How to negotiate the long, slow, SaaS ramp of death [video]

We have been running a SaaS product for SMBs for about 4 years now. If you bootstrapping and running on very low revenue like we do, the only option is to keep your costs even lower. We usually have enough money in the bank to pay salaries for next month and a half. The longer we stay in the game, the better our product gets. The better our product gets, the more traction we get via word-of-mouth. Not exactly what PG would call "growth", but enough to keep us in the game. (Our adwords spending is around $500 a month.)

The other way, I have heard that works is hiring sales people. But for that you need to raise at least some amount. And price your product a bit higher too.

we are successful in SMB in our space with a SaaS product line.

- it is a highly regulated industry

- we can prove compliance and prove ongoing compliance efforts

- we can prove better uptime and security then in-house, on premise solutions

we do not dabble in other verticals, all our customer facing personnel is fluent in this industries language.

funnily enough, true success in SMB only happened after success with top20 companies. SMB sales cycles tend to be a lot longer, as budgets are way more constrained. once you have some of the big guys though, SMB starts trusting you.

SMB in US is still easy though, we are now tackling EU and this is really hard. if it's not SAP or some homegrown shit-solution built by the IT chief's nephew, it is deeply suspect.

I know this sounds obvious, but "word of mouth" is massive. It works particularly well when your product is something that other companies are forced to interact with.

So for a [bad] example let's say you offered FTP as a SaaS solution. Let's say your client is "client.com" and you are "ftpsaas.com" when your client buys your services, instead of letting them do "ftp.client.com" you FORCE them to do "ftp.ftpsaas.com."

That way when other companies interact with client.com they also can see that your service ftpsaas.com is involved. This makes you a "known name" within that area, it also often encourages them to check you out to see /why/ client.com thinks you are such a good idea (assuming client.com is someone they trust).

So if you have a single good client you almost feed off of their reputation to build your own.

As I said, this only works with SaaS which requires external parties to connect to you or for you to connect with them. If you offer like accounting services for example the same effect doesn't exist.

SMB is tough because they have a million people looking to nicle and dime them all of the time. Be prepared to quantify your value.

Having no idea what you are doing, I'd say look for vertical niches and get established in there. Look for associations and organziations to target. Examples: School superintendent association, Project Management meetings, working groups in a chamber of commerce type org, etc.

Another angle -- look for non-profit spaces where there may be grant funding opportunities. People need to spend grant money quickly, so word of mouth is key.

Thanks Adriano. (I put the conference together). A good summary of what we try to do at Business of Software. :-)