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A primary practice in the SaaS industry is to offer users a trial period to check out how your app works and see whether it will benefit them. Time bound trial is the most common trial option offered in the industry. But how does it stick up against usage based trial?

SaaS consumers are used to trials. This is logical because the consumers need to get a “feel” of your service before they decide to jump in. Some companies use the freemium model, where they offer a set of features for free and hope consumer can see the benefits of the app and later upgrade to access more robust features, storage space, support, etc. However, it is time-bound trial that is most prevalent among SaaS businesses.

SaaS Time Bound Trials

Time bound trials are everywhere, with most businesses offering between 14 to 30 days trial. The sales team hopes that within the trial period, users will have gotten the hang of the application and seen its benefits.

Time bound trials create a sense of urgency to the user. Given that the clock is ticking, the user may be more committed to trying the app and this is good news for the SaaS business in three ways:

• Serious users can be identified based on their activities. These users can be segmented and allocated dedicated Account Managers that can pursue them to close sales.
• The business can know which aspects of their app are important based on user activity. This information can be used in R&D.
• Payment based trials give the business some revenue regardless of whether the customer uses or doesn’t use the software. (e.g. Aweber)

In spite of the above advantages, time bound trials may not give users ample time to explore the service to make an informed choice. This usually leads to low sign up rates. Things happen; the user may go on vacation, PCs may crash, and so on; all this time the trial period clock is ticking. It is not uncommon for users to sign up for trials and never use the service until the trial expires.

Continue reading “SaaS Trial Options: Usage Based or Time Bound?” »

Like with any business, the customer remains king in a SaaS business model. Ongoing customer relationship is of central importance when offering SaaS services and it directly affects the financial health of the business. With good customer relationship, SaaS businesses can lower their churn, generate significant recurring revenue, reduce costs and grow faster. Let’s look at how important customer relationship is in a SaaS business model.

As the traditional software business model stifles and more companies adopt the SaaS model, business owners transitioning from the perpetual software licensing business have to grapple with the reality that SaaS business is not dependent on the copies of software sold, but the number of customers the business has. The economics of licensed software do not apply in SaaS business model when evaluating capital, profitability and business value.

The traditional software vendor sells copies of his application to customers. Typically, the more copies he sells, the more revenue he generates. This is apart from other one-time sales that may occur for selling multi-user licenses, upgrades and other additions.

On the other hand, the SaaS business owner generates revenue by selling subscription to his customers. Every customer contributes to the overall revenue generated by the company. Revenues can be flexible if the business offers different pricing packages and enables upgrades and downgrades of service offerings.

The Fundamental Revenue Shift in SaaS Business Model

There is a shift in how revenue is generated by the traditional software vendor and the SaaS owner. For the former, revenue is recorded in the business when a user purchases a copy of the software. Traditional software features are fairly standard across all users and thus revenues from upgrades will not have a major impact on the overall revenue generated by initial sales. Thus, the vendor will have achieved his objectives after licensing the software the first time.

On the other hand, for the SaaS owner, revenue is recurring since it is generated through a subscription model. For continued revenue generation, the business has to maintain a good relationship with the customers. A strained relationship with customers can increase churn and in turn affect the financial health of the business.

Continue reading “Why customer is more than a King in SaaS?” »

The Freemium Model has been gaining traction in recent years. However, industry experts and experienced founders have been discovering the inefficiency of the model in generating revenues and lowering customer acquisition costs. Is freemium a viable business model for SaaS or does it simply drain resources with low ROI?

Freemium is a marketing tactic where a SaaS company offers both free and paid version of their product.  SaaS owners use freemium as a market entry strategy to get users fast and test the viability of their offer in the market. However, it is only in rare cases that freemium has been found to lead to a substantial increase in the number of paying customers. In most cases, it leads to negative product positioning, increased costs and stifling of the business.

Before we go further, let’s be clear on what freemium is not.

A product demo or a product that does not give a solution unless the user upgrades to the premium version is not considered freemium. Most startups offer demos to generate feedback from customers, demonstrate the capability of the product or get users to upgrade to the paid version.

