Traditional software companies 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. The difference is transparency or lack of it for the software company , and an aspect of the sales process that is applicable to a variety of as-a-Service businesses, including SaaS hosting companies.

Traditional software companies instruct their sales staff “to not divulge any additional information beyond the minimum required to conclude the sale”. Due to the one-time payment arrangement of these deals they create a short-term concentration on the deal and your Change failure rate relationship with the potential customer. But it is true that with SaaS services, customers can “try before buying” and, based on the length of the contract and the contract’s length, walk away at any point in the event that the service isn’t suitable for them. This helps to focus on the long term which makes transparency and trust between both parties more normal.

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

“Ask yourself what you are spending right today in Google AdWords without ever having talked to a sales representative. What is the difference to your average selling price in online transactions? Then, consider the reason. The answer lies in transparency, from brand reputation to cost-per-click.”

While Joel is focusing his talk on the software industry, this holds true for any product that could also be considered services, including SaaS hosting. This is evident with large expensive items such as houses and cars and also with everyday purchases such as books and music. The greater the amount of money and commitment, the greater risk is involved, and the less trustworthy the two parties are. Transparency is the only sensible option when dealing with businesses that offer Product-as-a-Service as well as it’s the only option when dealing with SaaS hosting companies.

Anyone who has played”the prisoner’s dilemma” (a game that is similar to a negotiation process) is aware that when the game is played one time (like buying a product like automobiles) each party has the desire to “defect” or lie (it is the rational approach). But, when it is played several times over a period of time that is not known to each party (like the subscription-based service) the best strategy would be to “cooperate”. The repetition of “games” provides the motivation to leap of faith and adopt a cooperative strategy. If one side is not satisfied and the other party does, they will both defect throughout the discussions and reverse. If one party defected, there’s no trust, and everyone will be worse off throughout the game.

The model of as-a-Service is based upon the “repetition of playing games” trust and cooperation. although you may gain in the short-term when you are honest but in the long run you’ll lose an important relationship. The commitment to openness is among the less talked about advantages of not just moving your business into an as-a-Service business, but also purchasing from these kinds of SaaS hosting firms.

Many SaaS hosting providers see and experience this every day. If companies realize the importance of transparency, they’ll engage with their customers in order to better understand their requirements. If the needs of prospects do not match with what the SaaS hosting provider can provide it will inform them know. It is not a good idea for an as-a-Service provider to offer clients that they don’t require. This isn’t an ideal win-win situation. The customer will soon realize that they don’t require your services and will move to another place. This creates a waste of time for both the client and the company. This is something that every as-a-service company should do.

Think about this: Have you ever seen an as-a-Service business prosper that didn’t have trust and transparency?

Online Tech owns and manages SAS-70, a secure and reliable multi-tenant data centers throughout the Midwest. Offering a wide range of managed and colocation servers for SaaS hosting services, Online Tech reduces IT data center expenses as well as operational risks and downtime and ensures that their SaaS clients servers are always up all the time, always connected, and always secure.

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