SAN FRANCISCO, January 15, 2013 — “We’re the best kept secret in e-commerce,” says Carl Theobald, CEO of Avangate. “The tough part for most solution vendors is how to make money. Avangate offers an e-commerce platform that empowers software and Software-as-a-Service (SaaS) companies to be competitive and scalable by helping them sell more globally.”
No matter what transition phase a software business is in—legacy-only, partial-SaaS, or full-SaaS—vendors need to reassess their business model and determine how to target the right customers at the right time with the right e-commerce platform.
Theobald is banking on the online software sales industry that is a $55 billion global market propelled by the SaaS and subscription approach to distribution. Below, he discusses how the software industry is not dying, but rather, it needs a different approach toward distribution and sales in the age of cloud computing.
1. Explain Avangate and how it is helping software vendors sell more.
Avangate has been around since 2006, helping thousands of software and SaaS companies to grow their revenue and increase sales all around the world, without hiring a big sales force. The company also helps software vendors with servicing their customers, in addition to channel and e-commerce management, for retention and business growth.
Software is not dead—it just needs another approach to selling. Avangate believes that the future of software is the SaaS and subscription distribution approach. The cloud has made it easy to distribute solutions, and Avangate enables flexibility in its customers’ business models in order to adapt to these kinds of trends.
2. What is a key trend impacting the software industry and its form for software delivery?
If you think about the software industry, there have been some mega-trends. The rise of cloud computing has ushered in a rapid change with regard to how software is being delivered — shifting from just over a third in 2010 to over two-thirds in 2014 being delivered online, according to IDC (International Data Corporation). Cloud has no doubt “disrupted” IT and technology in general, but it has also impacted software sales. And just as the shift to focus more on consumer engagement has impacted hardware, so has it on software sales. Software sales are affected more by search and social recommendations rather than the big software publishers who delivered packaged products to the limited retail shelf space.
Additionally, almost every aspect of the enterprise has been getting consumerized to some degree. But the actual purchasing process for companies has not gotten the same treatment. Enterprise software sales is a $1.3 trillion market made up of SaaS and on-premise products, and Avangate is changing the enterprise purchasing process to finally resemble the consumer shopping experience no matter what type of software they buy. For the foreseeable future, on-premise and SaaS product procurement will continue to co-exist, resulting in the need for comprehensive solutions that can help manage both worlds without having the need to choose one or the other – something that the subscription-only world ignores.
3. How has the relationship between vendors and customers changed?
The cloud has virtually impacted the entire process entailing how software is developed, distributed and consumed. Customers are now more in control of what they want and ultimately buy. Whether you are a B2B or B2C company, buyers expect instant gratification and frictionless self-service transactions. This phenomenon has also affected pricing models, with more customers wanting to choose the subscription or pay-as-you-go option.
Ultimately, buyer behavior has shifted over the last couple of years, driven by the rapid shift to cloud-based services and solutions. Impacting the entire lifecycle of how vendors must manage their customers from acquisition to retention, vendors are increasingly dependent on customer success due to increased transparency to the market and the low barriers for customer attrition. The bar of expectations for servicing the customer at every touch point has been raised—from selling within the context of the customer’s chosen channels and servicing them when they want service. The customers today define the product or service around what they actually use to drive their success. Overall, servicing customers are now more important than just winning over new customers, as the value of keeping and upselling current customers is larger given increasing acquisition costs.
Specifically in software sales, the power has shifted away from the vendor and firmly into the customer’s hands. As the relationship moves from a transactional to an interpersonal experience, these vendors will need to purposefully and strategically build predictability into their businesses as part of their e-commerce strategy.
4. How can software vendors survive in the cloud era with increased customer expectations?
There is more to it than just simple discounting—software vendors need to build loyalty by focusing on reaching out to all customer touch points and servicing each point for more opportunities. Essentially, businesses need to focus more on the customer experience by having a more unified view of the customer engagement process. As mentioned before, servicing the customer has become more important and will only continue to be so as we transition into the New Year. It’s important to be aware of what is impacting customer expectations.
For instance, we’re seeing more customers adapting to the “app store” model in their personal lives due to the proliferation of mobile devices and apps. This translates into them also expecting that similar experience from B2B solution providers and software vendors. These vendors might want to consider building their own app stores as a way of selling to their customers.
Avangate is providing the vendors not only sales-as-a-service but also support-as-a-service by enabling vendors to offer add-on capabilities, amend their software and answer customer needs. We will continue to enable customers to be agile and flexible with capabilities for new revenue models—freemium, free and paid trials, pay-as-you-go and metered billing—while expanding and scaling internationally.
5. What’s next for Avangate?
There are a lot of things going on. We’ve grown at approximately an 80 percent annual rate between 2006 and 2012. As part of 2013, we’re innovating solutions to provide more value for customers to ultimately grow their revenue. We’re focusing on helping vendors not just drive sales, but also protect future revenues and better serve customers.
We’ll continue to release updates to our solution, for example with increased customer retention capabilities. We’re going to also focus on channels and SaaS. Even for SaaS, channels are growing in importance as they have a greater role in customer acquisition and retention.
Other areas we’re looking at are mobile and Big Data - the latter in the sense that we are looking to leverage more the data collected by the operational and transactional side of the business to provide more insight into market trends and make powerful recommendations to our clients. Right now, we use big data internally for constant platform optimization, risk management and security.
Lastly, we’re looking to grow our business in new regions, like India and Brazil. We see these countries as exciting areas of opportunity for growth as we move into 2013.
Jeff Barrett is a recognized leader in public relations, experiential marketing and social media. CEO of Status Creative, 2012 PRNewswire Award Winner for “Best Use of Video In Social Media” and once stayed at a Holiday Inn Express.
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