You can't build your product in a vacuum. The customers drive engineering priorities. You also can't let your customers control your engineering team.
Who do you want to be when you grow up?
Are you a daisy or an orchid? Both are great. But you can’t be both.
When assessing the competitive playing field of any Software Product Category, we can use the following model:
It’s important to realize that each of these quadrants provides a healthy opportunity to create a valuable, profitable business. It’s hard to optimize for multiple quadrants though.
Here are some of the trade-offs that are easier to master when you know what you want to be(come):
- A value player will invest in technology to bring down the on-boarding-, service- and operating cost of the SaaS Service (the so-called “Cost-to-Service”, CTS)
- A Premium player will invest in R&D and Visionary Product Leadership.
- Premium niche players will likely go direct.
- Value and Volume players will allow a channel to control (part of) the relation with the market, and just add their unique piece of technology to the value chain.
- Niche players will hire experts in their vertical or segment to give them unique credibility and specialization in a small (but profitable) market.
Customer Success and Support
- A value or volume player will optimize for low-cost, self-service support, and easy on-boarding.
- Premium players will invest in Customer Success teams, consulting departments and paid premier support services to maximize individual customer delight.
- Niche and Premium players will likely build (and protect) their Intelectual Property.
- Value and Volume players are more comfortable with licensing, buying or partnering.
- Value and Volume players can get by with great utility players who can get the job done for a relatively low cost.
- Premium and Niche players probably have to pay a premium to get the best people for their sales, services and engineering teams.
- Finally, marketing will be very different for each of these 4 quadrants. The difference from branding, positioning, messaging, pricing and campaign perspective are vast.
So make up your mind, and then optimize for the quadrant you pick.