Remember how way back in the old days of traditional software sales, customers had to pay the entire purchase price and installation costs before they’d ever get to use the software? Sounds crazy now. The customer had to commit to making the initial investment of time and money before seeing any value out of the software. While this created a tremendous barrier to customer acquisition, once a customer came on board, they tended to do the work required to see the return on their investment. This meant they would spend time learning a software package’s interface, integrating it as needed, and inputting their data. By paying 100% up front, the customer was on the hook.
In today’s world of software-as-a-service, we work to remove barriers to customer acquisition. The easiest way to do this is to break down the steps of customer commitment into small bite-sized pieces, and then sequence these steps so they align with the value your customer gets out of your application. Ideally, you want to make sure your customer always gets more value out of your application than they are investing in it at every step of the process. This has led us to a world of applications with optimized sign-up processes, free trial and freemium pricing plans, and refined & delightful user experiences. A successful SaaS application builds trust with customers by delivering value. With that trust comes increasing customer investment.
Here’s what a ‘perfect’ SaaS customer investment process might look like, where the customer never has to give you anything (their email, time configuring the app, their data, or their payment info) without first seeing enough value to build trust for the next step:
This ‘perfect’ process works well if your app delivers value in a nice, linear way over time. It works even better if you can deliver a big bang of value right at customer signup. This is one of the reasons why a big criteria of SaaS success is the ability to provide immediate value to new customers. Unfortunately for some of us, value only comes from customer investment. If your app requires complex configuration, integration, input of customer data, collaboration across multiple users, or external action from your customer before you can show value, you’re out of luck.
For example, Google Analytics can’t provide you with any value until you’ve set up the tracking code and waited at least 24 hours. The first step in their Onboarding Checklist is basically a big road-block sign saying “Wait 24 hours”.
Making a customer wait to see value is a huge risk in your acquisition process. This risk is amplified when they haven’t invested in the app yet. If you make a customer wait or perform some complex step before you can show them value and before they’ve invested in your app, you face the very real risk that they just might simply not ever come back. All of that work in marketing, optimizing your signup process, and building out features is just lost by simple user impatience.
So what can you, as a SaaS business, do?
1. Detune the process
Learn from traditional (old school) software sales. If you can get a customer to invest early on, they are committed to seeing the return on their investment. Try moving a key step in your customer investment process up in sequence, so you’re forcing them to commit. This might mean taking a credit card at the beginning of a free trial, shortening your trail period, or requiring customer data earlier. Keep track of the key milestones that differentiate customers that stay after the activation period from those that don’t to get a sense of what you should move up.
Chargify (somewhat infamously) went from offering a free plan with 50 customers to zero customers to force trial customers into committing to their application. While this made free customers unhappy, it forced customers to either commit to investing in their use of Chargify or get out of the way.
By detuning the process, you’re creating a trust barrier that you will need to overcome somehow. This might mean better marketing, providing a toll-free number for customers to call during sales and setup, or some other activity to build a relationship with your new customer, just as a traditional salesperson would.
2. Create artificial value
If your application requires setup and time to see value, look for other ways to create value early on. This can range from simple marketing techniques like publishing ebooks & videos to developing ‘mini applications’ that get customers in and receiving value from your business to build the momentum required to overcome the value gap in your engagement process.
Hubspot has developed an entire toolbox of market resources, from webinars to training to a suite of mini applications, all designed to deliver customer value and build trust that will get customers through the signup and engagement process they require before seeing the return on their core applications.
3. Be proactive in engaging customers
Sometimes your new customers just need a little push. Other times, they need to be reminded that you exist. Make sure you have a clear and well lit path for your new customers to travel down, and a communication plan to keep gently guiding them forward. Keep track of your customers as they move through activation and begin to see value so you determine which customers are at risk, which ones are likely to become paying customers, and reach out if and when they get stuck.
“The more things change, the more things stay the same…”
In the move software to the cloud and build out web applications, we’re moving our customers through a dramatic shift in the way they purchase and pay for software. We’ve removed some of the biggest sales hurdles that in the past required trust. But in doing so, we’ve lost a little bit of control of the process. As we work to perfect our customer acquisition strategies, take advantage of the lessons learned in years of doing sales the hard way. Sometimes forcing your customer to commit up front will benefit them in the long run. And always remember that the end goal has never changed: happy paying customers.