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Company: Marketbright
Started: March 2005
Located: San Bruno, California
Geography: Global
Market: On-Demand Marketing Automation Solution
Products:
Marketing Automation
B2B Sales Portal using Social Networking
Key Customers: Varonis, Serena Software, SAP Business Objects and Genesys
Website: Marketbright
Recent News:
Marketbright Grows Customer Base by 43% in Q1 2009
Marketbright Expands Capabilities for Salesforce CRM Customers
Raab Guide Ranks Marketbright Among Top Demand Generation Systems
Marketbright and Rackspace Hosting Announce Solution Partnership
I asked Dom Lindars, Marketbright Chief Executive Officer a few questions about his business and his view of the SaaS market in 2009.
Did you start out as a Software-as-a-Service company?
When we started out in 2005 our vision was to create a better way to automate and integrate SaaS functionality using tools and systems to streamline large scale marketing efforts, and improve marketing ROI. I have more than 18 years experience as a veteran of online marketing and website management and Marketbright’s senior team has its roots in large enterprise marketing operations, web content management, business and enterprise software sales.
Why do your customers buy from Marketbright?
Our customers turn to us for sophisticated lead nurturing and management programs, which emphasize listening closely to customer feedback, communicating proactively and building relationships. Lead nurturing is a new business practice for many companies, where the typical mode of operation usually has marketing throwing all leads over the wall to pre-sales or sales –who often cherry-pick leads and leave the others to grow cold. Nurture marketing involves building multistage campaigns that interact with customers across multiple touch points. These nurture programs can create complex customer interactions that are difficult to manage and run the risk of causing customer fatigue if not handled properly or efficiently. Our customers choose the Marketbright approach because it automates the difficult task of managing multi-touch campaigns and the resulting, often complex flows. The platform provides an easy way to deploy and manage multi-touch campaigns across all marketing channels:
Our customers rely on us to deliver marketing automation solutions that check all the boxes, are easy to use for all team members, make complex tasks simple, and are integrated, secure, scalable and reliable.
What do you see as the key trend emerging in the SaaS industry?
The advent of social media has had an enormous impact across industry. In light of the economic instability (and at the risk of discussing the economy ad nauseam), most organizations are making efforts to save money and tighten their belts. Often the first way to do this is to cut spending on marketing for one, but the problem is, this is the time when money spent on marketing is probably more critical than ever. Companies just have to spend their money in the right place, and social media is emerging as a pretty safe bet. Even better, a SaaS solution combined with social media efforts will give you more bang for your buck. SaaS does well in a downturn economy, especially when big organizations are looking to cut back and outsource. It’s also a good alternative when organizations have no or small IT groups, or their IT teams simply don’t have the bandwidth to contribute to social media efforts.
Over the next few years we’ll see social media as a baked-in element of all multi-channel marketing solutions. At Marketbright, we’re already bringing in 17% of our leads through social media, such as LinkedIn, Twitter, Facebook, and staff blogs. Most importantly, no one objects to spending on marketing when it directly results in delivering qualified leads to sales.
What is your outlook for 2009?
In this year of pocket change, trying to find a way to sell more with less, stretching less of last year’s marketing dollars to meet more of this year’s is a top priority. The challenge for many businesses today is they seek a silver bullet, one solution that will solve everything, which of course is non-existent.
For the remainder of 2009, B2B companies should focus on the lead generation activity delivered in the past that directly produced the greatest return. Spend on those programs that generated the majority of business last year. (Seems obvious? Do any of your budgets show trimming of activities you should really be stopped altogether?) Work with sales to identify those accounts that have the greatest propensity to move through the pipeline. Get proactive. Find out what is the minimum amount of information you need to give to a prospect to make them a customer and give it to them proactively.
There is no point in pretending 2009 hasn’t been a challenging year for business thus far, but we may as well make the best of it. Apply your best judgment in becoming more agile, more creative, and above all pay attention to the data that is sitting in your businesses. Find out what worked, do more of it. Accept what didn’t. Don’t do so much of that.
Thank you to Dom Lindars, Erik Bower and Lilly Hanscom for contributing to this profile.
I was listening to an interesting panel discussion at a recent SIIA show in San Francisco that a very good panel:
Joe Talley, Partner at Deloitte who was the moderator; Ken Goldman CFO at Fortinet a large privately held firm and former CFO at Siebel; Sandip Gupta, President, NetMagic a profitable private company; Jeffery Kuhn, Managing Partner FLG Partners, a CFO advisory firm; and Bill Soward, CEO at Adaptive Planning.
Here were some of the interesting tidbits I picked up.
General perceptions on the panel of the economic outlook were cautiously optimistic for the SaaS market. Adaptive Planning just conducted a survey of financial executives in the last 60 days that stated that these buyers are more pessimistic about the future than they were at the end of December. A lot of that pessimism was due to the lack of marketplace visibility, challenges in hitting quarterly sales targets and future cost reductions.
