8 Tips for Marketing SaaS and Software in the Cloud

The cloud is all the rage these days. Saugatuck Technology's Bruce Guptill released some interesting market research predicting that by 2014 the majority of new corporate B2B software purchases will be in the form of cloud software solutions (SaaS) rather than traditional on-premise software. This is a significant tipping point, after which adoption of cloud services is expected to further accelerate. What does this mean for B2B marketers selling cloud solutions and software as a service? I think it will pretty much change the rules of the game, and in ways that are somewhat unpredictable today. Here is why.

Why SaaS Marketing Rocks
After having taken to market both SaaS (starting in 2002) as well as traditional on-premise software solutions, I observed first hand some of the significant differences between the two models as it relates to marketing. And I also learned a few lessons along the way (some were learned the hard way, but I guess that’s how you learn best). You will see quickly in the following sections that I have a bias towards cloud software solutions, mostly because, if done right, the on-demand cloud model provides much faster, more direct and immediate feedback cycles on how your market is responding to your solution and marketing stimuli - a marketer's dream! In many cases, it also allows for much more compelling value propositions compared to traditional on-premise solutions. But let's take a closer look.

(1) Focus on the business buyer
One of the biggest changes in marketing SaaS vs on-premise software is the makeup of your target audience. While IT departments traditionally had a lot of influence over the software buying decision and acted as gate keepers, cloud solutions today often allow you to deal directly with the business problem owner and end user to make the decision and subscribe to your service (this obviously depends a great deal on the complexity, integration and scope of the solution). One of the biggest factors in the adoption of cloud solutions is that business users can activate the solution quickly, often without having to rely on slow IT resources.

For many applications, this will allow you to bypass IT in the early stages of adoption or altogether, depending on your solution. This is especially true for stand-alone, point solutions that don't require integration into on-premise or other cloud solutions. Also, be aware of IT pushback. I have seen many IT departments that have a strong on-premise bias to justify keeping their budgets and headcounts required for running the entire IT stack in-house.

(2) Re-focus messaging from product to buyer 
While more direct access to the decision maker and buying authority may simplify the decision process to some extent, it requires marketing to better understand the underlying business problem the cloud solution is solving. Technical specs, speeds and feeds are now much less important, even irrelevant, to the buyer as they are often entirely encapsulated and "hidden" in the cloud.

What matters to the business user is the business value the solution delivers, the process it helps automate or enable, the cost it reduces or the opportunity it unlocks. In addition to your unique business and functional message, make sure to also embed a unique version of the “generic” cloud value proposition (lower cost and complexity, higher flexibility, faster on-boarding, seamless scalability, etc) into your marketing message and make them relevant and specific to your offering.

(3) Create buyer personas
For many software vendors who have been selling traditional on-premise solutions to customers, this focus on the business buyer and their unique requirements should not be new. The move to the cloud, in combination with dramatically changing buyer behaviors, however, requires a more sophisticated approach to marketing. It requires a crystal clear definition of your target segments, target buyer personas, and the typical journey your buyers take from problem to buying decision to actual purchase. This path needs to be made painfully easy for prospects to travel along. With powerful content assets that lead, just like breadcrumbs, from problem to solution.

(4) Simplify content marketing
Content marketing (combined with robust marketing automation) allows you to scale and put much of your inbound marketing efforts on "auto pilot", and "cherry pick" the leads you want to engage with directly, when they are ready to talk to you. While there are many steps in the decision process and many buyer personas that influence it, I have found that simplification is key to success. Especially if your marketing and sales organization is new to content and buyer centric marketing, don't be tempted to build the perfect system that, for example, captures 8 granular buying stages, 5 buyer personas, across, 5 market segments. Creating compelling content for the intersections of all these dimensions, you might be looking at hundreds of assets to be produced and deployed. This will easily overwhelm even the most sophisticated marketing teams.
Instead of attempting perfection, take a simplified crawl-walk-run approach, starting with as few as three buying stages (for example: “Awareness”, “Discovery”, “Decision”), one or two key buyer personas, and one target segment. Once this pilot model is designed and implemented with all content assets and associated programs, then you can move on to more sophisticated models applying the lessons learned earlier on.

(5) Highlight pricing model advantages
Pay as you go or subscription models enabled by cloud services allow buyers to adopt your solution much more quickly as they don't have huge upfront license fees to worry about that are often Capex, require justification, and many levels of sign-off. Instead, the monthly subscription payments can often fly under the radar and get paid without the intense scrutiny of big, lump sum payments, making it easier for buyers to pull the trigger.

(6) Mind the adoption gap
In market categories where cloud solutions are disrupting the way an existing problem is solved, make sure to revisit Geoffrey Moore's Chasm framework. If your SaaS category is in its early stages of adoption (for example marketing automation) market dynamics and buyer preferences will be dramatically different from segments that are in later stages in the technology adoption cycle (for example CRM). Innovators and early adopters are willing to take a lot of risk for a potentially big payoff. Early majority buyers will want to see references from companies just like them to reduce risk and ensure economic and technical success. Late majority and laggard buyers are the most risk averse bunch and will require strong cost and risk reduction benefits to be persuaded to move away from their existing solution. Pick the predominant segment in your market and focus on growing it instead of trying to be all things to all people – that hardly ever works.