Upgrading to premium comes with its perks. For example, users can get increased usage quota limits, useful features exclusively available to the paid versions, additional tools to maximize the products efficiency among others.

The Freemium Attraction

The freemium model proponents point out to various facts that make the model attractive for startups. Here are some of the advantages:

1. No Usage Barrier

Today’s consumers are bombarded with hundreds of products to try. Moreover, the attraction of SaaS over the past few years has led to the rise of any and all types of SaaS products. Just like apps, SaaS vendors are covering everything, from time management to WordPress backup. Users therefore have to filter different products to find what works for them. How do you get your app to be found in this sea of apps? By using the word FREE.

Continue reading “Is Freemium a Viable SaaS Business Model?” »

Customers are the lifeline of any SaaS business. Without paying customers, businesses growth comes to a halt and capital eventually runs out. Burnout becomes evident and staff morale goes down. You can therefore understand why having paying customers is crucial to the growth and sustainability of any business. Getting customers is easy, but how do you win them?

The SaaS business model is at the heart of today’s online economy. Big and small companies are experimenting with the SaaS business model, with varied success. Such experiments do not come as a surprise given the success of pioneer SaaS companies like Salesforce, Omniture, LogMeIn and others. However, while the prospect of getting recurring revenue is enticing, there is churn to think about. Ultimately, the fool-proof way of reducing churn is to win your customer’s head and hearts. And here comes the big question: how do you do this?

Customer satisfaction is one of the components that contribute to the success of any SaaS business. Poor customer satisfaction can increase churn, erode brand confidence and ultimately reduce your revenues. While product development is good, any development of your app should be geared towards fulfilling the needs of customers to win them.

Let’s look at some of the ways through which you can win customers to your SaaS business.

1. Deliver your promise

Business is about being faithful to your customers and delivering your promise. When it comes to delivery, it is not just about your product, but your whole brand. Users should have the experience they expect from your brand right from when they come across your content on your website or connect with you on your social media network, up to when they sign up for a trial or pay for your service.

Don’t sit on the fence when it comes to delivering. Ruth Stevens of eMarketing Strategy points out that most businesses lose sight of their product or services by focusing on ways to keep customers. Before you think of pleasing customers, know what you want to offer.

Delivering your promise is part of your brand. To successful execute your brand, you need the 3Cs as reviewed by Dr. Alan Middleton (Executive Director of Executive Development at Schulich School of Business, York University). The 3Cs refer to the commercial, culture and community pieces of business that work together to result in strong brand equity. The outcomes of the 3Cs working together include less price sensitivity when it comes to competition, more sales, and loyalty among customers. Winning customers over makes them loyal to your brand.

2. Do the SCD Test

Before you go out to market your service, do the SCD test. Every marketing promotion that you put out, whether online or offline, should be Simple, Creative and Dominating. Don’t be clever with your target market. SaaS founders and teams can get egoistic, trying to sound all geeky with marketing. Wrong approach. The best ad is one that is simple and clearly communicates your message.

Ever wondered why GoDaddy commercials are always a resounding success during Super Bowl? The company must have one of the most creative marketing teams. Simplicity, creativity and domination are evident on their commercial ads.

Great marketing should entertain as well as deliver your message. The message is the most important part of the marketing.

Continue reading “How to win your customer’s head and heart” »

Gift boxes and food subscription businesses like Birch, Healthy Surprise, Tasterie and other may have made the news in 2012. However, they are not the only new wave of subscription models. One of the unique subscription businesses that was launched in 2012 is HowAboutWe for Couples, a curated local dating experiences business for couples. Let’s look at this unique subscription business.

HowAboutWe started in 2010 as a dating site. In 2012, the site started a subscription dating curation offering for couples. Every month, users get a DateBook with curated date ideas customized for every user. The date ideas are based on the area that a user indicates they live when signing up and their preferences.

HowAboutWe Works

For example, a person can get suggestion on the best restaurants to go on a date in their area, where to visit and of course, where they can save money and still have fun during the date. The whole idea of HowAbout We is getting people who are dating offline. Most dating sites try to keep users on their sites, offering various features like messaging, virtual gifts and so on. HowAbout We wants users to get to know each other away from the Internet. This is through planning physical dates around the users’ home areas.

