SaaS Go to Market

The Art and Science of Software GTM Change Management

By David H. Deans

Software-as-a-Service (SaaS) has become the preferred delivery model for enterprise software applications. As IT vendors shift to SaaS-based offerings, they must adapt their sales and marketing strategies, pricing models, and customer engagement methods.

Let’s examine the key B2B SaaS Go-to-Market (GTM) challenges and opportunities that vendor Sales, Marketing, and Customer Success leaders will encounter in the software solutions world, by exploring the proven strategies for achieving meaningful progress.

The Shift to Subscription-Based SaaS

The vendor sales model for SaaS-based offerings is different from that for on-premises software solutions, where vendors typically sell a perpetual license. With SaaS, cloud service providers charge a recurring subscription fee for each end-user.

According to the findings from numerous market research studies, the transition can be extremely puzzling for sales teams that are accustomed to selling one-time licenses. Instead of working on deals with large, upfront payments, sales and support teams must now focus on building a predictable revenue stream through subscription-based sales.

This requires a significant re-framing of the traditional sales process, from focusing on a complex one-time sale to nurturing long-term relationships with customer buyers. To overcome this fundamental challenge, SaaS providers must retrain their sales teams and equip them with the tools and resources needed to build a predictable revenue stream.

This transition involves creating a sales process that emphasizes customer engagement and customer success, instead of merely focusing on solution features and functions. Sales teams must develop a deep understanding of the customer's desired business outcomes and use this knowledge to craft compelling solutions that meet those needs.

They must also develop a customer success program that ensures the Line of Business (LoB) project sponsor – and supporting IT organization leadership – are fully prepared to extract value from the proposed solution. That’s how they validate and renew their SaaS subscriptions.

Balancing Customer Needs and Profitability

Pricing is another critical aspect that providers need to consider when transitioning to SaaS-based offerings. The pricing model for SaaS is typically different from that for on-premises software, where IT vendors charge a one-time fee for the software license.

In contrast, SaaS-based offerings are priced based on a recurring subscription fee. While this approach offers long-term benefits, determining the right pricing model can be a challenging task. SaaS providers need to balance customer needs, such as affordability and flexibility, with their own profitability requirements to ensure long-term viability and sustainability.

To overcome this challenge, SaaS providers must conduct a thorough analysis of their customers' needs and willingness to pay. They should evaluate their competitors' pricing models and identify areas where they can differentiate themselves.

They should also consider offering different pricing tiers and bundling features to appeal to different customer segments. Moreover, SaaS providers must regularly review their pricing model to ensure that it is aligned with their evolving target buyer needs.

Attracting and Nurturing Growth Opportunities

With SaaS-based offerings, providers must attract new customers more frequently than with on-premises software solutions. This requires a strong customer acquisition strategy, which can be costly and time-consuming.

SaaS-based offerings likely face substantial vendor competition, and providers need to differentiate themselves from competitors to stand out in an established market. Savvy software vendors must invest in the ongoing transformation of marketing and sales to reach a broader audience and build a robust pipeline of potential customers.

To overcome this challenge, SaaS providers must develop a comprehensive marketing and sales strategy that is aligned with their target audience. They should create meaningful and substantive messaging that resonates with their target audience via digital marketing channels.

They should also leverage skilled and experienced consultants to help them build brand awareness and generate qualified sales leads. Finally, SaaS providers must have a clear understanding of their customer acquisition cost (CAC) and customer lifetime value (CLV) to ensure that they are acquiring new customers profitably.

Ensuring Satisfied Customers Renew Their Subscriptions

With subscription-based SaaS offerings, customer retention becomes crucial. SaaS providers must ensure that their customers are satisfied and continue to renew their subscriptions.

This requires a comprehensive Customer Success program, which can be challenging for legacy software vendors to design, implement, and maintain. Regardless, SaaS providers need to focus on delivering realized value to buyers throughout their customer journey and ensure that their customers are receiving maximum benefit from the solution (e.g. the customer's desired business outcome).

How to Align B2B Sales and Marketing Teams for Growth

In Summary: Your Call to Action

Managing change in the SaaS marketplace can be a challenge, but it is also a huge upside opportunity for vendor leaders who crave revenue growth. By carefully planning and executing their Value Realization transition, providers can achieve lasting transformation success in the B2B SaaS arena.

These lessons learned and associated best practices are from my digital business growth leadership roles and market development accomplishments at VMware, Citrix, IBM, Red Hat, and Cisco Systems.

In addition to the strategies outlined above, B2B SaaS providers will also benefit from partnering with a trusted advisor who can provide fully tested and proven guidance throughout the transition journey.