By Jeff Kaplan, managing director of THINKStrategies
Market research firms agree that software-as-a-service (SaaS) solutions are quickly overtaking on-premise applications in organizations of all sizes across nearly every industry. An important reason for the rapid rise of these SaaS solutions is how they meet the needs of increasingly empowered end-users in an era when customer loyalty has never been more tenuous. A new generation of customer satisfaction management (CSM) solutions promises to make SaaS applications even better to combat user abandonment.
SaaS solutions emerged over the past decade in response to growing frustration among corporate executives and disgruntled end-users increasingly impatient with the costs and complexities associated with legacy, on-premise applications. Corporate end-users are no longer willing to let legacy applications get in the way of fulfilling their day-to-day responsibilities. And corporate executives can no longer justify the high total cost of ownership (TCO) and lower-than-expected return on investment (ROI) of legacy apps, especially in an era characterized by continuing economic uncertainty, escalating competition and declining customer loyalty.
Measuring SaaS Satisfaction
The “pay-as-you-go,” hosted, subscription service delivery model of SaaS has put more of the burden of success on software vendors. Not only do they have to make sure their applications work, but they also have to continuously enhance the applications to keep pace with their customers’ evolving needs if they want to retain their customers’ business.
Because the SaaS industry’s “land and expand” credo to maintain high renewal rates and substantial add-on business for each account is imperative to success and survival in the SaaS industry, ensuring customer satisfaction is critical.
The SaaS service delivery model gives SaaS providers a significant competitive advantage over traditional independent software vendors (ISVs). Unlike the ISVs, who historically had no direct contact with the end-users of their applications, SaaS providers have a direct connection that offers unprecedented visibility into how people actually utilize their software. SaaS providers can track every keystroke and see which features and functions end-users are utilizing and those which are sitting dormant.
Also, the multi-tenant architecture of today’s SaaS apps enable the providers to aggregate end-user data across the entire customer base to gain even greater insight into how their applications are being utilized.
Yet a surprising number of SaaS providers are not fully equipped to capture this information and collate it into useful insight which can help them continuously improve the quality of their applications or better package and price the apps to appeal to a broader audience of potential customers.
This shortcoming could come back to haunt these SaaS providers because we are entering a “cloud rush” stage in the industry’s evolution, with a proliferation of players entering the market and customers becoming increasingly fickle about their vendor loyalties.
Connecting SaaS to CRM
SaaS providers and other ISVs are beginning to recognize the need to more effectively acquire, analyze and act on timely customer data. This means using additional tools to obtain insight about customer preferences, such as survey instruments and other pooling devices to solicit customer ideas.
JBara Software and Totango are among the companies that are pioneering this new generation of customer satisfaction management (CSM) solutions. Their solutions are not only helping SaaS providers continuously improve their apps to better satisfy their customers’ needs, they can also tie into leading customer relationship management (CRM) systems to permit companies to better serve their customers and sell their products and services.
These CSM solutions will become even more important as competition intensifies and customer loyalty becomes more fleeting.