Selling SaaS: Are You the First Solution or Displacing an Incumbent?

When approaching a new potential customer for Selling SaaS, every SaaS founder faces the same question — is their prospect operating in the land of spreadsheets or do they have an existing platform that is partially addressing their business problems?The answer to that question will determine how you approach them and what type of solution you bring to the table.In fact, getting to that answer should be a critical component of your customer discovery process that informs how you target, position and ultimately succeed in your market. You’re either the first solution provider or your replacing someone who has previously been in your spot. Let’s explore what both scenarios mean for you and your potential customer. Selling SaaS: Are You the First Solution or Displacing an Incumbent?

 

Providing a First Solution

There are a lot of advantages that come with being the first SaaS provider to address a customer’s problem when Selling SaaS. The pros of this approach include:

 

You can learn more.

You’ve always wanted to be a therapist, right? Well, here you go. You have someone who wants to be heard and understood. They’re hurting and need to get it out.

• Them: “[Problem X] is driving me crazy. Can you help me please?”
• You: “Why don’t you tell me more about what’s going on?”

This is a recipe for connecting with your prospect through hearing them out and learning the position you can take to get your business. They may tell you things you’ve never heard before. You don’t necessarily need to have everything covered, this process is all about being empathetic and building trust that you are in their corner and can help them get on the right path.

 

You can then teach more.

You: “OK, I now have a good sense for the challenges you’re facing and how we may be able to overcome them and help you be more productive in [role to be served]. In listening to what you’ve conveyed, I can tell you that you’re not alone. Our customers have come to us with the same set of problems time and time again, and we’ve helped them be successful [in these ways] using [your product].” Bingo — You’ve got a stew going!

 

Ultimately, you can deliver less and still WOW.

Assuming you present a solution that’s better than what your customer has come up with on her own and the price matches the perceived value, you can get in the door with something that doesn’t necessarily have to knock the cover off the ball. You product just needs to be more enjoyable to work with and more reliable to reduce angst, but that should be a relatively low bar to overcome given what you’re replacing. The implementation should be simple, hopefully something encompassing data swapping to your product (which you can help with) and setting up of initial workflows, as necessary. Then make sure you onboard and follow-up with them for success. You and your team need to supervise your new customers for the first 30 days and build an active advocate who’s delighted in the decision she’s made to partner with you. However, it’s not always sunshine and roses when you’re the first one to a given issue with Selling SaaS. The cons of this approach include:

 

Having to “sell the problem.”

Sure, your potential customer may feel some pain, but it’s on you to really prove to them that it’s a real problem. You have to paint a picture of what’s coming if they don’t find a solution, along with what it will look like once the problem is solved and life gets back to normal. This person or organization has likely been operating in a mode of “this sucks but it’s not unbearable and I can handle it.” In order to take the step to stop just handling it, your solution has to be markedly better and provide enough meaningful value to justify not only the cost but also the commitment to doing things a new way. Remember, we’re all creatures of habit, even bad habits, so we often have to be led to adopting new ones.

 

You have to be time-aligned.

There comes a time when we all go in search of something better. Maybe the spreadsheet broke for the umpteenth time or your boss said, once again, “why are you spending so much time on this?” Or it could be a simple as finally getting some extra budget. Any number of things can happen to make the time “right” for your customer to go on the hunt for a new solution like yours when Selling SaaS. This is the time of purchasing motivation for your customer, and you need to be ready to meet them where they are, which means…

 

You have to be found.

With a first solution offering, you’re relying heavily on a proactive solution seeker who is motivated to actively seek you out. This means you must be readily discoverable online, which, in turn, means you need to invest time into search engine optimization (SEO), outreach, and potentially money into search engine marketing (SEM). Generating SEO value to rank organically starts with building a content-driven foundation that will stake your digital presence. This is hard work that requires consistent effort but generally does not provide a quick shot of traffic. It is rather a long-term investment. Depending upon the competitiveness of your space and your own capital resources, you may also decide to purchase traffic through SEM. This includes buying the keywords you need to rank for. This can be a costly endeavor with mixed results, but it may be necessary to get you in front of your solution seeker. It’s a true “is the juice worth the squeeze?” evaluation where you need to understand your funnel economics.One more, you may also have to get a team on board to actually adopt your product. This can be very challenging to ramp up if you have a product that requires organizational buy-in rather than something more lightweight that can service one or a handful of users at a low cost.

