A great article at Joel York’s SaaS Blog (Chaotic Flow) titled “SaaS Marketing Tips – The Truth Shall Set You Free”, explains the critical difference in the sales process between selling traditional software and Software-as-a-Service. The main difference is transparency or lack of it, on behalf of the software business and an aspect of the sales process that is applicable to a variety of as-a service companies, including SaaS hosting providers.

Traditional software companies teach their sales personnel “to avoid disclosing any additional information beyond the minimum required to conclude the sale”. Due to the one-time-payment arrangement in these contracts this creates a temporary focus on both the software development goals deal and the relationship with the prospective customer. However the advantage of SaaS services, one can “try before they purchase” and, based on the contract length, walk at any time in the event that the service isn’t satisfactory to them. This creates a long-term focus, making transparency and trust between both parties more natural.

As Joel says, Google AdWords is a great example:

“Ask yourself what you are spending right now on Google AdWords without ever having talked to a sales representative. What is the difference with your average selling price for online transactions? Then, consider the reason. The answer lies in transparency, from company reputation to cost-per-click.”

While Joel talks about the software industry, this can be said for all goods that can also be services including SaaS hosting. This is true for big expensive items such as homes and cars and everyday purchases like music and books. The greater the amount of money and commitment, the more risks involved and the less trusting the two parties are. Transparency becomes the only sensible option in dealing with businesses offering Product-asa-Service, just as it’s the sole option when dealing with SaaS hosting providers.

Anyone who has played the prisoner’s dilemma (a game similar to a negotiation) knows it is not a game that is played once (like buying a product like a car) both sides have the motive to “defect” or lie (it is the rational approach). However, when games are played several times, for a length of time that is not known to each party (like the subscription-based service) the rational strategy should be “cooperate”. The repeated play of “games” provides the motivation to jump the hurdle of faith to adopt a cooperative strategy. If one side is not satisfied, the other will defect throughout the negotiations and vice versa. One defect, and there’s no trust, and everyone will be worse off over the course of the game.

The model of as-a-Service is based by this “repetition of playing games” collaboration and trust; although you may gain some short-term benefits if you hide the truth, in the long term you’ll be losing an important connection. This dedication to openness is one of the lesser talked about benefits of not just moving your business to an as-a-Service company , but also buying from these kinds of SaaS hosting companies.

Many SaaS hosting firms see the same phenomenon day in and day. When companies recognize the value of transparency, they’ll be in contact with their customers in an effort to learn about their requirements. If the needs of prospects aren’t in line with what the SaaS hosting company offers, the company will let them know. It is not a good idea for an as-a-Service company to promote clients that they don’t require. This isn’t an ideal win-win situation. The customer will soon discover that they do not require your help and decide to move to another location. This results in unproductive work for both the client and the company. This is something every as-a-service company should do.

Think about this: Have you ever seen an as-a-Service business be successful that doesn’t have trust and transparency?

Online Tech owns and manages SAS-70 secure and reliable multi-tenant facilities across the Midwest. With a variety of colocation and managed dedicated servers for SaaS hosting, Online Tech reduces IT data center expenses as well as operational risks and downtime and makes sure that the SaaS clients their servers are always online, always online, and always safe.

Leave a Comment