Start up business challenges of ISVs when moving to the cloud

Why customers are more then just a buyer persona. In this article we will discuss why it is important to build a sustainable relationship with your customers when building and delivering your solution through the Cloud.

 

 Deni Harrewijn, Intercept

We earlier discussed the five transformation areas for software driven companies: Strategy, Financial, Organizational, Go to Market and Technology. In addition to building solutions and/or services in the Cloud we are zooming in on how to build a sustainable relationship with your customers when building your solutions and/or services in the Cloud. Many ISVs are asking us how we are able to build international business and start with our geo-expansion as we are a small company in the Netherlands. Let us share our best practices with you. 

In every company, big or small, multinational or regional, a team of dedicated people should be focusing on getting feedback from their customers. By building a strong relation with your customers you will be able to sell more, create more value, exceed customer satisfaction and become irreplaceable as primary supplier. 

Why it is important to know your customers. By knowing your customers we will prevent the top failures for startups and therefor let’s understand and focus on: market need, competition, pricing, user friendly product, marketing and the timing of the product release. In this article we will discuss why it is important to build a sustainable relationship with your customers when building and delivering your solution through the Cloud. 

A quick checklist, if you are missing one of the following checkboxes, please use this article as a beginner’s guide to build a better customer relationship.

  • I am or will be building a service or solution in the Cloud;
  • I know who I am targeting, I know my customers;
  • I know my focus industries and market / I know their challenges and the market trends;
  • I have validated our products and services and is ready to scale through the Cloud;
  • I have done a competition analysis and created a value proposition;
  • I have multiple business models to adopt the different markets and industries;
  • We are ready to accelerate our sales.

Market need

You can have great technology, great reputation, great expertise, but if you are missing the right business model and value proposition you will miss the opportunity to scale your solution in the market. The market will simply not be attracted by the solution, understand your value proposition or what problem it actually solves. You can create a business model to engage with an existing market or you can build your own market, either way you will need the input and feedback from your customers to create the correct value proposition and business model. 

Must do: read Business Model Canvas

Partner in Crime: DigiQuery 
 

Competition

Despite companies shouldn’t pay attention to the competition when building a Cloud solution or service, we need to keep in mind an idea gets hot when it has been validated on the market. Building in the Cloud means quick traction and quick competition. While obsessing the competition is not healthy, ignoring them is good for 20% of the startup failures. The good news is here, the average five-year survival rate for new businesses is around 50%. The better we understand our competition the better we can serve and stay the primary supplier. 

Must do: do a market research and include competitors, similar products and feature comparison and create a battle card 

Partner in crime: Merluno

 

Pricing

Price is the value that is put to a product or service. It exists firstly out of costs on building the product, validation, research, resources, platform independencies, etc., secondly out of market conditions, competitor actions, marketing and sales activities, etc. and thirdly the margin. The difficulty with pricing is the value perception to bring in new customer versus covering all costs, not to mention the many different strategies. If we are able to understand the buy patterns and willingness to pay, we can define the right price and start lowering the costs. 

Must do: look into the different pricing strategies and based on the value proposition start a research with existing customers 

Partner in Crime: Behavioural Strategie

 

User friendly product

A user friendly product leads towards a better experience, satisfaction and will support the overall relationship between the software vendor and customer. I believe there are 4 main topics to keep in mind here: 

1. Reliability, do the requirements meet the expectations.
2. Interface, the interface should be simple, functional and easy to understand
3. Functionalities, the functionalities should solve the initial stated problems
4. Service and quality, will lead to a higher customer satisfaction and better relationship 

Must do: do an user friendly study amongst your users 
Partner in Crime:
 Betabit

 

Marketing

Marketing will satisfy existing customers and find new customers. By knowing your target audience you will be able to get their attention, get them interested, create a desire and create an action. The message should always be consistent and word should meet promise. By understanding the market trends, customer’s challenges and needs, you can adjust the message to get the right traction. Marketing is most of the time subject to other investments. Especially when it comes to startups and SMB business companies should heavily invest in marketing resources to find customer and support sales in delivering the right message and content. 

Must do: build enough collateral such as: best practices, customer references, quotes about your added value, white papers 

Partner in crime: ask support from your local marketing agency 
 

Timing of product release

Timing is crucial when it comes to product releases. If you plan to release a product too early, users may find it too poor on quality or functionality and the first impression will probably be negative. Whereas a late product release, could lead to missing the window of opportunity in the market. By including your users and customers in the development and use them as test users before releasing a product, you will become a trusted developer and able to address the features and services in regards to expectations. 

Partner in crime: Betabit

 

Interested to learn more?

In the upcoming period we are going to publish more articles about common startup business challenges of ISVs. Do you don’t want to miss it? Subscribe here to our Intercept Insights.

We also host a Go To Market Webinar for ISVs on Monday 25th of May together with Microsoft. So are you considering moving your existing software/application to a cloud model? And are you wondering what different transformation areas you will go through and what the positive impact will be on your business and customers? Subscribe here to this free webinar.