metric that applies throughout all lifecycles is practically impossible. Consider the following (in a fictitious SaaS application):

User1: Signed up last week, has logged in 5 times, created a project with some content and reviewed our knowledge-base 3 times
User2: Paying customer for a year. Last week logged in 5 times, created a project with some content and reviewed our knowledge-base 3 times

Clearly User1, as a new trial user, is exhibiting a good level of engagement, where-as the behavior of User2, a year into their subscription, is concerning at best.

We recommend you break down user lifecycle at least into the following stages. We also suggest some ideas of things you’d want to look at as you compute engagement at each stage

You’d want to apply a different engagement metric to users depending on where they are in the process.

Step 2: Create a scale

Engagement is not a binary metric. Users are not either engaged or unengaged, but rather fluctuate on a scale. We recommend creating the following buckets:

The time window to measure varies. we typically suggest 14 days – 30 days, depending on the application’s complexity.

For a top-line view, you eventually want to end up with a dashboard similar to that shown below.

The chart shows, number of total, highly engaged and lightly engaged users overtime. For convenience, we overlay important milestones (product releases, marketing campaigns, etc.) so we can see their affect on our users.

For example, we see a good pickup of total activated users after launch . Growth is mainly in lightly engaged users however.
Important milestone 1 made almost no impact (maybe it wasn’t that important after all?
Important milestone 2 on the other had, clearly increased the number of highly engaged users (we should do more of that)

Step 3: Constantly refine & improve

Your engagement metrics should not be static but evolve over time. You should constantly “test” them against users eventual decision to purchase or cancel their subscription. If they don’t provide a good enough prediction as to what a user is likely to do with their account, the metric and its underlying formula should be tweeked.

Specific Examples:

• “Highly Engaged” Trial users should convert at a very high conversion-rate to paying accounts
• “Gone” and “Fading” Paying users would tend to churn if left unchecked

Summary

Measuring engagement can be tricky, but is absolutely essential for success in a SaaS environment.

A corporate-wide engagement metric helps:

• The product-teams improve the product’s value to customers
• The sales team focus on trial accounts that matter most
• The customer-success team identify and proactively manage paying-customers
• And helps marketing teams bring more qualified, relevant leads

It should be part of every SaaS organization’s core-competency. Get it implemented in yours today!
 

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The basic idea as described in [...]]]> Paul Stamatiou is doing a great job describing the concept of “User Retention as a Service” and from the long thread of comments we can certainly learn that this is a true pain point folks have.

The basic idea as described in the post is to run drip marketing campaigns based on user life-cycle and as opposed to mass marketing email or time based marketing systems.

I absolutely agree! And in fact this was one of the first features we’ve put into Totango. And yes, we provide this feature as a service (you can start a free trial here)

The importance of doing communication with users based on their life-cycle is clear. Instead of bombarding all users with the same message regardless to their status and progress of using or evaluating a service, way more effective way is simply ‘talk’ to users in a way which is specific, personalized and timely.

I had several discussion with Steve Bartel from Dropbox to learn about how they communicate so effectively with their users. And indeed, Dropbox have developed an internal system which does exactly that – it communicates with users based on their usage (or lack of) within Dropbox.

I like that – it is a great concept!

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Tracey was watching the Totango demo and then answered some questions about what she thinks of the application from a Customer Experience point of view.

Tracey believes that anyone who has cloud9.

Tracey was watching the Totango demo and then answered some questions about what she thinks of the application from a Customer Experience point of view.

Tracey believes that anyone who has trial period in the SaaS business or has the need, like herself, to understand users activities and prevent churn, would want to actively know what customers are doing in their application during that trial period.

It is very important to understand users behavior – especially at the trial period in order to proactively prioritize customers to refer to during that time. This way you could know who is potentially at risk because they’re not using the product or – the opposite – you can spot customers who are using the product well and you can use them as a reference or a case study.

Tracey especially likes the integration Totango has with salesforce and the fact that sales people are exposed to information that shows the level of customer engagement. This will allow them to determine the priority of their calls – for example they can first contact the users who are actually evaluating the service and try and move them up in the sales cycle.

To read the full transcription of the video, click here

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Video Transcription:

Q: Hello, who am i speaking with here today?

A: Hi, my name is Tracey Kaufman, I’m the a VP of customer experience for cloud 9.

Q: Since we just went through the demo of Totango, can you give me your first reaction and who do you think should look at the Totango product and what’s cool about it?

A: So i think, actually, you know, certainly any one in the SaaS business who has recurring revenue or has trials, whereas anything to do where they need to understand the activities of their users and really try to chart from the time that you say OK, we’re going and we’re deploying and I’ve launched you, then what happens?

If you have a trial it’s absolutely critical to understand what is your leave conversion? Right who using this trial. Because what are you going to do? You’re going to call. You’re going to say, here you go, have this 30-day trial. And then you sit and you call them 30 days later so if you are a sales VP or a marketing VP and you actually want to know what happens, and you want to get a proactive look at some key trick so that you know when to call them or when to send off an email.

You know, if you’re like me and your running customer experience and you want to understand churn, and you want to understand who is potentially at risk because they’re not using the product or on the other side, obviously, people who are really using the product and gang busters and you can use them as a reference or case study think, you know, marketing, sales, customer experience, i mean, product, what part of the product you’re using. So i think it’s widespread usage, actually.

Q: That’s great. What do you think is the most sticky feature of the product?

A: So, i really love the fact that, of course you’ve got these great analytics and you’ve got people who are individuals in executive positions who love numbers. But what I think is the best thing you talked to me about, was how you’re actually going to put the information back in sales force and that way your sales reps can go in and figure out “Oh wow, I have this trial customer and I don’t know whether they’re using it, but wow now I can find out who’s actually using the product. So now I know I’m going to call them, because they’re going to be hot. Because I’ve got these ten people who’ve started and tried using my product and I can call them and now maybe move them down the sales cycle. I just think that’s great.

I agree with that saying. Furthermore, I think that if a business is constantly supplying [...]]]> In today video post, Tracey Kaufman, VP of Customer Experience for Cloud9, speaks about how a business should aspire to its customer’s success in order to become successful itself.

I agree with that saying. Furthermore, I think that if a business is constantly supplying an added value to its customers and focusing on the quality of its service rather than on sales (read: How NOT to Sell in SaaS and Increase Paid Conversions), that would lead to a win-win situation as both the users will get added value and the business will gain loyal customers.

Tracey is also talking about how to count active paying customers, referring to Jeanne Bliss book: “Chief Customer Officer“. How do you measure how many customers you have? Do you count your customer accounts? buy do you include cancelled account in this amount? and did you count how many of them have actually succeeded and how many are going to renew?

In this blog I mention the importance of the measurement of the key metrics that any successful SaaS business should have. There are measurements which sometimes look simple but takes several metrics to calculate. Also should also keep in mind, that measuring is just the first step – the second step, which is just as important, is to interpret these numbers into customer behavior and make the right decisions by them.

To read the full transcription of the video, click here

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Video Transcription:
Hi, my name is Tracey Kaufman, I’m the a VP of Customer Experience for Cloud9. In a lot of times, I think people look at, when they look at their customers, they say, “OK, well how do we know we’re done and if you have a product you know are they using that product? Have you deployed that product? Have you gotten them implemented?” But really you have to ask yourself–the question is, “What is the greater vision for that product?” Are you telling this customer that they’re gonna grow their business or they’re gonna gain more revenues or they’re gonna gain more forecast accuracy like we talk about.

And so I really believe at the beginning of an engagement with a customer, you have to dream. You have to figure out, what is it that they really want so it isn’t just the tactical, and then gauge success and come up like with a little success curve so you have key metrics along the way and you can have, you know, individual wins along the way but at the end of the day you’re really reaching high up, and that’s when you’re successful, when they’re increasing revenues, when they’re growing their company because of using your application.

Jeanne Bliss wrote a book called, “Chief Customer Officer”. And it’s really the Bible that I use for if you’re trying to do a customer success. disorganization. You really should read that book. It’s asking yourself the very basic questions of, how do you count your customers.

So many companies You ask them how many customers they have. And they look at their active paying customers and that’s their customer account. But you also have to know other questions like how many customer did you have now many of them actually cancelled? And how many of them are successful? And how many of them are going to renew?

So you have to be a lot more granular and segment your customer base and understand what your patterns are. If you had a hundred customers and now you have fifty customers, well that’s a problem. Because now you have a fifty percent turn rate. So it’s really being much more honest with yourself.

Yammer, like other SaaS companies understands that Customer Success is key to their success, and much like other successful SaaS companies invests significant efforts and resources to ensure that.

Client retention is a critical component to any organization, especially for Client retention is a critical component to any organization, especially for subscription based revenue model organizations.

I agree with Jeff that reducing churn is not only the concern of your Support group – the entire company should focus on client retention and reducing churn as focusing on existing leads is more profitable than acquiring new ones (see: Treat Customers Based on Their Value)

Below are the most critical elements for client retention strategy:

1. Losing an executive champion opens the door for competitive bids at renewal time – In order to leave their mark, new executive champions will be open to more competitive bides before agreeing to renew.
2. Many software companies are surprised when clients renew or leave - technology companies need to adopt a client lifecycle approach that removes the element of surprise.
3. Understanding the true retention rate – many clients will renew in year two more as a reflex then as a choice (Unless you have failed them miserably) making the 3^rd 12 month term less likely for renewal. Therefore, it is important to measure retention rate per subsequent renewal years
4. Having high client retention, frankly, is hard work – clients will renew only if they find value in your product. Ensuring retention requires hard work and the whole organization should be focus on that.
5. A disconnect between the purchaser and the user community spells trouble – Companies rarely renew a solution that is not being properly used.  Wherever necessary, bridge the void between purchaser and user when a divide exists.
6. The bad news – SaaS solutions are easy to deploy – If they are easy to deploy, they are also easy to remove and in many cases, the customers’ risk in replacing a SaaS provider is low. Retention is always a risk, when leaving you is painless – relative to the on-premise model.
7. Client retention is strengthened when your solution is connected into a larger eco-system of solutions – your clients will be more dependent on your solution and less likely to leave if your solution can integrate, communicate or otherwise “hook into” other key tools that your client needs such as financials, CRM, project management tools, etc.
8. Complimentary service offerings positively impact client retention – That too will create dependency for your service – offer complementary services that will help to ensure that your solution is entrenched in your client’s business process and workflow.
9. Sales rarely take an active involvement in client retention – Sales people skill set is very different from Customer Success skill set (read: Hunters and Farmers post) and even though Sales is often responsible for all revenue they cannot and should not spend the amount of time and effort on client retention.  This is another reason why you need a client lifecycle approach that complements the Sales team and gives them the confidence to pursue new business because they know the company is pursuing client retention and revenue protection.
10. Clients will not renew if they think they have chosen a market loser – have your Marketing and PR teams communicating you market wins to counter any perceived “market loser” symptoms.  i.e. RIM, a great company, that has great products, but will lose clients not because their products or solutions, but because they are perceived (wrongly so) as a “market loser” – and no one wants to be associated with a perceived loser.

So take a hard look at your organization through the lens of each of our Top 10 items, and adjust accordingly.

For the full version of the tips, please refer Jeff’s post on ServiceVantage blog

Get your FREE copy of our latest RESEARCH:

“The 2012 SaaS Free Trial, Freemium and Pricing Benchmark“

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

Increase your sales revenue!
Try Totango free for 30 days
Totango analyzes in real time customer engagement and intention within SaaS applications to help you grow your business

Increase your sales revenue!
Try Totango free for 30 days

The subscription model, like many of the B2B sales models in the SaaS industry, is all about the customers [...]]]> The subscription-based economy is thriving.  Netflix’s well-known model (and subsequent public relations mess in changing it), and the recent announcements from Google and Apple have set it in stone.

The subscription model, like many of the B2B sales models in the SaaS industry, is all about the customers – listen to your customers and have your service to comply and you’re on the right direction!

Here are 10 tips that can assist subscription based companies to get by in the industry:

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After yesterday’s post on Top 10 Requirements for an Effective Client Lifecycle, Today, I’m going to review Jeff Bennet’s top 10 must do’s for young SaaS companies.

Jeff Bennett, who is the founder and CEO [...]]]> I declare this week as the “Top 10″ Practices week in Totango!

