Welcome to                           Selling and Marketing                           As-a-Service Products                ...
2015                   In                   24%                   of all new business software purchases                  ...
Today          • Is it a Product or a Service?          • How can Marketing impact as-a-Service            metrics?© 2012 ...
Unless you sell infrastructure as a service, the cloud is just a delivery mechanism.                                      ...
A reliable, secure, responsive, high performing delivery       mechanism is table stakes.© 2012 The Shirman Group, Inc. Al...
You still need to decide     What market are you in?                         You want some                                ...
Product or Service?                                             Products        Services         Products as ServicesBuy P...
Product or Service?                                          Products         Services           Products as ServicesRelea...
Product or Service?                                          Neither         As-a-Service                                •...
Conversion Rate         Customer Acquisition Cost (CAC)         Average Recurring Revenue (ARR)         Churn Rate        ...
Increasing Conversion Rate               First                                                                     • Be ea...
Keeping CAC Low                                                                          • Can you avoid high-touch       ...
Increasing Recurring Revenue                                                                                              ...
Decreasing Churn           Median Churn Rate*                        • Pre-sale readiness                                 ...
Increasing LTV More                                                     Premium Infrastructure                            ...
DEVELOP ACTIONABLE                                                                     STRATEGY                           ...
Resources          • Consumption Economics by J.B. Wood          • ForEntrepreneurs.com blog – David Skok                 ...
Web:     www.ShirmanGroup.com                                                     Email:   lilia@ShirmanGroup.com         ...
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  • Global SaaS app revenue $11.8B in 2012 – $26.5B in 2016Fastest growth Segments (CAGR) Office Suites (40.7%)Digital Content Creation (32.2%) Business Intelligence applications (27.1%)
  • Unless you are selling infrastructure as a service (e.g. you’re with Cloudera or Amazon or similar) the Cloud is not the product, it’s a delivery mechanism. You still have to understand your market and your audiences, and demonstrate tangible, relevant, and unique value.
  • Granted, the delivery mechanism has to be up to the job. The exact requirements will depend on what markets you are selling into, but table stakes typically includeService level (availability, response times, uptime) – sometimes with SLAsSecurityDisaster recovery
  • Evaluation : Superiority of technology & featuresInteraction: Ability to solve problems Experience:Enable customer to solve problemsLinear - Marketing stops when customer enters sales funnel, Sales stops when purchase made, support stops when issue resolvedCircular - Marketing & Sales continue during engagement to id & sell follow-on Continuous – up-sell and cross-sell are integrated into product usage
  • I’ve seen multiple definitions of CAC – And of course it depends first and foremost on the sales model. - Direct sales model – sales rep cost + marketing cost / customers acquired - Indirect model, SaaS companies should target average payback of 1 year on sales and marketing costs. Bessemer surveyed a number of SaaS companies in 2008 and found an average CAC ratio of 0.6.Churn is the percent of customers who cancel each year. Ideally, a SaaS company should target a churn rate of less than 12% of CMRR.Cash flow is of course important for any company, software or SaaS or anything else. But because so many of the costs are front-loaded in the SaaS model, it is a critically important metric to track and manage.
  • 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%.
  • 19% Average Percentage of New ACV from Upsells to Existing CustomersUpsell / Cross-Sell Focus Will Vary by Pricing Model:Number of SeatsUsage or TransactionsNumber of SitesAlso – total employees, database size, etc.
  • Low switching costprice Low Service Levels (response times, downtime, service and support) Product quality (missing features or bugs)From Dennis Howlett:Misalignment between cost and value deliveredInsufficient functionalityLack of individually required functionalityPerceived poor performancePerceived poor servicePerceived poor supportPerceived poor response timesUnacceptable downtimeSecurity breachesBilling problemsUnresolved software bugsUnexpected chargesUnexpected or unacceptable price risesGone out of businessService no longer requiredKeyStone On Demand, an online training application, analyzed the main reasons why customers cancel: low organization adoption, not enough customer stakeholders app is not utilized properly to gain full potential.
