Traditionally the difference between B2C and B2B SaaS and mobile software businesses have been pretty stark. The B2C business has been characterized by low price points, a focus on ease-of-use, low cost and marketing-oriented customer acquisition models. Meanwhile, the typical B2B software business focused on higher price points, rich feature sets (often at the cost of good ease-of-use), sales-intensive customer acquisition and in some cases customizability. In the last several years, however, with the increasing dominance of web-based software and SaaS this has begun to change.
Chief among these changes has been the “consumerization” of B2B SaaS and enterprise software user interfaces. Users that have become used to the simplicity of the Google homepage and many other B2C SaaS sites have become less willing to slog through the complexity of the traditional “fat” enterprise B2B software UI. This has been accelerated by many “clean sheet of paper” B2B SaaS applications from startups that have disrupted many mature B2B software categories.
Yet I find many B2B software companies (particularly those in vertical niche markets) lagging this trend. Lag too long and you’ll likely fall off the market share map of your segment altogether. In addition to more simple, intuitive UIs, there are a number of other techniques used by B2C software companies that forward-looking B2B software companies would be wise to emulate. Not all apply to every market and your mileage may vary. But let’s take a look at a list of a few the more promising for crossover to B2B:
Great, simple user interfaces
I alluded to this in the preface. Not only will a simple, intuitive UI please your customers, but it actually can has a positive effect in a number of areas of your business operations. The consumerization of a B2B software interface should free up tech support resources by reducing the number of UI questions. A simple, intuitive interface can make a “self-serve, free trial” customer acquisition model viable, potentially reducing the sales-intensiveness required to make a sale in a dramatic fashion. This is to just name a couple of the ancillary benefits which, in total, could substantially change your business model and drive increased profitability. So don’t give your B2B SaaS UI development short shrift; it’s critical to many aspects of modernizing your business.
Marketing rather than sales driven
As discussed above, B2B software companies (especially those focused on the enterprise) traditionally have invested heavily in sales forces, either usually outside but inside/inbound as well. This can be a HUGE expense and drag on the bottom line, typically amounting to roughly 10% or more of revenue at maturity. Early on, if you have to invest in a large sales force this expense can represent several times that as a percentage of revenue. In many market segments and product categories this may still be necessary. But what if you could reduce this investment, by making at least some sales with a lower cost inside sales force, or best case eliminate the sales force entirely for some customer categories with a pure self-service model? This can have a dramatic impact on your software company’s profitability – assuming that you can develop low cost customer acquisition strategies, based upon outbound and inbound/content marketing methods. Maybe your company can’t flip from a large outside sales force to a pure self-service, marketing-driven approach. But even progress on the margin, such as marketing programs which reduce the length of the sales cycle, can have a substantial impact on growth and profitability.
B2B SaaS Freemium business models
A Freemium business model represents the marketing-driven approach of the bullet point above taken to the extreme. Traditional software free trials work best when the product is a real pain killer, and only a short time with the product is required to bring assurance to the user that it will work for them. For a lesser known product whose benefits aren’t quite as striking, or a product that takes longer for adoption, the free trial approach may not work as well. In these cases a Freemium model may be appropriate. For the Freemium model to work well, getting the pricing/market segmentation is critical. Specifically, you need to put “just enough” functionality into the free version of the product so that folks will find it useful, but leave them “wanting for more” by reserving the “killer features” for paid versions. Also, the pricing of the paid versions must be attractive enough that folks feel good about paying for the added value when they upgrade to a paid version. Since it’s unprofitable to provide much support to non-paying users, a great UI is also very important to success. While Freemium isn’t my favorite software business model, in many circumstances it makes a lot of sense. If you’re interested, I’ve written more about Freemium software business models in this article.
Social media and inbound marketing sophistication
Traditionally, B2C companies usually haven’t been able to afford the economics of a lot of outbound sales or marketing efforts, due to lower margins. As a result, they tend to have more focus and are more sophisticated at both social media and inbound/content marketing efforts (including SEO). B2B SaaS and mobile software companies can learn a lot from the typical B2C marketing approach. Investing more in content marketing and other thought leadership activities can be very rewarding in the long run, positioning your company in prospect’s eyes as a market leader, even if your market share isn’t quite there yet. This investment in content creation is an activity that is often considered “soft”, without measurable ROI, but one which I urge you to invest in. Fully utilizing all appropriate social media platforms is another area more often optimized in B2C companies than in their B2B counterparts. For example, Facebook is generally considered a B2C social platform. But Facebook has 2 billion accounts worldwide (that’s two BILLION with a B). What this means is that your prospects and customers very likely have Facebook accounts already, making it an under-appreciated way to reach them. Other platforms which you may not even think of such as Pinterest are also quite often ignored by B2B companies, but can be quite useful. Twitter can be very useful to any B2B or B2C company, especially in distributing that expert content that you’ve hopefully invested in creating. And I’ve found niche platforms such as QUIBB can have a very high return from even minimal participation. You can get more detail in the articles Tech Startup Social Media Strategy and Tactics and Social Media Marketing for B2B Tech Companies.
Price for penetration, not margin
Now this is a tactic that definitely isn’t for everyone. For example, if you are in a tiny market niche or well into the late adopter phase of the market penetration cycle, it wouldn’t make much sense. You’d simply be leaving money on the table. But if you have a substantial market size or are still early in the penetration phase of a smaller segment, this strategy can hold a lot of benefits. My basic premise in this area is based upon a silly old saying I like to invoke: “The more you sell, the more you sell!”. So what does this mean? Simply put, having more customers at a lower price tends to speed everything up. If your product is good, one of most efficient, powerful forms of marketing that you can have is “word of mouth”. Having more rather than fewer customers accelerates this phenomenon. Also, sales cycles tend to speed up at lower price points and there are many other potential benefits, such as more attention from the press due to a larger market share and higher profile. All in all, this pricing strategy might enable you to get to stability/profitability sooner than you otherwise would, and on to investing in your next market segment sooner than a higher-price strategy might.
Customer retention strategies 24/7/365, not just at renewal time
Finally but certainly not last, utilize proactive strategies to prevent customer churn via a Customer Success strategy. For most SaaS companies, this means a formal Customer Success department focused on retention and upselling. I won’t go into too much detail here, but you should monitor customer usage and process the data with an analytics package to truly understand how your customers are using the product. Identify bottlenecks and UI issues proactively and utilize automation to send targeted, customized messages of assistance when data suggests a user will benefit. Of course, have human assistance available to your customers as well, whenever they feel they need it.
So there’s my not-comprehensive list of traditionally B2C software approaches that can be exploited by aggressive B2B SaaS and mobile software companies. Which of these items are you taking full advantage of today? And what else should have been on the list? Please comment or post a question below to add your take to the discussion.