After yesterday’s post on Top 10 Requirements for an Effective Client Lifecycle, Today, I’m going to review Jeff Bennet’s top 10 must do’s for young SaaS companies.

Jeff Bennett, who is the founder and CEO of ServiceVantage, has a lot of experience working with SaaS companies in various sizes and being part of the SaaS Industry myself, I see eye to eye with his key strategies and therefore thought it would be interesting to share:

1. Easily Consumable and User Initiated - have ALL of your customer experience as easy as possible. This includes software trials, sales, on-boarding, training,  support etc.
2. Hold off on the elephant hunt - Don’t start off with the big shots companies, take it step by step and wait till you’ll have a more mature infrastructure
3. Configure, don’t customize - Rather than customizing, allow configuration which do not change the core product yet provide some tailoring to specific customer needs
4. Marketing can close deals - Sales are all about conversion from lead to paid. Incent your marketing to close deals!
5. Understand your cost of sale - Push deals by their cost – bigger deals to outside sales and smaller to marketing
6. Understand usage rates – Learn to measure customer engagement and usage data, you can use specified SaaS dashboard to do it for you!
7. Have a Client Lifecycle Program – Especially important for SaaS businesses that need to ensure customer retention and recurring revenue
8. Don’t be an island – Aspire to integrate your solution with other solutions to increase dependency on your service
9. Broaden the impact of your SaaS solution through services – Provide service offerings to compliment your solution
10. Make client retention a corporate mantra – this is not only the concern of your Support group – have the entire company focus on client retention and reducing churn

For the full version of the tips, please refer Jeff’s post on ServiceVentage blog

Do you know how to measure your Customer Engagement?
Our SaaS Dashboard can easily do that for you!
Try it now for FREE

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Without Board and CEO level visibility, buy-in and sponsorship this type of corporate-wide initiative can be challenging to have all key stakeholders involved and invested. Although it is often lead by the client services team, a multi-departmental approach is necessary for [...]]]> 1. Must be a corporate wide initiative – not just a client services initiative.

Without Board and CEO level visibility, buy-in and sponsorship this type of corporate-wide initiative can be challenging to have all key stakeholders involved and invested. Although it is often lead by the client services team, a multi-departmental approach is necessary for it to be highly effective.

2. Each Department Leader has a key role to play

In a successful Client Lifecycle program, the leaders in departments such of Sales, Marketing, Product Management and Client Services all have a role to play at some point. Their contributions provide the pieces to the puzzle for a client when they are decided whether or not to renew.

3. Market and Promote your client lifecycle program

When you develop and execute on a truly unique approach to client engagement that will absolutely be a differentiator from your competitors, brand it. Market it. Don’t be afraid to let people know that your whole company has an approach that will make your clients successful with your product & service over the long haul. This added visibility also provides the appropriate amount of pressure to make sure your organization sticks with it.

4. Have a designated owner who acts as a “quarterback” of Client Lifecycle program.

Coordinating multiple stakeholders does require ownership for a client lifecycle program. The Executive owner is often the most senior client-facing (post-sale) executive. Depending on the size of firm, this would be the CEO, COO or VP of Client Services. This executive owner should be responsible for client retention. From a client to client perspective the owner should be a post-sales account manager, often referred to as a Client Advocate, Client Account Manager or Client Success Manager who is measured on retention, and not new sales revenue.

5. The Client Lifecycle activities should support the three main criteria that a client will use when deciding to renew:

Although this is a potential point of debate, from our experience there are 3 key factors that your client assesses when deciding to renew business with you:

1. Is your organization meeting or exceeding their current business needs / business drivers;
2. Does your client have confidence that you will continue to meet their current, future and evolving business needs business drivers, and;
3. The client is confident that they picked a market “winner” not a market “loser”. For example, even though RIM continues to be quite strong on meeting the business needs of the corporate user community, they will still lose many clients because they are now perceived , wrongly so, as a market “loser”. No one will want to be the one that made the decision to go with a market “loser”.

Each of these three areas must be proven, measure, re-evaluated over and over again throughout the client lifecycle to ensure that the elements your can control or influence are in your favor when they are making a renewal decision. There are other factors outside of your control, but they are just that, outside of your control.

6. Should leverage, and take advantage of, your ability to use client driven referrals to generate new business.

This should be an obvious, but many companies stop at having a logo on a website, or perhaps a case study, as a method to use an existing client as a reference. The reality is, that if you are doing a great job for your client, many of them would take a call from a prospect, or even better, refer you to a peer from another organization who would also benefit from your solution. As a former colleague of mine used to say, “Don’t ask, don’t get”. Understand, per client, what type of reference they are willing to be, and leverage it – but don’t take it for granted either. You need to continue to earn their reference.

7. Should concentrate on user adoption and overall usage rates

The user community within your client’s organization can change frequently due to layoffs, new hires, mergers, and other business events. You client lifecycle approach must have a deep understanding of the user community and adapt to a changing and evolving user base within the client’s organization. A strong client lifecycle approach is highly proactive in tracking usage & adoption and stays on top of the shifts in user community and reacts accordingly. A fantastic product that could help you get great detail on usage iswww.totango.com . It gives a level of usage intelligence that is invaluable.

8. Should provide client intelligence on the renewal health of each client

Having a client lifecycle program that measures, among other possible things, business driver attainment, Vendor-Client interactions, client’s willingness to be a market reference and usage rates provides an ongoing scoring ability to gain a solid understanding of the likelihood of renewal. Doing this in regular intervals gives you plenty of time to change the course for any client who is on the path of not renewing.

9. Measurable with centralized access for all stakeholders

A successful client lifecycle program is like a hub on a wheel with information “spokes” going to and from all key stakeholders in the your organization. Each group will benefit significantly from the knowledge/intelligence gained about client activities, successes, failures etc. In our experience, it can have a profound effect on who you market to, how your market to them, what the actual development priorities should be, etc. With one of my clients, it provided great clarity into a market segment that just wasn’t right for their solution. They pulled all Leads, Opportunities with prospects from this segment, and they exited gracefully from existing contracts that we knew were doomed to fail.

10. Proactive in nature,

If your sole interaction with your clients is reactive by definition it’s a failure. Getting ahead of a train, is far better than being run over by it.

This blog was first posted at ServiceVantage by Jeff Bennett, Founder and CEO. His company, ServiceVantage, which has helped technology clients to maximize recurring revenue, strengthen client retention and increase client-driven referrals via a unique client lifecycle approach since 2002.

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Knowing of the advantages of free trial / freemium models, I agree that companies that are making the adjustments towards those sales [...]]]> As promised, here is the second tip from Chris Yeh, VP Marketing of PBWorks about freemium sales models for b2b and SaaS.

Knowing of the advantages of free trial / freemium models, I agree that companies that are making the adjustments towards those sales models have an advantage in today’s online market where users can pick their products without a moderator (sales person) and pay for it only it it’s valuable for them

Similarly, Chris believes that the way to business success is establishing a trial for its product. This way customers feel they’re not taking a risk by buying a product but they test it first and understand how the product works before paying for it and this is tremendously important for building up a Successful contemporary business.

In his blog post: Bought vs. Sold (Why Jive is a dinosaur & Dropbox is the future), Chris compares 2 types of companies that have similar revenues achieved it in very different ways. The first company is Jive software and the other is Dropbox.
Jive is a 10 years old traditional enterprise company who spent millions of dollars in marketing and still not profitable and on the other hand there’s the 5 years old Dropbox, who has 40 employees already and a hundred millions in revenue.
 
To read the full transcription of the video, click here
 

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Video Transcription:
I’m Chris Yeh. I’m the VP of Marketing for PBworks, which is a SaaS company that does collaboration software for various markets like advertising agencies, law firms and, of course, general business.

Well, it just so happens that I wrote an extensive blog post about this, comparing Jive Software with Dropbox, two companies which, interestingly enough, have almost the same revenues, but have achieved them in very different ways. Jive is a traditional enterprise company that was started almost 10 years ago and has spent hundreds of millions of dollars in marketing to get to where they are today and are still not profitable.

On the other hand, we have Dropbox which was started in 2007, has something like forty employees in a hundred million in revenues and so where I really see this going is that you know, certainly the tradition enterprise world still applies to large complex products but the ability to get a trial going, the ability to get people to say, okay I’m not taking a risk by buying this product, I know that it can deliver for me, is tremendously important for building up the business, so somebody like Dropbox or somebody like PBworks who offers the ability for people to really understand how the product works before they have to make a six figure commitment I think and that’s the way to go.

As you know, I declared more than once that the customers are kings which means companies should be able to understand their customers behavior and trends [...]]]> I’ve conducted an interview with Chris Yeh, VP Marketing from PBWorks and thought it would be interesting to share.

As you know, I declared more than once that the customers are kings which means companies should be able to understand their customers behavior and trends and interpret it correctly into customer engagement level in order to know which customers to focus on later at the funnel.

Chris explains why customer engagement is so important when using the land and expand strategy – for example once a large company is starting to use their services their goal is to have that company to use them more and more and eventually to spread into an enterprise wide deployment.

So tracking and enhancing the customer engagement level is very important. The metrics to know that could be i.e. how much a user is using the products, how many usage days they have per week, the total volume of transactions, etc.

I agree with using those metrics in measuring customer engagement and every company should pick the right metrics for its business. At the same time, there are acceptable metrics that every SaaS company should use which are elaborated in our SaaS Business Metrics Survey Results. Using those metrics  will not only show the engagement level but the whole business overview which every successful SaaS business should act upon.

Tomorrow I will post another tip by Chris about Freemium Sales Models for B2B and SaaS.

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To read the full transcription of the video, click here
 

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Video Transcription:
I’m Chris Yeh. I’m the VP of Marketing for PB Works, which is a SaaS company that does collaboration software for various markets, like advertising agencies, law firms, and of course general business. Customer engagement is super important to us because a lot of times we have, what we call, a land and expand strategy.

So often times a large company will start to use us in just a small group, maybe just one team that’s using PB Works to be more effective. And what we want to do is to have them use us more and more to bring in more and more people and eventually to spread into an enterprise wide deployment. So what’s very important for us is to be able to track and enhance the level of customer engagement, how much they’re using the product.

We look at things like how many days per week are they using it. We look at things like what’s the total volume of transactions and things that they’re doing and all this is really important for our marketing and for business in general.

I emphasized during the talk [...]]]> We’ve held yet another very interesting lean-startup meetup on Thursday to discuss free to paid conversion best practices for cloud applications.
First, please find within the presentation I’ve used. It’s a collection of many ideas we’ve been working on at TOTANGO collected into idea presented by this presentation.

I emphasized during the talk the need to focus on the ‘evaluating’ users – the ones that their actions indicate genuine intent to come up with a buying decision.
Many people still wanted to understand what to do with the other group. The short out of the sleeve answer would be: “It depends ”. Seriously, this question deserves a blog post on it’s own which I’m going to write later this week.

In the mean time, please feel free to enjoy the presentation. You will be able to learn a lot also by starting a ‘free trial’ for the TOTANGO trial conversion product. So here’s the link for that as well.

If you enjoy this content, please be kind and share it with your friend. The links are above and below.

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In his last tip from the Sales 2.0 Convention, Mark Roberge, VP Sales at Hubspot explains that it’s really depends on your buyer, [...]]]> So how do you know which sales model is best for you – zero touch vs. low touch vs. high touch vs. field?

In his last tip from the Sales 2.0 Convention, Mark Roberge, VP Sales at Hubspot explains that it’s really depends on your buyer, what you’re selling and the full sales context and it does require some experimentation.

Preferably you should aspire to go on no touch or low touch as possible as the economical will always be best if you can pull that off.
But it is best to simply run experiments – set 100 leads to no touch and 100 leads to low touch and check the conversion rate, revenue, Customer Lifetime Value and in SaaS see what the CAC to LTV is  (Customer Acquisition Cost to Lifetime Value) and what the payback periods are and take the approach which has the best economics.

Furthermore, as mentioned in many of my previous posts, it is highly recommended to keep a thorough and updated Cohort Analysis for your metrics so that user behavior would come out accurately. This is the only way a successful SaaS business could reach the right consequences and choose its suitable sales model!