  • Shirman group saas-sales__marketing-marketingcampsv2012-slideshare

    1. 1. Welcome to Selling and Marketing As-a-Service Products Lilia Shirman, Managing Director, The Shirman Group© 2012 The Shirman Group, Inc. All rights Reserved
    2. 2. 2015 In 24% of all new business software purchases will be of service-enabled software - IDC© 2012 The Shirman Group, Inc. All rights Reserved
    3. 3. Today • Is it a Product or a Service? • How can Marketing impact as-a-Service metrics?© 2012 The Shirman Group, Inc. All rights Reserved
    4. 4. Unless you sell infrastructure as a service, the cloud is just a delivery mechanism. Product Delivery Mechanism© 2012 The Shirman Group, Inc. All rights Reserved
    5. 5. A reliable, secure, responsive, high performing delivery mechanism is table stakes.© 2012 The Shirman Group, Inc. All rights Reserved
    6. 6. You still need to decide What market are you in? You want some of THIS? What is your value? Which audiences care? What proof do you have?© 2012 The Shirman Group, Inc. All rights Reserved
    7. 7. Product or Service? Products Services Products as ServicesBuy Process Evaluation Interaction Experience •Scalable relationships • Messaging •Relationship •Usage insightsMarketing • Brand awareness development •OffersRole • Lead generation •Thought leadership •Word of mouth catalyst •Referrals •Churn prevention •Partnership promotionSales Process Linear Circular Continuous© 2012 The Shirman Group, Inc. All rights Reserved
    8. 8. Product or Service? Products Services Products as ServicesRelease Months or years Real-time Weeks or DaysCadence • Planning • Value designRole of • Deployment • Managed services Value deliveryConsulting • Customization • Proactive usage guidance • Integration • Drive adoption &Role of consumption React to problems n/a • React to problemsSupport • Product • Product administration administration Knowledge transferEducation • Product usage • Product usage Value delivery • Optimizing value • Development© 2012 The Shirman Group, Inc. All rights Reserved
    9. 9. Product or Service? Neither As-a-Service • Scalability Success • Repeatability Factors • High Transaction Volume • Whole Experience • Loyalty • Adoption & Consumption© 2012 The Shirman Group, Inc. All rights Reserved
    10. 10. Conversion Rate Customer Acquisition Cost (CAC) Average Recurring Revenue (ARR) Churn Rate Lifetime Value (LTV) How Can Marketing Impact Key as-a-Service Metrics?© 2012 The Shirman Group, Inc. All rights Reserved Images from Forbes article by David Skok and from Chaotic Flow blog by Joel York
    11. 11. Increasing Conversion Rate First • Be easy to find Experience First Sale • Send daily usage suggestions and tips • Contact trial users • Focus on prospects who are actively evaluating Free trial users still active on day 3 were 4X • Provide reason or means more likely to convert to engage multiple users in Active trial users contacted by sales 70% a trial more likely to buy • Connect evaluators with Evaluators who had 3 users joint account existing users in their in 1st 3 days were 12x more likely to convert network Source: Totango© 2012 The Shirman Group, Inc. All rights Reserved
    12. 12. Keeping CAC Low • Can you avoid high-touch First selling? First Sale Experience • Can your product sell itself? • How are you influencing the Buyer’s Journey • How many points of entry Median CAC are there? $1.00 • Are you driving positive $0.90 $0.75 word of mouth? $0.45 • Can your partners’ products sell yours? Field Sales Inside Sales Internet Channel • Is your product inescapably viral? Source: Pacific Crest SaaS Survey 2011© 2012 The Shirman Group, Inc. All rights Reserved
    13. 13. Increasing Recurring Revenue Increase Adoption (Number of users) First Increase Consumption First Sale Experience (Variety of services) Increase Usage (Activity volume) CAC by Sale Type $0.93 $0.28 $0.16 New ACV from New Customer Upsell to Existing Customer Renewals Source: Pacific Crest SaaS Survey 2011© 2012 The Shirman Group, Inc. All rights Reserved
    14. 14. Decreasing Churn Median Churn Rate* • Pre-sale readiness evaluation 5% • Business process / usage analysis & guidance • Customer Success Officer Most cancellations were preceded by – assist with adoption a period of non-use and value • Proactive support for infrequent users • Simple pricing and billing • Opportunity for feature requests and input Source: Totango© 2012 The Shirman Group, Inc. All rights Reserved *Source: Pacific Crest SaaS Survey 2011
    15. 15. Increasing LTV More Premium Infrastructure (Security, SLAs, Dedicated ) Increase Adoption Analytics-based Best (Number of users) Practice Consulting First Increase Consumption First Sale Usage Intelligence & Experience (Variety of services) Process Enhancement Increase Usage (Activity volume) Insight / Data Mining Architect product with Private Labeling long-term revenue possibilities in mind Advertising / Affiliate Sales© 2012 The Shirman Group, Inc. All rights Reserved
    16. 16. DEVELOP ACTIONABLE STRATEGY Content Structure People CREATE CUSTOMER PLAN & EXECUTE RELEVANCE GO-TO-MARKET Value Stories Integrated Marketing Audiences Channel Enablement Industries Alliances Solutions We believe real innovators are “tech-knowlegists” who create technology that matters to businesses and people© 2012 The Shirman Group, Inc. All rights Reserved
    17. 17. Resources • Consumption Economics by J.B. Wood • ForEntrepreneurs.com blog – David Skok http://www.forentrepreneurs.com/ • Chaotic-Flow.com blog by Joel York http://chaotic-flow.com/ (Guide to SaaS Metrics)© 2012 The Shirman Group, Inc. All rights Reserved
    18. 18. Web: www.ShirmanGroup.com Email: lilia@ShirmanGroup.com Blog: www.RevenueOrchard.com Twitter: B2BGuru Available on Amazon.com at http://amzn.to/RC5Xjm or at the 42 Rules Publisher page: http://42rules.com/book/42-rules-for-growing-enterprise-revenue/ MarketingCamp Discount: ADD12© 2012 The Shirman Group, Inc. All rights Reserved
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