The Four Gears of B2B SaaS – Part 1

February 18, 2014 Paul Philp

Geoffrey Moore recently published a new edition of his classic high-tech marketing book, Crossing the Chasm, updated to be relevant for today’s markets.  While the core model is unchanged, Moore makes it clear that ‘Crossing the Chasm’ is strictly a B2B model.  To address newly relevant B2C markets, Moore adds a new model as an appendix.

The Four Gears Model for Digital Consumer Adoption

B2B SaaS

Here is a short overview of what each of the gears refers to:

Acquire – finding affordable, predictable sources of traffic.

Engage – developing content and services that engage people and keep them returning to the service.

Monetize – finding ways to turn the audience into a revenue stream without reducing the engagement.

Enlist – turning happy users into champions for the cause and having them spread the word.

An effective B2C enterprise needs to have all 4 gears spinning to drive adoption and growth.  Management needs to be continually monitoring the effectiveness of all four gears and working on improving the slowest gear.

While Geoffrey Moore is clear that the Four Gears model applies to consumer markets, as the SaaS business model evolves and industry adopts more of the tactics of consumer markets, it starts to resemble the B2C markets in many ways.

I  propose a modification of the 4 Gears model to help understand what we are seeing in the SaaS 2.0 business model.

 

The Four Gears Model for B2B SaaS

B2B SaaS

This is what each gear refers to in the SaaS 2.0 business model:

Land – This is the traditional B2B customer acquisition process.  It is the domain of marketing and sales, and whether inbound or outbound, the outcome is customers committing to using your SaaS service.

Convert – In SaaS 2.0, initial commitment is only the beginning.  The commitment may be for a trial, pilot project or other low-risk implementation.  The goal now is to convert these early experimenting customers into full-time committed paying customers.  The future of the relationship is frequently determined in the conversion period.

Expand – Once the customer is satisfied and using the service, the next goal is to increase adoption by attracting new users, more departments, and additional valuable use cases.  This is much more than simply upselling and cross-selling tactics.  It means becoming a more valuable supplier and partner.

Enlist – Similar to the consumer model, enlistment in B2B turns happy customers into champions for the cause and having them spread the word through referrals, references, community participation, white papers and events.

Like the consumer model, a thriving SaaS 2.0 company must have all four gears spinning at all times to achieve growth and long-time profitability. The key to success is to constantly monitor and improve the slowest gear.

This model is very different from the tradition B2B model which could be called ‘Land and Maintain’’.  B2B business have focussed heavily on the ‘Land’ gear historically.  The Convert, Expand and Enlist gears are all recent additions to the B2B model and they result in a level of alignment between customers and vendors that didn’t exist in the traditional B2B model.

The Convert, Expand and Enlist gears require vendors to focus on the outcomes the customer is receiving by using the service.  If the customer does not receive value from the service, they will not convert to being a loyal customer, they will not expand their purchasing and they will not become active members of the community. An unbalanced focus on the Land gear leads to significant economic and competitive underperformance in today’s SaaS model.

Proactively managing the delivery of customer outcomes is a new business capability that require new strategies, tactics and operations to be successful.

We will look at these new processes in Part 2.

Previous Article
The Four Gears of B2B SaaS – Part 2
The Four Gears of B2B SaaS – Part 2

In Part 1 we expanded Geoffrey Moore’s Four Gears model to this emerging B2B model (SaaS 2.0) In this post ...

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