Continue reading “Challenges of Dating Subscription Site HowAboutWe” »

Adobe, one of the largest creative software services providers, is now fully pursuing a subscription business model. The company’s flagship product, Adobe Creative Suite, has been evolved to be accessible on the cloud on a subscription basis. What does this mean for creatives and other software services competitors?

For over three decades, creatives have been paying a license fee to use Adobe design software. However, as the subscription business evolves, large software companies are not being left behind. Adobe Creative Cloud was introduced in late 2012 as a subscription option and so far, everything indicates the company got it right. In the first 9 months, over 450,000 premium users and more than 2 million free members had subscribe to the subscription package.

Adobe’s Creative Cloud Pricing

Creative Cloud was initially introduced to individual members and later to teams. The response has been positive so far. Users can access a single Adobe product for a monthly fee of $29.99 or the entire Creative Suite for a monthly fee of $49.99.

As consumer software consumption moves from perpetual licensing (where you purchase a software to install to your PC) to a SaaS model, Adobe has decided to go all-in to offer a SaaS service with its Creative Cloud. While the company will continue selling the current versions of its products, no further feature updates will be made for them

Benefits of the Cloud

Together with its cloud storage service, Adobe is providing creative professionals with all they need to successfully execute projects. According to Adobe senior executives, the shift to a subscription based model is a major but necessary step for the company’s future sustainability. Users can now expect more stable versions and quicker patches, fixes and updates with the Creative Cloud.

Continue reading “Adobe Fully Adopts Subscription Model With Creative Cloud” »

While the rising subscription-based economy is an entirely new phenomenon, the human affinity for narrative is nothing new. According to experienced brand storyteller James T. Noble, “storytelling is a proven way to develop identity, build your client base, and increase sales.” A well-told narrative bridges the gap between advertising and building relationships. Given that 75% of consumers don’t trust advertising messages, the emotional appeal of a story can draw them in, and leave them more receptive to further communications from a brand. Here are several additional benefits:

• Narrative lends a personalized bent to your brand.
• Stories can spruce up even the most boring case studies and data sets. 
• Tales of real-life customers can lend social proof to your advertising messages.

Perhaps best of all, stories are a cheap platform. There’s no cost aside from your time in developing a tale of your best customer’s success using your product, or penning a modern fable that directly ties to your ideal customer’s pain points. Here are some ways to ensure storytelling is highly appropriate, and effective:

1. Strive for Social Proof

Perhaps the simplest and most-apparent form of brand storytelling, case studies allow customers to do the talking on behalf of the brand. Consumers are more likely to listen to another consumer’s take on a branded solution than a companies, and a well-written case study illustrates the efficacy of a product in action. The most well-written customer success stories read more like a narrative than a corporate tip sheet, and include insight on the company’s pain points, and any difficulty encountered in reaching their current level of success.

71% of B2B marketers are currently using case studies actively to convert and convince their prospects. Case studies aren’t the only form of social proof that can effectively convey a brand’s story. Actively solicit quotations, images, and other content from your customer base to incorporate into your content marketing.

2. Be Relevant

Even if you opt to craft a modernized fairy tale of a company actively seeking subscription software solutions and fighting the terrible dragon known as low uptime, your story should be rooted in reality. Use enough consistency with the factors your prospects encounter on a regular basis to develop rapport, and avoid overselling your solution in a way that could potentially damage trust.

While AllState’s Mayhem character is a sort of dark and mythical, the situations he causes present very real risk to the brand’s target buyer.

Continue reading “How to use story telling to increase customer engagement?” »

Drip marketing helps brands stay relevant to their prospects and build relationships over time. To remain in a healthy state, SaaS businesses should strive to get customers at the lowest cost possible. Drip marketing gives SaaS founders an opportunity to establish their credibility in the market and convert leads to customers at a low cost. Let’s take a look at how drip marketing can work for your business.

