By APNWLNS payday loans
May 24, 2011
Even SMBs have inertia.
I have been waiting for a solid uptick in cloud services adoption by Small and Mid-Sized Businesses (SMBs). Yet a recent report from Microsoft indicates that SMBs are not yet adopting SaaS and cloud services at a blistering pace. Then again, given Microsoft’s rapidly plunging market value, maybe their survey sample included only Microsoft loyalists … both of them.
 According to 3,258 respondents representing companies with less than 250 employees, fewer than 40% plan on paying for cloud services in the next few years, though this is a full 10 points higher than in Microsoft’s previous poll. They also report that those SMBs with their heads in the clouds are doubling the number of services which they rent. The analysis suggests that cloud adoption will be gradual and, given SMB investments into non-cloud infrastructure, a hybrid model will persist.
In the absence of established infrastructure, small businesses have little need for in-house server-side software. Nearly every business function that once required start-ups to have their own server racks are now outsourcable. Need tons of servers and bandwidth for your web sites? Turn to Amazon, Rackspace and others. Need cross-platform office applications? Google and Microsoft are ready to deliver. Need an ERP system? NetSuite is as close as your browser. Anyone starting a business does not need an IT department, server room or the dull headaches induced by overhearing IT geeks reciting Monty Python scripts to one another.
SMB cloud adoption will happen, and as the Microsoft survey shows, it will occur over time. Established SMBs need to engineer services into their mix, and since SMBs typically do not have large and experienced IT staffs, conversions will be slow and painful (those words — slow and painful — are signals to entrepreneurs looking for a new market). New SMBs can adopt SaaS and cloud services today, but given their start-up status, time is required for them to grow and contribute meaningfully to the cloud’s critical mass.
For SaaS and cloud services vendors, the future is bright. SMBs have always been the toughest market to crack given the cost to sell, ROI on sales, low customer skill levels, etc. SaaS was custom made for getting SMBs productive in a hurry while dropping the expense of recruiting them. This model will continue as cloud vendors streamline common application installation and consultants change business models to bridge any remaining gaps.
The channels will not do as well. Anyone in the business of helping SMBs adopt technology, and making a buck on hardware and software reselling, will suffer in style. The economics of SaaS and clouds for SMBs is unbeatable, and continuing refinement of end-user interfaces for even infrastructure services reduce, perhaps even eliminate the value provided by the channel. Where there is less value, providers either compete on price, change their offerings or starve.
Markets change, sometimes overnight and sometimes over time. But they always change. In this case the once seemingly uncrackable nut of the SMB space is breaking. It was broken by addressing an SMB pain point (lack of IT sophistication) and cutting out middlemen. The only losers are the latter.
November 9, 2010
The concepts of “free” and “sex” sell more products than all other promotional elements, and if you are offering free sex people will line-up at your door.
SaaS companies, among others, like “free” lead generation. Most SaaS providers give away a limited version of their offering to collect people’s contact info and build long-term connections to the product. Their grand scheme is always to up-sale freeloading bottom feeders into paid accounts. Yet most SaaS companies have no plan of action for up-selling.
 It’s a SaaS underpants gnome problem.
One of the problems is that online up-selling is a target moving faster than the one on Osama bin Laden’s back (we will get ya, boy). Rules that made sense when Marc Benioff first started pimping Salesforce.com do not apply today. There is no template, just a growing list of things to stop doing.
The most prevalent mistake made in up-selling is poor targeting. When you open your SaaS solution to everybody and their cat, many to most of your freemium customers will not fit any description of “qualified lead.” Most are individuals or small players with no elaborate needs and who are too cheap to buy some desktop software to do the same job. Spending time trying to up-sell them is a lost cause, and might irritate them to the point of becoming a vocal brand detractor. Thus, segmenting your freemium lead list, into the qualified and not, is an essential first step followed quickly by figuring out when an unqualified users changes status to qualified (and that subject will take too long to discuss in any tome shorter than War and Peace).
