SaaS Segmentation Struggles

KlompenDuring two events we attended last week it became strikingly clear; we have so many great software firms in the Netherlands and we (as an industry) do such a lousy marketing job profiling these great companies.

The first event we attended was a Main Capital event that focused on: “Successful international partner and channel strategies for software companies”.  SAP, Qliktech and Salesforce presented at the event but the more interesting presentations were delivered by VisionWaves and RES Software. Both went beyond corporate strategy and discussed the real issues they ran across on their quest for growth with and through partners.

The second event we attended was initiated by the Software VOC, a chapter of Nederland ICT, with the theme “the software company and marketing’, hosted by AFAS Software in its in-house theatre. Presenters included Orange Lime, TopDesk Software and AFAS itself.

While the first event focused on growth, partnering and innovation, the second event focused on marketing techniques, lead generation and segmentation. If the two work together it’s an excellent combination, unfortunately, they often don´t.

And that is probably when the problem arises. While the software industry is growing, and in certain areas growing quite substantially (e.g. SaaS and Big Data), software firms seem to get stuck in traditional market segmentation techniques to create leads and convert these to sales. Though presentations from both TopDesk and AFAS had great examples of do’s and don’t’s in marketing, it still came down to collecting addresses,  follow up with calls and convert calls to leads to sales, e.g. focus on conversion rates.

One of the speakers stated: “Selling software is a very abstract thing. All you actually are selling is 1’s and 0’s.”. The question is whether what you are selling is really software or a solution. And if you’re selling solutions, who are you selling it to? Traditional IT or business users? What you are selling to whom is becoming more and more complex. Oracle’s Mark Hurd said it last week, the lines between IT and marketing are blurring.

Cloud and SaaS adoption are important drivers for growth in the software industry. Changing buying behavior and changing business models require different segmentation techniques than the traditional corporate, midmarket and small, or the regional segmentation. And with respect to partners it goes beyond the traditional services, resellers, VARs , distributors and OEM deals.

Customer Marketing

Selling and marketing SaaS requires different thinking from selling traditional enterprise software, whether you sell point solutions best of breed or integrated packages. Instead of selling the product other elements become much more important. In the SaaS world, what counts is the front-end. It is not always the best solution that necessarily gets the best market share. Joel York summarized the following SaaS Marketing priorities:

  • Increase awareness
  • Facilitate evaluation
  • Streamline purchase
  • Simplify Onboarding

But most importantly, the priority is to decrease the hurdles that may lie between the vendor and the customer. This is exactly what vendors such as Salesforce, Google and Amazon are doing. Salesforce is extremely focused on sales & marketing. Their cost of sales and marketing is 53% of overall costs. Whether the company actually offers the best in class CRM products, the customer probably does not know. But they focus on making your life easy and focus on easy onboarding and that is something that the customer does know. It’s all about the customer experience.

In the Netherlands we have a myriad of (potentially) great software firms. There are numerous companies mentioned in the various start-up contests, where many continue to outperform the market. Also our cloudscape already lists 190 SaaS companies. Of these however, only 39% offers online onboarding. The Truffle 100 only lists 6 Dutch software firms, led by our “national champion” Wolters Kluwer (Twinfield). Others are: Unit4, Gemalto, Centric, Exact and TSS.

The latest research on brand awareness shows that technology companies are not just providers of functional products, they become an integral part of our business and personal lives. Yet, many technology firms focus their marketing on product solutions. True, not all companies can lead in that role, or have the budget to do so. The good thing is that you do not actually need to have the size of a  Microsoft, Google or Salesforce. There are lots of smaller companies that manage quite well selling their products. Even with local limited marketing budgets. A good step in that direction is the following youtube video by AFAS. They do not mention their product, not even once.

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About Simone de Bruin

One Response to “SaaS Segmentation Struggles”

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  1. Mark Appel says:

    Hi Simone, great post, read it with great interest. I am more than willing to show you how we as a true Dutch sofware company added 50.000 new paying companies in 2013 by contemporary marketing efforts fully aligned with sales. I think the way we practice marketing in new ways where traditional software vendors can learn from. Oracle’s Eloqua marketing automation plays an important role in this but even more mentality and mindset of all marketing professionals is making the real difference. So you are invited!