There has never been a more exciting time to be a SaaS enterprise start-up:

  • Plentiful venture capital at great valuations
  • Platforms to build on easily and quickly
  • Growing enterprise acceptance of SaaS
  • Better sales and marketing, R&D and support economics from SaaS

And that is exactly the problem.  In almost every space I work in now from healthcare to e-invoicing to supply chain finance to marketing/sales automation to global payments, there are dozens of SaaS start-ups. For an extreme example, take a look at this graphic of the marketing automation market (which is largely SaaS):

Marketing Automation Market

 

In this market and many others, SaaS start-ups have been coached to position themselves as a market leader in a space they “own”.

The result of these two trends is that enterprise software buyers in many markets are besieged and bewildered by an array of options.

Customers respond to this clutter by asking trusted references, analysts, and consultants for advice.  SaaS vendors need to help too!

Many SaaS vendor sales pitches avoid mentioning competition, so the vendor can appear to “own” a self-defined market.  In most cases, this is a self-defeating, rather than self-defined pitch!  Hoping that your prospect does not know the other vendors in your market is a very risky strategy.  After many pitches, I’m still left wondering “What exactly does that company do?  And how is it different from X, Y, and Z?”

SaaS vendors who:

  • cut through the clutter
  • help clients understand their needs in a clear and concise way and how their needs relate to what vendors say, and
  • honestly position themselves relative to the competition

seize the “trusted advisor” role and have a better chance at making the sale.  It takes honesty, some modesty, and a willingness to sometimes “be the same before being different.”  Ken Stanick of Amazon Business, formerly of Ariba, taught me that last one. (It is less clear where he stole it from.)  Unless you have a real lead in a market, a tiny niche, or fabulous marketing, you may need to have your customer’s existing frame of reference in your positioning and balance what is new about your solution with what is the same.  And I’m not talking about positioning your solution as  “the Uber of X” or “think AirBNB meets XYZ”.   That high-level stuff may work for VC and PE firms, but not for prospects.

If your elevator pitch leaves you “owning a new space”, but leaves the customer not knowing exactly what problem of theirs you solve and where your solution fits relative to everything else that came up in their last google search–you own the wrong space.

I feel like I’m channeling Seth Godin today!

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