Review Mark’s first tip “Do you Distinguish Your Sales to Hunters and Farmers?”
Review Mark’s second tip “Top-of-Funnel Strategy”

To read the full transcription of the video, click here

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Video Transcription:

Mark Roberge, VP of Sales at Hubspot.

Yes so, zero touch versus low touch versus high touch versus fields, the quick answer is it depends, unfortunately, and I’ll walk through the dynamics. It really depends on your buyer and what you’re selling in the full sales context. And it’s gonna require some experimentation. I think in general you’d prefer to go as no touch or low touch as possible.

I think the economics will always be best if you can pull that off. But hey, if you’re wondering, “Here’s a lead that has 50 employees in this particular segment. Should this be a no touch or a low touch or a high touch?” You run experiments. You send a hundred leads like that to no touch, you send a hundred leads like that to low touch, and you see what the conversion rates are, you see what the revenue is, you see what the lifetime value is, in a SaaS role you see what the LTV to CAC and the payback periods are, and then whichever ones have the best economics, you take that approach.

Mark recommends on keeping the top-of-funnel as wide as possible and worry about the filtering and the quality further down at the funnel.

Most companies don’t know what type [...]]]> Another tip from VP sales at Hubspot Mark Roberge at the Sales 2.0 convention re top-of-funnel strategy.

Mark recommends on keeping the top-of-funnel as wide as possible and worry about the filtering and the quality further down at the funnel.

Most companies don’t know what type of a customer will convert and this will allow tracking a whole bunch of data that can be analyzed later.

However, the danger in that strategy is when passing all those customers to your sales team, it could lead to ineffectiveness and waste of their time so it is recommended to use filtering at this stage so that the most quality stuff is being transferred.

As mentioned in my previous post: “Top 3 Metrics to Measure Customer Engagement“, there are ways to set your filters by. Choosing the right metrics and measuring them correctly will assist in screening out the non potential buyers and keep the high potential ones is essential to any successful SaaS business.

Once the data is gathered and there are more and more leads you can continue optimizing this process.

Tomorrow I will publish another tip by Mark Roberge regarding how to pick your sales model – zero touch vs. low touch vs. high touch.

To read the full transcription of the video, click here

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Video Transcription:

Mark Roberge. VP of sales at Hubspot.

I highly recommend at the top of the funnel keeping it as wide as possible and worry about the the filtering and the quality further down to the funnel, and the reason being is especially when you are stunning out and most people are starting out with inbound. You actually have no idea who’s going to work out, what type of marketing tactics are going to work, what types of buyers are going to actually work well in your funnel, so keeping it why it is, possible allows you to capture a whole bunch of data to see what actually progresses through.

The danger in that strategy comes when you pass everything to the sales team, because that can lead to a lot of ineffectiveness in recent time by that sales team so with that process you want to have a lot of filtering to make sure that the most quality staff is actually getting down to the sales team.

And as you gather data and gather more and more leads, you will continue to optimize that process.

You know how it is [...]]]> Another tip taken during Sales 2.0 from Darren Suomi, VP Sales at HootSuite – this time regarding self service model and how to adjust it to reduce churn.

You know how it is that you get many leads and you just don’t know who to refer first? This situation is common in many SaaS companies.

With the right metrics and cohort analysis, it’s easy to decide who are the more engaged customers that are ready for sale and it’s usually more likely that if you’ll approach those customers, they’ll signup for your product.

Darren is also claiming that even in a self service model (low-touch model) like HootSuite, once they find out who are their active users in their service, they proactively reaching them and by that they reduce churn.

Tomorrow I will publish a tip by Mark Roberge, VP Sales at HubSpot who will explain the difference between the hunters and the farmers skill sets.

To read the full transcription of the video, click here

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Video Transcription:

I’m talking to Darren Suomi, VP of Sales from HootSuite.

Bring me a model which where we play, it is a self-service model. So, we’re really trying to look at it from turning down the churn. I guess I’m looking at what people are trying to play instead of going from just a self-service. We’re actually just playing with the model in terms of a little bit of more of a high touch point. So, we are really taking a look at our customer who are quite active on social media. We are actually proactively reaching out of them and seeing where we might be able to help them versus just letting them fend for themselves.

As you probably know, [...]]]> At the Sales 2.0, I’ve met Darren Suomi, VP Sales at HootSuite who gave me a tip regarding social media – If you’ve ever considered not to give a salesperson your phone or email address, consider giving them a social media address.

As you probably know, nowadays, where customer engagement is the focus of successful SaaS business, social media is a central player in communicating with your customers and for customers to communicate with each other. As I presented in my previous video post, the world have moved on from “system of records” to the system of engagement and social media become a big influence in the system of engagement.

According to Darren, a lot of companies are afraid from allowing their workers interacting on this medium, however, Darren encourages they allow it as it worth while in the long run. Of course it should be accompanied with guiding you team about what’s acceptable and what’s not.

In my next post I will publish another tip from Darren regarding self service model and how to adjust it to reduce churn.

To read the full transcription of the video, click here

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Video Transcription:

“Darren Suomi, VP Sales from HootSuite.
Well, what I was talking about earlier was in terms of well, in the past if you’ve ever considered not giving a salesperson a phone or an email address. I think it began by giving them a social media address. A lot of companies are afraid to let people go and interact on that medium, I will say, really, “Open up, stick your foot in the water.
Get the waters warm.”
So come on in, play around, let people go but give them a little bit of guidelines in you know, what’s acceptable and what’s not, what kind of branding you want to give them.”

As mentioned a lot in this blog, nowadays the customers [...]]]> Here is the additional interview promised from the Enterprise 2.0 Conference.
This time Jessie Wilkins, Director System Engagement for aiim speaks about how will the future of the enterprise information management will look like.

As mentioned a lot in this blog, nowadays the customers are kings, customer engagement is taking a royal place in web applications and the interaction between the business and the customers and between the customers themselves is highly important for any successful SaaS business.

Jessie mentions that for decades the world have been focused on “system of records” which is actually focusing on documents.
These days the focus is on conversation, interaction, Facebook “likes” and it’s called “System of Engagement” where individuals engage with each other, organizations engage with customers and partners try to develop more collaborate ways of working together.

To learn more about the System of Engagement, read the white paper by Geoffrey Moore: System of Engagement and the Future of Enterprise IT

Tomorrow I will upload an interview from the Sales 2.0 Conference. This time Darren Suomi, VP Sales at HootSuite will give a tip regarding social media channels in businesses.

To read the full transcription of the video, click here

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Video Transcription:
“My name is Jessie Wilkins. I’m Director Systems of Engagement for Aiim. Aiim is a non profit trade association. We do market research, networking events, industry analysis, standards development and training. We did some research earlier this year, and to try and determine what the future of enterprising information management looked like.

And what we determined was that for decades we’ve been focused on systems of record, all of those databases, repositories, share points, et cetera – that every organization has. They’re focused on documents and now we are starting to focus more on conversations, interactions, Facebook likes – and so we call those systems of engagement.

Ways in which individuals engage with each other, organizations engage with their customers and their partners and try and develop more collaborative ways of working together. Our research and research from others including Mackenzie, Forrester and Gardner, all suggest that organizations that use these tools effectively are more profitable, their market leaders are gaining market share, they can streamline their processes, but too many organizations don’t know how to do that.

And so, we’re here to hopefully provide our strategies, processes and plans for how to do it more effectively.”

At the Enterprise 2.0 Conference, I’ve met Eric Montoya from BadgeVille and interviewed him about the ways to convert from visitors [...]]]> In the next couple of weeks I would like to share some short video interviews on relevant subjects taken at several events I’ve been to.

At the Enterprise 2.0 Conference, I’ve met Eric Montoya from BadgeVille and interviewed him about the ways to convert from visitors to signups and from freemium to paid users.

These topics are highly relevant to every SaaS business and I’ve been writing a few posts about it lately, including my previous post.

In this interview, Eric explains how the conversion process become a simple mechanism when you find unique and fun ways to get your users to know your product by gentle guides or creating a feedback system that is presented back to the end-user once they conducted a series of behaviors that we wanted them to.

Eric also gave some interesting examples in which he mentions a 500% lift for a unique application of Samsung – view the interview to learn more

Tomorrow I will upload another interview from the Enterprise 2.0 Conference. This time Jessie Wilkins, Director System of Engagement for aiim will talk about how the document system era evolved to the system of engagement era.

To read the full transcription of the video, click here

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Video Transcription:

“My name is Eric Montoya, I am with sales and business development here at BadgeVille. You know, there is a couple of really, really unique things that happen within the context of any sort of online community or any sort of interaction with the product, the first is some sort of anonymous or local capture, right?

How do i get that person who has just come to my platforms, to my products and my brand and what can I do to try to capture them at that point? How do I convert them, maybe from fremium to paid and all of those mechanics that go along with could be something as simple as a mechanism like gentle guide or something where I am taking a series of behaviors or actions and presenting that back to the end user in some sort of unique, very step oriented, fun way with that getting feed back as they through all of the interactions learning the platform, taking a steps in necessary to become engaged within the product, but they are doing it in a way that’s very controlled and really wrapped around the behaviors and the actions that you want dozen users to perform.

Us, like our kind of broad, you know, 100 plus customers that we have now, we’ve seen, you know, strategic impact to the goals and objectives tied to a lot of those specific behaviors in the, like, 25 to 30% range, if you want to be very broad.

When you look at very, very unique applications or specific behavior such those users are performing. Samsung, for example, has just put out this last week that they are seeing a 500% lift on some of the drive and user engagement and actions that are very relevant to the success of their community.

Things like rating and reviewing and interacting with the product and the brand overall. So, you know,we have seen a lot of variance but the impact, you know, whether that’s 10%, 50% or 500%, absolutely the numbers are there.”

This is especially important for lean startups and high velocity sales businesses, where there are a relatively high number of prospects as compared to the number of sales and marketing [...]]]> Anthony Iannarino’s sales blog on “All Opportunities Aren’t Created Equal” got me thinking about prioritizing your time, given limited sales and marketing resources.

This is especially important for lean startups and high velocity sales businesses, where there are a relatively high number of prospects as compared to the number of sales and marketing resources.

However, prioritizing your time in a self service sales model is changing as compared to the traditional enterprise model where every prospect requires sales touch. Consider these reasons
why a prospect may not be ‘Mr. Right’ or ‘Mrs. Right’ in the traditional sales model (as mentioned in Anthony’s blog):

#1 – When a Prospect Has No Money. The art world’s ‘starving artist’ is the ‘struggling start-up’ of business. Both may produce beauty, but without a stable income neither is worth bringing
home to your parents.

#2 – When a Prospect Has Too Much Money. They have big ideas and big budgets to make them happen—they just need your software, customized almost beyond recognition; causing too much work and distraction.

#3 – When a Prospect Is Dissimilar. Trust, communication, shared values, and a united vision for achieving goals are all factors of a great relationship.

Interestingly, if you are offering an online, self service trial for your service and have a low touch or zero touch sales model, you may not need to be too concerned about these factors
upfront. You can let customers self qualify through your sales funnel. It is ok to have any of these three customers sign up for a trial. Then actions speak louder than words. When a prospect
is active during the trial and engages with your product as-is, he is probably worth your time.
If, on the other hand your prospect never logs into the free trial or is aggressively calling your support team, it may be worthwhile finding yourself another ‘date’.

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As I wrote in my previous post, two very [...]]]> So you have a product! you’ve worked so hard on making it the way you want (iteratively of course) and now you want to sell it – so how do you do that? The answer, as strange as it might sound, is that you don’t!

As I wrote in my previous post, two very common sales models which have recently evolved are the zero-touch and the low-touch models where there are no sales teams or a very small sales team respectively. Why have these models evolved? because they were needed! in the SaaS reality, where the Internet is flooded with information, customers prefer being the active searchers and find solutions for their specific problems. They tend to rely less on non-objective sales people to convince them why their product is good for them – they prefer to simply read or hear about a solution from someone else and if they feel a solution might help them, they can simply sign-up to it’s free trial period or free account (freemium) and try it themselves!

Come to think of it, it’s kind of a revolutionary state of mind where your customers want to be able to choose their products based on its true value! After choosing it, they’ll evaluate it and only then, if they find it really helpful for their needs, they’ll convert to paid users.

