A few months ago, my wife and I were watching a TV series about the food industry and how it has changed dramatically over the last thirty years. Integral to this programme was the way that the industry revolutionised its marketing and the way it updated its propositions. Since then, I’ve been mulling over some of the ideas that they talked about in the series and how these concepts might be applied in other places, especially in accountancy and in SaaS publishing. There were some very good ideas (which we’ll use later in the article) and there was one particularly bad one.
The bad idea was all about the development of ‘low fat’ food. The difficulty with this is that consumers were confused – they thought that ‘low fat’ meant ‘low calorie’ so they went out and bought the products thinking that they would help them lose weight. Actually, these products became extremely popular and many food companies raced to produce ‘low fat’ versions of their normal range. However, many products actually contained a greater number of calories and consumers didn’t get the result they wanted; it was actually exactly the opposite.
Although this was a commercial success for the food industry in short run, we think that the food companies should have been more proactive in ensuring that consumers didn’t mistakenly use their products. At some point, the consumer would realise their assumption wasn’t actually correct and would suddenly reverse their buying behaviour – which would be a commercial disaster for the companies. Misleading customers – even unwittingly – is never a good course of action for a company.
The good things
So, back to the good things that were in the documentary. What were the great concepts that the food industry used that could be easily adopted in the SaaS publishing industry? Well, it isn’t just the food industry but it is the fast food industry that has these useful, successful concepts that can be adopted. Probably not the first choice for software publishers and professional service industry but – here’s the rub – good ideas can be found everywhere.
There are three good ideas that the fast food industry does very well:
What we are talking about here is ‘meal deals’. How does this convert into something that is useful for SaaS publishing? This goes back to one of the earlier ideas of ARPU (average revenue per user) and what the fast food industry have done really well is to increase the total spend whilst not compromising their margin too much: it’s much better to get a £5 per month spend on a 40% margin than a £3 per month spend on a 50% margin. The whole point is to maximise revenues and bundling enables this. It also reduces the marketing overhead of cross selling other products to your installed base if they already purchased. Getting your customers to buy a greater number of services together early in the process is an excellent way of building revenue without taking too much of a profit hit.
2. Going large
This is all about providing the customer with more value at a small perceived cost. There should be lots of ways that this can be achieved – be that free trials of other services, reduced prices or waiving of set up fees (you are extremely lucky if you can still get away with these). The cost to you – the publisher – is actually minimal, but you are providing real value to the customers and making them feel that you have done something special for them. Other things that you can do is work with some of your suppliers to provide trials to other services – if you are a finance provider then you might want to provide a trial to a BACS service, for example. What you are doing here is providing the customer with a better experience. Timing these extras is quite important too – especially if you are focused on extending the average length of stay.
3. Focusing on a target market
One of the things that you quickly notice if you visit a fast food operation (especially if you take your 7-year-old child to a well known burger restaurant which is found across the globe) is that these operations know their target market (small children) very well and focus a compelling solution on them (boxed Happy Meals). This solution meets the customer’s every requirement: reasonably small portion of a number of foods, a toy all contained in their own convenient box. Everything the child wants is there – and, in my experience, it is the toy that is often most popular – which makes it a simple, quick purchase for the decision maker. How about treating our service propositions in a similar way? If we were able to concentrate down what the customer actually wanted and provided that in a neat, packaged way, priced correctly, then they would purchase quickly and in sufficient volume to be a commercial success? I think too many of us make things far too complicated so we actually delay buying decisions.
We hope that gives a summary of our thoughts on how to steal some good ideas when you are a SaaS publisher.