Secrets to Selling the Full Stack

Secrets to Selling the Full Stack

SaaS was on full display at two recent conferences that have their roots in the Yellow Pages industry, a clear indication of just how much change is occurring among companies that sell digital products and services to small businesses.

First, at the SIINDA conference of European local search publishers in Dubrovnik, Croatia, multiple speakers focused on the shift publishers are undergoing from selling advertising on annual contracts (which SMBs are increasingly resisting) to seeing software as a service on a subscription basis.

Many companies that have previously sold website fulfillment or digital marketing services are now offering SaaS platforms that publishers can sell to their SMB customers that perform a variety of marketing and back-office functions. Many of these platforms are built around customer relationship management systems designed for use by small businesses, with additional services (booking, email marketing, social media management) hanging off the core CRM.

One of the big challenges in offering these “full stack” solutions is selling them effectively with a direct sales channel.

Most direct sales channels are focused on making sales as efficiently as possible, and having to unpack each element of an all-in-one SaaS product can make sales calls unwieldy and unprofitable. This objection has made many companies wary of offering all-in-one suites, even though the demand for them is pretty clear. In the latest wave of Tech Adoption Index survey data, 65% of respondents indicated they preferred to work with a single source for all the SaaS tools they need to run their businesses vs. picking and choosing individual point solutions.

The LSA and the Tech Adoption Index will soon publish a paper commissioned by Camilyo on this topic, tapping into a variety of voices for their views on how best to go to market with full stack solutions.

At last week’s AsiaComm conference in Hua Hin, Thailand, the theme of moving the industry to a SaaS-based business model was as prevalent as it was in Dubrovnic.

I personally gave three presentations at AsiaComm related to the Tech Adoption Index and the movement to SaaS as the predominant model for going to market in the SMB market going forward.

One of the three talks summarized the findings of the upcoming LSA-Camilyo white paper on “Selling the Full Stack”. Here are the key takeaways from the report, which will be published later this month on TheLSA.org website.

You can watch the entire AsiaComm presentation on “Selling the Digital Marketing Stack” here:

Why SMBs Abandon DIY Software Mid-Purchase

Why SMBs Abandon DIY Software Mid-Purchase

According to a new survey conducted by LSA and Mono Solutions, more than half of SMBs have at some point abandoned an online software purchase in the middle of the process. And their reasons suggest that DIY software vendors overall haven’t yet perfected the customer experience.

According to the online survey of roughly 500 small business operators conducted in September, only 41% of respondents said they had never abandoned an online software purchase once started. The most commonly abandoned services included website domains, websites, and social media advertising.

Respondents were then asked why they abandoned the DIY purchase. The most commonly cited reason was “I changed my mind about needing the product,” following closely by “I felt misled about the cost”, “The process was complicated or confusing” and “The process was taking too long.”

The leading response about customers changing their minds about their need for the software is open to interpretation. Some SMBs are likely fickle by nature. But the response may also suggest that something was missing in the customer experience that gave pause and led them to abandon the purchase. And this response choice may have come closest to articulating this anxiety. The remaining choices are less open to interpretations. They reflect a bad customer experience and also provide insight into what SMBs need in order to feel comfortable purchasing software in a DIY environment.

These and other findings will be shared in a new LSA white paper commissioned by Mono Solutions, “Meet the New Small Business SaaS Customer,” that summarizes the survey findings. The paper will publish next week and key findings will be shared at the AsiaComm conference (presented by ALSMA) next week in Hua Hin, Thailand, and at the LSA’s Tech Adoption Summit, November 6-7 in San Francisco.

The survey and white paper seek to answer some key questions about in which circumstances SMBs prefer to DIY their software purchases vs. when they would rather use a more service-intensive model. The survey explored this for key elements of the digital marketing stack: domains, websites, social media advertising, SEO, listings, reputation management, email marketing, appointment booking applications, and CRM.

Stay tuned for most posts this week sharing other findings from the survey and white paper.

 

Source: LSA & Mono Solutions survey (September 2018)

New Podcast: “SMBs Have No Time”

New Podcast: “SMBs Have No Time”

There are few people with a broader or deeper perspective on the small business SaaS world than Mark MacLeod, the latest guest on the “Above the Cloud” podcast series. Mark was the founder CFO at Shopify, which helped democratize e-commerce by enabling SMBs to become online merchants. And he ran finance, corporate and business development for Freshbooks, which has made cloud accounting accessible to freelancers and solo-preneurs the world over.

Today Mark leads SurePath Capital Partners, a financial advisory firm that helps small business software companies raise capital and find buyers for attractive exits. With this background, it stands to reason that Mark would have some great insights on what it takes to win in SMB SaaS.

Here are some highlights from our conversation.

Customer Support is King. “Many vendors have this perception that they can’t afford to offer customer support,” MacLeod said. “The opposite is true. They can’t afford not to offer customer support.” The logic being that mastering customer support will pay for itself by turning customers into a sales channel by driving positive word of mouth. He cites his former company Freshbooks as a leader in offering obsessive customer service, noting that all Freshbooks employees are trained in customer support, from the marketing team all the way through to introverted coders.

It’s All About Channels. “I can’t think of a meaningful company that has been built without indirect channels at some point.” However, timing is critical. MacLeod argues that companies need to get some traction with direct sales before seeking new channels makes sense. “If they do it from Day 1, it’s like pushing a boulder up a hill, because they haven’t built a brand yet.”