Important Business Metrics
Others felt that SaaS companies are faring better during this recession because of the importance of taking a metrics-based approach to running their businesses. Key business indicators that need to be carefully monitored include:
MRR - Monthly Recurring Revenues. Are they predictable? Have they been consistent? Are they shrinking or growing? These are all important MRR trends to monitor on a monthly basis.
Churn - The percentage of customers who don’t renew your software service. This is a critical metric because no matter how effectively you sell, if you are losing more than you are selling it can be impossible to reach profitability. Another Churn component to keep an eye on are if your Churn or Renewals percentage is consistent but your overall number of seats or dollar amounts shrink.
Renewals - Percentage of customers who renew your service. See above. Another important indicator is if customers are renewing for multiple year terms, this can save your firm precious resources annually to renew your customers.
Cashflow - How much cash are you generating on a monthly/quarterly basis. This is vital in modeling a future path to profitability as well as effective expense control. Cash management is really important in this environment especially for smaller firms because VC funding is very difficult.
Another good point that was made, is that when times are tough, many smaller firms will take on debt when cash is tight. The panelists felt this was a very bad idea and that pursuing debt makes it harder to run a business in a downturn. It is a better idea to think about ways of selling more services, software or content to your existing customers
Communications
I agree with several of the panelists that one good way to improve renewals and reduce churn is to over-communicate with your customers. During the last recession, many software companies went out of business and your customers are nervous unless you are a large publicly traded firm. This type of communications strategy is especially important with large customers who might provide most of the MRR for your company.
In addition, this approach is also applicable for your employees and investors as well. Opening the lines of communication, good and bad, will calm everyone down and make it somewhat easier to manage these key relationships. Talk about corporate goals, KPI’s and several panelists said it is important to practice empathy.
Changing Sales Environment
The recession is definitely changing software buying habits. Customers are now more attuned to buying a subscription rather than an upfront software license. Part of the reason for this is that capital is really tight, and your customers are trying to manage their cash carefully. Some firms, like Adaptive Planning, claim to be able to collect up to 12 months of cash upfront at the time of their deals being signed. This is a good best practice because it provides much needed operating capital for the SaaS firm and it also can be a way for customers to get up to an additional 5% discount on their deal for a 1 year upfront payment.
The panel agreed that customers were buying fewer seats, training less people and looking at longer roll outs. The deals tend to be a little smaller but deals are still getting done. Because SaaS deals are usually handled as an operating expense, it may be possible to get deals done without the intervention of the CFO. But there are still many deals that require not only the CFO to sign-off but also require the CEO and even sometimes the Board to approve the deal.
Customer Acquisition Costs
CAC or Customer Acquisition Costs, is another metric that is important for SaaS companies to monitor. These costs during the recession have also risen. Even though growth is not viewed as important during the recession as cash conservation, it is an ideal time to take share from competitors. This is why many firms are looking at extended trials and even giving their software away to seed their pipeline with future deals that can be harvested as the recession ends and companies start buying again.
Other Marketing and Sales Ideas
Think seriously about shifting your model from an enterprise, field sales orientation to more of a tele-sales approach. Continue to do lead generation and automate your processes, because your sales teams still need leads. Cutting out your lead generation activities to save some near term money can cripple your company later on.
Know who your real sales performers are and upgrade those who are not performing. There are a lot of talented people available in the market, now is the time to improve your team. Re-organize your sales team to be leaner, more focused and effective.
Regional seminars can be very effective. Partially because there are too many webinars but also because people can travel anymore but might want to get out the office to see you in person. It is also a way for the potential customer to see if you and your company are for real.
What I took away from the panel is that if you manage your SaaS firm by monitoring these important Key Performance Indicators and are decisive about making decisions, today’s SaaS firms will emerge from this recession as not only survivors but winners.
Company: Sonoa Systems
Started: 2005
Located: Santa Clara, California
Geography: North America, APAC
Market: Cloud Computing : Enabling technology / API Infrastructure
Products: Analytics, Management and Governance solutions for APIs, feeds and services - available as software, hardware or as a Cloud-based service
Key Customers: MTV Networks, SelectMinds, Innotas, TrueCredit, InfoNGen, ING, Warner Music Group and others.
Website: Sonoa Systems
Recent News:
Sonoa Builds the Enterprise-Class Content Policy Cloud
Cloud Management Provider Sonoa Systems Lands Deal With MTVN
I asked Chet Kapoor, Sonoa Systems Chief Executive Officer a few questions about his business and his view of the SaaS market in 2009.
Did you start out as a Software-as-a-Service company?
We started out shipping our technology on hardware appliances. Fundamentally, our software is architected like a networking device for deployment on the edge in high-scale environments. Last year we began shipping this same technology on a software virtual appliance to meet some OEM opportunities and also because more customers are in a virtualized environment. We soon saw demand for ServiceNet as an on-demand service because some customers wanted ServiceNet as a subscription-based cloud offering.
Why do your customers buy from Sonoa Systems?
We have very deep technology for very high-scale, very configurable policy enforcement. The design center for our technology is around meeting the unique challenges that enterprises, SaaS providers, or media companies find in managing APIs, feeds, and cloud services.
