If you’re a Software-as-a-Service (SaaS) company still differentiating on price and features, your future could be in jeopardy. As the SaaS model has gained traction, thousands of companies have launched. And while about 80% of new businesses survive past their first year of operation, the availability of so many software products combined with low switching costs means you need a new way to engage and retain customers.
In the age of the customer and “Everything-as-a-Service,” delivering a personalized product experience is the new SaaS mandate – and key to your company’s enduring success. After all, The Motley Fool article highlighting the survival rates of new businesses continues with these sobering statistics: almost 50% of all businesses go under after five years, and only 33% make it beyond 10 years. Your business success hinges on your ability to evolve with the market.
The Glaring Gap in Most SaaS Business Models
While SaaS ushered in a new era in the software industry, it only addressed a small portion of the purchase and consumption experience. Namely, it changed the licensing and delivery model. But simply offering software through a subscription and making it accessible via a web browser is no longer game changing. In fact, it’s now par for the course. In some regards, it’s even a bit outdated in light of the growing preference for mobile apps. What was once considered breakthrough is now common, forcing SaaS companies to further innovate just to stay relevant. In essence, they must once again innovate their models in order to survive and thrive.
Enter the Third Wave of SaaS
The first wave of SaaS replaced on-premise software installations, introducing many advantages by moving to the cloud. The second wave brought major changes in workflow and processes. However, it’s the third wave – with its focus on customer experience and personalization – that now revolutionizes how SaaS companies go to market and dominate. Simply put, SaaS companies must fundamentally change how they think about and create customer experiences and engagement to satisfy and exceed customer expectations. The reality is that competitors can match their rivals’ prices and copy product features and marketing messages. But unique customer experiences aren’t easily duplicated.
Consumerization Strikes Again
This shift has been triggered largely by the impact of consumerization popularized by the likes of Amazon, Netflix and Uber. We live in an era when everyone has come to appreciate and expect the frictionless way they consume a variety of applications, services, and products. Business buyers are looking for a purchase experience on par or even better than the standout ones in their personal lives.
According to Accenture Strategy, seventy-one percent of B2B executives say customers increasingly want B2C-like experiences compared to a few years ago. This includes fast response times, consistent experiences across multiple channels, and availability 24/7. However, almost half (49 percent) admit they are failing to deliver the cutting edge and highly relevant experiences that customers crave.
Most SaaS companies are adept at creating a seamless experience that drives prospects to become buyers. However, it’s the next stage of the experience that matters most to initial adoption, and ongoing renewal, upsell and even advocacy.
Assuming a SaaS product truly solves a big enough market need (i.e., fulfills the product/market fit assessment), the key to sustainable growth is delivering a seamless end-to-end customer experience that inspires near-term conversion and long-term retention.
Why the Traditional Go-to-Market Strategy Must Be Replaced
To address the new customer and product experience mandate, SaaS companies need a modern go-to-market (GTM) strategy that takes into account today’s buying behavior and preferences. At the core, this is about understanding the complete customer lifecycle, specifically grasping the buying process from the perspective of the buyer. Central to this is embracing a critical finding from HubSpot research. Namely, that “buyers want the opportunity to see a product in action very early on. They want a very tangible understanding of what they’re potentially buying, and they want it right away.”
Unfortunately, few SaaS companies are set up to support this new buying reality. Most are organized along siloed department lines, which makes it impossible to ensure a seamless end-to-end experience. Each department – marketing, sales and customer support – is responsible for only part of the customer lifecycle. As a prospective buyer (and then existing customer) is passed from one department to another, it’s complicated – if not impossible – to effectively optimize the overall experience with the company and product.
Furthermore, in most organizations, product teams are not part of the customer acquisition process. Yet because product experiences are an essential part of the SaaS customer experience, it’s essential that they are brought closer to the customer and customer acquisition and retention processes.
It’s Time for a Product-Led GTM Strategy
The first step to delivering a winning customer-centric experience is transitioning to a product-led GTM strategy. This strategy is an action plan that describes how a company acquires, retains, and grows customers driven by in-product customer behavior, feedback, product usage, and analytics. And it hinges on SaaS companies giving prospects access to the product earlier in the buying cycle.
A self-service offering lets buyers evaluate and judge a product rather than rely on marketing content and sales interactions to convince them. It also streamlines the customer acquisition process by focusing on one entry point for prospects. When prospective customers sign up for a freemium or free trial, they show a higher buying intent. They also give the company’s teams the opportunity to analyze how prospects interact with the product in the course of their daily usage.
How prospective customers interact with a SaaS product early in the buying success could help the company make better decisions about what features to build next. The SaaS provider could even adjust marketing messages based on in-product behaviors to highlight values and features that correlate with a higher probability of a prospect becoming a customer.
How to Put This Modern Strategy Into Action
So what does a product-led strategy entail? After deciding on a free trial or freemium model, it requires that the entire organization focus on the customer lifecycle rather than the product lifecycle. This customer focus aligns marketing, sales, customer success, and product teams around buyers and customers. But it’s not enough to simply say that’s the focus. The organization – and in particular, these groups – need to dig in to deeply understand complete customer journeys and not just individual interactions.
While the customer lifecycle encompasses a complete company-customer relationship from start to finish, it also includes many journeys. Think of journeys as sequences of touchpoints, interactions, and engagements a buyer experiences before reaching a milestone. In other words, it’s the path buyers take during their relationship with a company and its product.
In SaaS, a free trial signup journey includes all steps someone must take to get inside the product for the first time. As buyers progress through one customer lifecycle stage to another, their journeys can be very unique. One may take a couple of days and four interactions between signing up to becoming fully on-boarded. Another’s onboarding journey could span a four-week period and contain twenty interactions.
It’s essential for marketing, sales, customer support, and product teams to understand these nuances and variations so they can work in concert to orchestrate the ideal customer experience. A product-led GTM makes it possible for companies to personalize the onboarding experience and collect insight into what product features drive the most value. It also helps pinpoint steps in customer journeys that cause a negative customer experience and result in product abandonment. Empowered to deliver personalized customer and product experiences, marketing, sales, customer support, and product teams can successfully and quickly guide users to initial value, and then continually to ongoing value.
As hugely successful SaaS companies like Slack, Zoom, Asana, InVision, Expensify, and Dropbox know, nothing is more valuable than understanding how customers use, interact with, and feel about their products. With this insight and the capability to act on it, SaaS companies greatly boost the odds of winning more customers for the long haul and achieving enviable marketplace success.