Freshbooks is an awesome application.
It’s an online time tracking and invoicing solution.
I’ve played with it a lot, and used it briefly in the past and I love it. Though I do not have a use for it at the present time, I plan to use it in the future when I do, and I recommend it to anyone that does have a use for it.
Aside from being an excellent application on so many levels, Freshbooks the company is in my opinion a great example of an ISV who has leveraged the SaaS delivery method very well from a business model perspective.
I’ll use some screenshots to explain.
Initial Home Page:
Freshbooks uses the initial homepage upon login to:
1) Post simple announcements
2) Advertise special offers for their own, useful services. (Snail Mail Invoice)
As mentioned in a previous post, this is something that all SaaS ISV’s should do. It should be done in a way that is targeted as well, based on the individual user. I wonder if I actually used snail mail invoices, if that ad would go away for good?
Now don’t get me wrong, there is a fine line between providing relevant unobtrusive announcements and advertising and polluting the application with ads. It has to be done right, and I believe Freshbooks gives us one example of how to do it right.
Freshbooks gives their users a very easy way to refer their product to others, from within the application. Yet they don’t stop there. They also provide incentive AND a way to easily track the referrals you send.
Freshbooks gives their users a way to instantly upgrade their account from inside the application. They also provide access to their FAQ’s and prominently display their phone number on this page as well, to ensure that if someone is even considering upgrading, they have multiple ways to have their questions or concerns addressed right then and there.
Freshbooks gives their users a way to instantly purchase credits for a commonly used add-on service of theirs (Snai-Mail Invoicing), from within the application. They also prominently advertise their offer to allow users to test the service out on themselves for FREE on this same page.
Report Cards in Account Info:
From the account info section, Freshbooks provides a quarterly report card for their users.
As you can see, this report card provides aggregate benchmarks for some key metrics associated with the application’s purpose and function. It shows the user what their results were as well as what the average results were for the other users in the same profession.
They also provide the user with a score that can then be displayed on their website if they desire, and they ask for feedback as to how they can improve the report card system right on the same page.
Taking it one step further, they actually get feedback from their top performers about their business practices, and share them here on their company blog.
This is one place where Freshbooks REALLY excels, and does one of the things that many of us had talked about last week in the discussion originating over at SaaSBlogs.
They create a way for their users to gain value from each other.
In case you missed it, you can view my detailed post about this here
Last but not least, they ask for feedback at the appropriate time. When someone is logging out, in most cases they have just finished working with the application. This is a prime time to get honest feedback and gain valuable insight regarding how to continue to improve the product, as well as what things users like most about the product.
Bravo Freshbooks…Keep up the excellent work!
Sinclair Schuller posted a great article over at SaaSBlogs entitled: How can a SaaS ISV drive down sales and marketing costs? It’s an excellent post, and well worth the read as a precursor to this post.
One of the key assessments that Sinclair makes early on in his post, is the fact that many ISVs are not exploiting the potential of the SaaS delivery method. I totally agree. I think that many ISVs have yet to even come close to leveraging the value that the SaaS delivery method affords them.
SaaS as a delivery method provides ISV’s with a foundation for innovation throughout their entire business. It provides ISVs with multiple advantages and ways to differentiate and add substantial value to their business, not just their product offerings. Using the SaaS delivery method simply to deliver Regular Old Functionality (ROF) is a very sophomoric approach in my opinion.
Ben Kepes touchs on this topic here as well.
The first and probably greatest advantage is that SaaS ISVs have a network of users using the same product, all in the same place. Leveraging that network of users in multiple ways is one of the clearest ways in which SaaS ISVs can reduce their sales and marketing costs, yet many fail to do so.
So how can SaaS ISVs leverage that network? Im glad you asked
SaaS ISVs must create ways for their users to gain value from each other.
To have a SaaS offering and not provide ways for users to gain value from being in close proximity with other users at all times is like a conference, or user group meeting, or a community planning meeting packed with people that are all interested in the same things and all have valuable insights and experiences to share with one another, yet they are physically unable to speak or communicate with one another.
It makes no sense at all.
The value that each tenant of a SaaS application brings to the whole, should be realized by all others in some way, shape, or form. This is something that the SaaS ISV must make possible. This could be through direct communication with one another, by the application functionality improving based on the participation of it’s users, through benchmarks, sharing of data, etc. There are hosts of ways this can be done.
Here are some specific examples:
Aggregate Benchmarks – Sinclair uses the example of a ticketing system providing users with benchmarks related to most reliable hardware, etc. Allowing your users to define the metrics that are valuable to them, and then providing them with those benchmarks and statistics is one great example of leveraging the value of your tenant network.
To take this a step further, ISVs should put in place ways to connect users that are top performers in certain areas, with those that are looking to improve. This could be done via monthly webcasts where top performers talk about their processes and answer questions from other users, or through a blog or simple online discussion board/forum.
Depending on the type of application, ISVs could even enable users/tenants to interact with one another directly, from within the application. That way, if a particular user has a question while they are working in the application, they could find the tenant most knowledgeable based on the benchmarks, and ask them directly.
Sharing Data/Work – The ability to share data/work with other users/tenants is something that provides added value to users, especially in any service based industry where companies work with multiple partners.
A more abstract thought along these lines…
The ability to spread certain work/tasks across the entire tenant/user base, or for the system itself to recognize when the same tasks are being done by multiple users at the same time (or were done recently), and somehow aggregate that effort into something that could be applied globally could have substantial impact in certain verticals. Almost like a living, realtime knowledgebase.
