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A SaaS Go-To-Market Segmentation Framework

Posted by Graham Lubie on May 10th, 2008 | 0 comments

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While SaaS is a relatively new deployment option (since ~1998), it is still governed by the fundamental rules of B2B marketing: understand your customer (research), make sure that you connect with them (lead gen), and then provide them with a value proposition that they can’t refuse (product positioning). Sort of like the Godfather movie but without the terminal consequences. It’s a terribly summarized overview of B2B marketing, and one that my old marketing professors Kottler and Sawhney would probably raise their eyebrows at, but fundamentally it’s true There are however a number of twists in marketing SaaS that distinguish it from traditional SW sales.

To start with, SaaS is just like installed SW in that there is no one-size-fits-all solution. Different SaaS applications will appeal to different customer demographics. The functional and technical requirements of a 5 person consulting organization are vastly different from those of a $5B bank. For example, the consulting organization probably does not need LDAP integration while the bank will need LDAP (or equivalent) integration into its security infrastructure. The bank will most likely also willing to pay for process refinements and user training as part of a standardized rollout methodology. The Net Net is that any SaaS go-to-market offering needs to be designed for the specific segments that are being targeted.

I have developed the following segmentation framework to analyze and plan a SaaS go-to-market program. Specifically, it is focused on strategic product positioning based on the deployment of the SaaS solution – it does not address any of the tactical marketing / lead generation programs. Also, I am making an assumption that the solution itself is solving a material business problem — if you are not solving a problem and meeting a need, all the positioning in the world is not going to make a difference.

The following images provide a fairly self explanatory overview of the framework.

(1) Defining the Organizational Impact of the SaaS solution:

(2) Defining the Technical Impactof the SaaS solution:

(3) Using the Technical Impact / Organizational Impact structure, here is how some existing SaaS players stackup:

(4) Breaking the segmentation up a bit further, you get Three Tiers of SaaS Go-To-Market Options:

(5) SaaS Go To Market Actions By Tier:

*When it comes to compensation, SaaS sales introduce complexity. How do you compensate the salesperson? On the total contact value? On a per sale value? What if you are in Tier 1 and offer a 30 day free trial? Or Tier 2, a 90 day paid pilot? Or Tier 3, a 1 year subscription with a service based cancellation clause? Lot’s of interesting topics for another post.

So, this post has been a bit more extensive than most, but it does give a good idea of the structure that I have defined and implemented at IQ as part of our segmentation and go to market strategy. This structure works for us and there is a good chance that it is flexible enough to work for you. At the very least, it is a starting point for how to do your own segmentation and frame your own strategy.

A SaaS Go-To-Market Segmentation Framework

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