The key is not to sell the product but to give away value – if you honestly & utterly try to gain customer success and help other people with their existing needs, they will feel your pure intentions and stay for more. Once trying to sell, the whole focus will go in that direction and you risk loosing the audience loyalty.

This very much like Google organic search: if your website truly provides relevant and valuable content, it will be ranked high in Google and attract prospects. Similarly, if your product is truly relevant and provides value to customers, prospects will try it and convert into paying customers.  Your solution should of course solve a very common problem and preferably have a unique answer (and that is a subject to a whole different post).

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#1 – Attract many, then focus on filtering

If [...]]]> It was a jam packed day at Sales 2.0 in Santa Monica today. It was a great opportunity to meet with and learn from some of the brightest in the Sales 2.0 community.  I have summarized my key takeaways for Sales 2.0 leaders below:

#1 – Attract many, then focus on filtering

If your prospects do research online, will they find your company, or your competitor? Mark Roberge, VP Sales from HubSpot argued that you should keep the top of your sales funnel as broad as possible. Attract as many people as possible to your website through good content. HubSpot itself is attracting 50,000 leads a month, of which 40% get passed to the inside sales team and about 400 (or less than 1%) convert into new customers.  The leads that don’t convert still help to reinforce the HubSpot brand and trust. With so many leads, strong filtering and lead scoring algorithms are keys to sales success.

#2 – Give all sales people a social media address

Scott Holden, Senior Director at Salesforce.com argued that not just companies need to be discoverable, but also individual sales representatives. Social pages are often the first ones to come up in search results.  Darren Suomi, VP Sales from HootSuite called it “giving all sales reps a social media address”. He said it is no different from issuing a rep a cell phone and e-mail. IBM indeed has done just that, said Douglas Hannan, BU Executive at IBM: all 1,000 IBM sales reps have a web page with built in 2-way video and chat. They are also asked to get on Twitter and LinkedIn. IBM marketing maintains a social messaging calendar to make it easy for reps to find content to post.

#3 – Deliver value first, sell later

Jim Cathcart, the well-known author of “Relationship Selling”, defined what customer relationships are all about: in a relationship people know each other and have an exchange of value. Ask yourself: who is truly glad to know me? In a sales relationship, provide value first, sell later. Don’t talk about up selling customers, but rather up serving them. If you do a good job others will vouch for you and recommend your services. Scott Holden summarized this as moving from self-promotion to social referrals: “trust me, he is a great lover” and not “I am a great lover”.  I expressed a similar sentiment in my blog earlier this week on Genuine Customer Engagement.

#4 – Use online demos to drive sales

Salesforce.com recently did a survey of 1 million influencers in the buying process and found that 50%-70% of sales processes start long before a sales person ever gets involved. The most important deciding factor in the sales process was “online demos”, not sales person interaction.   HubSpot data points in the same direction: the most reliable indicator that a lead will convert into a customer is a request for a demo (46%) as compared to download a white paper for example (22%). As we discussed in many blogs including Trial Conversion is Top Priority in SaaS, I would add that interaction with a free trial version of your product has an even higher correlation with conversion to customer.

#5 – Consider a territory model based on social proximity

A somewhat radical idea was presented by Michael Lodato from Network Hardware Resale. He argued that in a commodity business (he sells network hardware) buyers are deciding based on personal relationships and customer service. Therefore he moved to an open territory model, where leads are assigned based on the personal relationship of a rep to the lead, rather than geography. On paper this social proximity model sounds great, but in reality it is still difficult to implement. Michael admitted to have a team of marketers manually assigning leads based on social parameters.

#6 – Move towards a lower touch model

Gerhard Gschwandtner pushed speakers to learn from B2C selling models:  Amazon has $30 billion in sales with ZERO sales reps. B2B companies need to learn from this and move to lower touch selling models, wherever possible. One of the speakers, Rini Das from PAKRA, has achieved just that. She is closing 95% of her business based on social media leads. She has hardly met any of her clients in person, but is still doing $30,000 to $150,000 in revenues per customer each year.  

Gerhard and gang; thank you so much for a great conference!

Tomorrow: Enterprise 2.0!

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This article grabbed my attention as I’ve been thinking a [...]]]> Jon Buscall on Be Good to Your Customers believes that most engagement related activities these days are actually lead generation activities and not really about customer engagement.

This article grabbed my attention as I’ve been thinking a lot lately about the whole customer engagement life-cycle for SaaS and other online services.

The main strategy Jon suggest B2B businesses should apply is to provide true value to loyal customers only.

I would argue even further; loyal customers of online services should get specialized treatment. They should receive personalized engagement by their B2B vendors.
This wasn’t possible few years back, when it took few months and even years to create products and later on deliver it to customers. This isn’t the case anymore, and customers do expect this level of service.

For example, SaaS companies basically have all the information required to provide to each and every one of their customer special treatment tuned directly to their needs:

• They know who they are
• They know what they are trying to achieve with their service and
• They have all of their interaction history

Genuine customer engagement is personalized, contextual and timely. This is what customers expect.

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Lesson 1: Think how [...]]]>

I attended Jeff Kaplan’s Cloud Channel Summit today. It was a very interesting conference. Clearly cloud channel sales is in its infancy, but there were some companies here with successful channel strategies including Salesforce.com (1400 partners and counting), Scribe and others.  What follows are six tips that stuck with me:

Lesson 1: Think how you will compensate cloud channels
By: Jeff Kaplan, Managing Director THINKStrategies @thinkstrategies
Jeff opened the conference by highlighting the 4 Common Fears of the use of the Channel in Cloud: Cannibalization, Confusion, Disruption of the corporate environment and operations, and Channel conflict. After listening to most of the conference, I would have added to his list: How to compensate the channel to create a win-win relationship (as we discussed in our blog post on 3 Recommendations for Sales Compensation for SaaS from earlier today).

Lesson 2: Your job starts when you sign-up a new customer
By: Ron Huddleston, SVP ISV Alliances, Salesforce.com @Rhuddles1
Your job just begins when you sign-up a new customer: you need to focus on customer success (as a vendor and also working with your partners).  With cloud and subscription based businesses, you have to build deeper relationships that last much longer. This is true not only for partners, but also for your relationships with your customers. Also in this context: don’t overestimate ramp & return, don’t underestimate initial investment.

Lesson 3: In the cloud, you have to earn your business on a daily basis
By: Gil Zimmerman, Founder & CEO of CloudLock @giljzim
This one speaks for itself and is re-iterating Ron’s lesson in different words. Customers can vote with their wallets and cancel their subscription, often on a month-to-month basis.  I have written on this topic on this blog as well such as in my blog on Customer Engagement is Key for SaaS.

Lesson 4: The primary role of the cloud channel today is integration
By: Carolyn April, Director of Industry Analysis, CompTIA @CarolynAApril
In a CompTIA study Carolyn found that the primary role for channels in cloud today is integration, not sales.  This makes sense considering many attendees and speakers felt that we haven’t figured out commission plans for channel sales yet. That being said, I believe there will be major opportunities for the channel in on boarding new customers as well as sales, both initial and up selling, that will increase Customer Lifetime Value and Customer Experience.

Lesson 5: Use the coloring book approach to onboard cloud channels (and customers)
By: Brian Anderson, Global Business Development, Dell
The best way to onboard new partners (but this could also be new customers): take the coloring book approach – give them direction, success stories and examples. I really like this analogy and plan to maybe write about it in the context of on boarding new SaaS customers.

Lesson 6: Let customer success own the relationship with the customer
Michael Blaisdell, The Customer Success Management Initiative
Who owns the customer: sales or support (customer success)?  If customer success owns the customer it really changes the tone with the customer and creates much more trust with the vendor.  In reality, customer success probably doesn’t own all of the relationship, but it should at the very least be responsible for the ‘farmer type sales’: renewals and incremental sales. TOTANGO is sponsoring some of Michael’s research and we recommend you check it out. It’s fascinating stuff and an important area.

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A topic that seems to be coming up over and over again today is the need to come up with innovative sales compensation (commission) models that align with the subscription business model of cloud.

While this is mentioned as an issue, not too many solutions were [...]]]> I am at the Cloud Channel Summit today.

A topic that seems to be coming up over and over again today is the need to come up with innovative sales compensation (commission) models that align with the subscription business model of cloud.

While this is mentioned as an issue, not too many solutions were discussed so far (we are only at lunch time) so I went hunting online for some good blog posts on the topic. Here are three posts to get the discussion started:

October 2011 – David Cummings on Inside Sales Rep Comp Model for Startups

Here are some ideas when thinking about the inside sales representative compensation model in a startup:

• Base salaries in the range of $25k – $50k
• Commissions in the range of $25k – $60k (e.g. $40k base salary and $60k in commission for an on-target earnings of $100k)
• Commissions would be 10% – 20% of first-year’s revenues (e.g. $1,000/month SaaS product is $12,000/year with a 15% commission would be an $1,800 commission)
• Commissions should be paid out after the customer’s payment has been received by the startup

July 2011 – Larry Steele (VP of SaaS at Savvis) Tips for Transitioning Your Business to SaaS

It’s not just about compensation: you could technically have a comp-neutral model for perpetual licensing and SaaS bookings. However, you need to examine how Sales is compensated on revenue or bookings. If you set up term limits (i.e., 12 to 36 months) in your subscription billing, then you will want to review your renewal process and make sure your sales team has the right incentives in place to keep the customers you have. Remember, it’s harder to find new customers than it is to keep the precious ones you have.

February 2011 – Joel York Cloud Channel SaaS Channel Compensation

In my post on SaaS Sales compensation, I made the claims that SaaS vendors should a) pay in proportion to the lifetime value of the deal and b) pay entirely up-front, because the SaaS sales rep should not be asked to bear any of the SaaS investment risk, or the rep is likely to just quit and find better work. The same basic ideas holds for the SaaS channel partner with the caveat that it is reasonable to expect the channel to absorb at least some of the risk, if not all of it. So, when it comes to SaaS channel compensation, SaaS vendors should a) pay in proportion to the lifetime value of the deal and b) pay disproportionately, but not entirely up-front because the SaaS channel partner should not be asked to bear a disproportionate amount of the SaaS investment risk, or the channel partner is likely to just quit and find better work.

Somebody also mentioned to me over the break that there may also be models we could learn from in other industries: for example, in commercial real-estate sales people are paid as a percentage of the monthly lease over the lifetime of that lease.

Do you know of any other good recommendations or posts? Please let me know in the comments!

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Matt and I met each other on a very nice day at San Francisco and conducted this interivew which is actually about Totango’s core believes.

Here are the main points from the [...]]]> Interview to DreamSimplicity.com

A quick recap …

The good old sales process according to Joel

“The process went something like this: [...]]]> Joel York has written extensively about the new breed of B2B buyer and the changes to the B2B sales process, especially for SaaS products.

A quick recap …

The good old sales process according to Joel

“The process went something like this: ask the analysts about the next big thing, collect requirements into and RFP, get a list of vendors from a roundup in an industry magazine, go to a trade show and collect collateral, solicit and evaluate RFP responses by mail or fax, call in a short list of vendors to do a dog and pony show, follow up with a technical drill down meeting, maybe do a bake-off or a pilot, select a vendor, call a reference account, negotiate final pricing and contract terms, and wrap it all up by planning out phase 2 of the project: a complex and expensive implementation.”

The new breed B2B buyer: it’s self-service stupid!

“With such a treasure trove of information available online, the Internet is the 21st century B2B buyer’s first stop for researching products and services. Your strongest strategy is to give the prospect efficient self-service access to your content.”

“In the case of most SaaS and cloud applications, the entire B2B buying process is cheap: trial is free and purchase amounts to a monthly subscription that can be canceled at any time. So in addition to reading about the product, the barriers for a customer to go ahead and just try your product itself (even without a lot of upfront research) are low.”

Long story short, the key to the wallet of the new B2B buyer:

Instant online gratification through efficient self-service

So it’s no surprise that many SaaS companies spend their marketing dollars on content creation and inbound marketing, and invest in marketing automation to track campaign ROI.

Good. But not enough. According to Joel.

“Inbound marketing or simply getting found by a prospect is not enough. Once you are found, you must engage with that prospect frequently and consistently throughout the entire customer lifecycle, because if you don’t, your competitors will, and what is easily found can be just as easily lost.”

