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Will the enterprise market spend significant IT budget on Windows Vista in 2007?



Are Your Customers Unhappy? Here's Help!
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In particular, the customer support organization has to appreciate its power and the many competing demands there are for corporate resources. First and foremost is the ever present need for new sales. All companies talk about the trade off between new sales and servicing existing customers, but this becomes all the more pressing in the new world of SaaS.

To solve some of these problems, we cheated a little bit. We promoted the person who used to oversee customer support to VP of Sales and Marketing. That is how much we valued sensitivity to current customers.

In other settings where that move may not make sense, you need to create a collaborative culture where all sides of the equation need to learn to listen to one another. As much power as customer support has, as a department it has to realize that one of its key responsibilities is to try to resolve customer challenges by helping customers use the application properly rather than instantly look to engineering or services to change the configurations or rewrite code. That is not designed to put off customers. On the contrary, it is designed to play to one of the strengths of the SaaS company, namely, the virtual best practices community created by the users of the application.

What is a virtual best practices community and what is its significance? Think of it as the ability to hold a free user group conference every day. You get to see how your best customers use your application. You get to ask them how they would recommend others use it. And, finally, you get to ask them about and deliver virtually real-time improvements to the product so they can be more successful.

Then, your customer support team can take these insights in aggregate, not in any specific or identifiable way and help others use the application in a more productive way. One of the first responsibilities of the customer support team is to enable other customers to benefit from this expertise. Although this ends up facilitating the optimal use of engineering resources, in other words, we aren't developing bespoke solutions for different companies without a clear need, it also enables customers to rapidly and effectively get the most from our application.

Effective customer support also is critical for ensuring that sales can use the existing customer base as a reference. Ultimately, all elements of the company benefit from this focus and quickly support it.

Customer-Centric Management and Research & Development
As should be clear, managing a customer-focused engineering effort is a bit harder than it sounds. On its face, what could be easier than managing a customer-focused engineering department? We all want to provide features that our customers want, don't we?

In short, I believe that although all of us want to think this way, relatively few of us do this.

I will submit that most software companies actually create features based on relatively little evidence of what their customers really want.

Imagine the typical product development process. A sales representative or a marketing person says that they have heard that "Feature X" is really popular with the "Market." Maybe the marketing department has even done surveys or focus groups on "Feature X." The company, committed to satisfying customers and the market, begins a concentrated effort to develop Feature X. Feature X is not simple that is its strength. It will really transform the way the customers do business. Deadlines slip, but lo and behold, after six or nine months of concerted effort, the company release "Feature X."

Customer feedback is terrible or, more accurately, non-existent. It turns out no one needs or wants Feature X.

How Did This Happen?
It all goes back to the development cycle of enterprise software it is hard to release bits and pieces of code, but one is forced to launch a large effort. As in anything, small errors over a large product result in a massive problem.

It also relates to the fact that the focus for this product enhancement came from people who are talking to prospective customers and not actual customers. In our business, actual customers request enhancements on an ongoing basis and when we include them we have a high degree of certainty that the enhancement will be both required and used.

As a result, the bulk of our development effort is oriented toward existing customers. That doesn't mean we are not creating new code. It means we are creating code that customers are directing.

At this point in the argument, someone always asks how do you move the product forward? What about new product development that builds a new market? All well and good, I respond, but recognize you are taking a completely new bet with a new product and a new market. That isn't necessarily wrong and, in fact, it may be a wonderful way to boost growth, but it means that you are turning aside opportunities to exploit existing growth in your current market. If you want to maximize growth in your current market, focusing on existing customers and their evolving needs, is the best bet for deployment of capital.

Of course, if you believe you have maxed out your existing market and there is simply no more growth there, then investing more capital makes no sense. But, and this is the big but, your next move is into a new market with a set of risks that come with any effort of a new product in a new market.

Put that way, it is much harder to make the argument for a completely new product line, since most markets have a long and profitable way to go. Customer-centric development almost always ensures an optimal return for effort in research and development.

Some criticize this as creating a stale culture where existing customers have too large a voice in allocating scarce resources. On the contrary, your customers remain your very best source of incremental innovation and your best chance of providing a product that appeals to an ever-expanding sector of the market.

An effective customer service team is the core strategic asset of a SaaS company. Implementing a disciplined approach to building and improving the process and team will reap important benefits to the SaaS company. The SaaS software company already holds many strategic advantages in terms of development methodology, deployment and alignment between customer and vendor that are greatly improved upon by a focus on customer service. Customer service will change the relationships among all the different departments and will ultimately result in an incredibly successful company.

How will you know you are moving in the right direction? Here is one suggestion. Try and conduct an informal poll to determine who the MVP of the company is? If it is someone in customer support or in a customer facing position, you will know you are on the right track.

Morris Panner is the CEO of OpenAir, a Boston-based SaaS provider of business process software for consulting firms. A graduate of Yale University and Harvard Law School, he has spoken at a wide-variety of industry events, including SIIA CNET and IBM Conferences, and written widely in this area, including for AlwaysOn Network. Morris has been featured in the NY Times "The Boss" Column and in Fast Company Magazine, among others. This article is excerpted from his forth-coming book, "Customers, Markets and Democracy." For article feedback, contact Morris at mpanner@openair.com


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