SaaS Entrepreneur

EXCERPT FROM CHAPTER SEVEN

SaaS Entrepreneur: The Definitive Guide
to Succeeding in Your Cloud Application Business

Customer Service and Retention in SaaS

On Premise vs. SaaS Customer Support and Service Expectations

For enterprise class, on-premise software, support is typically bundled into a service and maintenance contract, but the model is inevitably shaped by the realities of the situation. In the licensed model, a program will be installed on hardware and expected to work in a customized environment over which the software provider has no control and often incomplete knowledge of the operating parameters. It is no surprise, then, that in most cases the support for an on-premise software product must be provided by the customer’s IT department.

In SaaS, this dynamic changes radically. Subscribers typically have ‘white glove’ support expectations, and failing to meet them will have a strong impact on both customer satisfaction and re-subscription rates. Unlike on-premise software sales, which follow a ‘sell and go’ trajectory (i.e. you send a CD or install a product for a customer, then return only when it is time to upgrade), SaaS is a ‘sell and grow’ paradigm. Once a subscriber accesses the system, their interaction with the product and with your company is a 24/7/52 proposition. You are always in contact with the customer and they, in turn, become intimately acquainted with your firm’s support and service policies. And the more your customers pay for their subscriptions, the higher their expectations. That, in turn, drives the need for SaaS companies to provide levels of support and assistance that are far more comprehensive and responsive than those in on-premise markets. It is often easier for customers to move on to other service providers if they are unhappy. The resulting subscription churn will damage your company’s economics, and as churn drops to 90% or lower, maintaining profitability and revenue growth becomes very difficult.

Customer Support and Service Levels

Free vs. Paid Support

Depending on the product and the market, your company may or may not offer paid support. Firms that rely on free support programs typically address broad or ‘horizontal’ markets such as low-end project management, file uploading and storage, casual video and graphics storage and presentation, and large file transportation.

If your company has a substantial freemium subscriber base, it will be somewhat atypical to provide them with paid support; this option will normally be offered when the freemium subscriber purchases a paid subscription package.


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