What’s worse, simply accessing your content may no longer be a reliable indicator of purchase intend. Joel uses the term “fuzzy funnel” to describe the undeterministic process that customers follow these days: the new B2B buying process is anything but linear, deterministic and under the B2B salesperson’s control.

So what comes after inbound marketing? If accessing your content is no longer a reliable indicator of purchase intent, then how to best measure customer interest?

I asked Joel some questions on it via e-mail and got his permission to publish his answers on this blog:

1. Do you see more B2B buyers demanding instant and self-service access to the product or service (rather than just to information and education about the product)?

Joel: I think in general, B2B buyers want a trial whenever it is possible. A brochure or a video is great, but they are no substitute for test driving the actual product you plan to buy. It’s more educational, more convincing, and more comforting to see the real thing. And, given the choice of getting it immediately without a salesperson looking over their shoulder vs. scheduling a demo or a pilot that will be designed to hide any flaws, most B2B buyers will choose the former. However, I prefaced all this with “whenever it is possible.” Some products are so complex that it is simply too much work for the buyer to go it alone, especially those that need extensive configuration, imported data and integration and before they are useful, and in these cases the buyer will actually prefer to lean on the advice and assistance of a salesperson.

2. Do you see a strong correlation between trial sign-up and product usage and the conversion to a paid customer (as compared to say, downloading a white paper)?

Joel: Absolutely. Test driving the real thing demonstrates more interest and requires more commitment on the part of the buyer than reading a piece of content.

3. Do you see marketing automation systems, which you mention in your article, integrating trial usage related metrics into their lead scoring algorithms?

Joel: If they are smart marketers they will. As I mentioned, trial and usage demonstrate interest and commitment. If the statistics are segmented, e.g, what is tried and used, they also show interest at the feature/function level, which can be used in both marketing campaigns and sales calls. For all these reasons, trial and usage statistics are probably some of the strongest indicators you could integrate into a lead score.

Of course, I very much agree with Joel. Participating in a trial is the best possible indicator of potential customer commitment. Of course, I also believe that not all trial customers are created equal. As we discussed in a previous post: a prospect with many users and many hours of trial usage is a hotter prospect than a trial user who only logged in once. And yes, of course Totango can help you figure out who these hot prospects are!

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At Totango, we care deeply about customer engagement and customer success. We agree with Dave that with SaaS “it might make just as much sense [...]]]> Earlier this week, I spoke to Dave Rosenberg for his CNET Blog ‘Customer success’ VP role: To reduce SaaS churn.

At Totango, we care deeply about customer engagement and customer success. We agree with Dave that with SaaS “it might make just as much sense to focus on retaining (and garnering new revenue from) current customers as it would be to focus on gaining new customers”.

For companies with a zero-touch or low-touch sales model, customer engagement management is about much more than ensuring customer satisfaction. I wrote about that previously in my blog 4 Tips to Increase B2B Sales for example. It doesn’t matter who owns the customer engagement function and many modern sales leaders understand and implement customer success programs. Some B2B sales leaders have split their team into hunters and farmers, with the latter focused on customer success. Others now call themselves “Chief Revenue Officer” (as discussed in a recent blog by Phil Hernandez).

Still, the trend to assign a dedicated executive to manage customer engagement, is promising. Sometimes, you have to put your money (people) where your mouth is.

Some companies which already have a VP Customer Success include: ReputationDefender, Intacct (VP Sales and Customer Success), HubSpot, Salesforce.com, Sendori, Computer Associates, SAP, Marketo, InsideView, Zuberance, Success Factors, Zuora, JIVE Software, and Yammer (VP Customer Engagement).

On this blog, we plan to continue to monitor this trend.

For now, some appointments we have seen in recent months are below.

New VP Customer Success Appointments

Rudy Reyes, VP Customer Success at Alcove9

• On October 17, 2011 Alcove9 appoints Rudy Reyes, Vice President of Customer Success.
• On October 3, 2011 Xignite appoints Cameron Karr as VP Customer Success.
• On September 14, 2011 Jump Technologies announced the appointment of Adam Jacobs as Vice President of Customer Success.
• On August 23, 2011 AtHoc appointed Sanjay Saini as its vice president of global operations and customer success.
• On August 2, 2011 Zenprise Inc. announced it has named Christopher Doell as vice president, customer success.

Congratulations to all!

If you know about a recent Customer Success appointment
please e-mail me at gnirpaz [at] totango [com]

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The SaaS Executive Dashboard allows SaaS executives to track [...]]]> Today, the Totango team is excited to announce a brand new “SaaS Executive Dashboard”.
The Totango SaaS Executive Dashboard is an extension of the Totango online platform which allows SaaS teams to gain full visibility into the level of customer engagement in their business.

To learn more about how to measure key metrics
view our 40 minute webinar: “Best Practices on Trial Conversion”

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He suggests measuring two basic metrics: CLTV (Customer Life Time Value) and CAC (Customer Acquisition Cost). Those metrics should both be measured accurately, as based on the [...]]]> in Scott Gruher’s blog post on “Go to Market Strategy: How Much are Your Customers Worth?”, his recommendation is to treat customers based on their values.

He suggests measuring two basic metrics: CLTV (Customer Life Time Value) and CAC (Customer Acquisition Cost). Those metrics should both be measured accurately, as based on the outcome, a company should decide how to treat its prospects/customers:
Low CLTV would mean to use a less expensive resource to handle prospects/customers (i.e. non-direct contact such as email).
On the other hand high CLTV would mean considering a one-on-one contact with the prospect/customer.

This principle would increase conversion rates from prospects and maximize penetration rates withing current customers.

As for the CAC, Scott recommends focusing on existing leads as it more profitable to cross-sell and upsell an existing customer than acquiring a new one.

I agree it is much more effective to reach out customers from a dedicated list.
I also agree, as posted in my previous post, that CLTV and CAC are crucial metrics which should be measured accurately in order to spot potential buyers.
However, CTLV and CAC are not the only metrics a company should measure – there are other metrics (such as churn rates, account activation rate, account usage statistics, etc.), that should be taken under account in order to perceive a business whole picture.

In addition, in order to reach the right conclusions out of those metrics and know where to focus on, it is essential to wisely choose tools that would help a business to both measure and analyze its data correctly.

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In this post I’d like to elaborate in what areas customer [...]]]> Customer Engagement is key for software-as-a-Service business. A recent post by David Skok explains how and why to measure customer engagement. If you are a SaaS executive and haven’t read it yet, read this first.

In this post I’d like to elaborate in what areas customer engagement is critical for SaaS business success.

Balancing Customer Acquisition Costs and Lifetime Value

The baseline metrics that govern SaaS business success are Customer Acquisition Costs (CAC) and Customer Lifetime Value (CLTV).   The larger the margin between CAC and CLTV, the more poised the business is for sustainable growth and profitability.

So lowering CAC while increasing CLTV is key and customer engagement has a dramatic impact on both.

The most effective way to lower CAC is to increase conversion rates from free to paying customers. We’ve learned that when customer engagement is high during evaluation period it has direct link on conversion rates.

Same in CLTV. The key metric here is churn. Higher CLTV means lower churn.
Customer engagement (or lack of) is very good indication for churn.

The dynamics of “Land & Expand”

The SaaS model lends itself to gradual adoption by customers. It could be inherit in the business model (e.g. freemium), or just by nature of subscription model itself:  Most customers start off as short term pilots by one team in an organization. Success results in renewed subscriptions and further adoption within the organization.

This means that SaaS companies have users/clients who actively evaluate the service (paid or free evaluation), and at the end reaches a decision to continue or not as a customer.

As David describes in his post, times have changed with a much higher percentage of business transactions transpiring online with much less interaction.

This new reality places customer engagement at the center. So what does it take to strengthen customer engagement in your service?

Cultivating Customer Engagement

Cultivating customer engagement requires an organizational culture that focuses on customers and their needs.

1. Know your customers

It’s easy to fall into the trap of treating your customers as unknown, faceless people. After all, chances are no-one in your organization ever met them. They probably live far away and may even speak a different language. But you can’t afford to do that.

A company must develop or achieve tools that will help them measure customer behaviour on their service. These tools must be capable of presenting the users behaviour once in your application and answer relevant questions such as:

• Have the users tried the service more than once?
• How much time are users investing in your service?
• Which features have they used?
• Have they been exposed to your core features and do they fully understand the value-propositon of  your offerings?
• Is momentum growing or declining within the organization?
• Are they potential buyers?
• Etc.

Knowing what your users choose to do in your application is crucial for you to be able to interpret their actions correctly and use it as a basis for running a successful SaaS business.

2. Learn how to be proactive

Being attentive to your customers also means knowing when to intervene.
You need tools to wisely call-out users who need help and are at risk of churn or, conversely, those that are reaching the limits of their current plan and are prime for “upsell”.

Being able to identify these users and conditions is critical because:

• Your sales and success teams have finite resources and need to be laser focused on accounts that matter
• Users nowadays prefer self-serve and self-paced work. You need to know it’s a good time to contact them, or run the risk of doing more damage than good.

Contacting users at the right time increases their satisfaction and loyalty. It shows you understand their needs and respect their time. And it will increase conversion, reduce churn and maximize upsell opportunities for your business.

3. Evolve your service

The same tools that help you measure and understanding customer behaviour, should help you draw conclusions of how your service and product needs to improve.

• Do the new features add value or complexity?
• Is the new design helping convert more trials but causing added friction to existing customers?
• Are the new tutorials and guides helping new users or are they still getting lost?
• Are users from the basic plan not engaged enough to “push through” to the premium packages?

Customer engagement can shed a light to some of these tough product and marketing questions. Not only by directly showing you what parts of your product different users engage with, but by surfacing the users you should be talking to directly for primary market research.

Summary

In the long run, Customer Engagement is all about value – customers have needs and they’re seeking for an efficient, ready and easy solution that fulfills those needs. Now.

If you are able to understand your customer’s behavior, interpret their needs and act accordingly, customers will choose to use and reuse your service!

Do you know how to measure your Customer Engagement?
Our SaaS Dashboard can easily do that for you!
Try it now for FREE

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It’s hard to know what metrics [...]]]> Following Lincoln Murphy’s post on SixteenVentures.com (talking about conversion average rate for free trials, pricing pages or Freemium for SaaS or Web Apps), conversion rate average figures will do no good, as it doesn’t reflect the whole picture and usually lacking context.

It’s hard to know what metrics are being used for the “average conversion rate” and Lincoln claims that looking on average numbers to plan businesses around might make us average ourselves – and who want to be considered average?

Every company aspires to increase their conversion rate figures but Murphy’s suggestion is to figure out where you are today and then figure out how to make it better.
Meaning, if you’re at 1% conversion rate, reaching 2% is achievable, even though it’s 100% increase over what you have now.

I agree that context is crucial and also explained about this in “Measure trial conversion rate” webinar. Furthermore, in order for each SaaS business to understand where they stand, a lot of other metrics need to be taken under account besides conversion rate from free to paying customers. For example – do you also review unique visitors to your website? Social media mentions? signups, churn rates, customer lifetime value, account activation rate, account usage statistics, etc.?
All of these are metrics that should be taken under consideration in order to reflect the whole picture for a SaaS company and to allow it to set its goals.

Which metrics do you use to make your goals setting?

Want to know which metrics other Sales Executives use?
Download SaaS Business Survey Results

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But how do businesses know [...]]]> Businesses these days are making significant efforts to delight their customers, and for good reasons. One of the key areas where businesses focus their efforts is in creating online self-serve applications with a great user experience in order to help customers get what they need and when they need it.

But how do businesses know if they are successful? Below are 3 key metrics you need to measure customer engagement.

1. Activity Time

When an online service creates value, people use it and use it often. Usage is measured by the number of times a customer visits your service (sometimes termed sessions) and the elapsed time they spend in using it.

We call this Activity Time – the total time a user spends online, interacting with the offered service. Note that Activity Time measures the actual time a user spends interacting with the service, and factors out time in which the user is idle (even if logged-in). This is critical given modern usage behaviors where users typically have many web-applications and sites open on different browser tabs.

2. Visit Frequency

How often a user returns to your service is a key reflection of the value they get from it. This is often called Visit Frequency.

