You’d think that by now nearly everyone would be sold on the idea of SaaS, cloud services, and the power and flexibility of a subscription service to meet their needs.
Unfortunately, not everyone is convinced that SaaS is a legitimate model for software usage and purchase.
I’m going to go through their main objections one by one. What you need to know at the outset is that many B2B decision makers view cloud solutions with a heavy dose of skepticism. As many as 49% of companies are concerned about data and the security of their information in a cloud context.
Let me set the stage for what you’re about to read.
- In this article, I’m going to discuss some of the main objections to SaaS. I’m referring primarily to B2B SaaS that have recurring subscription models. You can derive value from this article regardless of your particular type of SaaS.
- Within the discussion of each objection, I provide a summary of how to overcome the particular objection.
- At the close of the article, I provide a general view of overcoming these objections.
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Your ultimate takeaway from this article is this: You will have the knowledge that you need to empower your SaaS sales regardless of the objections, and to improve your revenue.
Let’s get started. Here are the objections.
1. It’s too expensive.
Cost is the oldest objection in the book. The problem is, in the case of SaaS, such an objection doesn’t hold up under scrutiny.
Are some SaaS businesses overcharging for their product? Probably, yeah. But is the SaaS industry the realm of price-gouging, over-reaching, greedy startup monsters? Um. No.
Any budget-sensitive executive will be averse to needlessly spending more money. Adroit buyers, however, understand that every expenditure should be a means of making a profit or reducing other costs.
One vice president complains, “Software as a service is too expensive.” How does he validate his complaint? He cites conversations with business leaders in which they are charged for converting to cloud models, and concerned about growing costs as they add additional layers of SaaS and functionality to their organization.
Other potential buyers have heard that “SaaS pricing is a black art,” and that you should raise your price ten times simply in order to multiply your revenue. Such articles snidely comment, “pricing is not primarily about math,” and recommend less-than-forthright pricing structures.
This kind of careless blather does a disservice to strategically-priced SaaS companies who are truly validating their price with a quality product. Potential customers of your SaaS that do read this kind of information are scared — believing the myth that all SaaS is overpriced.
The truth is, SaaS saves companies money. SaaS implementation has skyrocketed over the past five years, according to data from Gartner.com. 77% of businesses plan to increase SaaS spending. Most businesses are taking on SaaS as new deployments, and many are upgrading their SaaS approach. As legacy applications falter, businesses are rushing to get ahead of the curve by implementing SaaS applications.
Why? Because they need to cut costs, save money, increase efficiency, and grow their revenue!
David Card, VP at GigaOM, put it like this:
This wave of cloud computing that’s revenue and new-business driven is good news for long-suffering IT execs. If they can offload tedious but necessary cost-center functions, and refocus resources on cloud-driven new business, they might be able to retake their seat at the C-table.”
The three main drivers for SaaS adoption are agility, scalability, and cost.
Did you get that? Cost!
SaaS is a cost-saving measure! With lower cost of entry, time-saving advantages, and pay-as-you-go models, it simply makes financial sense. Furthermore, the SaaS business takes on the cost of upgrades, uptime, security, and hosting, allowing the customer a hands-off way to manage multiple cost-intensive activities.
As Gartner discovered in a survey, “overall cost reduction continues to dominate as the main reason for investment” in SaaS.
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2. I don’t want to get stuck in a subscription
Some people are plain skittish about subscription anything. Maybe they’ve had a bad experience with trying to cut a cable subscription. Who knows? Whatever the case, they’re hesitant to commit to a month-after-month payment model.
I argue that recurring billing is the way to go for any SaaS company, so don’t back down on that point. To allay recurring billing, you may have to provide guarantees and the assurance that a customer can discontinue the service at any point.
It should be easy for customers to get out of their subscription, and they should have full knowledge that their participation is as flexible as they want it to be.
3. I’m looking for software that will be able to adapt to our growing needs.
This is the scalability question. Does SaaS allow a customer to grow? Won’t they grow out of it eventually, and work up to some big boy solution?
Somehow, buyers have the idea that SaaS is for little companies, front-office operations, or dinky CRMs that won’t be able to manage their vast needs.
Thankfully, SaaS is as big as you want it to be. KlugoGroup makes the point that buyers, regardless of size, should choose SaaS. In fact, SaaS is especially encouraged “if you need a business software solution that grows as you need it.”
What do the big companies do with their big data? How do they handle their massive needs? They use SaaS. How many of them? Of the top 50 Fortune 500 companies, 47 of them are using SaaS for their needs.
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4. I’m concerned about security.
If there were ever an objection that seemed valid, this would be the one.
With the tsunami of data breaches over the past few months, businesses and consumers have every reason to view anything in the “cloud” as inherently untrustworthy and prone to leaks, breaches, hacks, and all manner of public availability. One GigaOM blog post boldly declares “Why I don’t trust the cloud,” and forthwith lists all the reasons to be very afraid.
