SaaS distribution model challenges vendors to take customer service to the next level

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Many companies focus most of their marketing efforts on bringing in new accounts, yet most realize that the fastest path to increased revenues is repeat business to existing customers. For this reason, alone, it makes sense to deliver outstanding customer service.

The customer service bar, however, is especially high for service providers. That's because while product companies tend to recognize revenue at the time that they make the initial sale, service providers depend on recurring payments to maximize revenue. Those that fail to meet customer expectations run the risk of never realizing a return on their upfront investments.

SaaS vs. On-Premise Software Distribution: What are the implications?

Last month, the Massachusetts Technology Leadership Council invited Bill Bohen, VP of Client Services at TimeTrade Systems, to speak about the implications of this distinction for companies like his that now sell software as a service (SaaS). Until recently, most software providers sold licenses that entitled purchasers to run a copy of the product "on premise". Today, however, many software providers, like TimeTrade Systems, have migrated to a model wherein the vendor hosts "multi-tenant" software centrally; and purchasers "pay as they go", on a monthly or annual basis, for web-based access.

One of the main differences between the conventional and SaaS models is the payment stream. Another is that the SaaS providers typically assume accountability for uptime, security, data continuity, and upgrading the software; since they now host the product (or contract with a third party to do so for them).

Software purchaser benefits and software provider challenges

Many purchasers prefer the SaaS model because:
•  The initial investment is smaller
•  They can scale up or down as their needs evolve
•  It's easier to administer and places less demand on scarce IT resources
•  Employees can access the product anytime/anywhere via the web

From a provider perspective, however, the SaaS model has created unique challenges--especially for companies like TimeTrade Systems that offer mission-critical applications. For one, if problems arise in a multi-tenant environment, they have the potential to cripple numerous customers rather than just a single company. For another, customers are demanding aggressive service level agreements--and exacting penalties for non-performance--now that they depend on their vendors to assure system availability, integrity, and currency.

Customer Service investments improve software performance and customer satisfaction

To minimize downtime and maximize customer satisfaction, Bohen told us that Time Trade Systems has made, and continues to make significant investments in predictive monitoring and state-of-the-art communication systems. Predictive monitoring enables his company to anticipate failures before they happen, and take preventive action. Rapid, helpful communications reduce uncertainty, minimize unnecessary calls, and decrease delays in getting everyone up and running.

As Bohen points out, when problems occur the company needs to know who is affected and inform them quickly. There isn't time to let people know one-by-one.

Automated communications, and meticulous maintenance of the distribution database, have enabled TimeTrade Systems to quickly identify and notify appropriate internal personnel, and customers, when problems occur. The company has also instituted a clear escalation procedure to facilitate quick problem resolution and minimize delays in restoring full service.

SaaS upgrades also present unique challenges. In the past, software providers delivered upgrades that customers installed on their own schedules. Today, however, the vendor updates the central site and everyone begins using the new version right away. To facilitate the upgrade process, Time Trade Systems has invested in automated testing and in systems that make upgrades easier to release--and rollback, in the event that issues arise.

Better service benefits vendors as well as customers

As mentioned above, providing outgoing service on an ongoing basis is essential for companies that depend on high customer satisfaction to maximize renewals and revenue. TimeTrade Systems offers customers a number of venues to get quick answers to pressing questions, including online access to frequently asked questions, customer forums, and social networks.

The company also produces reports that enable account managers to monitor any hiccups their customers' experience. Moreover, the CEO, himself, reviews every incident to spot opportunities for improvements, or situations that may call for his personal involvement.

But can vendors quantify the benefit?

Bill Bohen's talk was of particular interest to me as a strategic marketing consultant--who advises both technology companies and professional service providers on steps they can take to accelerate the sale--and believes that outstanding service matters a lot. The questions are, "Do the numbers bear out that belief? Will SaaS providers get a return on the investments they are taking to meet customers' rising expectations?

The answer appears to be "yes". As they realize that SaaS can meet their performance and security requirements, more and more companies are opting for SaaS applications--even for mission-critical applications. As for TimeTrade Systems, their year-over-year bookings increased by 140% last year--clear affirmation of the marketing ROI that excellent customer service delivers.

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