Note: This is the second half of a two part article on strategy and design for a profitable SaaS, written by Paul Giurata of Catalyst Resources. If you missed part one, be sure to read it here.

Purchase Experience    

Traditional Software

Sales models are predicated on typically long sales cycles (6-18 months) executed by highly compensated, direct sales teams of account executives, sales engineers, and services consultants. The deals are larger, the targets are often fewer.  Often an installment must be $100K to $250K to justify investment in sales effort.    

SaaS

The business relies on a high-volume, low-cost demand generation that is metrics-focused. In almost all cases there is a large portion, if not all of the purchase experience completed online.  A SaaS can become profitable through just online sales. This opens up the opportunity for software applications with annual revenues as low as $250-1,000 per year.

Strategy

Purchase experience becomes an extension of the product and should be designed aright along with the product. This includes full access trials, options for occasional use, and a friction-free sign up experience that is given the same level of usability testing as the application itself.  With an effective trial user experience, the barriers to entry can be more or less eliminated. Just sign up, login and start using.

Deployment and Customization    

Traditional Software

Offers little easy customization, which forces the user to utilize the out-of-the-box solution.  Extensive and sophisticated customization that can generally be achieved by technical consultants.

SaaS

Typically a need for some level of customization.  Customers often want the online experience to appear as their own application and to modify basic graphics and terms.   User initiated customization becomes a strong reason to stay loyal to a SaaS solution and not switch. The challenge is to find the balance point. If the customization is too significant, ongoing refinement of the application is not reasonable and support costs will increase.

Strategy