We’re having some building work done, and while we were selecting the builders I got talking to the owners of the firm over a coffee. Inevitably we talked about IT, and they told me their SaaS horror story.
These two guys run a small building firm that specialises in domestic extensions, small builds and refurbs. They employ 15 people and have a very sound reputation. Last year, when the clouds of recession started to gather, they lost quite a bit of business, but heard that another local builder seemed to be winning a lot.
So they called a selection of the customers who had chosen not to go with them and asked why.
Was it price? No.
Was it reputation? No.
Was it personal? No.
They finally found out it was because these other guys had put in a slick piece of sotware that produced estimates and project plans, showed the costs and when they were going to be billed and used pretty bar charts to show the customer how the different elements of the plan would come together. They were also able to demonstrate how they had used this in past projects.
It gave the impression that the builder was very organised and transparent, so customers felt confident they would get a good build and wouldn’t get ripped off. It gave these guys a significant competitive advantage.
So my guys decided that this was the way to go. They looked around the web for a fairly simple project management system, and after many evenings trawling through online demos, they finally signed up to a ‘simple, easy to use, project management and costing system – complete with ‘comprehensive online help’ and in their own words, ‘entered a whole new world of confusion’.
To cut a long story short, a year later, having tried three different systems and wasted countless days trying to master them, they went back to building estimates on Excel, billing in Word, and handing everything over to the book-keeper at the end of a month to find out how much profit they made.
As a business process, theirs is about the simplest – They produce a customer estimate based on time and materials, add a markup for handling, do the work and send out the bill. They’re also a bright couple of guys, regularly use PCs and financially astute. But this whole experience left them confused, exasperated and totally negative about software’s ability to help them streamline their business.
Given that the whole point about SaaS is that it nurtures the customer along the journey, this suggests that all three companies failed dismally, despite having a willing customer.
So, curious to know more, I asked them for the names of the vendors, which they gave me, and decided to check them out.
All three had great websites.
All three looked as though they had all the bells and whistles the customer needs.
Two of them had a series of on-line demos and how to’s.
They all had big numbers plastered over the website to call for sales – In the US.
And guess what?Just one of them had a helpdesk, which for the frst ten minutes you listened played music, told me how much they valued my custom, and that the call would incur a charge of 50p a minute.
Who are they kidding?
From the customer perspective, the journey these vendors took them on was not to a good place. The ‘first ‘S’ was there, but the ‘aaS’ was missing.
Of course this is a challenge to the vendor. If you sell to the general public, you are inevitably going to sell to some numpties, but you are also going to have to find a way of supporting them effectively, in their terms, or the sale value will be a couple of months at best.
My builders are astute, and although they readily admit they’re not IT savvy, they don’t see why they should pay £5 to hang on and listen to crap music.
In theory, the company that can crack this one will really be made for life, but there’s an interesting sting in the tail of this tale.
I introduced them to one of our clients – a small software developer working in FileMaker – who has built a great system for time-based professionals, that also builds estimates for time and materials, as well as doing the billing. This however is not sold at SaaS prices, it had a price ticket to them of £ 10,000, but the developer set up a lease deal, so the builders pay just £ 350 a month for three years and it’s fully deductible.
Yes it’s more expensive, but within the cost they’ve been trained to use it, the developer has customised the look of all the outputs with their logos and typefaces, he’s available for help calls, and the builders reckon they’ll now get Saturdays off instead of losing them to paperwork. Good result all round.
And the moral ? If you’re selling to SMBs don’t devalue your product just to get a sale – Acquiring lots of unhappy customers is bad business – in any arena.
Which does raise another question – Is the SaaS model so restrictive, that software companies would be better focused on selling specialist solutions in vertical markets?
As ever, all opinions welcomed