Engeering analytics tips

A great article at Joel York’s SaaS Blog (Chaotic Flow) titled “SaaS Marketing Tips – The Truth Shall Set You Free”, explains the critical difference in the sales process between selling traditional software and Software-as-a-Service. This distinction is transparency, or lack of it, on behalf of the software company and an element of sales that could be applied to many as-a service companies, including SaaS hosting companies.

Traditional software companies teach their sales employees “to avoid disclosing any more details than what is required to conclude the sale”. Because of the one-time payments arrangement of these deals they create a short-term attention to both the sale and your relationship with your prospective client. However when using SaaS services, customers can “try before they buy” and, based on the duration of the contract and the contract’s length, walk away at any point when the service isn’t satisfactory to them. This is a way to ensure that the service will last for a long time creating trust and transparency between both parties more easy to establish.

As Joel notes, Google AdWords is a excellent example of this:

“Ask yourself how much you spend right this moment using Google AdWords without ever having talked to a sales representative. What is the difference to your own software development goals typical selling price for online transactions? Ask yourself why. The answer is transparency, from brand reputation to cost-per-click.”

While Joel is focusing his talk on the software industry, this is true to all products that can also be considered services like SaaS hosting. This is the case with big ticket items like houses and automobiles as well as more common purchases like music and books. The greater the amount of money and commitment, the greater there is a risk and the less trusted the two parties are. Transparency becomes the only viable option for dealing with companies that use Product-as a Service in the same way as it’s the sole option when dealing with SaaS hosting companies.

Anyone who is familiar with”the prisoner’s dilemma” (a game similar to a negotiation process) is aware that when the game is only played once (like purchasing a product such as a car) each party has the incentive to “defect” or lie (it is the rational approach). But, when you play the same game several times, for a length of time unknown to both sides (like the subscription-based service) the most rational approach is to “cooperate”. The repeated play of “games” creates the incentive to take the leap of faith to adopt a cooperative strategy. If one person is deviating, the other will defect throughout the discussions, and the reverse is true. With just one defection, there’s no trust, and everyone is worse off for the rest of the series of games.

The model of as-a service is based by that “repetition of games” trust and cooperation; while you might gain in the short term If you don’t disclose the truth but in the long run you’ll lose an important relationship. This dedication to openness is among the lesser talked about benefits of not only transferring your company to an as-a service company , but also buying from these types of SaaS hosting firms.

Many SaaS hosting companies observe and experience this kind of thing every day. If companies realize the importance of transparency, they will engage in a dialogue with all of their prospects in an effort to learn about their requirements. If the needs of prospects don’t match what the SaaS hosting company offers it will inform them know. There’s no need for an as-a-Service provider to market a product to a client that they don’t require. This isn’t a win-win deal. The client will quickly find out they don’t need your service and move to another company. It creates unproductive work for both parties. This is something all companies that offer as-a service should follow.

Consider this: have you ever seen an as-a-Service business achieve success that wasn’t built on transparency and trust?

Online Tech owns and manages SAS-70 secure and reliable multi-tenant facilities across the Midwest. With a full range of managed and colocation server offerings for SaaS hosting services, Online Tech reduces IT cost of data centers as well as operational risks and downtime and makes sure that the SaaS clients’ servers are always on, always online, and always secure.

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