Sharing of Configurations/Add-Ons/Customizations – Giving users the ability to share their customizations, configurations, add-ons and extensions, all from within the application itself is another value add that SaaS ISV’s can provide. Templates that have been created, themes, custom integrations, etc. All of these things leverage the network, and add significant value to an ISV’s core offering.
So how do these things equate to savings in sales and marketing spend?
Sinclair touches on one way – if you can build into your application lasting reasons for your users to have a vested interest in the growth of your userbase (such as many of the above examples), to want others to use your application as well, you can catalyze the most powerful and least expensive form of marketing – Word Of Mouth.
Sinclair’s graph outlines this concept very well.
Two additional ways that SaaS ISV’s can leverage the SaaS delivery method to lessen their Sales and Marketing expenses are:
1) Build a system for analyzing usage data, in order to produce custom, personalized marketing messaging.
For instance, data regarding a customer’s number of users, the functionality those users utilize most, the add-ons or features your customers do not have, etc. This information can be utilized to produce highly personalized and targeted marketing and service from within your application. I venture to say that many of the next generation SaaS apps will have a layer that is so tightly woven into the ISV’s CRM and support systems, that marketing and support/training will be far more efficient and targeted then ever before.
2) Make it simple for users to test out and add features and extensions from within the application.
Your users should be able to pick and choose what features they want to use at any given time, and just start using them. By allowing users to see what additional features are available to them, and even recommending them to them from time to time, based on the data you have compiled about their usage patterns, etc, you remove multiple barriers and hindrances to up sales.
I’ll try and post some additional thoughts on this topic, with some more detailed analysis.
I’d love to hear from some others regarding your experiences and ideas.
Sinclair Schuller, over at SaaSBlogs posted a fairly brief article regarding SaaS and VARs/The Channel that sparked a great discussion late last week.
Working with VARs, IT Consultants, SIs, and Managed Service Providers of all types and sizes, I thought I’d chime in with regards to how I believe SaaS and The Channel should mix, in order to provide a win-win relationship for both parties.
Many people have looked at SaaS as a threat to the channel, because generally SaaS application are sold the same way they are delivered, via the web. So at first glance this hinders to some extent, the ability for VARs to be as easily involved in the process of software procurement as they were in the past. It also in most cases, completely removes the hardware component of the sale.
Also, most SaaS applications are priced on a per month basis, which again, at first glance would lead one to believe that the return on investment for the effort involved on the VAR’s part will be small, at least initially.
Its All About The Relationship
However, what this says to me is that both ISVs and VARs need to come up with more creative ways to leverage one another’s strengths and the value each one brings to the table for the other. It’s all about the relationship.
In my opinion, SaaS can and should create healthier relationships all around.
It should force ISVs and VARs to form more of a true partnership relationship, as opposed to a supplier-reseller relationship. This is also a win-win for the end user, because both parties are motivated to keep them happy and successful for the long term, so that they continue paying/using the software.
What ISV’s Should Do
ISVs should structure their compensation in a way that incents VARs enough to bring them business, but forces VARs to maintain the customer relationship in order to continue to receive further compensation. Of course, the ISV will want to support the VAR, and enable them to do the best possible job in maintaining that relationship, because they are also making their money on the longevity of the customer relationship.
What VARs Should Do
VARs should look for ISVs that provide them with the ability to differentiate themselves, by offering them tools to easily build custom extensions, mashups and integrations with other applications – both 3rd party applications and home grown solutions. They should also look for ISV’s that provide them with creative ways to offer additional services to their clients.
Another great point that Sinclair made is that VARs should consider spreading out into more endpoint hardware devices that interface with SaaS applications. This is an area where there will be lots of room for creativity, as more and more ISVs with specialty niche offerings embrace the SaaS model.
This brings me to another point regarding SaaS ISVs and the channel. VARs are a huge asset to ISVs targeting more niche/specialty markets with SaaS offerings, especially new ISVs that are just starting up. For instance, if I wanted to create a SaaS offering targeting a very “long tail” specialty type market that had previously not been cost effective for traditional ISVs to target, there are almost definitely VARs who are currently servicing those customers. Those VARs have keen insight into the needs of that market and become EXTREMELY valuable to me. Valuable from the standpoint of helping me build the best product, as well as providing me with in roads to those customers.
I were planning on starting up a software company focused on a very niche market, I would seek out as many VARs that specialize in servicing those companies in my target market as possible and form very strong partnerships with them from the start.
Future of SaaS and The Channel?
Here’s an idea I’d love to hear some feedback on.
What if ISV’s simply developed their SaaS offerings, and deployed them to a decentralized network of managed service providers, that host, sell, and manage the ISV’s software?
The ISV has no data center, no end user support team, no sales reps, they simply develop the software, and deploy it to the channel. Then, it becomes the managed service providers’ responsibility to differentiate. End users can be brought on by the managed service providers themselves, or through the ISV’s website. If they are brought on through the ISV’s website, they have the choice of choosing multiple packages which include the many specialized/customized versions of the application, mashups, etc, which are offered by the multiple managed services providers in the ISVs network.
I think that the Managed Service Providers that are building their own data centers/NOCs would be uniquely positioned for something like this.
Again, I’d love to hear some thoughts and comments on this concept