The Hotline Magazine
The Redefinition of Customer Support
The SaaS & Success Project

Thursday September 9, 2010




Page Two


The HotLine Recommends

For Customer Support Professionals

For Technology CEOs / CxOs

For Contact Center Technology Vendors:


Related Materials
Below Are Excerpts From Articles Related To The One You Are Now Viewing

Caveat Emptor, tar-traps and Customer Retention

[San Francisco, CA] "Caveat Emptor” -- Let the Buyer Beware is an old approach to Sales which places all of the responsibility on the customer for determining whether or not the product being purchased actually works or is in fact suitable for the intended use.  Many a purchaser of software over the early years of the industry, especially in the personal computer sector, has found that what they ended up with was not what they thought they were buying -- with predictable results.  A related ploy

More on page 207

Aligning with the SaaS/Cloud Profits-Realization Strategy

In the traditional perpetual-license model of selling software, the manufacturer takes the majority of their profit up front from the sale of the licenses. In the Software As A Service subscription model, that large up-front influx of revenue and profit goes away, replaced by a more predictable monthly membership arrangement. SaaS profit is realized incrementally instead of all at once. There are variances -- some manufacturers require a 12-month commitment and payment in advance while others do

More on page 45

The Technology of Customer Centricity

Many companies these days want to be perceived as being "Customer Centric." The rewards of customer loyalty supposedly to be gained through attaining such status certainly seem impressive. It's understandable that senior management teams and contact center executives would want to jump on the bandwagon and talk of customer centricity initiatives of their own. Unfortunately, the moves being made and the path being followed are mostly transaction centric rather than truly being about a mutually pr

More on page 68

A Litmus Test for Customer Centricity

The decision to transform a company, to recode its essential DNA for customer centricity, is not something to be considered lightly. The shift is not about changing what you do or merely improving how fast you do it for your customers; true customer centricity begins with the very definition of who you are and why as a company. The effects of such a profound reinvention of company identity necessarily will be global, touching every aspect and level of the organization's strategy, process, people

More on page 69

The Role of the Channel in SaaS Customer Retention

A very savvy SaaS CEO told me recently that he was concerned about the fact that 80% of his customers had never met anyone at his company face to face. The resulting lack of customer intimacy, as he termed it, was seen as a major contributing factor to the risk of churn. I think he’s right about the connection to risk, and the customer retention rates of most, if not all, SaaS vendors are also vulnerable. Features and functionality are not long-term competitive advantages; they are too easily an

More on page 576

Print Print
Comment Comment
Email This Post Email This Post
  • Digg
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks
  • Blogplay
  • LinkedIn
  • Live
  • Technorati
  • Twitter
By Mikael Blaisdell

When the features and functionality of Product A are essentially the same as those offered by Product B, what will truly distinguish one software company from another?  For a time, SaaS manufacturers held an edge over their on-premised perpetual license based competitors, but those days are swiftly passing.  The rumors of a coming shakeout in the on-demand market are steadily becoming observable reality, with SaaS vendor pitted against SaaS vendor with survival at stake.  To succeed in this present arena, a company must offer a new and brand-able value to consistently attract and to retain the best customers.  The winners will be those that realize that the true product is the long-term partnership.  It’s not about the software anymore.  What counts is the continuing connection to value.

Product As A Relationship

There is a Navy football 1930s 02 SMlarge pool of experienced people who know how to produce and sell technology into the old market, and how to build companies around those products.  They can construct business plans around typical expected margins and projected sales, and talk of supplementary income streams from an installed base in year two and so on.  But the world in which those calculations and cases were valid has gone away.  The venture capital firms saw the truth early and have not been funding anything in the software sector that wasn’t SaaS-based for several years. Now the rest of the technology industry needs to catch up.  The rules of the game have changed; it’s time to train and field a new team that has the skills and knowledge to compete.

DNA horizontal blue

It’s true that software technology will still be a part of the admission ticket.  The burden of making effective use of that technology to increase productivity and profitability, however, once shoved onto the customers’ shoulders, now needs to move back towards the manufacturer.  The core of what the manufacturer has to offer is vertical industry knowledge and expertise in using technology.  Value, in the form of enhancement and improvement of their business, is what the customers want to buy, not code.  To deliver on that new product requires a manufacturer that knows how to design, produce, brand and deliver a relationship of mutual profitability to both parties, something worth maintaining over the long haul.  That can only be done when relationship-thinking is embedded in the DNA of every department and member of the company.

The Metrics of Continuing Connection

handshake business sm 300x225 Its Not About the Software AnymoreCustomer Lifetime Value (Average and Total), Acquisition Costs, Retention Costs, Number of Seats, Contracted Monthly Recurring Revenue, Break-Even Point, Average Duration, Churn — while useful, these metrics as typically calculated may conceal more than they reveal.  The view they provide is essentially transactional in nature and inherently short-term.  The real questions that need to be asked and answered to address long-term profitability and success are much harder.  If you’re interested in finding out what lies beneath your metrics, let’s talk.