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Internet software executive and popular cloud blogger at Chaotic Flow, B2B Marketing Strategy, and Cloud Ave, Joel is well known for his work in SaaS business models, sales and marketing strategy, and financial metrics. Professionally, he has managed global sales and marketing organizations serving over 50 countries, including local offices in the United States, United Kingdom, Germany, Israel, and India. He holds degrees in physics from Caltech and Cornell and received his MBA from the University of Chicago.
Joel York is currently VP Marketing at Meltwater Group and Principal at the Internet startup consulting firm affinitos.

9 responses to “SaaS Startup Strategy – Three SaaS Sales Models”

  1. Rushabh Mehta

    Dear Joel,

    Great article, exactly the thoughts we are going through. You can say we are in the “graveyard” at the moment. We started from the “enterprise” quadrant and moved into the “graveyard” now we are moving into the self-service zone. Unfortunately our team who was hired when we were in “enterprise” mode have trouble adjusting to their new roles. Its a really tough job being in this situation!

    – Rushabh

    ERPNext.com

  2. Sumeet

    Great article Joel!! This helped us re-visit and refine our customer acquisition strategy.

    I would add that the ARR is not just a matter of price but as ARR=Price x Users (or whatever other metric). Given that selling and support costs do not move up linearly with a larger user base and “complexity reduction” will happen over a time, there really may not be much of “choice” of the segment to focus on, at least in the short term.

    Keep your insights flowing :-)

    – Sumeet @ EmployWise

  3. Off By One #17. Todays roundup of Startup and Micro ISV links

    [...] SaaS Startup Strategy – Three SaaS Sales Models http://www.cloudave.com/8079/saas-startup-strategy-%E2%80%93-three-saas-sales-models/ [...]

  4. Jan

    Great article, and the graphs actually make sense :)

  5. Norman Evans

    Thanks for this, I’ll be using it with some of my incubator clients. I find that giving a budding start-up business an early “reality check” is helpful to setting expectations and your article will be perfect.

    Of course, overlaid on any business model is the actual behavior pattern of the entrepreneur. His behaviors can be the breaking or the making of the enterprise. What upsets me (really!) is that I see the same behaviors over and over. They doom so many promising businesses because entrepreneurs won’t learn to change their behaviors in order to preserve their business start-up.

  6. Craig LaFrance

    It is said that Winston Churchill once had a rule – no matter how complex the operation if a subordinate could not net out a plan on one page he/she wasn’t ready.

    Having spent a lot of time in enterprise sales, go-to-market messaging and more recently selling SaaS/Cloud solutions I can boil it down to three things to start with. 1) Visualize the value – if you can’t articulate the value you’re adding to a customer’s success with 95% accuracy you’re in trouble to start. 2) Visualize the journey to Value – never leave your prospects guessing how they’re going to get to #3 3) Delivery of Value – never leave your prospects guessing on the actual delivery of value.

    Obviously there’s more to it, but VALUE has to be clear, especially today. The value messaging around SaaS and “cloud” can be incredibly compelling, even against traditional headwinds.

  7. David Skok

    Joel, yet another very good article. I agree with your points.

    I have a complementary post on the impact of Sales Complexity on cost of customer acquisition. It explores the relative expenses of these three sales models, and discusses what things in the product cause sales complexity, and how these might be addressed.

    That post can be found here if your readers are interested:
    http://www.forentrepreneurs.com/sales-complexity/

  8. Stratégie des startup SaaS | Business Intelligence Matters

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  9. Jim Idelson

    Great, thought-provoking article. But, I’d like to add a different perspective. Our SaaS startup is evolving differently. We’ve gone directly at the Enterprise space, with a powerful, high-end solution. In terms most sales guys understand, we’ve gone Elephant hunting; and we’ve brought in a couple. While we pursue more Elephants, we’re also starting the process of opening up the less-complex Transactional and Self-service market segments.

    What are the Pro’s and Con’s of our approach?

    On the Con side
    – It took a long time to build an Enterprise-class service
    – It took a lot of time and energy to bring in a couple of Elephants
    – It takes a lot of time and energy to support the Elephants
    – We’ve got some work to do to make our service ‘right’ for the less complex market segments

    On the Pro side
    – Our Value Proposition is magnified in Elephant companies. They need our stuff badly. Their motivation to work with us is strong.
    – Elephants have taught us what parts of our solution are really important, and which are not.
    – Elephants have kept us focused
    – Elephants provide the market-opening validation and references we need for more Elephants and other market segments (and investors)
    – Elephants write bigger checks
    – We think it’s proving easier to take our technology from Enterprise down to Self-Service than going in the other direction

    Our goal, of course, it to get to the left side of the chart with profitable offerings from low to high price – while minimizing complexity (and our cost model) across the whole price/value range.

    Jim Idelson
    CEO and Founder
    DesigNET International
    http://www.designet.com blog.designet.com
    SMART SaaS Analytics and Reporting for Enterprise Videoconferencing and Telepresence