Twitter:               @Lingotek

Recent News:

Lingotek Enables Companies to Go Global, Using Trusted, Reliable and Cost-Effective Translation Platform

Lingotek Wins International Stevie® Award for Best New Product of the Year

Lingotek Appoints Calvin Scharffs as Vice President of Marketing and Product Development

Lingotek to Deliver More Localized Community Translation for Adobe

I asked Rob Vandenberg, President and CEO a few questions about his business and view of the SaaS market in 2010.

Did you start out as a Software-as-a-Service company?

Yes, we started out as an online translation service. Currently our products are hosted on Amazon AWS but some of our customers, like the CIA, prefer their product to work on-premise. (That makes sense since the company was originally funded by In-Q-Tel, the venture arm of the CIA. By the way, the Q in the name is for “Q” from the James Bond movie fame.)

We worked through our business model over the past five years and finally got launched our platform about two years ago and were able to secure our first stage of funding from In-Q-Tel, as a way to put more translation control in the hands of the actual content owner.

Our web-based platform allows content owners to load up their content, which allows outside translators to actively participate in the process. This approach allows organizations to better manage a massive data stream of content that needs to be translated. Administrators can identify content that needs to be machine or human translated and then the translated content can be stored in memory for reuse or even train other services.

We have always thought that machine translation from software firms like Google and Microsoft offer good resources but only provide a very rough-cut type of translation. These services don’t produce translation results that are ready for publishing, that’s when you need more detailed post-editing that can only be done by a person. Machine translations are a good start but there is never a way to review and improve the translation, without involving people and that’s where Lingotek comes in.

Why do your customers buy from Lingotek?

Lingotek enables our customers to capture, grow, and re-use their linguistic assets, while achieving unprecedented control over the translation process.

We have deployments at some of the most innovative organizations in the United States, from Fortune 500 corporations, to government agencies, to small professional service firms. Some of our more recognizable customers are Cisco, Novell and Abobe.

Our software was designed to help content owners at larger organizations do translations more quickly and easily. The Church of Latter Day Saints has more than 14 million members who are doing family search and genealogy every year. These members to translate this content into virtually every available language use our translation software platform. The LDS members publish, tag content and domains, and then the community translates chunks of content.

Crowdsourcing is the answer to dis-intermediate traditional translation processes. Adobe has over 650 product user groups who are all generating and using content. The opportunity is to have all of these groups participate and focus on translation and creation of new content. What they have discovered is that their users are willing to translate and create content, which is what happened with their Russian Flex community. Lingotek really created our translation platform based on this work with Adobe.

The Lingotek software allows translators to act like freelancers who can do their work online inside of the platform, but also helps large organizations to overcome content language barriers. This approach is similar to other freelance work type of platforms such as eLance, Guru.com or oDesk. We also make is easy and affordable for these content owners at large organizations by using a software subscription pricing model.

Our software platform is very popular in China and India. We currently support 26 different languages, local dialects and regions.

What do you see as the key trend emerging in the SaaS industry?

Lingotek has formed a number of newer partnerships with firms like Jive Software and Microsoft (SharePoint), because they are large content containers that store a tremendous amount of user-generated content. This type of user-generated content is doubling every year but only about 2% of it is getting translated every year. This is a big opportunity for these types of firms and Lingotek can make it easier to get this content translated and deployed. Their users can nominate content to be translated and then the Lingotek community can work on translating it using a ‘follow-the-sun’ type of business model.

When our customers capture their linguistic assets, it makes it easier for them to go global with their products and services. By engaging both their internal subject matter experts and the Lingotek community, and getting them to actively participate in translations, this allows them helps break down the traditional language barriers for their offerings.

What is your outlook for 2010?

The translation market is a $15 billion a year market and there are many opportunities to expand our services to help our customers overcome language barriers for their products and services. Our next phase of growth is to work with these content container partners to create new tools to expand our services to these firms.

by Kevin Dobbs

Montclair Advisors, LLC

When advising software clients who are interested in moving to a SaaS business model, one of the areas I really dig into is how are they selling to new customers. Most of us in the SaaS community realize that carefully tracking your Customer Acquisition Costs or CAC, is a critical component in building a successful and profitable company, but I think it is equally important to understand how traditional software sales  and marketing models and SaaS models differ.

Traditional Software Sales & Marketing Model

Over the past 25 years there has been a traditional way to market and sell enterprise software which has been based on key principles such as:

• You need a Large direct sales force including a large support team, or as I used to call them, ‘The Cast of Thousands‘
• Front loaded compensation plans that pay out when deals are sold
  
• High average sales prices, including services, that would almost always be over $500,000
• Long sales cycles, usually 6-12 months, with pursuit costs averaging around $70,000 for every deal the company played in
• Win rates are in the 30-50% range
• Average face-to-face selling time that is around 15%
• Pipeline building using a combination of in-person events (seminars, tradeshows, user group meetings), telemarketing teams (inbound and cold calling) pounding the phones and a lot of paid marketing campaigns
• Lead pipelines that appeared full but always seemed to lack the appropriate level of qualified opportunities
• First generation CRM systems and reports that were produced periodically using Excel

Brings back the good ol’ days doesn’t it.  Many software firms are still using this model and they are finding out that it doesn’t work very well in the new world of Software-as-a-Service sales.  Some of the reasons it doesn’t work is that software buyer preferences are definitely changing, but one big issue is it is very expensive to operate this type of model, especially when you get your revenues paid out over time.

