We expect SaaS offer to evolve in Darwinian fashion over time. The fittest offers will include a customer service system capable of satisfying the support requirements of average subscribers.
We don’t think SaaS offers lacking a customer service component will survive the first few years of the cloud computing era. To reiterate, the profitability of SaaS depends on an average subscription term, by customer, long enough to deliver return on the upfront investment an ISV makes to launch the service. The key method of engaging with subscribers over the term of subscription is through a successfully managed customer service operation. If customers either fail to obtain the support they require, or obtain ineffective support, or, even worse, receive ineptly managed support, they will stop subscribing.
SaaS makes sense for ISVs as well their customers. We don’t see the trend diminishing anytime soon. So it makes sense for ISVs to put together a pricing model capable of supporting the cost of maintaining a customer support effort staffed with well trained personnel who can be expected to correctly handle support requests.
Large ISVs can afford to provision the type of customer service operation required to support a large subscriber base. We think smaller ISVs will do well to plan on the same high quality support system, but at a higher price. So it makes sense for smaller ISVs to explore niche requirements where the number of competitors is fewer and the customer base more selective. With fewer options, these highly qualified prospects will simply have to pay higher monthly subscription costs to get the services they’re after. But the real driver for them, we think, will be the quality of support. SaaS simply doesn’t work where the customer has to spend a lot of time servicing reasonable requests for support.
If you can use some assistance identifying niches where your products and services can make for an attractive SaaS offer, please contact us.
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