SaaS companies have to determine what kind of customers they are signing up. Trial users can be argued to be a vanity metric, but with proper segmentation, you can improve the chances of the users converting to paying customers.

Identifying Serious Buyers

When you launch your SaaS offering, you need to check various metrics to determine whether a user is simply an “explorer” or a “serious buyer”. You can use different tools to track user activity on your SaaS offering to better understand them. For example, you may want to know:

• Which features of the app is popular with your user
• Average time that trial users spend on your app
• Expressed interest in exploring paid features
• Know the type of persons who have signed up (Buyer Personas)

User engagement in your app can give you a clear indication on their likelihood of converting to paid customers. At the same time, you will get marketing insight on what users are looking for in your app.

Email communication is an important part of any SaaS drip marketing campaign. Email can provide crucial information that can help you know how to tailor your offer or approach your market. With email, you can:

• Carry out customer feedback and surveys.
• Provide quick links to FAQs and video tutorial.
• Provide marketing messages such as upgrades, discounts, etc.
• Reach users in a personal way to convince them to upgrade.

Continue reading “How to use Drip Marketing to your advantage in SaaS” »

When a SaaS customer churns, it isn’t just a sign of dissatisfaction with your product. As Lincoln Murphy puts it, lost customers are literally “threat to your business, your revenue, [and] your ability to grow.” Regardless of whether your company has a churn rate in the range of 5-7%, it’s critical to utilize implicit data to determine risk among your customer base.

If you aren’t actively using behavioral analysis to determine the segments of your clients who present the greatest churn risk, and reach out accordingly, you could be surprised by a sudden and potentially devastating loss of revenue when your customers migrate to a competitor. Here are several ways to proactively identify risk for churn:

1. User Engagement

The single-biggest risk for churn occurs when your customers aren’t invested in your product. If they aren’t using your subscription business on a regular basis, why should they continue paying for the service? However, it’s essential to realize that you can’t accurately analyze behavior without a baseline measurement of optimal engagement. What’s normal for your product may change significantly over the customer lifecycle, so develop an accurate gauge of how your real-life customers use your SaaS.

Murphy points out that without a baseline measurement, you could miss signs of disengagement, and “lose a customer when you really didn’t have to.” Webengage can aggregate customer insights and feedback for proactive monitoring.

2. Sign the Right Customers

Behavioral segmentation during the trial phase can ensure your company’s sales team are focusing on the right prospects, with intention to buy and a need for the product. Michael Gentle recommends proactively scoring your trial users against a set of defined churn risk criteria, which could include organizational information and insight on need, in addition to engagement.

Continue reading “How to Avoid Churn and Identify Risk” »

Salesforce custom fields can make your marketing campaign more efficient in gathering important information from your leads. Custom fields help you to better understand your customer needs and maximize on sales. 

When gathering leads using Salesforce, it is important to learn as much as you can about the prospects to determine how your SaaS service fits in their needs.The 4Ps of marketing (price, product, place and promotion) can help you determine the percentage possibility of a lead turning into a customer, and thus tailor your SaaS inbound marketing campaign to improve conversions.

Salesforce Custom Fields

Apart from the commonly used fields such as First Name, Last Name and Email Address, you may wish to get other information from your Salesforce forms. This is where custom fields are important. You can specify the type of data that will be accepted in each custom field based on what you are looking for. However, in as much as you can create as many fields as you wish, you have to strike a balance between information gathering and lead satisfaction. You do not want to have too many fields such that prospects will get discouraged from filling the form.

Best Practices on Using Custom Fields

a) Avoid cluttering the page with a lot of fields. Strike a balance between the number of custom fields you set up and the space available on your page. Only set up the necessary fields that will help in lead segmentation.

b) Use the right field for the right job. A text field will be able to hold dates but will be useless if you will want to do any calculations on the date. Whenever possible, use the picklists available to standardize data.

c) Use custom fields where you need them. You can use the fields to get important data such as the age, location, income levels, gender, interest/hobbies and so on. The data you request for should be guided by your service.

Continue reading “Custom fields – What salesforce did right & benefits” »