SaaS Sales & Marketing Model

There are several important differences in the SaaS model that make the traditional software sales and marketing model less than effective;

• SaaS customers pay a subscription based on users or usage of the software service over time, usually over three years.  After the recession, this has become the new normal for software sales
• More focused solutions that usually have Average Sales Prices that are typically lower, so reps need to sell more deals to hit the same quota targets
• Key metrics like customer satisfaction, renewals, up-selling and cross selling are even more important for SaaS than they were in the past
• Sales method is more of a “penetrate and radiate” approach
• It takes a long time to build up a recurring revenue stream

Given these differences, then what should your SaaS Sales & Marketing model look like?  Here are some ideas to consider when building out your SaaS sales and marketing plans for 2011 that can help you to build out a low-cost but high-efficiency sales and marketing machine;

Marketing

• Hire experienced marketing leadership and professional
• Evolve a good list of key influencers and industry contact and communicate with them frequently
• Develop a clean prospect database
• Mix paid and free social networking programs
• Build a vibrant customer community and market to them with products like Lithium
• Leverage social media like LinkedIn, Facebook and Twitter to generate interest and leads
• Use Web 2.0 marketing tools like Marketo, Eloqua, Pardot and try drip marketing
• Track everything (see the last Smart SaaS post)

Sales

• Hire experienced SaaS sales leadership and reps
• Your SaaS sales team should be more low touch than your traditional sales team
• Experiment with telesales even with high end enterprise products
• See is using an indirect channel makes sense for your business, if managed correctly these distribution partnerships can dramatically lower your sales costs
• Carefully track your lead hand off between marketing and sales, make sure leads are not falling through the cracks
• Track everything

Metrics like Customer Acquisition Costs and the Magic Number can help your sales and marketing teams see how effective their programs are and can provide insight when to invest and when to continue developing your repeatable sales model.  I would also encourage you to learn more about Mark Leslie’s Sales Learning Curve, because it offers a more scientific approach to cost-effectively building out your SaaS sales team.   Best-in-class firms that have profiled in this blog have adopted many of these techniques to build a scalable but cost-careful sales and marketing organizations.

Stay tuned for Tip #6 Package for Viral Adoption

Continue reading…

By Kevin Dobbs

Montclair Advisors, LLC

When thinking about your transition to SaaS, there are many questions to consider including target customers, value propositions, packaging, pricing and how best to build customer relationships.

After conducting more than 50 Smart SaaS business profiles of all different types including pure SaaS, Hybrids and Cross-Overs, all of these companies would probably answer many of these types of questions differently depending on their type of customer, functionality, geography, vertical markets and the only way they can get useful answers is to continually test everything.   Best in class SaaS firms are always trying different pricing, packages, messages in order to optimize their businesses, like a recent firm we profiled - Clarizen.

Some resources when thinking about these types of considerations include:

Software Pricing Partners - Jim Geisman

Chaotic Flow - Joel York

SaaS Blogs

Sixteen Ventures - Lincoln Murphy

4 Pillars of SaaS - Phil Wainewright, ZDNet

In addition to testing, it is a good idea to measure everything including website traffic, marketing campaigns, product usage, customer satisfaction and a myriad of other SaaS and business metrics.  Again, the best firms track and monitor all the key business metrics in order to improve their ability to generate revenues, build market share and reduce unnecessary customer churn.  SaaS requires a very tight operational model and has moved business an art to a science and now there are an entire new class to tools to improve revenue performance and reduce costs.  Some of these next generation of tools include:

Sales Automation

EchoSign - Provides electronic signature and contract management.

InsideView - Sales business intelligence and social media platform.

JigSaw - Business information and data services.

NetSuite - CRM and ERP suite.

RightNow - CRM, call center and social platform.

Salesforce.com - Salesforce is not only a solid Customer Relationship Management system but also a great system of record for all types of sales, marketing and service information and applications. Also offers a application marketplace that provides value added extensions.  Salesforce also offers Chatter a collaboration platform to improve internal communications.

SugarCRM - Open source based CRM that provides a robust no cost solution.

Marketing Automation

Eloqua - Marketing automation platform.

Genius.com - Sales and lead automation.

MarketBright - Marketing and lead generation management.

Marketo - Marketing and revenue management.

Pardot - Business to Business lead automation.

SaaS Analytics

Birst - On demand business intelligence product.

Cloud9 Analytics - SaaS performance management.

GoodData - SaaS business intelligence product.

PivotLink - On demand business intelligence product.

Using many of these tools companies can help a SaaS firm track their business, sales and marketing performance.  The question that I often get is ‘what should I be tracking?’  There are an emerging set of SaaS-based business metrics that include Monthly Recurring Revenues (MRR), Churn, Customer Acquisition Costs (CAC), The Magic Number (MN) and others that provide very precise views into how a SaaS business is performing.  Here is a chart that details some of the more common SaaS business metrics by functional area:

Other resources to learn about SaaS metrics;

5 C’s of SaaS Finance - Bessemer Ventures

Chaotic Flow - Joel York

For Entrepreneaurs - David Skok, Matrix Partners

Haut Tech - Michael Dunham at Scio Development

My opinion about the SaaS business model is that there are a lot of new considerations about building a profitable subscription business today.  The buyers are different, there are many robust low-cost tools available, Cloud technology that can radically change your cost model and time to market as well as many other business factors, so the only real way to really tune your business for SaaS is to continually test everything!

I would be interested in your comments and hearing about what you are testing.

Stay tuned for Tip #4 Sales & Marketing on a Budget