Visit frequency yields many potential patterns in customer behavior, as shown in the table below. The main goal is to identify the pattern that is most relevant for your service and monitor users against that pattern. If you expect a delighted user of your service to visit every day, measure against that, if you offer a seasonal service and expect them to only return on holidays, look for that pattern and so forth.

3. Core User Actions

Another indication of value customers gain is their use of Core User Actions, as defined for your service. If a user is consistently performing core actions, it is a good indication of adoption. When user’s explore new features and start to use them, the service is growing on them, and they are happy to use it more.

Conversely, if a user is not performing Core User Actions, while still spending time on the service, it may be because he is unable to get to it (indicating a usability problem) or that you don’t understand the value they are getting. Regardless, it requires further investigation to make sure the user and your offering are on track.

Core User Actions are naturally service specific, the following table gives examples of certain types of web applications and online services.

Creating an Engagement Score

A combination of these core metrics: Activity Time, Visit Frequency and Core User Actions uncovers the level of user engagement for any web-application or service. To get to the combination that is right for your particular service requires some thinking and modeling of the expected user behavior.

It may not be simple to do, but it’s essential if you want to continuously delight users and in turn increase their life time value. If you want the best tools in the industry for this job, we recommend you learn about Totango and signup to get started with these concepts today!

Learn which metrics other Sales Executives use?
Download SaaS Business Survey Results

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We’re excited to announce a new version of Totango including the new Activity [...]]]> Understanding the amount of time users spend in your application, and the actions they take, is the best way to know the level of value they are getting from your service. You can now use Totango to do just that.

We’re excited to announce a new version of Totango including the new Activity Time Metric. Totango now analyzes the activity stream of each user and calculates the amount of time spent interacting with your web application. The metric is provided at different levels to uncover key trends and insights:

- On a global level for the entire user-base. So you can keep a pulse on the overall value your application is delivering

- For all users associated with a particular account, helping sales teams determine which accounts are productive and which require more attention to become successful.

- Individual user basis, to identify the true-champions in each account

If you’re a Totango user, please login to check out how Activity Time can help increase SaaS sales. If not, signup to learn how

Request a demo

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This is often referred to as the ‘sales and marketing machine’ – a [...]]]> Managing a Software-as-a-Service (SaaS) business isn’t trivial. Successful SaaS companies are able to deal with a high volume of leads and turn those into a high volume of loyal customers with fast response and turnaround time.

This is often referred to as the ‘sales and marketing machine’ – a highly optimized, massively scalable and controlled business operation that is capable of:

• Generating, managing and nurturing leads;
• Converting leads into paying customers at high conversion rates;
• Ensuring customer success and preventing churn;
• Continuously increasing the service value, differentiation and offerings.

In order to build a ‘sales and marketing machine,’ companies need to invest in the tools that will get them the business scalability that is required and reduce the learning curve.

Many startups begin with homegrown solutions using spreadsheets and databases (with a bit of integration glue in between). This is sufficient for small scale, but quickly becomes unwieldy as the organization grows. Luckily, there are excellent tools available for SaaS companies to leverage.

Many vendors have a “starter” package, so there is really no excuse not to start building your tool-chest sooner rather than later.

The Customer Life-Cycle

To best understand where the different categories of tools fit, it’s best to look at the various stages of the customer life-cycle, as they evolve from early prospects to mature customers.

At Totango, we use the following customer life-cycle terms:

• Visitor – Anonymous user on the website
• Lead – Person who has expressed some interest in the service. This can be anything from downloading a white paper to signing-up to a trial
• Evaluating – A user (or company) who’s actively evaluating the service usually during a trial period or fermium
• Onboarding – A paying customer in the initial usage period
• Mature – A paying customer who has been loyal to the service beyond the initial usage period

With those definitions in mind, it’s easier to associate solutions and tools to help carry customers through every phase of their life-cycle.

CRM (Customer Relationship Management)

CRM is a common way to keep a reference of all customers’ life-cycle stages. CRM organizes all contacts’ information and account details in a single database, so it’s vital you select a tool that fits your needs and can grow with you.

Primary users
Specifically, your CRM software will be the main working software of your inside sales teams as they organize account work mainly during the sales life-cycle phases.

Select list of CRM solutions
Salesforce.com, SugarCRM, Highrise, or the ever promising Pipedrive

Web Analytics

Web analytics tools keep track of visitor activity on your website and various other marketing properties; this is where you keep track of your top-tier leads funnel, measure the initial success of marketing and advertising programs, and work to improve visitors’ experience with your products’ properties.

Primary users
Mainly the marketing team, though other users in the organization (product team, IT) will need to use it as well.

Select list of Web Analytics solutions
Google Analytics is the most commonly used tool. It’s immensely powerful, feature-rich and free. But there are other good tools your marketing team should look at, such as Clicky, WebTrends that provide additional useful views into vistiors’ actions.

Marketing Automation

Marketing automation takes you beyond basic web-properties and aims to help you interact, build, and cultivate a relationship with leads, so they can ultimately be passed on to your sales team and “convert” to happy customers.

Primary users
This is your marketing team’s main toy!

Select list of Marketing Automation tools
Hubspot, Marketo, Eloqua

Post Marketing

A post marketing (sales & customer success) solution stack for SaaS companies does not exist yet. Enabling the buying process (converting leads), ensuring customer success, and increasing service value, is something that I feel is needed and missing in the market, and this is what we’re building in Totango.

SaaS Dashboard

Having all the above tools in place enables marketing, sales and customer success teams to effectively do their jobs and be an integral part of the ‘sales and marketing machine’.

Having said that, it’s crucial to have a single business dashboard available to the executive teams that allows them monitor the business end-to-end.
The SaaS dashboard should include operational metrics, trends and key business performance indicators (KPI’s), which allow the business owners, get ‘the full picture’ of the business, identify bottlenecks and allow to teams to take appropriate actions.

Summary

The SaaS model presents an opportunity to run a predictable and high-volume business. The first step is to put the required business infrastructure in place in order to monitor, analyze and optimize the sales and marketing machine operation continuously.

In coming posts, I’ll discuss in further detail the actual attributes of the SaaS dashboard.

Get your FREE copy of our latest RESEARCH:

“The 2012 SaaS Free Trial, Freemium and Pricing Benchmark“

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Last week, we established the need to measure the “right things” constantly in order to improve trial conversion. This week, we’ll discuss how those metrics can be used to actually improve your company’s [...]]]> Understanding data to increase conversion rates and key business processes

Last week, we established the need to measure the “right things” constantly in order to improve trial conversion. This week, we’ll discuss how those metrics can be used to actually improve your company’s trial conversions.

Trial conversion comes from multiple business processes: from sales, to marketing, to the product itself. In order for metrics and collected data in general to be valuable to your company, they must be actionable and this will mean different things to different aspects of a SaaS business.

Sales

For sales teams, it’s all about focusing on opportunities that matter most in your business pipeline. For the majority of SaaS sales teams, there are many more leads than the team can effectively handle. The team needs to be able to focus its energy on those that are more likely to convert into a sale.

Once you are working with reliable conversion rates and have eliminated the noise in the funnel, your sales team can use the same process to prioritize its work. Rather than contacting, qualifying and trying to convert all new trials, they should focus on those that appear to be “Actually Evaluating,” as those provide a much more likely sale.

Marketing

One of the key challenges for the marketing teams of a SaaS company is the need to properly qualify leads. The nature of Internet marketing is essentially casting a wide net into the unknown and trying to engage with as many people that are relevant to what you have to sell. The reality though is that you end up also engaging many that are not really relevant to your offering. Understanding the ratio between these two groups is essential to figuring out which marketing efforts are effective for your business. The ratio between effective (i.e.. “Actually Evaluating”) and total leads represents this exact number. This ratio is essential when determining if your marketing strategy is working and if your budget is well spent.

The ratio number will naturally vary by industry, but you need to make sure it’s under control, i.e. the number of qualified leads should constantly be growing; this will essentially lower acquisition costs (a fundamental parameter in business sales of a SaaS company).

Product

People that signup to your trial are primarily there to experience your product and assess it if fits their needs, and they expect to be able to do that quickly and with minimal effort on their behalf.

That means, someone who comes into the trial immediately gets it, is productive in attempts to evaluate product, has all the information they need, and the product’s general usability and experience is of high quality.

How to improve the product experience for your customers is something your product team needs to constantly assess (see “Getting your prospects to be come devoted users” provides solid ideas). But the key metric they should use to determine if they are making progress is conversion rate. What percentage of qualified leads ends up activating they account, using it and eventually upgrading to a paid account.

Summary

Data, when correctly measured and broken down into proper categories, becomes valuably actionable. Keep in mind that this activity is not a one-time effort; it has to be ongoing and continuously improved. The business needs to be able to measure data effectively, get the information in front of the right people at the right time, and constantly improve those metrics based on their true meaning.

Next week we’ll jump into understanding marketing automation, BI, analytics, and CRM.

To learn more about Trial Conversion please View our Webinar where we discuss Best Practices in Measuring Trial Conversion Rates for SaaS Applications:

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

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Over the next few weeks, Totango will be posting a blog series on best practices for measuring conversion rates of trial usage for Software-as-a-Service (SaaS). Trial conversion is arguably the single most important business metric for SaaS companies since the model is based on two key [...]]]> Defining an active user and setting a baseline

Over the next few weeks, Totango will be posting a blog series on best practices for measuring conversion rates of trial usage for Software-as-a-Service (SaaS). Trial conversion is arguably the single most important business metric for SaaS companies since the model is based on two key parameters: customer acquisition cost and customer lifetime value. The trial conversion moves customers from the acquisition phase to the lifetime value phase and as more potential customers become paying customers, the customer acquisition cost goes down and the customer lifetime value goes up. Simply put, the ratio between customer lifetime value and customer acquisition cost is the entire profit of a SaaS company.

It is important to make sure that the measurement of trial conversion addresses three basic concepts:

1. Simple to measure;
2. Simple to understand;
3. Be actionable.

Unfortunately, trial conversion is not that simple to measure correctly (most organizations do it, but haphazardly) because there is no “single source of truth” per se. That is, trial conversion comes from multiple business processes (marketing and lead generation, in-house sales, and the product itself), which muddies the ability to measure it definitively. As a result, to get an accurate trial conversion number, organizations need to make sure that all the data collected is aligned among the business processes mentioned above.

The second challenge is “noise,” or trials that are “dead on arrival.” These users may have signedup for a trial, but have no intention of buying. They are just playing with the software because they can; it could be for educational reasons, it could be for other reasons. Taking these “dead on arrival” trails into account creates a very blurry picture, which is difficult to take action on.

Considering the challenges of measuring trail conversions (and the need for simplicity), the first step is to define the active, or effective trials (trials who came with the intention to buy and now are evaluating the service) and weed out the “dead on arrival” trials. There are different ways to do this of course, but one example could be measuring active trials based on a second day of usage or perhaps based on what the user is actually doing. Once the SaaS organization defines an active user, a baseline can be established. A baseline is taking the current number of trial conversions (and perhaps taking into account historical information as well, if available), and setting metrics around that.

With a baseline set that weeds out “dead on arrival” trials, organizations can tweak the service they sell or the various parts of their sales and marketing processes to improve trial conversions. Perhaps the organization needs to focus on marketing to get better leads because the current leads aren’t good enough. It could be that the sales process is not effective and it needs to be improved. Or it could be that the service itself needs improvement. Ultimately, the SaaS organization needs to measure continuously in order to put a finger on the right problem.

Imagine an organization that had, for the duration of July, 1,000 new signups for trial. Out of those accounts, 10 ended up “converting”. On the face of it, the conversion rate is 1%.

However, dig a bit deeper and in many cases, you see that many, if not most, of those 1,000 trials never had a “buying potential at all”, evident by the fact that they never did a serious evaluation of the service

(note: it would be nice if numbers in real life would be so round and simple to calculate in ones head!)

Why is this important? First off, because it gives a more real indication to what is going on within the sales team’s pipeline (they are succeeding in selling to 1 out of every 10 prospects not out of every 100), and it is easier to motivate people to improve a metric they intuitively feel is true.

But that is not it, in our next post, we’ll explore what the trial conversion metrics mean and how SaaS companies can best act on the data that is collected to increase conversion rates.

To learn more about Trial conversion,
view our 40 minute webinar: “Best Practices on Trial Conversion”

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

Want to optimize you trial conversion rate?
Try TOTANGO free for 30 days

I wanted to give a bit of a personal perspective to what is being announced today and put it in context.

