Archive for August 28, 2011

Souper frustrations – SaaS & the grocery store dilemma

Remember the last time you went to a grocery store that you were unfamiliar with?  Remember how frustrating it can be and how much time it can take to find the simplest of items?   You roam around the aisles wandering with your eyes rapidly moving between the category signs and the items on the shelves.  You don’t quite understand why that can of chicken stock you are looking for isn’t in the soup aisle.  Finally you find that chicken stock in a special section next to the spices four aisles away.  Frustrating right?

That grocery store chain has spent thousands upon thousands of dollars on designing their store to be the most organized, thoughtful, easy to use experience for the user errr.. I mean consumer.  I’m sure there was a study done and the result was that most people in their sample group thought that the chicken stock should be next to the spices, therefore it ended up on that aisle instead of the soup aisle.  Yet, as a new visitor to the store you don’t think like the test groups, and the result is that the first few visits are miserable.  As a matter of fact, you may decide to abandon that new store and drive half way across town to visit a store you are already familiar with.  It’s not the store layout, the lack of research or the signs around the store – it’s the general level of familiarity you have as a user that makes or breaks your experience.

This same analogy can be applied to today’s web applications.  Independent Software Vendors (ISVs)  do their best to model out the desires and needs of their target user and then build the software to satisfy those needs.  Unfortunately not all users think the same and what may be logical for one user may not be logical for the next.  Back in the days before app stores and instant downloads of everything, vendors of boxed software for personal computers were all aware of this dilemma.  They created getting started guides and quick start brochures all to help the user find their way around the software in the very first experience.

With SaaS offerings it seems that most companies are forgetting to solve this problem up front. The SaaS vendor thinks that the users will just get it and quickly adopt the solution.  The software vendor may even think – “well heck we are giving them a 30 days free trial to figure it all out they will eventually get it”. Unfortunately the conversation numbers from try to buy are showing all of us that there is still a significant gap that isn’t being addressed.  I personally think that putting in place an Onboarding program for each and every web application out there is what can make the difference between the start of a happy customer relationship or the lack of interest in completing a trial.

When it comes to introducing users to a successful start, SaaS vendors and web application entrepreneurs should do their own self evaluations.  They need to look at the overall experience of new users and determine how to make sure that every user sets off down a path leading to a mutually beneficial result.  Simple application can satisfy the needs of new customers with a quick video or getting started eBook.  And the more complex applications that involve multiple steps to get setup, interaction with third parties, installation of additional software or even the need to setup and teach other users all require a bit more guidance, examples and checklists to take those new users down a path to success.

There will always be a learning curve with everything new that we experience in life.  And those who profit from the new experience of software in the Cloud will be the ones that get their users quickly entrenched in their solutions.



What does a happy customer look like?

There’s nothing like receiving a bundle of cash from a customer. Getting recurring monthly payments from your users is a great sign of their happiness (not to mention your happiness). After all, happy customers are ones that stay and pay, month after month.

While receiving a payment from a customer is a great indicator of happiness, the binary nature of “pay”/”cancel” doesn’t give you any additional information. You don’t gain the insight into what’s really going on with your customer. Is their use of your application declining? Are they researching alternatives? Could they be happier? And if they’re paying annually, you have even less information.

In most subscription businesses, customers have two choices to resolve their unhappiness: contact customer support or cancel. Both of these options put the responsibility on the customer. What if there was a way for you to identify unhappy customers earlier, putting the control of customer happiness back in your hands?

At the 2010 Business of Software Conference, Hubspot co-founder Dharmesh Shah outlined the three key metrics Hubspot uses to track customer happiness:

  1. Frequency of product use
  2. Breadth of product use
  3. Sticky product features

By tracking these three key metrics, Hubspot is able to identify potentially unhappy customers before their account comes up for renewal. They use this information to proactively reach out to customers who are unhappy. A a result, they have been able to improve retention of these unhappy customers by 33%.

A happy customer is an engaged customer.

When a new customer first signs up for your service, they’ve shown enough interest to take the time to check your offering out, but they haven’t necessarily invested or committed. You need to engage this customer and make them happy. By knowing how your happy customers use your service, you can gently guide your new customers to behave the same way.

For example, you can compare the average number of logins of of a customer who stayed past a 30-day free trial with the number of logins of a prospect in their free trial. Is the prospect on track to match the number of logins as customers who stay past their free 30 days? If not, you have identified an opportunity to guide the prospect toward happiness.

With good data on what a happy customer looks like, you can not only increase retention of your current customers, you can also improve conversion of prospects during their free trial by guiding them to do the things that you know will make them happy in your service.

Cloud computing & the disruption of the sales cycle

In the golden age of Enterprise software sales, one of the last things an enterprise sales rep wants to do is hand over  software to a prospect. This was mainly driven by the fact that sales reps don’t want the prospect to “twiddle” with the software before they know how to guide the prospect to a decision that put money in their pockets.  As a member of these types of sales teams for more than a decade, I recall that we all lived by the creed that giving access to the software too early can result in a disaster, a lost deal and missing quota.

One of my favorite memories that exemplifies this situation was while working as a Sales Engineer for a software company in Manhattan.  My sales rep instructed me to refuse giving the trial keys to the customer until we had a commitment on the success criteria of the trial.  Fast forward 45 minutes into the meeting with unmet-demands for software keys and a very prominent CTO threw his laptop at me, as it zoomed over my head and hit the wall – I remember thinking, we are going to win this one.  And eventually we did to the tune of several hundred thousand dollars in a market with multiple competitors.  The success of that deal boiled down to understanding the prospects motivation and needs, then crafting a one on one experience for them that made sure they saw that value shine through in the software.

Fast forward to the year 2011 where the world around us has changed and the software sales cycle has been dramatically disrupted.  Prospective customers can now surf the web for a selection of on-demand offerings to meet their needs.  For the most part, those prospects can create and interact with a free trial with just a few keystrokes and a minute or two.  SaaS applications are judged in the blink of an eye and just as quickly as the prospect showed up on the front door, they left out the back barely leaving a trace.

Accepting the new sales cycle of the cloud services era is difficult for most ISVs.  The lack of control, the lack of visibility and the difficulty in forecasting ongoing subscription revenues is difficult to say the least.  But it’s the new reality for the ISV. And for startups like OnboardAvenue, there is a new opportunity to help those ISVs gain a competitive edge and embrace the sales cycle disruption.