Labcast: SaaS Marketing Mistakes to Avoid
Join us as we discuss common pitfalls SaaS marketers encounter with SaaS Marketing expert, Peter Cohen. Peter, who runs the blog SaaS Marketing Strategy, stopped by to record some videos and discuss the top SaaS marketing mistakes marketers make when switching from an on-premise product to a SaaS product. Take a listen and be sure to avoid these common mistakes.
Episode 22: SaaS Marketing with Peter Cohen
Corey O’Loughlin: This is Labcast. Insights and ideas for the expansion-stage senior manager, hosted by OpenView Labs.
Thanks for joining us for this episode of Labcast. Today, we’re joined by Peter Cohen, Managing Partner of SaaS Marketing Strategy Advisers. Today Peter and I will be speaking about common challenges marketers face when switching from marketing an on-premise solution to marketing a SaaS solution. So Peter, are there common problems that marketers run into?
Peter Cohen: There are common ones that I see often, and actually let me share first a little story about how it is that I came to encounter these common hazards. I was interviewing for a company for a marketing position, and somewhere in the course of the interview the topic came up that the company was in the midst of moving from an on-premise solution to software as a service.
Peter: Well, I had been doing marketing for twenty-something years, and I figured well, how difficult could this be? Technology marketing is technology marketing. What I found out was that a lot of the tactics of marketing were very similar. You’re still generating leads and building visibility, and you’re trying to close deals and accelerate the sales process. A lot of the tactics are very, very similar.
What I found though was that there were big differences in three areas. One was audiences, there were different audiences. And second, there was a big difference in the messages that we were delivering.
Peter: And the third was that there were different processes. So as I like to put it, the tactics were very similar, but the strategy was completely different.
Peter: So those are the sorts of hazards that if you’ve not been through this before that I think you will learn and discover really quickly. I certainly did in my experience.
Corey: Right. Trial by fire kind of on your behalf it sounds like.
Peter: Exactly. Exactly.
Corey: So Peter, can you kind of take us into those hazards and let us know what you uncovered?
Peter: Yeah, let me talk first about the audiences and a few of the specifics that were different. One was that, as opposed to my experience in on-premise marketing, we had to pay much more attention in the SaaS world to our existing customers. Let me make a confession. When I was marketing on-premise applications, the only time frankly that we paid a lot of attention to existing customers was if they were at the user conference.
When they came to the customer conference, we obviously paid attention to them and enjoyed ourselves there. The only other time we really paid attention is when we needed a reference or we were doing a customer story of some kind. The rest of time, existing customers we already sold them the product and that was it. We didn’t spend a whole lot of time with those guys.
In the SaaS model, that would be a recipe for disaster. You really are depending upon your existing customers to renew their subscriptions in order for your business model to work. In essence, you need to treat your existing customers in much the same way you treat prospective customers. You’re continually marketing to them. That’s one big difference, was in terms of audience.
You want to educate the procurement professionals. Put yourself in the position of the poor guy who’s responsible for software procurement or in the legal department. They’ve developed over many years lots of skills about how to evaluate your contracts from software. Then you come in with this software as a service thing, which may be very new to them, and they start looking at terms that they’re not familiar with.
They look at things like subscriptions and activation and renewals. All of those things are new to them, and the result is they’re not familiar with it and all of a sudden it’s like this big slow down in the sales process. The sales guy comes in. You think you’re ready to close this deal. They put the contract in front, and the next thing you know weeks go by and redline versions of the contract go back and forth.
As a marketing person, I always found it very helpful to educate these procurement people early in the process. Explain to them what it is. What does activation mean? What does renewal mean? What does subscription mean? All these new terms, and it always helps and to do that earlier in the process rather than later.
One other group I should mention in the way of different audiences and this is a common mistake for SaaS companies. They’ll avoid the CIO or they’ll avoid the IT people. The reasoning is well, the application doesn’t run, our solution doesn’t run in their data center. It runs on ours. Why should they care?
Well, that’s a big mistake. The CIO or the IT people do care. Believe me, when your application goes down, when the SaaS application goes down and people can’t get access to it or it’s not performing the way it’s supposed to, they call the internal IT person, they call the internal CIO. So that person really does care a lot.
Peter: The marketing people need to address their concerns. Their concerns are all about security and performance and reliability and to some extent integration. So if you’re a marketing person for a SaaS company, to do your job you have to pay attention and address those issues with the IT people, with the CIO to win their confidence and their trust. They can be your allies if you do it well.
Corey: Well, that certainly is a lot of different audiences that everyone needs to be aware of when making that switch. Earlier, you mentioned that there are also a lot of different messages that people need to be aware of.