In early 2009 I was looking for the next opportunity. Cloud [...]]]> Today we’re announcing our $3.8 million Series A financing as well as opening our service to the public with a free beta offering.

I wanted to give a bit of a personal perspective to what is being announced today and put it in context.

In early 2009 I was looking for the next opportunity. Cloud computing in general and Software-as-a-Service specifically were continuing to rapidly gain ground and it was clear that almost every aspect of the software was undergoing massive change: how software is delivered and consumed, bought and sold; everything was changing.

It was clear that while SaaS presents enormous opportunities for vendors, it also introduces new challenges. Much of the focus in the industry has been on the technical aspects of these challenges: how to build scalable, high-performing, reliable multi-tenant services. But while these technical challenges are interesting and important, we felt that not enough attention was being given to the business side. In SaaS, the customer engagement model is fundamentally different.

The SaaS Customer Engagement Challenge

Most SaaS companies put their services in front of potential customers on the web and allow for a self-paced evaluation process. The sales process is no longer controlled by the companies’ sales people. However, sales teams do need to keep up with the high volume of evaluating prospects and make sure the users find what they need to make a favorable buying decision.

Most SaaS pricing models are based on subscription or usage, which allows customers to stop using — and stop paying for — the service at any time. That, plus low switching costs, mandates that SaaS companies constantly monitor customer satisfaction and improve the value that is being delivered.

In addition, the engagement between customers and the business is indirect. There are almost no customer visits, minimum sales calls, and most of the interaction between clients and the business is usage of the service. This no-touch and low-touch engagement model creates a wide gap in how companies understand their customers.

But there is one huge advantage SaaS companies have over their traditional counterparts — they can measure the actual way in which prospects and customers use their products. That is, if they have the tools to properly track and analyze such activities.

Helping SaaS Companies Understand Their Customers

So we set out to help SaaS companies understand their customers through their actual interactions on the service. It also quickly became clear for us that [1] customer facing staff — sales, customer success and others –  are looking for practical and actionable solutions [2] based on this information, and not YAD (or yet another dashboard, as it is often referred to).

Before we wrote a single line of code, we talked to more than 50 SaaS companies, trying to validate our initial assumptions. It was clear from these conversations, and especially from the fact that many companies have developed homegrown tools that crudely attempted to address this need, that we were on to something.

Those homegrown solutions were developed, well frankly, half-ass, without a long term strategy. As a result, there was constant friction between the business users who need the information and the engineering team, which was already barely keeping up with its core product development responsibilities.

The Totango Solution

We created the initial version of Totango, and worked for almost a year with a number of SaaS companies of all sizes and industries in a private beta. From this we learned (and are still learning) how SaaS companies would like to analyze and act on customer usage information.

Today we are publicly releasing the first solution we developed through this process. It is a set of tools that help sales teams increase their effectiveness by improving the conversion rate of evaluating users into paying customers. We’ve built this by spending many days at the offices of our initial clients to learn their daily routines and practices so that we could provide the missing tools they’ve been looking for. The initial results with these private beta customers were amazing, and we feel very confidently that it is time to share our solution with a wider audience.

For now, the product is free. And although we will announce pricing in the coming months, we are planning to always offer a free tier.

When it comes down to it, we’re a SaaS company ourselves and we know first hand how important it is to get people up and running in minutes, so we’ve made sure Totango is as simple as can be to get going.
You can read our official press release here.

We’re ready Totango, please join us.
— Guy

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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Levie describes a major shift in enterprise software towards ‘value to users’ vs. the old ‘perceived value to the CIOs’.

One of the key [...]]]> Aaron Levie, CEO and Founder of Box.net posted this excellent article on TechCrunch. I encourage you all to read it before reading onwards.

Levie describes a major shift in enterprise software towards ‘value to users’ vs. the old ‘perceived value to the CIOs’.

One of the key arguments in his article, that grabbed my attention is:

“By focusing on building enterprise software that the users love, driving demand up to the CIO. Vendors like Workday, Jive, Yammer, or Rypple are responding by investing more in design, usability, openness, and the total user experience. They’re measuring success by user adoption, rather than feature checklists“

I couldn’t agree more! Consumer products, such as the iPhone, iPad, Facebook and many others are changing the way people evaluate products, including enterprise software products.

Value to users is key decision criteria. Software vendors who fail to constantly improve and increase value to users will end up with shrinking user bases, resulting in replacement from others who will deliver the right value.

When thinking about the emerging customer facing business models of subscription (SaaS) and pay-per-use, switching costs and vendor lock-ins can not be a reason for enterprises to stick with overly complex products who fail to deliver ‘right’ value to users. We at Totango certainly appreciate vendors that do it differently, and create an ongoing dialog about value with their customers.

It is crucial for software vendors, to constantly monitor the current value their users are getting from their online software. It is the challenge and at the same time the big opportunity for the SaaS delivery model.

Luckily, measuring value is simple. Vendors can learn about the value their customers are getting by measuring how much the software is being used and how. By providing Totango Analytics service to some of the vendors Levie mentions in his article we’ve learned that  investing a small effort in determining the right information to collect, companies gain great visibility of value their clients are getting (or not).

The need to constantly increase value to customers is inherit in the SaaS model and results in alignment of customer success and the vendor’s own business success.  Successful SaaS companies realize this and constantly strive to get immediate feedback on value by monitoring increases or drops is usage. Combined with fast paced releases and methodical A/B testing, software vendors can focus on building customer-centric, value-first enterprise software products.

It’s great to share this vision with others. Enterprise customers should expect this level of value from their software vendors.

Get your FREE copy of our latest RESEARCH:

“The 2012 SaaS Free Trial, Freemium and Pricing Benchmark“

About Totango:

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

Increase your sales revenue!
Try Totango free for 30 days

Such is life in sales everywhere, but if you’re a sales-manager at a SaaS company you have another hurdle to overcome on your quest for quota: [...]]]> It’s 2 days until the end of the quarter and sales people around the globe are scrambling, trying to close sales and meet quotas. It is, literally, “Money Time”.

Such is life in sales everywhere, but if you’re a sales-manager at a SaaS company you have another hurdle to overcome on your quest for quota: You don’t know your prospects.

Trial (or ‘Freemium’) accounts that self-drive their evaluation process are great for lowering acquisition costs, but they present a real challenge for sales teams that need to decide which prospects needs their attention in order to ‘close’.

Luckily answers are hidden in usage data and today we’re releasing a new feature on Totango that will help you get to them.

allows you to filter, slice and dice your customer base based on any activity profile.

Let’s use an example to make it real: Imagine you are trying to find all trial accounts that started their evaluation at least a month ago and are still actively trying out the system. Additionally, you want to narrow down the list to those that have at least 5 individual users involved in the evaluation process.

Sound’s like a pretty focused list you can engage with to make sales.
Here’s how you can get to them:

ACreate a new filter on accounts in the “trial” stage.

BAdd a condition to limit results to trials that started with in the last 30 days.

CAdd a condition to limit results to trials that registered activity in the last 3 days

DAdd a condition to further narrow results to those with at least 5 active users (active being they were on the system for at least once in the last 14 days).

Once you filter the customer population, you can drill-down into individual customers to understand what they’ve been doing better. You can also subscribe to receive daily or weekly updates into your email inbox, or even automatically sync. the information with a customer’s account record on Salesforce.

The Filter Editor function can help you do much more than just narrow down a list of engaged trials. Here are some of the examples we’ve heard about from early testers:

1. Detecting customers with declining usage to proactively manage retention and increase lifetime value
2. Identify upsell opportunities with customers that are showing a ramp up in usage
3. Identify “feature champions” by finding customers that make extensive use of parts of the application

… and we’d love to hear about more! Please share your thoughts with us either on this blog, in our support forums or by emailing me directly at oren at totango.com.

If you already have an account with us, you can start using the filter editor immediately. Just click here.
If you’re not a beta user yet, you should signup 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!
Try TOTANGO free for 30 days

Measure–Learn–Act is a key tenet of lean startups. We are big believers in lean. We run Lean startup Israel and [...]]]> Lean startups are not about learning — or at least not just about it. Learning is not enough because translating what you’ve learned into value is just as important and often no less difficult.

Measure–Learn–Act is a key tenet of lean startups. We are big believers in lean. We run Lean startup Israel and frequently blog and talk about our experiences of running a lean company.

Measure-Learn-Act is also a core part of our company vision. We believe measuring, learning and acting on usage-data is the right way to build, scale and operate any SaaS and web-business — and we’re building Totango to help companies do just that.

In this post, we’ll talk about how we “eat our own dogfood” and use this principle, and the Totango product, to drive our own product’s evolution.

In his remarkable work on lean-startups, Eric Reis uses the following definition for measuring progress at a startup:

We found that to be a limiting concept.

We discovered that when we defined learning as our core objective, we ended up spending too much energy on our own learning (running A/B tests, minimum viable versions to learn about market interest, etc.) and not enough on leveraging our learning to deliver value to end-users and customers.

In other words, learning is not enough and is not the end goal. The real test of a startup is whether it builds a service of value — one that people want to use and can’t live without.

So our definition of progress is:

‘Value’ means we released a product or service enhancement that helps customers accomplish something better or faster. ‘Validated’ is that we have a way to quantify the value delivered, usually through a positive change to one of the key usage metrics we track.

If, and only if, we reach that point do we declare progress. All the rest are considered internal milestones along the way.

Here is a set of product-level metrics we monitor on an ongoing basis:

Each product or service improvement we undertake needs to ultimately manifest itself with an improvement to one of these metrics. For example, changes to our signup process need to yield an improvement in signup numbers; a better customer onboarding process should result in a higher and faster rate of activations.

Our most interesting metric is ‘Engaged Organizations’. Our goal here is to have a quantifiable way to determine if accounts that went through the signup and activation process are actually deriving value from the solution. We measure this by counting the number of days each user performed meaningful interactions with our solution.

‘Meaningful interactions’ are not generic: each service naturally has a different set (in our case it can be usage of our inbox capabilities or interacting with an activity stream).

They also change over time when new functionality is added or product pivots are made. The point is that they provide a solid way to validate if users are seeing value in our solution, which in turns helps us determine if changes we make have a positive impact.

Validated-value-delivered is the way we measure progress, but that doesn’t mean we don’t spend a lot of time trying to learn what customers want. In fact, we’ve found that is the only way to consistently be able to add value. Otherwise, you spend too much time on bad ideas and get overly invested in product directions that ultimately prove incorrect.

We try to build an MVP (minimum viable product) as the first step for every product idea or feature request we handle. If we get good validation on the need, we know it’s a good place to spend more time.

Forcing ourselves to scientifically validate our assumptions about customer needs not only helps us reach results faster, it frees us from the need to argue to death over the merits of certain product directions.Rather than argue about it, we find a quick way to validate things as a precursor to spending more time on them.

But we don’t stop there, and neither should you.Measure value delivered.

It’s the best way to keep yourself true to the core mission of creating value, and make sure your product is on track.

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

Increase your sales revenue!
Try TOTANGO free for 30 days

We look at the relationship between online services and their customers as an intricate dance – a tango. You want to constantly understand and be “in step” with your customers, in order to improve the value delivered to them. Our platform enables you to [...]]]>
Today we are changing our name to TOTANGO.

We look at the relationship between online services and their customers as an intricate dance – a tango. You want to constantly understand and be “in step” with your customers, in order to improve the value delivered to them. Our platform enables you to do just that by increasing visibility into customers’ activities and delivering deep insights about their meaning.

So, we are now Totango, and we’re going to help you stay in step with your customers!

On a technical note, all existing references to the SaaSpulse domain name will continue to function as normal. But we encourage you to update your integration code to reference our new domain (details here). You should also update your address book, and follow us on Twitter, if you’re not doing so already.

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

Increase your sales revenue!
Try TOTANGO free for 30 days

I tend to have the same feelings when I receive monthly [...]]]> Who doesn’t like it when the bar tender pours an extra glass of fine wine ‘on the house’?
Every time it happens to me, my emotional attachment to the establishment grows, and it makes it that much more likely that I’ll visit again.

