How are software sales a lot like jazz? It may seem a little random, but it’s a pairing that’s been on my mind after spending a few days in New Orleans for Collision, a unique conference that brings together leaders from the world’s largest companies and fastest growing startups alongside leading investors and media.
While there, I had the chance to speak on stage with Inc. Magazine's Jeff Bercovici about the opportunities and challenges that selling SaaS can bring. We talked about how SaaS developers can sell their services effectively as their businesses evolve, an often tricky task that involves the jazz-like ability react, improvise, and create something that people want to hear—or in the case of a sales pitch, hear more about.
Many SaaS companies begin that evolution more or less in the same spot. First, the company launches a website to offer its SaaS product and starts testing the market by getting beta testers or freemium users. Eventually, the company will turn that small user base into paid customers, but more importantly, the company needs to find a way to tap into them for ongoing value. To do this, the company needs to figure out which aspects of their product work and which don’t. This feedback is an essential part of researching product market fit.
Here’s where it gets interesting. After starting off with a focus on selling directly to customers, companies can pursue a variety of different channels: Affiliates and referral programs, listing in online marketplaces and app directories, reseller programs, and full-service marketplaces that offer the on-demand, live customer support—the human element—that is so important to fully onboard customers and keep them satisfied.
As I explained during my conversation with Jeff, the ability to riff and experiment with different sales strategies quickly and inexpensively is key. Trial and error is one of the only ways you can be sure that you have the right strategies in place to drive the most revenue.
And finding that winning mix is critical. In his book Zero to One, Mithril Fund co-founder and AppDirect investor Peter Thiel writes: “Superior sales and distribution by itself can create a monopoly, even with no product differentiation. The converse is not true. No matter how strong your product—even if it easily fits into already established habits and anybody who tries it likes it immediately—you must still support it with a strong distribution plan.”
If you can tap into an effective channel or channels, you can increase your sales force, reduce your cost of customer acquisition, and drive revenue for a sustainable business. There’s no one-size fits all strategy for all SaaS companies, but when you invest time and resources into figuring out what works best, you can (as New Orleans natives are fond of saying) “laissez les bons temps rouler”—let the good times roll.
Daniel Saks is co-founder and co-CEO of AppDirect.