The next processes is nurturing both qualified and unqualified leads — and it should be blindingly obvious to a blind man that the processes must be different for these very different groups. The similarity in promoting to each group is demonstration of additional value possible through paid version of your SaaS system. The key difference is that the unqualified leads need to see practical how-to demonstrations for the free product, and to start getting material value from it before even considering an upgrade. Instead of hyping the benefits of the paid product, you need to spend your effort assuring they are getting the most from the free version until they are using it as a regular and indispensible part of their day.
Qualified leads likely use your product with rigor, and their usage can be profiled. For each feature, function and outcome, you have insight into what they can achieve by using more of the same, tangent features, or expanding to a larger pool of their employees. Lead nurturing qualified clients involves lighting a path from their current state of happiness to an advanced (and paid for) state of euphoria. But before you can light a path you have to locate the body — know what the qualified lead is doing and not doing.
One interesting and underused element of profiling SaaS users is comparing demographically similar companies who are paying and not. Let’s say you had ten grocery store chains who used a paid version of a SaaS application and another ten skulking about with the free edition. Let’s also assume that they are not radically different in size geography or customer base (for example, contrasting the software uses of Texas Tom’s Big Beef Outlet with Veronica Vegan’s Veggie Basket would be a horrendous mistake, especially after Tom catches and BBQ’s poor Veronica). Examining what features and functions paying customers use most often gives you the information necessary to know how non-paying customers could benefit from upgrading. Make promotions match the needs of freemium users (as demonstrated by non-freemium users) and you can not only make immediate and valuable sense to the prospect, but you can even supply statistical proof of how upgrading makes a prospect more competitive.
In all cases relevancy is primary. Sending an endless dribble of emails is an electronic Chinese water torture that produces the same degree of loyalty. Sending any stream of irrelevant materials is spam. Neither is welcome and when combined you get the typical SaaS up-sell campaign as practiced in the world today.
Phase 3, profit.
The marketing lesson herein is targeting with ample opportunity. The price paid by users for free SaaS is information. Not just contact info, but demographic info — data on which you can later profile your customers. SaaS is uniquely capable of acquiring this data because of the long-term rewards offered with free software. Be a little hungry, ask for meaningful data up front, and if necessary make adding to their demographic profile a requirement of continued free use. Then break out the BI tools and start segmenting, profiling and targeting.
And if anyone from Al Qaeda is using your SaaS software, send their contact info to the Marines.
June 22, 2010
I love technology fads. If I could just think of a way to profit from the inevitable failure of enterprises trying to implement them, I could retire … to my own private island.
Social networking is more than a fad, though the surrounding hype makes it sound like one (with the possible exception of Twitter, a fad that I hope will fade fast). Social networking serves a real purpose, namely uniting people who have common connections. Facebook facilitates all types of unions from the common to the outrageous (if you can get jihadists to threaten you, then you know you have some power in the world). The secret to social media systems is that they let people decide what common connections are important and that do not occur through nominal daily activities.
Which is why most corporate social media experiments have been misguided wastes of your bonus check. Corporate life is all about getting people with common purpose together — even sales and marketing, though the bloodshed between those camps makes cleaning up conference rooms an added expense. Social networking applied to corporations has few benefits because it lacks a real purpose that isn’t already being met. While judging entrees in last year’s CODIE Awards, I was subjected to a number of enterprise-focused social networking suites that in practice produced no benefits for the enterprise or its employees. They were, almost to the last, mere playthings without tangible end-games.
Which is why Connect2health is a delightful departure (full disclosure: Private Social Networks, the makers of Connect2health, is a Silicon Strategies Marketing client).
Connect2health was designed to achieve specific things for a specific market, which according to the units-squared principle means that Connect2health is already four time more viable than any other enterprise social networking suite. Specifically, Connect2health is designed to help hospitals grow communities and thus create marketing opportunities and control brands. Hospitals — at least those in major metropolitan areas — compete, and they know that creating and exploiting a lasting brand is difficult. Sure, Kaiser Permanente knows how, but they have been mastering the trade for ages, they have more money than Moses and can establish for themselves almost any brand (except that of being the low cost provider).