What do you see as the key trend emerging in the SaaS industry?
While a recession isn’t a good thing –it’s actually accelerated adoption of Cloud Computing technologies in the enterprise. We see a definite pickup in adoption of SaaS, APIs, Mashups, and mobile apps in the enterprise. It’s a ‘survival of the fittest’ environment and business managers are under the gun to either rework costs or come up with new ways to build revenue and share. Cloud Computing is a powerful weapon to do both , and the challenge is, how do you do this and still maintain the enterprise security, compliance, and service levels? You would never use a utility service without metering and circuit breakers – enterprises are very aware that they need this function when using cloud services, feeds, and APIs.
What is your outlook for 2009?
Our outlook is very excited and we are pumped! We’ve got some great partners that embed our technology in enterprise products and we’re very excited that customers are deploying ServiceNet in the Cloud. We’ve just passed 50 customers selecting our technology, and the bottom line is that we’ll continue to work towards making it very easy to get started using our technology.
Thank you to Chet Kapoor and Raksha Varma for contributing to this profile.
Company: M-Factor
Started: 2004
Located: San Mateo, California
Geography: Global
Market: Predictive analytics for marketing and trade investment management
Products: M4 – Marketing Investment Management
T4 – Trade Spending Effectiveness
P4 – Portfolio Pricing Optimization
Key Customers: Coca-Cola, Kellogg’s, Alberto Culver, Ocean Spray, White Wave Foods, Wendy’s
Website: M-Factor
Recent News:
M-Factor Named “Cool Vendor” by Leading Analyst Firm
M-Factor Announces Global Partner Program called “M-power”
M-Factor Appoints Dirk Beyer as Chief Scientific Officer
M-Factor Announces Record Performance & Additional Funding
I asked Lawrence Whittle, M-Factor’s Chief Executive Officer a few questions about his business and his view of the SaaS market in 2009.
Did you start out as a Software-as-a-Service company?
Yes, the background to most of our early team is heavily influenced by On Demand / SaaS delivery. From the beginning it was clear that our target customers were looking for solutions that could offer advanced functionality, but with a lower risk, lower total cost and faster time to value than on-premise solutions would allow and importantly without any significant dependency on IT organizations. Customers want the continuous innovation that is typically only possible with a SaaS delivery model that allows ongoing seamless enhancements — an unthinkable proposition with traditional licensed software.
Why do your customers buy from M-Factor?
Our clients and prospects (primarily Consumer Product and Quick Serve Restaurant companies), have never faced a greater need for forward-looking, predictive solutions so they can optimize where and how to spend their marketing and trade dollars. Simple point in time analysis and backward-looking assessments are of limited value unless you can harness this insight to be forward-looking and enable you to positively change the future outcome of your business.
M-Factor’s solutions provide companies the ability to fully understand what happened in the past by breaking down sales to see the impact of various trade and marketing strategies this is then coupled with an even more important ability to look at constraint-based simulations to accurately predict what will happen in the future. Examples include what will happen if a company shifts advertising support from a brand or product or moves trade funds from one brand to another across channels and time.
M-Factor’s solutions can optimize marketing and trade spend up and down a product/market hierarchy so that aggregate views (such as at a national or regional level) are clear and companies can ultimately construct the best overall plan to meet corporate objectives.
The solutions being delivered as SaaS provides companies with the lower cost and faster time-to-value that they desire in today’s fast moving and highly competitive business environment
What do you see as the key trend emerging in the SaaS industry?
We are seeing interest in SaaS solutions growing significantly as companies want to take advantage of the comparatively low total cost of ownership and quicker returns of implementing SaaS technologies. This trend was already underway but the economic downturn seems to be driving more companies to evaluate SaaS solutions over the traditional on-premise applications. We expect this trend to continue for the foreseeable future. Any operational or security risks around SaaS have been eliminated, in fact the performance, scalability and uptime demands of SaaS have led to a superior level of customer service, way ahead of traditional software applications.
There also needs to be a continued focus on customer satisfaction and innovation from SaaS providers. Since companies more or less rent the software, SaaS providers must provide unparalleled customer support and product functionality to ensure that customers renew. We take great pride in how we address both with our customers and believe that both are required for SaaS companies to be successful.
What is your outlook for 2009?
In this down economy it may be a bit crass to say, but our 2009 outlook is quite positive. We offer a unique and compelling value proposition that is in high demand right now since our solutions can provide companies a holistic view of their marketing and trade spend. Our solutions provide the ability to dynamically plan across accounts, channels, and various time frames and can predict what will happen in the future through constraint-based models. In a downturn year for almost every company, across every sector, we have advanced our customer count, our revenues and our headcount
The proven referenceability of our customers has significantly fueled the overall market interest in our solutions. The lower cost of ownership, faster time to value and ongoing innovation that the SaaS model allows along with advanced functionally of M-Factor’s solutions are also key drivers behind our positive outlook.
Thank you to Lawrence Whittle and Jason Gatoff for contributing to this profile.
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