(7) Highlight SaaS trial advantages
Cloud solutions make it easy for you to showcase your solution and make Trial or Freemium versions available as an offer and call to action that can be immediately provisioned. You can, for example, make a time limited (e.g. 1 month), concurrency limited, (e.g. number of parallel projects) or feature limited (e.g. disable premium features) version of the solution available in a self-service provisioning model and upsell later.

With software as a service, you can even see what features your trial users are actually using and are most interested in, and incorporate this information into your marketing and sales response (at the individual user level, leveraging marketing automation - you can even build feature usage into your lead scoring model to indicate sales readiness).

This insight into actual usage patterns allows you to fine-tune and reality-test your marketing message in a way that was previously impossible or cost prohibitive with packaged software. These insights, by the way, also enable you to create different, more granular subsets of your offering that you can provide to different segments in a way that was economically not feasible in the traditional on-prem model. There are great solutions available that let you do that granular packaging with minimum effort (contact me at hhschulze@gmail.com if you are interested in learning more).

(8) Address SaaS related concerns proactively
Cloud applications often face objections regarding data privacy (for example with companies in Europe), regulatory compliance, legal concerns, service availability, and other issues (especially with prospects in the late majority segment). Don't gloss over these concerns in your marketing and sales engagements. Instead, address issues upfront and outline your solution for each concern, before your on-premise competitors exploit them for you.

Embrace Cloud Marketing
In summary, SaaS and cloud software solutions are a very different animal compared to on-premise software. They offer new and exciting ways to deliver value to your customers. But don't treat the cloud the same way as your traditional software offering as the dynamics are profoundly different. And you may have to unlearn some things you thought to be tried and true. Also, make sure to embrace experimentation until you find the right mix of message, offers, and tactics. This market is still very new and constantly changing. Nobody has the right answers and best practices, so try new things and see what works. The cloud environment makes it easier for you than ever to test your approach in real time and make tweaks - take advantage of it!

What is your experience with marketing and selling SaaS?

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10 comments:

  1. I completely agree, marketing SaaS has to include tailored communications and campaigns focusing on specific buyers. Confidently addressing Pricing upfront will also be a huge time saver.

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  2. Terrific post Holger.

    We work with several SaaS companies on their marketing and can vouch that your insights are accurate and useful.

    My favourite is #4 simplify content marketing. Smart advice. While a customer-focus is essential when developing your content strategy you have the mix just right: high-yield with smart content investments. Check out our guide to planning B2B marketing content for a practical look at planning and developing content and you will see that we agree with you in principle and practice:

    http://blog.brainrider.com/2011/02/b2b-marketing-content-how-to-plan-website-sales-collateral-email-blog-linkedin-twitter-and-other-marketing-copy-for-my-business/

    In our experience your first 4 tips apply to all "complex sale" B2B marketing. Technology for sure but great thinking for services as well. I think you can even apply some of your SaaS specific thinking in the last 4 tips to other industries.

    Thanks for sharing!

    Scott
    BrainRider.com
    "sharing what we know about how to connect with and convert B2B customers is what we do!"

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  3. We provide a large footprint benefit administration system to a market that commonly chooses on premise installation, is slow to adopt change, and where concerns regarding data privacy, regulatory compliance and other service issues are common themes.

    We are incrementally adopting cloud processing as we introduce new capabilities. So, we have a hybrid of on premise and in the cloud processing within an integrated end-to-end system. This approach is greatly simplifying our development and software deployment in a manner that reduces the 'shock' impact to our customers.

    I am excited about the transition and found your article helpful.

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  4. I agree with Scott--numbers 1-4 are more widely applicable, but what you have for 5-8 is interesting. I think the flexible pricing model will be a hurdle for many companies to overcome and sales will have to be in on the discussions from the beginning. Yes, you have to change your marketing model but you'll also have to change your sales model and train the sales people on this services--not product--type of sale.

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  5. Scott, Jeanne,

    Thanks for your feedback - glad you like the post. You are right the first four points can be applied to any B2B marketing strategy. Maybe I will reverse the order next time :)

    Holger

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  6. Bobby - Agreed. And while that is true for any B2B marketing, I think SaaS makes it more critical with the opportunity for more direct engagement with the business buyer.

    Holger

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  7. As one who lived in a large IT shop for many years, and then one who managed products for a SaaS company, I've seen both sides of the IT issue.

    While I don't disagree that some IT shops are insular and therefore resist off-premise applications, that is not the only reason that SaaS product face challenges from IT.

    I have seen lots of problems with security, privacy, compliance with governmental regulations, and more.

    Not only that, but what happens when all of your corporate data is off site on someone else's systems, and there's an outage, or worse, if the company goes under? What recourse is there?

    Don't misunderstand, I'm not ant-SaaS, but I think that there are legitimate objections raised by IT, and wise companies who want to sell to businesses with big IT need to consider them as influencers in the buy decision and make sure that they have some marketing materials addressed to that persona.

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  8. Great article! Not only do you have to think about the marketing of a SaaS company differently, but you have to approach the entire business differently than a traditional software company. I wrote an article for Pepperdine University some time ago that addressed this topic... http://gbr.pepperdine.edu/2010/08/servicing-the-software-industry-saas/

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  9. Bob, kmurphy, Mike - thanks for your feedback - glad you are enjoying the blog!

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