 

Displacing an Incumbent Solution

On the flipside, you can also take the approach of looking at a customer’s existing solution and replacing it with something better when Selling SaaS. The pros of this include:

 

Your customers are easier to find.

Hopefully, you know both your competitive set and your prospects. If you don’t know these things, do your homework! In a displacement scenario, your prospects are those currently using one of your competitors’ products. This is not a shotgun approach, it’s targeted, ideal customer profile (ICP) outreach. So, reach out and have conversations. Find out who they’re working with first through research (using tools such as builtwith.com, scanning your competitors’ websites, etc) and then give them a call. Find out how you can displace your competitor — what are the three things you do better? Discover from them what they’re not exactly satisfied with when their current contract ends and what it may take to win their business.Lastly, ask for the opportunity to prove to them that you can make their life better, somehow, some way. It’s much easier to win when you know what you’re competing against and can do better.

 

You can differentiate more clearly.

Once you’ve done your discovery research, you can craft a differentiation pitch. With an existing solution in place, you have the opportunity to position yourself against it, which should be easier than positioning yourself against nothing. What up value props?! This is your opportunity to show how you’re better, so get that demo in order. Get anonymized data and load it into your system. Create a personalized environment. Get on a Zoom or get the in-person meeting and show why you’re worth making the change.

 

You can charge more.

It’s always good to approach a customer that’s already used to paying for a solution. You know there’s budget there. In fact, there’s a cost savings opportunity, where, believe it or not, you can still make more money than when replacing nothing. When a customer is not used to paying your value has to be 10x to get them to pull the trigger. When they’re already paying but are dissatisfied, you can truly prove ROI and justify your price point. Don’t be shy. You don’t have to compete solely on price when you’re truly improving their situation.But, of course, as will coming in as the first solution, replacing an incumbent has its cons as well, including:

 

Retraining.

When you’re replacing an incumbent solution, you may have to work with a poorly trained user population that you’ll need to rewire. You’re creating change, unwinding muscle memory and bucking their status quo. They may think they want this, but that does not mean it’s easy for anyone to actually accomplish. Maybe you’ve heard: “But we’re able to do it this way in [current product].” Or: “My team really likes [some bespoke feature you’ve decided not to pursue for 24 months].” You’ll have to navigate the land of incumbency and make choices that work for your business at large, not necessarily for any particular customer.

 

Competition.

When displacing, you will face competition on two fronts. Externally, you may be part of an RFP process where you have to come out on top. Internally, you may be dealing with competing factions within your customer’s organization. Different users likely have different motivations, different levels of influence and different problems. In a world of multi-front competition, sales needs to navigate the external competition while customer success works to create commonalities within your prospect’s organization.It’s a balancing act.

 

Latent apathy.

Maybe you’ve gotten to the finish line and things stall out. That’s frustrating. This seemed locked and loaded last week. This is when you ask your prospect if they’re really committed to making a change and what’s holding them back. You will have to fight a wholly different form of FOMO — “fear of moving on.” You have to drive the transition or else your opportunity that you’ve invested in will die on the vine. Do the heavy lifting, provide assurances, go to their office and sit down to scope out the transition plan. Do whatever it takes to close.Whatever the case, when selling your product you’re going to be replacing something — either a failing process or a failing solution.Your customer has been doing things their own way before you; otherwise, they wouldn’t need you. So, before you you going dumping money into your marketing and jumping into your sales pitch, have conversations to figure out where they’re coming from and how you need to approach them. Without doing so, you’ll be uninformed and most likely someone else will take your place in line.Ask yourself: “Have I done the work to determine what type of customer I’m going after for Selling SaaS?”