Traditional software and Software-as-a-Service.

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 in the case of the software business and an element of sales that can be applied to different as-a-Service businesses, including SaaS hosting providers.

Traditional software companies teach their sales personnel “to avoid disclosing any more details than what is required to conclude the sale”. Due to the one-time-payment arrangement in these contracts Change failure rate this creates a temporary concentrate on both the transaction as well as the relationship with the prospective customer. But it is true that with SaaS services, one can “try before buying” and, depending on the duration of the contract it is possible to walk away at any moment in the event that the service isn’t satisfactory to them. This helps to focus on the long term that makes trust and transparency between both parties more normal.

As Joel says, Google AdWords is a fantastic example

“Ask yourself how much you spend right this moment on Google AdWords without ever having had a conversation with a salesperson. How does this compare to your personal typical selling price for online transactions? Then, consider the reason. The answer is transparency, from company reputation to cost-per-click.”

While Joel concentrates his conversation on the software industry, this holds true for all goods that can also be services including SaaS hosting. This is evident with large ticket items like homes and cars as well as more common purchase like books or music. The bigger the purchase and commitment, the greater risks involved and the less trusting the two parties become. Full transparency becomes the only logical play for dealing with companies that use Product-as a Service similar to as it’s the only option when dealing with SaaS hosting companies.

Anyone familiar with”the prisoner’s dilemma” (a game that is similar to a negotiation process) can tell it is not a game that is played once (like purchasing a product like automobiles) both parties have an motive to “defect” or lie (it is the rational choice). When games are played multiple times for an amount of time unknown to the two parties (like an subscription-based service) the rational strategy will be “cooperate”. The repetition of “games” provides the motivation to take the leap of faith to adopt a cooperative strategy. If one person is deviating and the other party does, they will both defect throughout the negotiations , and vice versa. If one party defected, there’s no trust, and everyone will be worse off for the rest of the series of games.

The model of as-a service is based around the “repetition of playing games” trust and cooperation; even though you could benefit in the short-term If you don’t disclose the truth however, over the long haul you will have lost the trust of a valued relationship. The commitment to transparency is one of the less talked about advantages of not only transferring your business into an as-a-Service company but purchasing from these kinds of SaaS hosting companies.

Many SaaS hosting providers see and live this phenomenon every day. If companies realize the importance of transparency, they will be in contact with their prospective customers to determine their requirements. If the requirements of the prospective customers don’t align with the SaaS hosting company can offer and the company is aware of this, it will let them know. It is not a good idea for an as-a-Service provider to sell something to clients that they don’t require. That’s not a win-win deal. The client will soon discover that they do not require your help and decide to move to another place. This results in unproductive work for both the client and the company. This is something all as-a-service companies should practice.

Think about this: Have you seen an as-a-Service company achieve success that wasn’t built on trust and transparency?

Online Tech owns and manages SAS-70 secure and reliable multi-tenant data centres across the Midwest. Offering a wide range of colocation and managed dedicated server options for SaaS hosting, Online Tech reduces IT costs for data centers, operational risks and downtime and makes sure that the SaaS clients their servers are always online all the time, always connected, and always safe.

Leave a Reply

Your email address will not be published.