4 Mistakes MSPs and VARs Make with Software as a Service

Avoid these mistakes to maximize your SaaS revenue and build strong relationships with your customers.

More and more, Software as a Service is becoming users’ preferred software delivery method – and that trend doesn’t show any signs of slowing. Technavio reports the global SaaS market will increase by $99 billion from 2020 to 2025, a CAGR of 11 percent.

There are numerous factors driving growth. SaaS allows users to pay for software on a subscription basis rather than with upfront capital expenditure, putting the burden for updates and software patches on the vendor and making it easier for businesses to scale. In addition, Technavio points out that AI-enabled SaaS solutions that will give users more value from their data will drive growth even more.

Even though Software as a Service growth represents a vast opportunity for value-added resellers (VARs) and managed services providers (MSPs), there are some missteps you need to avoid so you can maximize SaaS sales:

1Not including SaaS information on your website

Gartner reports that more than 80 percent of B2B buyers research products before contacting a provider’s sales rep, and more than one-quarter research online. Take a look at your website. Would a member of your target audience be able to find information on a SaaS solution you offer to solve their business challenge?

Investing in search engine optimization (SEO) for your website is also essential. For example, if a potential customer is looking for warehouse management system (WMS) software providers in St. Louis, if your business matches that description, make sure your listing comes up in search.

2Thinking one-time sale, not recurring revenue

With some SaaS vendors you partner with, selling software can be straightforward for a VAR or MSP. But your interaction with the client should not end after they download and implement the solution. You need to find ways to add value throughout your client’s use of the solution, which also can create touchpoints that can give you opportunities for upselling and cross-selling. The goal of a SaaS sale shouldn’t be only the referral fee or the residual. It should be leveraging SaaS sales to build relationships and grow your business.

3Locking customers into a package

One of the reasons that customers prefer SaaS is that they can pay only for what they use. Bundling solutions and services can give you the opportunity to maximize your margins, but if you tie up individual solutions that are only available in a package, you may lose sales to customers looking for one specific thing.

Of course, as a trusted advisor, you need to recommend solutions that are vital to your clients and their security, and as a business owner, you need to protect yourself, with measures such as requiring business continuity solutions for your managed services clients. However, there may not be any downside to providing a fitness center with only a payment processing solution or a salon with a loyalty solution. Be flexible enough to accommodate customers with solutions, which may eventually open the door to future sales.

4Allowing customers to contend with lousy customer support

Customer experience is a significant contributor to loyalty and recurring revenue. The Temkin Group conducted a study that concluded that modest improvements to customer experience could result in an additional $700 million over three years for a business with $1 billion in revenue. On the other hand, Oracle reports customers will leave a company for incompetent or slow service. Even if customer support falls to your vendor partner, lousy service will reflect on your business and could jeopardize whether you can continue to provide other services to your customer.

Before you partner with a SaaS vendor, carefully research the resources they dedicate to customer service and their track record for keeping customers happy. Also, ensure you understand the services the vendor will provide and what falls to your company so you can do your part to ensure customer satisfaction.

Plan strategically to offer SaaS solutions in ways that will provide the greatest value to your clients and create growth for your business.