Innovation is in some respects looking less innovative. The headlong rush to reimagine processes online probably with some form of automation based on shiny new tech is laudable of course. Thing is, most vendors jump straight to a subscription only business model. Why? The perception is that it is the only ticket to a stellar valuation so why not. The platforms are then marketed and sold aggressively, but all too often the realisation hits, not is all going to plan. The target audience aren’t signing up as fast as expected which in turn isn’t delivering the desired wild ride up the proverbial financial J curve.
As you know we’re at the ‘many years of experience’ part of our careers and we’ve seen this and similar ourselves. Also, we’ve recently discussed it with some of our lovely solution partners so we thought it time to look a little deeper and work out what to do.
It starts with the totally logical assumption that automating a process, wrangling data in new ways, or enabling new highly efficient methods to engage with consumers are all reasons for a quick signup and get going. After all, the entrepreneurs behind it know it’s so easy to use, the business case is bullet proof and it integrates with everything in moments. No brainer, right?
Whoa there! Hold on a moment. What happens when you throw human nature into the mix? First, logic does not always prevail (if ever) that’s a certainty. Second, the process of taking prospective customers through the pain of change – perceived or otherwise – can often be a barrier too tough for lacklustre corporations who would rather stick with what they do today even though it’s illogical.
The result is vendors with potentially beneficial technology platforms seeing them falter or plateau in sales once the initial early adopters are sold. There could be all sorts of reasons why, but typically these are the ones we see most often:
- The assumptions on which the platforms are built are not tested iteratively in the early build stages. i.e. teams put too much time and effort in V1 releases ahead of real market validation. As someone said, “if you’re not really embarrassed by your first release you’ve put too much into it” harsh but somewhat true.
- Not interpreting customer feedback properly. Read this and you’ll know what we’re on about. We are programmed with a basic need for affirmation of our ideas and so often hear what we want to hear not what we NEED to hear. (Have you ordered that book yet?)
- Fear of adding a services/consultancy function believing it will compromise company valuation potential. Nothing could be further from the truth. There are numerous reasons why a core service offering will almost certainly be essential and highly valuable, not just in revenue terms (especially early on) but market insight to drive product development.
- Entrepreneurs don’t adapt quickly enough in development, business models etc, and keep pushing on believing they can be wildly successful, eventually. . . See above.
- The big one (supporting some of the above). Potential corporate customers might share needs and challenges which are addressed by platforms from our plucky SaaS vendors. But, they rarely talk in detail of their teams and ability to utilise the platforms day to day which is an often missed ‘objection’. We’ve also seen very strange dynamics around relationships with their agencies who desperately hold onto increasingly irrelevant business models whilst simultaneously getting in the way of real progress.
We talk to a lot of corporates across many sectors that could benefit from the targeted solutions we work with. We also know they need maximum effectiveness with minimum disruption in their business. Budgets are rarely the issue, it’s time and friction that holds things up or derails the whole thing. In that situation what’s the solution for SaaS vendors to win more business? Offer just the outcomes they want and charge them accordingly. That may involve some consultancy, deeper investigation or whatever works for the customer but again that’s paid for work. It takes very little of their precious time and is about as frictionless as it gets.
Clearly there are a lot of generalisations here and no doubt exceptions. However, just consider how many of the mighty platform providers out there (Salesforce, Microsoft, Oracle etc) that all have significant service offerings. Yes, some are external, and this is undoubtedly a long term goal, but for the formative years, having those services in house is far more valuable.
What about that rebrand we hear you cry! We reckon SaaS is fine, now think of it as Software And a Service!