By Ray Sidney-Smith, W3 Consulting
The SaaS business model is broken.
Let’s face it — the SaaS distribution channel is growing slower than we had all hoped.
Consultants trying to resell SaaS to small business clients are struggling to do so with success. Vendors looking to capitalize on the power of consultancies as resellers are stuck between a rock and a hard place: Relinquish ownership of the end user or risk losing them altogether. This is the paradox Sunir Shah, CEO of the Cloud Software Association, calls the SaaS love triangle.
“In order for SaaS to scale, we have to get to a place where vendors can leverage distribution networks. Focusing on direct sales works in the short term, but in the long term it’s a shortsighted growth strategy. No company can phone every potential customer in North America, no matter how big their sales team is,” says Shah.
As a reseller of GoDaddy, Hootsuite, G Suite, and Evernote with a keen understanding of how cloud software is sold, resold, promoted, and managed on a daily basis, it’s a challenge I face daily. And, while my experience reselling software is quite varied, I have uncovered a few common roadblocks.
Capacity To Coordinate The Vendor Relationship
I spend my days setting up and managing cloud software subscriptions on my customers’ behalf which means I live inside the push-pull relationship between a SaaS manufacturer and reseller. I am hammered daily with calls from vendors wanting to add me to their referral/reseller program. What they don’t understand is I am not inclined to take on a new vendor unless my customers’ needs demand it. Why? Because the time needed to manage the vendor relationship is simply too taxing.
Because my clients have limited capacity to coordinate vendors, they rely on our consultancy to manage billing and subscriptions, as well as provide in-depth training on each platform. I actually have a full-time employee that spends between 70 and 80 percent of her time on these administrative tasks alone. Because of the high overhead of managing each SaaS subscription and the relatively low cost of SaaS itself, a poor commission structure means those reseller relationships are rarely worthwhile.
Uncertainty Surrounding Customer Communication And Billing
Everyone wants to own the customer and that causes tension between vendors and resellers. From the customers’ perspective, they have chosen to work with a consultant for one of two reasons: They either don’t have the experience or knowledge to deal with SaaS vendors, or they find the administrative overhead of setting up and managing SaaS accounts to be too heavy a burden.
Our clients are small business owners, often baby boomers, who lack the tech expertise SaaS vendors consider fundamental. And because they can’t provide the high level of service and training our clients require, customer service interactions between the vendor and end user often turn sour.
Because these vendors don’t want to deal with the lack of tech experience common among our clients, we work to fill that gap with training — a position underscoring the importance of retaining the customer relationship. Right now there just isn’t a seamless way to integrate both the SaaS vendor and the reseller into a unified customer experience.
Lack Of Uniformity In The Reseller Experience
SaaS vendors haven’t figured out which reseller experience works for best for them. My experiences reselling GoDaddy, Hootsuite, G Suite, and Evernote are each unique. From the perspective of the consultancy, the white labeling and customization GoDaddy allows is great. We have the front end ability to build our own interface and wordpress installation and can connect to the reseller API, ultimately manifesting in a front end environment that works for us.
Of course there are more straightforward referral programs, such as the one that Hootsuite offers, that also work well. Although, as previously mentioned, the idea of handing off our client to a vendor seems odd and doesn’t always prove fruitful.
I have heard about the reseller program Infusionsoft offers, which sounds ideal. They made a drastic change to focus on partner success. New customers are onboarded through partners, full stop. They don’t do it on their own anymore — a great example of a company aware of where their services should begin and end with regard to providing a great experience for their end users. Having an intermediary place where people like me can interact and engage with end users means tech support receives fewer inquiries and end users get the guidance they need.
Communication Is Key To Reseller Success
If there is one thing vendors should focus on when looking to improve their reseller experience, it’s communication. As a partner, if I want to contact a vendor about a customer issue, I usually have to reach out to an impersonal corporate email address, cross my fingers, and hope someone responds. If a vendor partner is reaching out to request an interaction to make their partnership more efficient, it will always be to benefit the end user, which is in the vendor’s best interest.
Bettering the reseller experience in the above areas will only increase profitability in the long run for SaaS companies. It’s worth the investment.
About The Author
Ray Sidney-Smith is the President of W3 Consulting, Inc., a consultancy providing small businesses with practical approaches to business development and management/operations using Web, mobile, social and digital technologies. As a Digital Business Strategist, Google Small Business Advisor, Evernote Certified Consultant, and Hootsuite Global Brand Ambassador, Ray is hired or invited by economic development authorities, chambers of commerce, small business development centers, convention and visitors associations, and small business advocacy & support organizations to speak to SMB audiences and conduct strategy sessions with small business owners on a small business management, Web, Mobile & Social Media marketing topics.