Is SaaS good for a vendor?

SaaS vendor With all the talk about Software as a Service (SaaS) being great for customers, I wondered if it’s a good deal for a vendor.  Creating a service can be capitally intensive and you may not get a payback until years later.  Some of the benefits for a customer are no upfront hardware and software investment, faster deployment, lower operating and maintenance costs and easy access through a browser.

One key that excites any customer is the pay-as-you-go model.  This makes it easy to add and remove users and capacity as needed.  Rather than worrying about how many software licenses to buy and if some of those wind up as shelf ware, a customer only has to worry about how many users they need today.  If they need more, they add them.  If they need fewer, they cancel them.

These are all compelling reasons for any customer to use SaaS.  So what are some of the benefits to the vendor?

  1. Access more customers (global)
  2. Lower operating cost per customer
  3. Simplify upgrades and maintenance
  4. Easy to add features to meet customer needs
  5. Acquire more customers with self-service

The cost issue is compelling, but getting more customers is even better.  If you offer an application that is valuable, easy to use and make it easy to sign up, you gain customers quickly.  If I can click on a link, enter a few pieces of information and I am off and running, I will try it every time.  Give me a 30-day free trial and you will hook me.  Take FreshBooks as a good example.  They offer an online invoicing system that is easy to access and easy to use.  It takes a few minutes to sign up and within 30 minutes you are tracking time, expenses and sending invoices.  So what’s the sales cost for customer acquisition? $0.00  And if I like it, I will tell my friends to sign up.  Can you have a negative customer acquisition cost?

Providing a self-service system gets me more customers faster.  I can offer more features to enhance the service once the customer is using it.  Adding features should be as simple as clicking a few checkmarks in your admin program.  If the customer needs integration to other SaaS or on-premise systems, those are additional sources of revenue.

Bottomline

Provide an application that is valuable, easy to use and make it easy for a customer to buy it.  If you do, you will grow your customer base very quickly.  Take a cue from the Apple iTunes store or Amazon.  They make it easy to find and buy what I want.  This drives adoption and increases revenue.  That is very good for a vendor.
     
What do you think?  Please share your thoughts in the comments.

 

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