When getting into the private social networking business, Private Social Networks decided to pick an industry that had a demonstrated need, apply social networking mechanics to customers in that industry, and find ways of having the product fulfill business missions. Stated succulently, Connect2health helps hospitals connect patients, families, friends, doctors, nurses and administrators online together with the express purpose of centering healthcare around the patient. The backend that excites hospital management is the ability to market to the patients, their families, their friends and everyone else who connects into the application. This amplifies and targets hospital outbound marketing, inbound talent, and for the non-profit hospitals, donations.
More importantly though is that by creating long-term customer connections, in an industry that normally connects only for the duration of hospitalization (and the funeral if it is a lousy institution), this is a brand defining tool. Patients bring in new people, demographic profiles develop, connections are kept long after patients are discharged, and the hospital (who owns the data) can continue to establish and expand their brand to these people.
Where enterprise social networking plays have gone astray was not providing concrete benefits. Most of the vendors in this space talk in vague generalities about “synergies of connected teams” and other effluvium written by junior marketing people who have never had P&L responsibility. Social networking companies that identify and address specific needs of specific industries and create specific payoffs will make some serious cash. Expect to see some players become “specialists”.
That is if they can keep up with Private Social Networks. Hospitals are only the first segment in their sights.
May 26, 2009
We may be in a recession, but SalesForce.com has decided not to participate.
Last week SalesForce submitted financial reports covering the three deepest months of the current downturn. From February through April, SalesForce saw their revenues rise 23% and their net income nearly double, climbing 92%. They also announced that SalesForce is the U.S. economy and that Marc Benioff would ascend to the papal throne.
Defying economic gravity is considered a miracle on Sandhill Road.
We should not be surprised by this quarter’s occurrence. When in recession, companies and consumers alike reduce risk while attempting to expand opportunity. SaaS offers a reduction in risk for implementing a CRM system. Since SalesForce is currently absconding with nearly 10% of all CRM revenues and is thus the undisputed heavyweight of the SaaS CRM industry, 3,900 new customers instinctively turned to them in early 2009.
Another angle is that in tough economic eras companies look for ways to increase their own sales. Coordinating sales efforts and keeping proper tabs on your pipeline is part of hitting pay dirt. When times are good, you can be a little lax about managing your sales efforts. When you start raiding the kid’s college fund, you instill discipline on your sales force.
This brings an interesting revelation about SaaS. As a delivery system, SaaS reduces risk to the consumer (and to the vendor as well). During times of profit peril, low risk alternatives beat those with large commitments. Thus SaaS has the ability to grow during down business cycles when packaged software does not. SalesForce has shown that it grows during up cycles too. We might assume that Marc’s Marauders merely are great at what they do (and they are). But a more fundamental shift in the software market is in play.
SaaS’ ability to attract business during downturns is compelling. Not every product category is as fundamental and as organizationally flexible as CRM, so SalesForce’s success is not directly transferable to other software solutions. Yet the principle of engineering risk reduction while offering economic adoption of business-improving solutions alters market fundamentals. It reduces and perhaps eliminates the drastic dips that hit enterprise software companies as industries that consume software suffer. Sure, revenues may lower during recession, but negative growth appears unlikely and thus most of the misery associated with recession may be avoidable. Since SaaS is delivered globally and since other markets suffer recessions less (my New Year investments Brazil are doing quite well, thank you), economic undulations are less serious for SaaS.
Aside from the well discussed issues of integration, I fail to see why a software vendor selling database-centered solutions would not opt to offer a SaaS alternative. Proffering one does not preclude a packaged product, and may well attract customers reluctant to risk the ‘big investment’ during periods of low lucre. SalesForce shows that you can produce double digit growth numbers in a downturn.
There is risk however. Benioff will look bizarre wearing his miter.
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