Shift Customer Mindset to Increase Revenue and Defend Market Position
Changing your mindset from that of a Legacy Software Vendor to a Service Company is a relatively simple thing, but the benefits can be enormous. Eliminating "versions" or "releases" from customer-facing properties is just one very simple way to illustrate execution of this mindset change. In addition to the customer benefits, the SaaS Vendor can benefit from the consumers' mindset change to Increase Revenue and Defend your Market Position.

By thinking and acting like a Service Company, the SaaS Vendor's goal is to remind the customer that they are not just "renting software" but are receiving a valuable service. When you do this, you put the customers' focus back where you want it; on the service that you are providing. This part of the mindset change, and about managing the mindset of the consumer, is absolutely critical because if they think they are simply "renting software" then they can devalue your product. They can make comparisons with other "software products," think your product is not important; begin to focus on price, the ROI, the TCO, etc. They can put these things into a spreadsheet and quantify those against the competitive products since software always has a competitor.

But by taking the focus off of the "software", perhaps by leveraging the previous example of eliminating version information off of your UI, you are in a very subtle way switching the clients' focus from Software to Service. Service, while it has a price, is all about the value it provides; the benefits. The true value of a service is often harder to quantify; it is harder to come up with a TCO on the value that a service provides. The ROI is more difficult to calculate on a service.

By putting the focus on the service, you as the SaaS Vendor move out of the commoditization trap where many SaaS Vendors have found themselves. In the early days of SaaS, in an effort to gain traction, Vendors opted to give access to their products away for free or for very little. This created the current dilemma for Vendors where SaaS is not just considered a Software Delivery Model, but a Cheap Software Delivery Model. Any SaaS product was instantly commoditized and this is just beginning to change. By focusing on Service and understanding that SaaS is a Value or Benefit Delivery Model rather than a Software Delivery Model, the SaaS Vendor can elevate themselves above their commodity competitors and become a truly premium service.

By focusing your clients on the fact that you provide a service rather than software, you are also reminding them that your company is the Subject Matter Expert, that you are the go-to company for this subject, this expertise. That with you, your customers do not "rent software" but subscribe to your Subject Matter Expertise delivered as a Service over the Web. This is a highly disruptive and extremely powerful change in mindset that more SaaS Vendors need to make.

As Managing Director at Sixteen Ventures, Lincoln Murphy helps SaaS vendors maximize revenue. He is on Twitter http://twitter.com/lincolnmurphy.

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