Selling SAAS to the SMB

A newly hired expert at a major player explains his plan.

by Alex Goldman ISP-Planet Managing Editor [February 29, 2008]

Steve Renda has just joined Verio, signing on as its vice president of sales and marketing, coming from a career that combines 17 years of telecom (Sprint, etc.) with a pair of startups and a company called MX Logic that will be familiar to any ISP that's looked at compliance and filtering in the recent past. "Verio's SAAS offering is one reason I was attracted to this opportunity," he says,

Verio's SAAS applications cover the basic needs of any SMB: McAfee security, Microsoft Exchange and Sharepoint for e-mail and collaboration, SugarCRM for sales, Accrisoft e-commerce, and data backup through Iron Mountain.

Part of what makes the offering attractive to SMB customers, Renda says, is that these applications are familiar. They've been part of webhosting packages for some time now. "The SMB is the last to adopt new technology," he says. "The technology the SMB needs to work. It must be reliable."

Differentiation
Verio isn't the only company offering these products, so how does it distinguish its offering? Renda says that the SMB wants to be able to trust the provider. "We distinguish ourselves in three areas: 1) reliability, 2) ease of use, and 3) we're a trusted partner."

Verio touts its data center infrastructure and NTT parent company's backbone as proof of its ability to deliver the application to the end user.

The company touts the user interface and, even more importantly, its support staff. "40 percent of our organization by head count is customer service, supporting clients in one way or another," says Renda.

Finally, there's financial reliability. As the economic mood turns pessimistic, Renda believes that this will become more and more important to SMB customers. "I want to know that if I turn over my business to you, you'll be there," he says.

But it's even more than that. The SMB wants to able to trust the SAAS vendor to make the decisions that an in-house CTO would make.

In all of this, Renda points out, technology is secondary to the story. Trust is primary. "Let's talk about virtualization," he says. "Vendors tout it as if it's something new and as if the SMB should care about it. Here at Verio we have over a decade of experience with virtualization and developed the virtual private server. It's a tool, a technology. It's secondary to the three points I already listed: reliability, ease of use, and trust."

The channel
Verio won't do this alone, of course. The company sells through a massive channel of over 3,000 resellers. "If you want to really cover the SMB opportunity, resale is the best and in some cases the only way to go," says Renda. "Design the right program, and you can bring a reseller from one time revenue into recurring sales, into the services world."

Of course, there is resistance to change. Services may mean more money over the long haul, but the switch from selling licenses to selling services involves making many changes.

"Maybe in the past you sold a three year license with hardware. You had a lot of activity followed by quiet until the license expired or they needed an upgrade," says Renda. "If you sell services, you're involved with the customer monthly, weekly, daily, and hourly. You're a utility. I come from a utility. In the software world, you solved problems with regularly scheduled releases and updates. In a utility, if the lights go off, they're expected to come back on very shortly."

Will you be adding VoIP? "The SMB is our focus. Will we do VoIP ourselves? I doubt it," says Renda. "Might we pick up a VoIP partner? Microsoft and others are doing very interesting things not just in VoIP but also in presence and directory integration. We serve the SMB and the market will tell us where we need to go."

—End