Marketing & Selling the Service Differentiation in SaaS Solutions

My previous post ‘Are there Differences for Marketing SaaS versus On-Premises Solutions?’ proffered that customers need to make 2 buying decisions with the increasing availability of mainstream SaaS alternatives to traditional On-premises solutions:

1. Which solution best fits their business needs
2. Which acquisition / deployment option best fits their IT strategy.

The second buying decision means that prospective buyers will want information and comparisons to help them make the best decision for their business.  This creates a need and opportunity for marketing and sales to establish additional differentiation for their solution based on the Service aspect of Software as a Service.  It may help to consider the following three questions more broadly to develop your Service differentiation for marketing and selling your SaaS solution:

Who are you competing against?
In the first buying decision of solution fit you are primarily competing against other vendor solutions.  In the second buying decision of acquisition / deployment options you are competing on multiple fronts such as:

• Other vendors on service costs, terms and delivery
• Other vendors on the delivery platform – is it just a SaaS solution or are there Platform as a Service (PaaS) and/or Infrastructure as a Service (IaaS) cloud computing differentiators?
• Customer’s internal IT organization’s perspective on SaaS solutions
• Other vendors and customer’s internal IT on service delivery – Service Level Agreement (SLA), operational controls, security, SAS 70 compliance certification and whether it’s Type I or II, etc.
• Financial – operational expenditure versus capital expenditure considerations
• Total Cost of Ownership – there’s a lot of spin from both On-premises and SaaS marketing and sales pitches about which model costs more over three, five or more years
• Inertia – some buyers and/or companies may be reluctant or even resistant to having their business systems run in a data center they don’t control.

Considering all the possible competitive points will help formulate your best competitive differentiation.

What are customers buying?
Although a customer needs to make 2 decisions during the buying cycle, once they decide on going with a SaaS solution, they are buying one inseparable solution comprising of the application functionality, acquisition method, services, deployment, provisioning and other elements to make it work.  In a previous post I suggested a bifurcated marketing approach to attack the market from two positions to find prospective buyers on either decision track.  However, the overall marketing and selling strategy should be on the goodness of the complete SaaS solution, because that’s what customers are buying.

What are you really selling?
The bottom line is that you’re selling trust – that the customer trusts your company, product and the representative people they’ve dealt with to provide the solution to satisfy their core buying motivations of solving business problems, developing new opportunities, improving performance, increasing profitability, etc.  This isn’t different for SaaS versus On-premises solutions, but SaaS adds another major dimension of trust in the Service aspect.  With the continuing commoditization of business software and minimal functional differentiation between products in the same category, Service is the operative word for differentiation of Software as a Service solutions.  Marketing and selling the Service differentiation will attract and engage prospective buyers, and trust in your company’s ability to deliver the Service will make the sale.

Do you have additional suggestions and ideas for marketing and selling the Service differentiation in SaaS solutions?  Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Do Psychographics work in B2B Marketing & Sales?

B2B marketers regularly use demographic data of tangible characteristics such as company size, industry classification, number of employees, etc. to segment and target relevant markets. While B2C marketers do use demographics, they also use psychographics to really understand what interests their prospective buyers. Psychographics classifies prospective buyers by psychological attitudes such as aspirations, interests, attitudes, opinions, etc. From a marketing perspective, demographics define what buyers commonly need whereas psychographics define what specific groups of buyers want.

From what I’ve experienced and seen, B2B marketers typically make little or no use of psychographics. The supposed issue is that you’re selling to a business, so there are no psychographics. IMO, that’s wrong and B2B marketers are missing out on connecting with the real context of their prospects and customers.

I see an over-reliance by B2B marketers on industry classifications (SIC, NAICS, NACE, etc.) and company size (revenue, employee count) demographic data for market segmentation without relevant psychographic qualification. A CEO/President of a $50m company doesn’t think of his/her business as ‘small’ – they may see the company an innovative market leader in their vertical industry and market. Their solution requirements may be very different from what the ‘small’ demographic typically defines. While the standard industry classification may tell part of the story, it provides you with same analysis as your competitors and no qualitative differentiation for defining your market segments. The point here is that the product, service, solution that a group of companies really want could be quite different from what the broader pack needs.

“Continue to surprise those who would put you in a neat demographic. Be insistently curious.” – Gordon Gee

The other aspect of psychographics in B2B marketing and selling is that your prospective buyers, influencers and decision makers are real people with psychographic profiles. The production manager may view him/herself as the de-facto COO with broader purview in the business, or the material planner may aspire to be the production manager. You need to market and sell to the views, aspirations and interests of the people who will ultimately decide whether or not to buy your stuff. Does your value proposition and solution support these views, aspirations, opinions and interests? The material planner, who is probably an influencer, will only support your solution if he/she can see it directly supporting their aspiration to be production manager.

You can’t just go out and buy psychographic data like we buy demographic data – it generally requires primary research. This is actually a good thing since the primary research will be tailored to your situation, providing valuable data and analysis to really differentiate yourself from competitors and connect more specifically with buyers in target markets. The primary research doesn’t have to be a major expense – a well constructed online survey can provide good data.

If you are a B2B marketer, do you use psychographics and if so, how do you collect the data, and how has this worked for you?

As always, your comments are welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Marketing in a ‘Competitor-driven’ company

Following on from my previous post How is your company ‘driven’? , this post looks at what it means to be a ‘competitor-driven’ company and how Marketing functions in this type of company culture.

Competitor-driven companies generally identify a market opportunity for a copycat or ‘me-too’ product or service. The value proposition is usually to offer a cheaper alternative, or greater availability, or some tweaks to the design, features or functions to make their product or service an appealing competitive alternative. The market leader usually holds a dominate market share with a number of competitor-driven companies battling for what is usually single digit or low double-digit market share each.

The common marketing approach for competitor-driven companies seems to be mostly tactical, focusing on competitive comparisons, cheaper price promotions, higher availability through mass-market channels, product comparisons in trade publications, comparative ‘shoot-out’ coverage, and pursuing favorable exposure from the myriad of awards, recognitions, seals of approvals and other endorsements. While these products or services are mostly undifferentiated in the minds of target customers, marketing must come up with some differentiated value propositions to gain prospect and customer mindshare.

If applicable, a competitor-driven differentiator that works in some markets is to offer an industry standards-based product versus proprietary technology products. The beauty about standards is there are so many to choose from. :)

A more strategic marketing approach would be to research and identify niche market segments or adjacent markets where competitive products may have minimal presence or little traction. These niche markets could be geographic, vertical industry, demographic, psychographic, professional, trade, persona, or one or more of many other market segmentation dimensions marketers regularly use. Strategically this could be a great approach – building market share and credibility in niche or adjacent markets. This strategy moves the approach from undifferentiated to differentiated marketing.

“If you don't have a competitive advantage, don't compete” - Jack Welch

IMO, a mistake many competitor-driven companies make is trying to directly compete with the market leader(s). That’s tough territory. If you look at typical market share breakdowns, it may be strategically better to first directly compete with other smaller players and build up a solid position in the top 5 or better before putting resources into competing with the market leader(s).

Do you work in a competitor-driven company – what’s your marketing approach?
(use the comment link below to share your thoughts on this topic)

Next post, we’ll look at marketing in a sales-driven company.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com