SaaS/Cloud & Support: Struggling with “Free” vs. “Fee”

At OpSource’s SaaS Summit gathering in Napa in 2006, a prominent venture capitalist complained that it was “very hard to find good Support execs for startup SaaS companies. They all seem to want to set up Service empires, and that’s not the point of SaaS.” Confusion over the role of Support in the overall product definition and profits-realization strategy of the company is nothing new, it’s been going on since the beginning of the industry. Some still believe Support is a cost center, a despised but unfortunately necessary aspect of doing business. Others make half-hearted attempts to treat it as a profit center. A few have a glimmering of the truth, and wonder how to make Support a part of the product itself, indistinguishable from the technology it serves. The struggle to position the function and to staff it is revealing, it means that Senior Management, and their VC partners, have not gotten clear on their strategy. Until they do, Support will continue to be an uncomfortable topic.

Help Me Get It To Work

“Help me get it to work” is the quintessential “tech support” question. It covers simple unsuccessful attempts to use an unintuitive feature of your product as well as the challenges of integrating another vendor’s product with yours. That’s a wide range, and it’s due to the failure of the industry and the manufacturers to properly define what is and isn’t meant by Support. Here’s the reality: The catchall Tech Support needs to go away. It provides no economic value to the customer, and the manufacturers can’t afford it, especially not in the subscription model of the SaaS/Cloud ecosystem.

A customer that is stuck because of an unintuitive or confusing bit of functionality and calls for help has encountered a bug; it’s just that simple. And you can’t charge for bugs, not if you expect to keep your customers’ loyalty. But there is a point where Tech Support becomes true Support, something that does indeed provide economic value to the customer and is therefore a billable, profitable, professional service. That transition point occurs when “Help me get it to work” becomes “How do I use it to increase productivity and profitability in my business?”

What The Customer Wants To Buy

A salesman told me about a powerful moment in his career, when he realized that while he was selling quarter-inch drills, the customer really wanted to buy quarter-inch holes in specific places. Most of his customers wanted to buy more, not just holes, but also competent advice as to how best to produce them. The salesman had been bundling the cost of the advice into the price of the drill, making money when the customer didn’t ask questions, and typically losing money, sometimes a lot, when the customer wanted a lot of hand-holding. Sound familiar?

In the SaaS model, the connection between the enhanced productivity and profitability that the customer truly wants to buy and the power of the ongoing professional relationship that the vendor needs to be selling ought to be easy to make. Because of the nature of the technology, the vendor can see exactly how the customer is using the application, and is therefore in a unique position to offer specific consulting services to the customer to enhance the value of their usage of the application. That’s Support, a professional service that offers significant value to the customer and substantial profitability for the vendor.

If you’re struggling over “free” (bundled) vs. “fee” when it comes to your support offerings, the starting point for resolving the problem lies outside the boundaries of your Support department. Once the strategic issues have been addressed, most of the struggle will be over, leaving only tuning and alignment to be done on your profitability engine.