SaaS

Managing Challenges of Onboarding SaaS Customers and Converting from Free Software Trials

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Many software companies lack visibility into what their customers/users are doing with their products and therefore don’t know how to communicate with them effectively to make sure they get the best value from the products. This is especially a challenge for SaaS companies onboarding new customers or trying to convert customers from a free trial model into paying customers.

Two software companies with highly popular products – Zendesk and CloudBees – have overcome these challenges by using Totango’s tools. Both realized increased customer acquisition and revenues within just a few weeks of implementing the Totango technology.

Sacha LaboureyCloudBees provides a cloud-based Java Platform-as-a-Service (PaaS) solution for developers. As Sacha Labouray, founder and CEO, points out, “As a Service” (XaaS) is a new space. It’s evolving for everybody. Understanding user behavior is new to XaaS vendors, and there are new requirements on an ongoing basis. Understanding user behavior is critical to success in the XaaS model.”

Zack UrlockerZendesk, which provides an on-demand help desk and customer support portal for millions of users around the world, offers a 30-day free trial of its product. COO Zack Urlocker says they need to analyze user behaviors during the trial so they can hone their marketing and sales efforts to be more effective. “Rather than trying to build the technology to do this in house, we love the fact that Totango has already figured this out, giving us tremendous insight into what is going on with our users during that trial period,” he says.

The Totango technology analyzes a lot of user behavior data in a very short time and then builds that information into reports and actionable insights. Totango’s technology also packages the insights a little differently for each customer-facing persona within an organization (such as marketing, sales or customer care) since different roles need to take different actions and communicate different messages.

Guy Nirpaz“We’ve worked with companies over the past 18 months that improve dramatically from these insights – conversion rates over 50 percent, efficiency of their sales team at 30-35 percent,” says Guy Nirpaz, Totango’s CEO. “The insights help companies communicate the right messages at the right time to help customers gain value.”

Increasing top-line growth from Totango’s user-behavior insights

Urlocker says Zendesk’s goal was to have customers become more engaged with the product during the 30-day free trial period, resulting in increased conversions to paying customers. As a result of understanding user behavior, they fine-tuned some aspects of presenting product features during the trial period.

“We changed how we expose certain features, such as how the user invites other participants to use the product. We got great insights into that and then made it easier by putting it up front during the trial process rather than hidden away under menus,” says Urlocker. “We also changed how people experience sending and receiving customer service tickets during the trial. Totango helped us figure out ways to try different approaches to highlight key features and see which ones got the most usage.”

Many people sign up for free software trials and never get around to really using it. With 65 million users and 15,000 customers, Zendesk has a huge volume of people for which it needs visibility into who is using the product and having the most success during the trial period so the sales team can focus on the people who demonstrate the highest propensity to buy. Urlocker reports that using Totango enabled Zendesk to increase its conversion rates.

Similarly, CloudBees needs to understand, in real time, how developers in its freemium model use the platform. “We need to see where they start using specific services and using multiple services,” says Labouray.

Depending on a user’s behavior, CloudBees then sends tips in email to help ensure success with the product. The Totango data enables personalizing those tips based on actual usage by a particular developer.

“Before implementing Totango, we tried using analytics to track user behaviors,” says Labouray. “It gave us overall trends but no insight into what specific teams or specific users within a team or group are doing on our platform. You don’t know what you don’t know. Totango showed us what we didn’t know. We’re using those insights in working a lot of services and reaching out to our users.”

He says they had a big “aha” moment when Totango revealed an unexpected spike in usage all of a sudden. They then realized there is often a lag between when customers sign up for the freemium model and when they actually get ready to use it.

Visibility into how people were using the platform drove new behaviors within the CloudBees organization. The insights they gained led to synchronizing a chain of systems. They tagged the behavior findings into buckets, then integrated those into Salesforce.com, then moved the information to their e-management tool.

Driving long-term value for SaaS customers after onboarding

Nirpaz points out that the potential ROI from the Totango tools is bigger than the short-term value of aligning sales and marketing on determining a “qualified lead” or converting and onboarding new customers. Companies can use the insights to align all their customer-facing teams in driving long-term value and maintaining good business relationships.

Creating value for customers is the most important activity for retaining customers longer, so all customer-facing teams need to align around that objective. “With the right data, you can get real insights into which customers are likely to convert from free to the paid model as well as where those customers come from, their overall lifetime value and the customer acquisition cost (which can be calibrated into the customer lifetime value). With all of that information, you can build an effective marketing/sales model,” says Nirpaz.

Over time, some companies increase their usage of Totango to the full customer engagement life cycle package. Zendesk, for example, moved beyond its initial visibility need in customer onboarding and now also uses the tools for customer success and life cycle marketing.

Continually creating more value for Totango’s customers involves more than enhancing the technology. Nirpaz explains that companies frequently ask for help in understanding how to change their operational methodologies and business processes as a result of the user-behavior insights they gain. To that end, Totango recently established a customer forum for capturing best practices and learning from each other in improving their processes to align with their new insights in what their users do with their products.

“We want to help ensure our customers not only improve their communications with their users but also gain the ability to drive to monetization and unified value-creating goals for acquiring and retaining customers,” says Nirpaz.

Guy Nirpaz is the CEO and co-founder of Totango, a full-service customer engagement platform for SaaS and cloud applications. Guy is also chair of lean startup Israel and a regular blogger on Mashable. Previously Guy was the EVP R&D at GigaSpaces Technologies, a platform for enterprise cloud computing, and before that Chief System Architect at Mercury Interactive, Chief Architect for large-scale enterprise systems at IBM and an executive at several other start-up companies.

Sacha Labourey is founder and CEO of CloudBees. In 2001, Sacha joined Marc Fleury’s JBoss project as a core contributor and implemented JBoss’ original clustering features. In 2003, Sacha founded the European headquarters for JBoss and in 2005 he was appointed CTO. After the acquisition of JBoss by Red Hat, Sacha became co-General Manager of Red Hat’s middleware division until leaving in 2009 to eventually start CloudBees.

Zack Urlocker is chief operating officer at Zendesk and heads up Sales, Marketing, Business Development and Support. Zack came to Zendesk from MySQL, where he was Executive VP of Products. Besides building the business model for MySQL, he helped grow revenues to more than $100 million annually. He has more than 20 years of experience in the software industry and has held executive management positions at Active Software, webMethods and Borland.

http://www.zendesk.com

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