Shelfware
I was listening to the SaaStr podcast (episode 039 with Cindy Padnos) and they brought up the history of SaaS companies over the past two decades. Cindy references Shelfware as the concept of acquiring software (e.g., on a disc) that simply sits on the shelf and rarely or never used.
That’s terrible. The buyer loses value on the deal because they went through a due diligence process, paid for it, and put some thought into implementation. All that set them way back. But it also spells a terrible future for the seller. They built a product —great, usable, or terrible — that isn’t getting used. They’ll likely never sell to that customer again. But the worst part is the lack of visibility into product use.
It’s such a shift to today where we can see how our customers are doing, what they are doing, and how their systems are. Whether it’s banking, fitness, portfolio management, mobile tech, streaming music, medical…if a customer isn’t active, we know. If our customer is running into trouble, we know. If our customer isn’t getting their desired outcomes through our company, we probably have an indication. In fact, within SaaS, we are able to predict that.
Integrated Supply Chains
So if we think about a fully integrated supply chain, we’re not simply focused on our customers well-being, but our customer’s customer’s customer’s well-being. If they aren’t doing well, we’ll eventually feel the ripple effects. If they are doing great, then we good things will come.
That means, at a minimum, that I need to deeply care about my customer’s customers. They will not only help forecast the next few quarters for me, but more importantly be our growth engine. Why the podcast fascinated me is we now have this visibility to our customer’s health — the bad news is if it becomes shelfware, they’ll simply cancel (i.e., no one “buys” Netflix and let’s it sit. They simply stop their monthly subscription).
Now we know what features aren’t used, what parts are popular, and where we need to do more. Not to mention customers are happy and willing to spend the time to send us feedback to make our products better for them. The feedback loop is tightening. It’s no longer about waiting six months to hear how implementation went. It’s now. It’s in the moment.
Visibility. We now have visibility. The fog is dispersing. The attentive systems give us a steady, raw feed. However, what does this mean for the next five years? If we now have the ability to measure the actions of our customers, will we be able to measure their success in three years? Also, with all privacy and safety concerns in the forefront of our minds, how can we succeed by learning more about our customers for them to succeed?
No matter what: I’m glad the threat of shelfware is dissipating, though we’re accruing different obstacles now. This time around, we’re armed with real-time knowledge and the ability to act — now.
Jeff Beaumont 