I assume “The Bulkhead Man” could probably handle a lot of other construction projects around the house: build a deck, hang new cabinets, replace siding, whatever. He could rightly call himself a “contractor” or “handyman.”
But that would be a bad idea.
Then he’d be just another guy in the long list of other “contractors” and “handymen” who advertise in my local paper. His ad would be stuck in with about two dozen others, instead of being the one and only “bulkhead man.”
Companies want solutions for their particular problems
If I needed a new bulkhead, believe me, “The Bulkhead Man” is the guy I’d call.
And I’m probably like most people in that way. Most of the time when we’re looking to fix something, we’re looking for someone with particular expertise, a specialist in delivering just exactly what we need.
How can software-as-a-service (SaaS) companies can take advantage of that logic? One word: Focus.
Focus lets companies build visibility and a reputation as experts in their particular niche. It lets them distinguish themselves from the pack.
When someone searches for solutions like theirs, they rank at the top of the list. When someone sees them at a show or receives an email from the company, they pay attention. “Hey, these folks have something that’s exactly what I’m looking for!”
Focus on a problem, a customer, a geography, something
A SaaS company can focus on a particular problem or task. For example, “our solution is specifically designed to help eCommerce companies more quickly and accurately update the inventory they present online.”
Or it can claim that its solution is developed for a particular kind of customer, as in “this product is built for companies with teams of 5-40 customer support reps.”
A company could even claim a specific geographic specialty. For example, “our solution is designed to help public school administrators meet the unique reporting requirements of the State of Florida.”
If you think about it carefully, you may find other ways to identify your particular market segment. Contact me if you need help.
Focus isn’t easy
Believe me, I know it’s difficult to narrow in on a specialty and there’s lots of temptation to present yourself as “we can do anything for anybody.”
I talk with a lot of companies that are rightly very proud of what they’ve built, all the things it can do, and all the markets it can serve. “Yes, it solves that one problem well… but wait. It does so much more.”
My advice in most cases: focus. Or at least take on a carefully selected handful of well-defined segments.
Focus is especially important if you’re competing in an established market with a few 800-lb gorillas. In the market for CRM solutions, for example, if you get head-to-head with companies like salesforce.com, they’ll easily out-spend you with their vast marketing and sales budget. You’ll be buried.
Focus is essential to the SaaS business model
The key to survival in the SaaS world is getting your money’s worth from what you spend on customer acquisition. (See “Marketing Spend; How Much is Enough?”) Once you’ve spent money on developing your product, sales and marketing expenses are likely to be among your largest on-going expenses. For your business to thrive, the return on that spending – the long-term customer value – must exceed the acquisition costs.
With focus, a company can distinguish itself from competitors, make itself easier to find, attract more leads, and close more business.
What does that means in terms of the “customer acquisition cost (CAC)/ long term customer value” (LCV) formula? If the company spends $1 on sales and marketing, it’s got a better chance at earning back much more than that in long-term customer value.
Don’t just be another company that does everything that everybody else does. Be the one and only “bulkhead man.”
This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License. Images obtained via iCLIPART.com.