At the most recent cleverbridge Networking Event in Edinburgh, Peter Sheldon, a Vice President and Principal Analyst from Forrester Research, gave the keynote address and provided an overview of the global ecommerce landscape, especially in regards to selling digital products like software and SaaS. Sheldon showed the audience of ebusiness professionals and executives how to create loyal customers by examining the way B2C and B2B buyers prefer to shop for software online, and by examining the challenges faced by online merchants. Specifically, Sheldon focused on five ecommerce trends for digital products:
- New regional markets
- SaaS / subscription products
- The B2B market
- In-app purchases
- A seamless digital experience
New Regional Markets
Targeting different regional markets can be a good idea when you’re looking for new revenue streams. Aside from the challenge of finding employees and staff who to help develop marketing campaigns with localized language, currencies and payment methods, other challenges of successfully marketing software in new countries include developing a timeline for profitability and finding the right go-to-market strategy.
For example, Sheldon suggested if a company decided to target the Chinese ecommerce market, they might first start selling products through a major online mall like Tmall and then develop a .cn website once brand recognition is achieved.
Subscriptions / SaaS
Adobe started making their big shift to SaaS in 2011, and now they have two million active subscribers. Moreover, they have many more trial users and expect another million to become paying subscribers. The cloud allows them to access precise details and data about their trial users and craft appropriate messaging to get them to convert into paying customers. Which is why they’re generating roughly one billion dollars in predictable recurring revenue every year.
Sheldon also discussed the perceived benefits of switching to a SaaS model today:
- Improved agility
- Faster time to market
- Faster delivery of new features
- The ability to focus on other important projects
- SaaS as a key for succeeding in the mobile space
Regarding that last point about SaaS being crucial for mobile success – if a business has a sales force out in the field, they need to provide them with functional software that can be easily maintained. In this increasingly common scenario, on-premise software becomes unnecessarily burdensome for users who will seek out a more flexible solution that meets their needs.
The B2B Market
According to Sheldon, the software industry is the most mature segment of the ecommerce market. He cited research from Forrester that if software is three percent of online spending, then by 2017, online spending in the U.S. will reach about 11 billion dollars for the consumer market. Meanwhile, the B2B market, with more and more B2B buyers increasing their budgets for applications and technology, can be expected to be at least twice as big as B2C spending. B2B companies are also heading out into SaaS products. Globally speaking, SMBs and enterprises are already spending 70 billion dollars a year on SaaS subscriptions worldwide.
If you don’t do B2B ecommerce sales now, you’re missing out on customers who prefer doing business that way. It’s clear that these buyers want to purchase online, just like when they shop on Amazon for a new book. This shift to direct online sales is especially important for those products that are a waste of time for your sales people to handle, like maintenance renewals or lower-end products.
Most of us probably think about in-app purchases in relation to buying extra lives for Candy Crush or other games found in mobile app stores. But in-app purchases aren’t just for games or even mobile platforms. When Microsoft built Office for iPad, they decided to limit access to those with an Office 365 subscription. However, if a user isn’t yet a 365 subscriber, and they downloaded the trial version through Apple’s App Store, Microsoft allows the user to create an Office 365 subscription with an in-app purchase for $99 a year, of which Apple receives a third of that amount. And like we said, it’s not just about the mobile applications – even companies like DropBox allow users to pay through their desktop application. The point, Sheldon said, is for software companies to challenge and disrupt their own business models and create new and exciting ways for generating revenue from their users.
A Seamless Digital Experience
In our 2014 Ecommerce Predictions, we noted that the consumer’s path to purchase is occurring through an increasing amount of different online channels. This complex situation causes online merchants to miss many opportunities for connecting with customers where they are. Sheldon encouraged ebusiness professionals to provide a seamless customer experience from the discovery phase through the purchasing phase through the support and renewal phases. It is especially important to understand that all these phases are occurring through many different touch points, like desktop, phone and tablet. So your digital marketing strategy must take all these disparate elements and combine them into a single seamless experience.
Please watch the video and let us know your thoughts in the comment section below.