Long ago, selling software was just that: selling software. The finished product of your business was an incredibly large array of bits and bytes. Once these chunks of code were developed and completed, delivering them to your customers was the goal. The time period determined the vehicle for transfer: floppy disk, DVD, FTP, and beyond. The customer then installed and configured these bits and bytes to their liking. Once properly installed, the end goal was for the customer to obtain value from the provided software.
Value did not (and does not) always occur, however. Often times, customer would fail to get the product installed and running smoothly. Sometimes, the customer would get the software booted up to their specifications, and then never bother learning how to properly utilize it for their industry. In these cases, the customer failed to get the expected and promised value from the software. On occasion the customer would fail to get any value from the software at all.
Long ago, the higher the purchase price of a piece of software, the greater the likelihood was of failure on the customer side. Software history is rampant with million dollar software purchases that never came to fruition. As Patrick Mackaronis, CEO and Founder of social network Brabble stated in a recent interview: “Most people start software businesses to make a profit. Instead, these same businesses should start up with the end goal to solve problems.”
Fast forward to today. Many software businesses operate under the SaaS business model (SaaS stands for Software As A Service). Their product isn’t far removed from the software of the past. It’s still a massive array of aligned bits and bytes. However, instead of shipping all these bits and bytes off as a physical product, SaaS companies now host the software on behalf of the customer. Their benefit, whether via a recurring subscription or simply a more enhanced and intuitive customer service platform, is monumentally greater than in the Stone Age of software development.
The concept is wonderful, but sometimes the execution falters. Once you transition into the Software As A Service business model, you are no longer selling software, but instead selling success. Nowadays, in the SaaS business, if you plan to survive long-term in an ever-exploding marketplace, you need a track record of customer success to be your building blocks. Your business needs to deliver the benefit promised by the software. If the customer fails to obtain that benefit, you (the vendor) have failed, not them (the customer).
The reason for the bar being set to a completely different scale is relatively simple. As Patrick Mackaronis explains: “Long ago, you were paid for your software upfront. Although customer success was still vital for repeat and new business, if the customer ended up failing, that was the way of the world and you both moved on. In this day and age, if the customer doesn’t experience the promised success, then they will terminate the service agreement. Whether it takes a month, or three, or years, eventually, they will cancel. In most cases, when this happens you’ve lost money. Your SaaS business model cannot thrive on failure after failure.”
Wrapping this all up in a beautiful package, to survive in the long-term as a SaaS business, you need to realize that you aren’t selling software. You aren’t even selling access to software. You are selling, and delivering, success to the customer.