Better software design saves your users time, better support helps them get more value
This is the third and final part of my series on our sales process. As a Software-as-a-Service startup, we have to choose between what is known as 'low-touch' versus 'high-touch' strategies.
In the low-touch strategy, you aim for higher numbers of users but lower revenue per user, and you sell mostly via self-service upgrades, with a little customer support assist.
In the high-touch strategy, you have more traditional salespeople out and about doing demos and closing deals.
In the real world, you'll employ both strategies.
The trick is to avoid using the wrong sales tactic for the wrong kind of deal.
Expensive software solutions do not sell themselves (so low-touch self-service is not going to work), and lower per-unit revenue does not justify an army of professional salespeople, who all expect good commissions. I am vastly oversimplifying, of course. In our case, we are low-touch and use a 'freemium' model, rather than a free-trial model.
That means you can use some part of the functionality of our system for free, forever.
Part of the value that we provide to our users is the network of other users, and the bigger that network, the bigger the value.
With this dynamic, freemium makes sense, whereas the free-trial model would inhibit growth of the network.
That said, we still have to make money. This happens when a freemium user decides to upgrade. Why would they?
The glib answer is because they need access to more features, or they have hit a usage limit (we only allow up to five users for free per organisation).
But let's dig a little deeper. Upgrades occur when you are providing value to your customers, and they can see that value increasing over time.
Our strategy to deliver value is to not only offer a network of other users to connect to in the same industry (technology events), but also to provide a user-friendly, modern service.
There is a trend in business and enterprise software that has been accelerating in recent years: 'consumerisation'. This is the business jargon term for a move to much friendlier and more usable business software, that is as easy to use as the social media services that most people are now familiar with.
Why should business users have to put up with clunky and badly designed user interfaces? The next time you are staying at a hotel, take a glance at the software the staff use to handle your booking.
Nine times out of 10, it will be an ancient, blocky, text-only interface in lurid blue, white and black.
Ever wonder why it takes so long to check in to a hotel?
Why the staff at reception seem to have to spend so much time pecking at the keyboard and asking each other for help? That's why.
And don't even get me started on the system used to book flights at a travel agent.
This trend towards much cleaner, modern and, above all, user-friendly interfaces is a big part of the business opportunity for us, and we try to displace some of the older incumbents.
We deliver value by saving our users time by being much easier and faster to use.
Many of our competitors, who are also new companies in this space, do the same. Usability and good design are therefore not a competitive differentiator, but they are table stakes for delivering value.
Once it is clear that we deliver value, we have to figure out how to charge for it in a way that is fair, both to our users, and to us.
The best model to use is the pricing axis model.
A pricing axis is a measurement of value that increases the price as value goes up.
For example, as our users host more events, or bring more members on to their team, they are clearly finding our system useful.
But it costs us more to support the greater activity.
Therefore, we can justify charging more on both the number-of-users axis and the number-of-events axis.
We upsell existing freemium users to paid accounts by making this transition much easier. The same approach applies to transitions to higher-paid tiers.
While these transitions are self- service, in that we provide the buttons and options to upgrade without friction directly in our product, customers often need a little bit of love and mutual commitment before going ahead. Users often have to justify the extra spend to their superiors.
Specialist software takes time to learn. And software always has bugs.
So you always need to offer some form of customer support.
The big innovation in the last decade has been to stop seeing this customer support function as a cost, and to start seeing it as an opportunity to help customers get more value from your software.
Next week we'll dive into our approach to customer success.
Richard Rodger is the founder of Voxgig. He is a former co-founder of Nearform, a technology consultancy firm based in County Waterford.