Thawte reports, “most Americans don’t trust cloud security.” According to Halon’s 2014 Security Survey, the percentage of skeptics is as high as 79%. But what about knowledgeable business leaders who read the data and see the evidence? Again, the picture is bleak: 86% don’t trust sensitive information to the cloud, and 88% think that their data could be “lost, corrupted, or accessed by unauthorized individuals.”
In the face of conflicting feelings, there is still a headlong rush to adopt SaaS solutions that that rely on the cloud. Here’s why.
For business owners who experience cloud-based SaaS solutions, the story is much different. They have learned to trust the cloud. 94% of businesses surveyed by Halon reported that they “have security benefits they didn’t previously with on-premises technology, including up-to-date systems, up-to-date antivirus and spam e-mail management.”
When users eventually understand the advanced layers of security that are in place for a given SaaS, they tend to reverse their judgments and agree that uptake of the SaaS is more beneficial from the security front.
Those who are informed about security protocols are aware that “having software delivered through the web can actually be more secure.” In the case of your SaaS, it’s important not just to declare your security, but to prove it through complying to audits, using data centers, encrypting data, and applying all necessary layers of security.
If cloud security is a concern, then contrast this with the security level of the company itself. I’ll allow Handshake to explain:
While some IT people worry about security outside of the enterprise walls, the likely truth is that the vendor has a much higher level of security than the enterprise itself would provide. Many will have redundant instances in very secure data centers in multiple geographies. Also, the data is being automatically backed up by the vendor, providing additional security and peace of mind. Because of the data center hosting, you’re getting the added benefit of at least some disaster recovery.
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5. I want to be able to control and customize the functionality of the software.
According to the SearchCloudApplications, “customization is a major concern for companies with specific needs.”
Customization is part of many SaaS packages. NetSuite’s CEO Zach Nelson is reported as saying that customization is the key to the new era of SaaS providers.
In NetSuite’s situation, Nelson explains, “Our customers are incredibly entrepreneurial, and that is what drives innovation. They want to be able to adapt the software to suit their particular needs, and that is what we offer in a SaaS form.”
Handshake.com explains the customization approach of SaaS:
Most SaaS apps are designed to support some amount of customization for the way you do business. SaaS vendors create APIs to allow connections not only to internal applications like ERPs or CRMs but also to other SaaS providers.
One SaaS site explains, “The primary enabler of mass customization is the elimination of setup costs.” SearchCloudApplications explains, “customization used to be an issue, but most Software as a Service (SaaS) vendors have figured out ways to enable complete customization.”
Today’s SaaS is or should be customizable. Customers do have unique needs, situations, and contexts. Few SaaS is a one-size-fits-all solution for any given company in any given context. Make sure that your SaaS has some level of flexibility and customization in order to cater to the specific needs of your target customers.
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How do you respond to these objections?
If you are actively responding to these types of objections in sales conversations, you’re doing it wrong.
One of the fundamental features of today’s consumers is that they research before they buy. If they are researching your product, they should know each of these things before they ever get on the phone with you.
Enter the power of content. It behooves every SaaS to use their content as the most powerful sales member on their team. In the traditional sales funnel, sales people were tasked with the onerous burden of teaching a customer about the advantages and features of the product under consideration.
In the contemporary, streamlined SaaS sales model, that learning happens before a contact form hits your CRM, before you get a phone call, and before you ever set foot in a presentation meeting.
Take a look at the funnel above, designed by Steve Patrizi head of partner marketing at Pinterest. Steve argues that the leads coming into sales are qualified, aware, and knowledgeable. Not only do they know about the right solution in general, but about your product in particular.
According to Patrizi’s research, B2B buyers are as much as 70% through the decision-making process by the time they talk to a sales rep. What tools are marketers using to close sales so effortlessly?
It’s content. Many of the most successful SaaS produce content with as much intensity and ability as they produce killer software. Marketing has fallen into the realm of content, leaving little need for a massive sales team with high-power deal closers.
What does this content look like in practice? One SaaS company, KluguGroup, created this article: “MythBuster: SaaS is Too Expensive.” Though I might quibble with some details of their content marketing approach, their intent is spot-on. They are dealing with customer objections early in the process, and stating plainly, “the benefits of SaaS will outweigh the cost.”
Another company, HookFeed, explains how and why squashing objections is possible using content.
Content is your ally. Use it to defeat objections, and to bring users into your sales funnel.
One of the best assessments of the SaaS industry comes from Gartner’s research vice president Charles Eschinger. In the face of high levels of research and data gathering, Eschinger said this:
Initial concerns about security, response time and service availability have diminished for many organizations as SaaS business and computing models have matured, and adoption has become more widespread.
We’re out of SaaS’s awkward adolescent years. Do your customers know that? Maybe not. It’s up to you to engage in a content marketing strategy to inform them.