Peter: Exactly. That’s a good point. The way I summarize this is SaaS is a promise. It’s not a product. Customers are buying a promise that you are going to deliver a valuable service over the life of the subscription and that you will in fact be enhancing that service over the life of the subscription. They have to sort of trust you to do that. Unlike the on-premise world where whatever you get in the box when you buy it, that’s what you got. It’s a whole different method of selling. You’re actually selling more of a long-term relationship than you are just a bunch of features and functions. One way to do that, that I think makes sense, is SaaS marketers really should show the roadmap of where they’re going with their product. One way to think about this is you’re asking your customers to go on a journey with you. They’re sort of like getting on a bus with you, right?
Peter: If you’re getting on a bus, you really want to know where the bus is going, and that’s often the sort of information that you want to share with your customers. Let them know where you’re going. Then they’ll trust you and they’ll feel good about entering this relationship with you.
Corey: What about concerns marketers could have about giving out too much information that might help their competitors?
Peter: I think that is less of a concern than it was in the on-premise world. In the on-premise world where oftentimes you were taking 18 months to 2 years to bring out a product, that kind of interval, if you gave that kind of head start to another company, that would be really meaningful.
In the SaaS world, oftentimes you’re bringing out releases and enhancements much more quickly, so responding to competitive issues is not as much of a deal. As I like to say, secrecy in this case is often overrated. I don’t think you need to be quite as concerned about that.
The other thing of course you want to be careful of is you don’t want to over-promise. You don’t want to tell people you’re going to deliver something and then in fact not deliver it. The further out you go in terms of time, you should be less and less specific. You just don’t have as much detail to share or that you want to commit to. So that is a concern.
Corey: Great. What about the process? The differences between an on-premise versus a SaaS model?
Peter: Sure. This is an experience that I had up-close and personal. Again, my experience from the on-premise world was you would be delivering a new product every 18 months, every 2 years, sometimes longer than that, and as the marketing group you would kind of ramp up and get yourself all girded up for one of these big product announcements every 2 years. Then afterward you would take a deep breath and I won’t say kick back, but you certainly were slowing down and recovering.
Corey: Right. Breathe a sigh of relief.
Peter: Exactly. Exactly. There were like these big humps and then there would be valleys, right?
Peter: Well, in the SaaS world where you’re not on that schedule, where you’re bringing out enhancements much more frequently than that, you can’t go through these peaks and valleys. You’ll just burn yourself out. As I was learning this, I used to call this you’d be on the wheel of death. You just could not possibly keep up. You’d be exhausted. All your material would be out of date, and there would be all kinds of problems trying to do things the same was as you used to do in the on-premise world.
Peter: A couple of things that I found were helpful, one was in the SaaS world that you really need to do is kind of prioritize the enhancements. Some of them are what I would call first class, need a lot of attention, and you really do want to do a full-fledged effort to market those out to everybody.
Others run in the economy or baggage class. They’re important, but they don’t deserve the full nine yards of treatment. You don’t have to get all completely ramped up for those.
The other thing that I find really helpful is to have with each of your announcements, put together what I used to call a lead dog document, where you, on half a page, would summarize what are the main benefits and advantages and features of this announcement. It makes it a whole lot easier to update all of your material consistently and do it much more quickly and efficiently than you might otherwise if you have that lead dog document in place. So that’s one thing in the way of processes is just basically avoid this burnout.
The other thing that’s different in the SaaS world is the need to spend very carefully, and that’s because of the differences in timing with the SaaS model. Let me contrast it to the on-premise model. The on-premise model you sold whatever you sold. You got this big upfront license fee for it. That covered basically everything, all your customer acquisition expenses and everything else, so you had this big upfront fee.
In the SaaS world, it doesn’t work like that. In the SaaS world, all your upfront costs are the same. All your customer acquisition, sales and marketing costs are paid upfront, but you don’t get the big upfront fee. You get paid over the life of the subscription. Your revenues come in over a period of time, over a month or a year or sometimes several years before you make money on this. So what does that mean?
Basically, you have to be very, very careful that you’re spending very, very wisely. You just can’t afford to be inefficient, because basically you’ll run out of money. You definitely don’t want to run a SaaS marketing group where you pour in a dollar’s worth of money for sales and marketing, for customer acquisition and $0.70 comes out the bottom. I mean that’s a recipe for disaster. You won’t make it up in volume.
Corey: Right. Well, Peter, these are really great tips, and I think that our audience will see a lot of value in them. So thank you very much for joining us today.
Peter: You’re welcome.
Corey: And everybody, you can visit Peter’s blog at SaaSMarketingStrategy.com, and I definitely would recommend it. Also, be sure to check out the OpenView Labs homepage in the coming weeks for Peter’s videos.
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