I tend to have the same feelings when I receive monthly emails from amazon AWS about new features and cost reductions, and a recent email I got from Beanstalk announcing a bunch of new services all included within the same package I’m already paying for. It’s a great way to create loyalty for subscription services.

Constant increment to value and service level improvement without additional costs is probably one of the biggest benefits for SaaS customers. It is inherent to the subscription/pay-as-you-go business models. The power is in the hands of the customers who can always decide to cancel their subscription. SaaS vendors must constantly innovate and create additional value to keep their customers happy.

SaaS vendors, frequently monitor a metric called Customer Life Time Value (CLTV). How much revenue does my average customer generates over it’s life-time. However, this metric can also be seen from the reverse perspective, how many months does my average customer continue to see value from my service such that they are willing to continue paying for the service.
It is also a key benefit for software vendors. Success comes from focus on the customer-lifetime value, which can only come when you truly understand customers and their changing needs. Anyone who developed software products knows how easier, more productive and more enjoyable it is when you have than organizational knowledge. With SaaS you have no choice but to develop it.

These type of customer/vendor relationships are healthier and thus last longer. As long as customers are getting real value they will pay for the services they are consuming. In the old, on-premise applications world, customers had to pay in advance for a service/product they didn’t really use yet. This up-front payment created a dynamic where application vendors where focused on the initial sales, and decision makers where focused on making the first initial buying decision. You can clearly understand why the new model is better for both sides. The new conversation between vendors and customers is about constant value creation, delivery and consumption.

Another great benefit which comes from both SaaS business models and the web based delivery model is a much faster value creation cycle. The motivation of the SaaS vendor to create value faster, combined with the opportunity to manage a single version of the service enables rapid cycle times. Customers are getting new features and functions which create value much faster.

Shorter customer commitments and business model flexibility presented by SaaS promotes healthy relationship between vendors and customers which revolves around value – simply win win!

Get your FREE copy of our latest RESEARCH:

“The 2012 SaaS Free Trial, Freemium and Pricing Benchmark“

About Totango:

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

Increase your SaaS revenue!
Try Totango free for 30 days

As one of our beta customer recently put it:

“I’m already getting addicted to watching the real-time activity stream. Very Nice!”

There is something powerful about seeing the flow of customers’ activities on the [...]]]> One of the first things that grabs people’s attention when they begin using SaaSPulse is our real time User Activity Stream.

As one of our beta customer recently put it:

“I’m already getting addicted to watching the real-time activity stream. Very Nice!”

There is something powerful about seeing the flow of customers’ activities on the service and getting a raw view of how it is being used and appreciated.  Here’s how it works:

Global Activity Stream (Service Pulse)

Service Pulse is a global view of all activities on a customer’s web-service. The view updates in real-time as new events are received.

The top of the page shows key metrics such as the active users, new trial sign-ups and the top activities users are performing today.

Underneath these metrics is the stream of events. Each entry shows:

1. The time-stamp when the event occurred
2. The user who conducted the activity and the organization they belong to (for multi-tenant applications)
3. The activity details.

This global view of the service is extremely valuable for emerging services trying to get a better feel on the value their customers are getting from the service. Established services can use it to build an understanding of how new or changed functionality is being received.

As is sometimes the case with global views, it can get noisy. That’s why our activity stream allows you to drill down to an individual customer’s activities.

Customer Activity Stream

Clicking on any customer in the global stream drills down to an individual customer’s usage. Here we see key metrics on a specific customer: the amount and breakdown of activities,  when they started using the service, when they used it last and so forth.

Similarly to the global view, this view shows a stream of the activities, but in this case only those conducted by an individual customer. This view helps build an understanding of  activities – and through that the value – that a customer is getting from the web-service.  We call this “Customer Context” and have seen it help our users in the following ways:

1.Framing a sales-call with a trial account
2.Improving customer satisfaction by better understanding of a customer’s frustration
3. Uncovering common customer archetypes and tuning the product accordingly

Instrumenting SaaSPulse is simple

We provide a very simple API to send data to SaaSPulse. A single HTTP or Javascript call communicates events in the form “user X did action Y” . We collect these events,  process them and use them as the base of our activity streams.

Summary

Activity streams are a great tool to understand customers. Often, seeing the stream of their own activity data is when our customers get their first “a-ha” moment. The  visualization helps them realize the full potential activity data has on improving their business, even before more advanced functionality like scaling trials and improving customer satisfaction.

It’s all about increasing customer life time value but it starts with simple visibility, which is what makes Activity Streams such a popular capability of our product and why we plan to continue to improve it.

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

Want to get personal with your customers?
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But what happens once the trial flood begins?

Often, the dream becomes a nightmare as the organization tries to figure out [...]]]> Sales and marketing departments in SaaS companies share a dream: A trial flood. A well-lubricated acquisition funnel that generates an endless, fast-paced stream of new trial users on their way to becoming happy customers.

But what happens once the trial flood begins?

Often, the dream becomes a nightmare as the organization tries to figure out how to convert this flood of trials into paying customers. With so many trials happening, where should sales attention go to? Which accounts should be engaged directly? Which should be nurtured? Which ignored?

The answers to these questions are, of course, hidden in trial users’ usage profile. The Trial Inbox brings them out and makes sure the team is focused on the most promising accounts in trial.

Trial Inbox

Trial Inbox contains a focused lists of trial customers based on activity segmentation. The out of the box categorization includes Hot, New, Active and Inactive trials. In addition we’ve added some nice visualization into the individual customers’ records that help filter and navigate quickly.

The image below is a screen shot of the trial inbox in action. If you’re not already part of the beta program, please make sure to drop us your email here.

Don’t let the trial flood catch you by surprise. Use the Trial Inbox and make it work for you.

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

Increase your trial conversion!
Try TOTANGO free for 30 days

We are particularly excited about this update because it includes a new application module, created to address a critical need of our beta-customers: Staying focused on important customers and the issues [...]]]> We didn’t let the festivities of the new year slow us down too much and just released a new version of the SaaSPulse application.

We are particularly excited about this update because it includes a new application module, created to address a critical need of our beta-customers: Staying focused on important customers and the issues that matter to them.

Scaling SaaS businesses have to deal with many issues pertaining the customer-success: New customers need help on-boarding to the service, important contracts are about to expire and must be monitored, key customers are unsatisfied and at risk.

It can get really overwhelming.

Customer Inbox
Our new Customer inbox it here to help. It surfaces customers that require treatment so that customer-success staff can focus attention where it matters. This focus helps systematically work through churn issues, increase customer life time value and build a clearer picture of the business’s overall health.

We analyze each customer’s activity data in the context of their contract information and present it in an intuitive inbox metaphor. This makes it easy to pinpoint customers that require attention, such as:

* Customers that are only using a small fraction of their license.
* Customers that recently went under-contract but have yet to start using the service in a meaningful way.
* Customers that are highly engaged with the service.
* Customers that have been inactive for a while.
* and more!

The Customer Inbox is available for all beta-customers, under the Customers menu.

What’s Cooking
In our upcoming update, we’ll be releasing the Trial Inbox, which applies similar principles to trial accounts. It’s an extremely helpful tool to isolate trial accounts that matter and require sales attention.

We’ve been getting very good reviews on the concept from early access customers. Contact me (oren at saaspulse.com) if you would like a sneak peak as well.

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

Increase your customers success!
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Highlights:

Customer Overview
We’ve changed the Customer Overview screen to make [...]]]> Earlier today we released a new version of our service for all beta customers.
Login here

Highlights:

• - Customer Overview: Review a segmented list of customers and trials accounts.
• - Customer Details: Customer panel summarizing key account, contract and usage data.

Customer Overview
We’ve changed the Customer Overview screen to make it easier to review the current list of customers and their engagement data.

The overview screen list the entire population of customers and trials:
Trial users are broken down to New, Ongoing and Inactive trials, while customers are segmented into Onboarding, Established and Inactive customers.

With this breakdown it is now easier to zoom in on the population you are interested in.

Customer Details
We’ve also improved the Customer Details screen, where you can see all the activities and data of each individual customer. The Top panel now displays account data such as their status (trial or paying), date and time of their last activities and contract information, when available.

From here, you can also change the status of a customer or trial, in cases where they were incorrectly assigned by the system.

This release is a first step we are taking to present the SaaSPulse data in a way that is immediately useful for sales and ongoing customer success management. We’ve been getting very consistent feedback on this and will be releasing much more enhancements in this area in the coming weeks.
Stay Tuned!

NOTE: To get future updates on releases, please make sure you follow us on twitter.

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

Increase your sales revenue!
Try TOTANGO free for 30 days

Often less discussed is the impact the service model has on the way software is sold.

In our discussions with SaaS [...]]]> SaaS forever changes how software is developed and delivered to customers. This shift is well understood, frequently discussed and represents a major shift in the way software is built by vendors of all sizes.

Often less discussed is the impact the service model has on the way software is sold.

In our discussions with SaaS providers, big and small, we see a growing understanding of the need to define sales strategy and processes while taking into account the full life-cycle of a customer. It’s not about making a sale, it’s about making your customer successful.

It’s useful to compare SaaS and enterprise sales to appreciate this:

Enterprise software sales are a high-touch activity.  Opportunities are identified, tracked, and closed by a direct sales force or resellers. This cycle is what makes a good enterprise software company tick.  And it’s why successful enterprise software vendors like HP and IBM are so sales-driven.  Their culture must be very sales-oriented in order for them to succeed.

Selling SaaS is different.  SaaS solutions are fundamentally ‘self-service’, relying on a large quantity of (hopefully qualified) leads funneled to the web-service through inbound marketing activities. In an ideal world, these leads pick up the solution and turn into happy customers by themselves. But in practice, for all but the most simple and commodity software, cultivating customers and growing the business requires direct interactions with the customer.

We call this model medium-touch. It is a sales model that puts more onus on marketing and the product’s self-service to move large quantities of prospects through the sales funnel, but also assumes a level of direct engagement of a sales and support team. The trick is to identify the right touch points to make the system work.

Here are some tips we’ve learned from  SaaS vendors on how they build their sales process differently than traditional enterprise sales:

• Successful customer onboarding is critical: in a SaaS model, because switching costs are low, “closing the sale” is not nearly as important as it used to. The vendor must ensure he’s doing everything possible to help customers adopt the solution rapidly and with ease. Otherwise, customers are likely to churn shortly after they subscribe, resulting in loss of revenue and reputation.
• Don’t bother top-selling:  in SaaS product-usage and its sales are always intermixed. Customers first look at your site, then they try the software, then they decide to buy it. In enterprise sales, the same process may be reversed, and a sale can occur before even one user tried the product. That’s why “top-down” selling isn’t a useful strategy for SaaS and investment must be made in reducing usage-friction at every junction.
• Focus on up-sell :  In traditional enterprise sales, customers often pre-budget and pay for what they (think) they will need in a few years. With SaaS, customers tend to buy what they need and buy more when they feel they need to. Therefore SaaS is as much about up-sell than the initial sale. For a SaaS salesperson, a large chunk of  energy need to go to cultivating existing customers and identifying up-sell opportunities.

The reality is that implementing these sorts of practices isn’t as straightforward as it looks. It often spans different organizations such as sales, customer-support, product development and operations — and it involves aligning goals and pulling in expertise from many disciplines. More than anything, it involves getting a very good understanding of what customers are doing so you can properly prioritize and streamline the process.

More and more SaaS providers are building “Customer Success” teams  that focus on just that: making the customer successful.  We’re building software to make it possible for them.

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

Increase your sales revenue!
Try TOTANGO free for 30 days

Acquiring customers is hard. Retaining customers is hard. Helping customers successfully adopt and use your great software and [...]]]> We are a small team of engineers and business folks that have been living and breathing Web based software (SaaS) for many years. Through our own experience we’ve learned that building a successful SaaS business is hard.

Acquiring customers is hard. Retaining customers is hard. Helping customers successfully adopt and use your great software and service is hard.

We have great ideas on how to help SaaS businesses tackle these issues and are fortunate to be working closely with a number of early customers to test, improve and mature our solution.

We are learning a lot and excited about where things are headed.

We’ll use this blog for updates, so be sure to check in on us periodically. If your company develops web-based software and you would like to learn how you can grow online subscription revenue — drop us an email to learn more: info@saaspulse.com

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

Increase your sales revenue!
Try TOTANGO free for 30 days