Customer Experience is Also King. Granted, the lumascape for small business software tools makes the Milky Way look minimalist. But the small business market is so large and fragmented there is room for multiple players. Mark made two important points on this. First, brand building is not just for the well-funded. The best brands are built on delivering an amazing customer experience (see point above about customer support). Second, while the small business market is large, much of it is defined by the non-consumption of cloud software (a point confirmed by the Tech Adoption Index). However, as younger business operators supplant older ones, an app first mentality will increasingly dominate small business, which will expand the sales funnel for all.

Small Businesses Don’t Have Time to Breath. Let alone have time to muck around with software. “SMBs have no time. And technology hasn’t fixed that. If anything it has made things worse.” The point being that while automation is taking place and becoming a much bigger factor in SMB software, it remains true that any solution that doesn’t credibly offer to save a business time will struggle.

You can listen to the full podcast here

Thanks once again to our podcast sponsors for their support for Above the Cloud and the Tech Adoption Index.

 

 

 

New Podcast: “A Product First Go to Market Strategy”

New Podcast: “A Product First Go to Market Strategy”

In a business world awash in buzzwords and phrases, let us lay one more on you: product-centric customer acquisition. As buzzy as it sounds, it’s a profound concept. Give valuable yet free stuff to lots and lots of SMBs knowing full well that the overwhelming majority of them will never be paying customers. But those that do will be the right customers, profitable and with a low propensity to churn.

Our latest episode of the Above the Cloud podcast features an interview with Adam Blake, CMO of ThriveHive, a SaaS-based marketing platform for small businesses. A key focus of the conversation was unpacking the beautifully counter-intuitive logic behind ThriveHive’s product-centric marketing philosophy.

Blake explains the product-first philosophy on the podcast.

“The old way of doing things is sales first, involving cold calling and so on. We want to go with product first, then sales,” Blake explains.

The reason is to have enough relationships to be able to use the platform (enabled by AI) to learn which free customers would really benefit from an upgrade.

“We don’t expect to sell to everyone who uses our free products. Quite the opposite. We expect the vast majority to use our free products,” Blake said. From this larger number the platform looks for signals to “find the folks who are the right fit for us…It is not good for us to sign up a business, have them pay for our software, become dissatisfied and churn. We lose money (in this scenario) and they will be upset. Let’s avoid that.”

Blake also discusses its latest example of a high value free service, ThirveHive Grader, which helps SMBs optimize their Google My Business listings. ThriveHive launched Grader today.

GMB optimization will be the next wave of presence management, and ThriveHive believes it has a jump on the competition with Grader.

The new tool grades SMBs on how well they’ve optimized their GMB listing, and offers to help them improving their scores. Google has greatly expanded the features offered on GMB, but SMBs have failed to keep up, with few adding more than name, address and phone number to their claimed listings. Yet adding more content to GMB has a dramatic impact on a small business’s visibility, Blake says.

“The GMB directory has become so important to local business,” Blake said, “We believe [Grader] is the most comprehensive freely available tool for business owners and marketers to grade their Google My Business listings and get a truly comprehensive view of what they need to do to improve it.”

Blake will be a headline speaker at the LSA’s Tech Adoption Summit, Nov. 6-7 at The Laundry San Francisco.

You can listen to the podcast here

Thanks once again to our podcast sponsors for their support for Above the Cloud and the Tech Adoption Index.

 

 

 

 

Will Every Business Eventually Become a Subscription Business?

Will Every Business Eventually Become a Subscription Business?

A hot (relatively) new business book is making the argument that we are making a fundamental shift from an ownership economy to a subscription economy, where we essentially rent what we need for as long as we need it.

The book, Subscribed: Why the Subscription Model Will Be Your Company’s Future and What to Do About it,” makes the argument that most products and services will eventually be sold via subscription, and companies that fail to catch up with the trend will be left behind. The book’s author, Tien Tzuo, is pretty adamant on this point.

“If you’re not shifting to this business model now,” Tzuo writes, “chances are that in a few years you might not have any business left to shift.”

The main reason for the shift is that customers (consumers and businesses) are increasingly uses to pay for products and services this ay, and they will demand this model for an increasingly diverse array of services. The subscription trend in this sense is tied in with the on demand and gig economy. Consumers want only to pay for what they use, when the use it and do not want to be tied down by long term obligations or heavy up front investments.

The book is highly relevant to market shift that spawned the Tech Adoption Index, this blog, the Above the Cloud podcast and the Tech Adoption Summit. In a B2B context the subscription model (along with the cloud) is what has enabled small businesses to access technology that once required a large cash outlay to purchase software that had to be installed locally. And re-installed as new versions were shipped. In many cases software was prohibitive for all but larger enterprises.

Now, the SaaS model gives SMBs access to regularly updated software at a monthly subscription that spreads out the cost. And which cash flow is king for any business, it is particularly true for small ones.

One of the biggest challenges is the pain of switching to a subscription model. The book cites the case of Adobe, which experienced a painful revenue drop when it transitioned to subscription software. The book argues that this pain is temporary and the end result is stronger revenue growth. The “fish model” below illustrates this model.

Our view is that anyone building products for SMBs (software in particular) must think cloud and subscription first. it will be very difficult to compete otherwise. So this is a relevant book for those thinking about shifting their offer to the SMB market from an annual contact to a monthly recurring revenue SaaS model.