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 main difference is transparency or lack of it in the case of the software company and an aspect of the sales process that can be applied to different as-a-Service providers, such as SaaS hosting providers.
Traditional software companies teach their sales representatives “to not divulge any more details than what is required to make a sale”. Because of the one-time payments structure of these contracts Change failure rate that creates a quick-term attention to both the sale and your relationship with the potential customer. But it is true that with SaaS services, one can “try before they purchase” and, depending on the length of the contract, walk at any time when the service isn’t to their liking. This is a way to ensure that the service will last for a long time, making transparency and trust between the two parties more easy to establish.
As Joel mentions, Google AdWords is a excellent example of this:
“Ask yourself what you are spending right today using Google AdWords without ever having talked to a sales representative. How does this compare with your typical selling price for online transactions? Then, consider the reason. The answer lies in transparency, from reputation of the company to cost-per click.”
While Joel concentrates his conversation on the software industry, this can be said for all products that can be services as well, such as SaaS hosting. This is evident with large ticket items like houses and automobiles as well as everyday purchases such as books and music. The larger the purchase and commitment, the greater risk involved and the less trusting the two competing parties become. Transparency becomes the only sensible option in dealing with businesses offering Product-asa-Service, just as it is the only feasible option when dealing with SaaS hosting providers.
Anyone who is familiar with”the prisoner’s dilemma” (a game that is similar to a negotiation process) knows when the game is played one time (like buying a product such as a car) both parties have an incentive to “defect” or lie (it is the rational approach). However, when it is played multiple times over a period of time that is not known to both parties (like an subscription-based service) the best strategy should be “cooperate”. The repetition of “games” gives the players the motivation to jump the hurdle of faith into a cooperative strategy. If one of the parties is dissatisfied and the other party does, they will both defect for the rest of the discussions, and the reverse is true. In the event of a single defection, there is no trust, and everyone is in worse shape for the remainder of the game.
The model of an as-a-Service is built by this “repetition in games” trust and cooperation; while you might gain some short-term benefits in the event that you lie about the facts but in the long run you’ll lose an important relationship. This commitment to openness is among the lesser-known advantages of not only transferring your company to an as-a service business, but also purchasing from these types of SaaS hosting providers.
Many SaaS hosting providers see the same phenomenon day in and day. When businesses realize the value of transparency, they will be in contact with their customers in order to better understand their requirements. If the demands of prospective clients do not match with what the SaaS hosting company can offer, the company will let them know. It is not a good idea for an As-a-Service business to promote a client that they don’t need. It’s not an effective win-win-win-win-win-win-win-win-win. The client will soon figure out that they don’t need your service and move to another location. This causes unproductive work for both the client and the company. This is something every as-a-service company should do.
Think about this: Have you witnessed an as-a service company be successful that doesn’t have transparency and trust?
Online Tech owns and manages SAS-70, a secure and reliable multi-tenant facilities across the Midwest. With a variety of colocation and managed dedicated server offerings 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 24/7, online and always safe.