I went to a good talk today at Software Business 2007 by Joe Gustafson from Brainshark on “Establishing and Growing a Successful SaaS Business.” Joe characterized Brainshark is “Tivo for Business Content” available when users want to consume it.
He opened with the best part of a SaaS business: recurring predictable revenue makes it easier to manage. Also low cost of development is a big advantage, they have 5 versions of machines that need to be supported.
The thing he likes the least is it takes time to scale: the revenue from an annual SaaS contract is 1/3 to 1/4 of an equivalent on-premises perpetual software license. The hardest part of selling is becoming very efficient at managing a number of distinct transactions efficiently. Since the up front fees are low, developing customers cost effectively is critical.
In 2000, there was one sales team with a blended responsibility of selling, renew, and expanding accounts. Now they have four teams each with their own incentive programs and distinct quotas:
- New Accounts
- Renew Accounts
- Expand Account
- Small Business Account
All of Brainshark’s sales are direct. After the early sales, sales became a “build a machine” problem rather than “art of the deal” sales strategy. The other major message he hammered home: SaaS = Service. It’s a relationship based on trust. And that trust is not only a challenge to develop, it requires both a engineering development methodology committed to high reliability–Brainshark aims for “3 9’s” or 99.9% uptime: this is 0.1% downtime which is about 45 minutes per month and an ongoing–and a sales and support culture committed to service and customer success–the SaaS model does not reward companies selling shelfware (software that’s purchased by IT but not adopted by the business).
Renewals are the life blood of the SaaS model: and it always about service and building trust and maintaining. He strives for Ritz or Four Season customer service in his relationship with customers. For the full presentation see http://presentation.brainshark.com/campaigns/swbiz2007.asp (registration required but has narration in addition to slides: although it sounds like Gustafson didn’t do the narration in front of an audience, he speaks very clearly but has much less energy and modulation in his voice compared to his talk).
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