Monday, April 25, 2016

SaaS - The High Road and The Low Road

O ye'll tak' the high road, and I'll tak' the low road,
And I'll be in Scotland afore ye

              - From "The Bonnie Banks of Loch Lomond"

So we just talked about the lifecycle in SaaS.  While we can see that it's more than a little different from what we've seen in the past, it's also a bit tough to match those lifecycle states to the types of activities SaaS service providers (both software vendors and partners) and customers.  One group  must 'take the high road while the other must 'tak the low road...two paths to the desired end results. With that challenge in mind, I offer up the following for your consideration:

Customer Activities play out like this:
  • New:  A newly signed customer.  The important goal here is to gain user acceptance by winning hearts and minds.  The best tactic here is to get to "first valuable use" (aka "a big win") as quickly, easily and inexpensively as possible.
  • Growing:  Customers want to be here most of the time.  If customers achieve their desired results, this is when it happens.  We're also looking for growth in value through an increase in engagement:  more users, more transactions, more use of features, subscription to additional products.
  • Renewal:  A very short activity in which the customer (hopefully) opts to renew subscriptions and jump right back into the growth phases.
  • Cancelled:  If the New or Growing phases have not been good experiences, customers will terminate subscriptions and move to another solution.  One of the benefits of SaaS for customers - doing this is easy in comparison to the historical effort of switching platforms, because there is no tech stack to transition.
In parallel to each phase of Customer Activities, Service Provider activities play out like this:
  • Integrate Services:  This includes everything the Service Provider does to get a customer from "New" to that first valuable use.  Creating and provisioning instances, implementation, initial training, and whatever else is done to get the new customer's subscribed services up, running, and adding initial value.
  • Tending:  Much like parenting a newborn child, the work does not end when the baby is delivered.  You tend to that child:  feeding, changing, socializing, managing health and development... It's much the same with SaaS customer.  You're continually working to develop value: new use cases, new capabilities, post-implementation training, and so on.  The quality and volume of the Tending effort here is directly related to whether customer accounts head to Realization or Churn.
  • Harvesting:  This is when the Service Provider reaps the results of their efforts in Integrate Services and Tending.  If it went well, we'll see customers renew their subscriptions.  We'll also see opportunities to upsell (expansion to existing service subscriptions) and cross-sell (new services for existing customers).  But if Integrate Services and Tending did not meet expectations, we move into...
  • Saving: Work done to address issues that may lead to customer cancellation.  This is always bad news, but the real bad news is this:  across the SaaS industry, we have yet to be able to consistently save projects that have gone off the rails during the Integrate Services or Tending phases.  To a very great degree, there is no saving the soup once it's turned bitter.
So the big takeaway here?  SaaS customers and service providers take different paths and engage in different activities to wind up together in the same happy Realization works better when each  knows how the other gets there.  And it's also important to realize (and this is a hint for the next post) that creating customer success is an exercise in portfolio management - it's not a traditional pipeline management effort.

Comments?  You know where we keep 'em.

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