SaaS adoption statistics and switching costs: The double-edged sword of data
SaaS Economics 101: So far, this series has discussed the economics of SaaS from a vendor’s perspective. But there are other switching costs that must be considered when switching to or adopting new software: adoption and migration costs.
If you have built your SaaS business well, following all of the Top Ten Do’s and Don’ts, then it should be easy for customers to find and buy. However, most businesses require more than just registration data; they need customer information in order to make their product usable.
Once a prospect is sold on the value of the product, data becomes the most significant barrier to adoption. Click To Tweet
SaaS Economics 101: Getting data in and getting data out. If the primary users of your application are people, then getting data in amounts to mouse clicks, typing, spreadsheet uploads, etc., and getting data out (and into the heads of your customers) amounts to learning how to use the application, both individually and organizationally. There may also be a need for other systems to get data in and out of your SaaS, then the switching cost is integration.
Data, like many other things in life, starts out as a barrier to adoption but over time becomes the cost of switching. To make it easier for people to adopt your product or service and more difficult for them to switch away from you is what I call application discovery.
One way to illustrate the difference between enterprise software and consumer-oriented SaaS is through an example. If you were looking for a book on Amazon, it would be easy enough to search and find what you’re looking for.
With most enterprise-oriented applications, there are multiple features that users may not even know about until they’ve already bought into them by buying their product or service upfront. Click To Tweet
The enterprise model of SaaS cost adoption is still available to vendors. The Internet does not take this option away, and some applications may be so inherently complex that it is required in order for them to work correctly.
However, there are ways to build application discovery into the software without increasing license pricing or revenue from high-touch services; if done well with data-driven mass customization built in at every level, managing the process of initial adoption becomes just another example of how successful a company can become through implementing true automation by building easy accessability into their products
