In this swirling world of the digerati, we tend to encourage others to “drink of the kool aid” in the way that we are. What I mean is that we push our more mainstream brethren to partake in all the things we are - twitter, plurk, identi.ca, blogging, social media etc etc.
I’ve often felt this is a dangerous thing to push people into - us bleeding-edgers can cope with a service going down, or even entering the deadpool, oh we’ll moan about it ad nauseum, but deep down it’s kind of what we expect with a lot of these things. In the same way that its a pretty cool thing for VCs to be able to say they were in at the ground floor on the next Google, it’s pretty cool for the digerati to say they were one of the first to use the 2.0 offering du jour once it achieves critical mass.
One of the most even-keeled posts I’ve read lately about uptake for later adopters is from Steve Borsch. Steve gives sage advice when he says, in relation to one of his corporate clients question about whether Twitter should be one of their marketing platforms, that;
[you should] begin to participate, watch it (especially for brand mentions), but make it very peripheral to the rest of [your] strategies since the service simply isn’t reliable
I agree wholeheartedly with Steve but would extend his comments beyond merely reliability - to include viability, business-sustainability and the other due-diligence measures that somehow seem to have been forgotten in this mad dash to the kool aid fountain
I recently had an interesting debate with someone about ‘customer ownership’ and how this plays out in a SaaS world. It’s perplexing because my verbal sparring partner has some great points, but the root of my unease with the whole debate was based on uncertainty about if "ownership" even matters anymore?
Let’s look at the evolving SaaS reseller and integrator market. A bunch of companies have made money through selling, installing, integrating and managing on-premise software, but have now have seen the writing on the wall and are looking at morphing their business models to support SaaS. In this case they still sell, but their services are significantly different. They configure, train and provide "2nd level" support.
The issue is that in the first instance, the customer was ‘theirs’. They held the core engagement and their walk away position was strong. But in a SaaS world (Salesforce.com, or even Microsoft’s hosted exchange product), the SaaS provider holds the customer, they are no longer "owned" by the integrators. So the integrator can do the up-front work, but can easily be disintermediated in the medium to long term. Imagine if Salesforce.com or Xero or another SaaS player decided to increase revenue by building a consulting and training practice…what then for their channel partners?
My counter argument was that in a SaaS world you are on the line every day for great delivery. This includes the channel partner - if you don’t deliver then of course you can lose the customer. There is also a lot of relationship and customer knowledge that comes with the deal AND if you are dumb enough to be a one track pony then of course you are under more risk. What I mean is, if all you do is sell Xero or Salesforce.com and you haven’t thought about expanding your engagement with that customer with other services like change management etc then you created a high-risk situation yourself.
What do you all think?
Is customer ownership still relevant? If so how does it work in a SaaS world? Where do you stand on this? I think its important because a good channel model is going to be increasingly important to SaaS to counter the stagnant growth perceptions that exist.
I posted the other day about the concerns I have for the multitude of Web 2,0 businesses that have no real clue about how, when or from whom they’ll monetise their product.
Mike commented astutely saying that (edited for brevity);
…surely you know that “free” isn’t “free”…When I take SME’s through a “free” service I am very honest that it’s NOT “free”. It’s paid for by advertising which in turn they contribute to by paying for it with their “data” and “attention”.
I think “free” is different to how software/computer stuff has normally been moved around (as a product, like shoes, cars and other physical stuff) but the alternative ways of making $$$ are also occurring. It’s not one or the other, it’s a world of every which way
The trick is to be very clear HOW the money is coming and not be sucked into some sort of hippy concept of “free”
And Mike of course is 100% correct. Sort of…
Third part paid software
Google Apps (for example) IS a monetised service. The fact that the monetisation comes from third party advertiser and not directly from the user does nothing to diminish the fact that it’s a paid for service. Advertisers pay Google in return for the attention of the users of the applications.
So where’s the problem with that? Simple really, the jury is very much out on whether or not online advertising of this kind is in fact effective. Sure there are staggering amounts of money to be made from online advertising, but just imagine what would happen if it was discovered that no one actually looks at online adds. There endeth the viability of Google apps (hell most of Google for that matter) as we know it.
I wonder if users (myself included) really consider this risk when launching into “free software”?
Vaporware
My definition of vaporware is software with no clear monetisation path, that is created on the expectation that major uptake will create significant value and monetisation opportunities for the product. There are two classes of vaporware, both equally invalid;
the “we’ll charge once people have got used to using it” model
the “but we’ve got 100 million eyeballs - that must be worth something” model
Subverting the free model
I know all about freemium. I know all about up-sell. I know all about creating stickiness. Notwithstanding any of that it is very very difficult to change users attitudes once they are used to a free product. Charging for something that was formerly free is a staggeringly hard change to make. Period.
Dollars in eyeballs
I’ve got a theory that the monetisation model based on potential future users is no different to the hysteria that pork belly trading caused. In effect businesses are borrowing against a possible future value of a business, with that future value wholly based on eyeballs.
This model clearly feeds back into the “third party paid software” model as detailed above - only it’s more risky. Not only does it rely on the shaky assumption that online advertising will continue to be worthwhile, lucrative and relevant. But it also tries to second guess the future value of that advertising.
Summary
It’s very simple - bake in a monetisation model with the business model. If there isn’t an obvious one then talk to someone who might be able to help you find one. If they can’t…. think again.
Apparently in a semi off-the-record interview with the New York Times, Apple CEO Steve Jobs disclosed that while he has some health concerns, they are not life threatening.
Then, as if to prove he’s pretty much on usual form, he’s quoted as saying;
This is Steve Jobs, you think I’m an arrogant [expletive] who thinks he’s above the law, and I think you’re a slime bucket who gets most of his facts wrong
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