December 15, 2015

Salesforce Spotlight: SaaS (Software-as-a-Service) companies

BY :     December 15, 2015

saas-development-banner (1)My career started at Mynewsdesk – a fast growing SaaS company delivering a Digital PR platform. This instilled a necessity to understand the various aspects of the digital landscape, as well as familiarize myself with the importance of SMAC (Social, Mobile, Analytics & Cloud). In addition, I was introduced to ForEntrpreneurs SaaS 2.0 Metrics and told we needed Salesforce to be able to reporting on it.

All in all, Mynewsdesk was a fun and challenging learning experience. In addition, it has given me a passion for the potential Salesforce represents for SaaS companies. There are so many options for how Salesforce’s product portfolio can be used to enhance SaaS companies operations.

As Scott White from Andreessen Horowitz (a 4 billion venture capital firm) puts it:

“The combination of SaaS, cloud services and mobile has the potential to topple nearly every major enterprise software incumbents”

In order to tap into the potential, you naturally need the right idea, the right team, funding etc. But you also need to have the correct system configuration, as it is your core systems that play a part in how fast the organization can scale.

This post starts with creating a brief overview of the industry, then seeks to highlight some of the challenges the industry faces. Later, I try to paint a picture of how Salesforce can address some of the challenges and finally I end the post with a short summary.

What characterizes the industry’s business model?

The product is delivered via the cloud. As a starting point, all functionality is accessed via a browser, and some systems have a component that can be installed locally, or integrate with existing software (for example, plugins for Excel, Outlook etc.). New features can be rolled out to all customers simultaneously, and if a customer needs to scale, it can often happen in just a few moments, instead of being forced to invest in new equipment, etc.

If we are going for a more formalized definition for SaaS, we can look at the NIST’s definition (National Institute of standards and Technology), which defines five essential characteristics in relation to the Cloud;

  • On-demand self-service
  • Broad network access
  • Resource pooling
  • Rapid elasticity
  • Measured service

What are the challenges facing the industry?

SaaS companies are often met with high expectations to their performance, as the product simply has to work, needs to be easy to work it etc. Those things are not addressed or solved by Salesforce. What is however within the scope of Salesforce, are the requirements posed towards efficiency, backend systems, scalability, competitive advantages, data insight, distribution etc.

How does Salesforce enter the picture?

Salesforce in addition to being the world’s leading CRM and Service management vendor, is also 100% API enabled. Everything you create in terms of fields and objects, automatically becomes part of the API meaning you can integrate to and from (e.g. via Web service calls). Unlike some of the other platforms I have looked at, Salesforce has a very extensive technical documentation. The reason I stress this, is that in addition to all the really awesome sales and service stuff that all companies can leverage using Salesforce, SaaS companies are ideally positioned to take full advantage of the platform as a whole.

Based on the business model and the challenges, I believe that Salesforce fits in SaaS businesses as follows:

  • Pull in product data. For me, this is by far the biggest advantage and therefore I put this at the top of the list. Data can be included on several different levels (account, contact, opportunity, other), but some key data points that are relevant to highlight;
  • Last login date / usage for the product – this can be both at the account level (customer) or all the way down at an individual level (contact). Having this would enable you to catch customers who stop using your product.
  • Product / Usage data – this relates to what you sell. Is it distribution of press releases? Automations? Templates? Emails sent? other? Be sure to aggregate your data and send “sums” to Salesforce so you can report on them. It makes it easy to segment your customers based on these parameters, which could help you gain insight into how to position or package your product offerings. More on this later.
  • Automating processes. Should we send a mail if a customer hasn’t logged in for 2 months? Do you need to be notified if a new customer is not logged in within 7 days? Or if their usage pattern falls outside of the normal on boarding process? The main point is that you can automate notifications based on key touch points. You can also make field updates, generate automatic follow-up tasks or otherwise automate and assist your business.
  • CHURN Prevention. In combination with the above, you can take advantage of Salesforce’s standard reporting and dashboard engine to easily highlight customers that you suspect could be on the way to terminate. You could also have a customer with a geographically dispersed team. Here you could make a report with a graph on the customer’s account, which shows how many % of the contacts on each geography there are active, reach out with that insight about their usage patterns and finally help them to use more (and ideally spend more).
  • SaaS Metrics are readily available. Are you the type who is inspired by the modern SaaS Metrics, in particular, MRR, ACV, CHURN, etc.? By using standard fields in Salesforce, standard reports, etc. it is very easy and very simple to bring these metrics out for each sale, summarized on the customer, summarized at product level, by sale person or however you wish to view your data.
  • Full control of the sales process. Reporting can be done in real time. Using reporting snapshots, you can easily visualize the historical development of the MRR, ACV, Customer Volume, number of Subscriptions, etc. In addition you can leverage the forecasting feature to easily view your projected performance over the next X periods.
  • 360 degree view and Omni-Channel Service are all possible using the Salesforce’s product portfolio. This overview is attained by ensuring that you capture all the relevant data in Salesforce. The service cloud encompass everything from a Smart FAQ & Knowledge Base, to a Customer Community, Chat support, CTI integration, self-service portals, video support – you name it.
  • Marketing Cloud – whether it is ExactTarget, Pardot or Social Studio – this is the new black. There are many buzzwords we can include here (Marketing Automation, Customer Journeys etc..), but the essence is that through these products and on the basis of data, trigger points, etc. you can achieve total control of the customer experience – which in turn makes 1:1 marketing possible. This doesn’t require Salesforce CRM or Service Cloud, but of course there are many associated with doing just that.

Summary

Salesforce is one of the most technically and technologically advanced companies with full documentation. Combining that with their strong capabilities in their standard functionality, there is so much potential for SaaS companies. The combination of product data, sales data and automations creates many possibilities wherein you can achieve total control and gain a full overview of your business – and you can easily report on what you need – being booked revenue or MRR, ACV, etc.

References

image: google images

http://blog.startupcompass.co/2014-saas-market-outlook

http://www.forentrepreneurs.com/saas-metrics-2/

 

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    *Opinions expressed on this blog reflect the writer’s views and not the position of the Sogeti Group