The World is SaaSing Up in All Industries

SaaSification of Industries · Luigi Mallardo · June 11, 2020
The World is SaaSing Up in All Industries

Zoom valued 12 times Lufthansa and 3 times Delta Air Lines. Subscription retailers booming as people are looking for experiential shopping … in their houses, and they want convenience and excitement.

There are many examples from several industries and good market insight available to make the point that today all sort of industries are SaaSing up as they go to market like Spotify, Netflix and the whole SaaS (Software as a Service) industry.

In this 8 minute webinar presentation (or 5 minute reading) you’ll learn from real examples why industries are SaaSing up and what are the commonalities.

I was presenting to an audience of CEOs and senior executives of airline companies but the content is relevant for most industries.

 

 

We all know companies like Netflix, Spotify or Linkedin disrupted and became the dominators of big industries.

Not everyone knows they are all SaaS businesses; even Amazon that many people think is just an e-commerce company whilst most of its profit historically came from its SaaS business, AWS (Amazon Web Services).

There is a popular quote Software is Eating the world. It is true but it’s one side of the story.

The other truth is that we are seeing everywhere the SaaSification of non-tech industries.

The male shaving market for example. Unilever bought Dollar Shave Club for 1 billion $ and took the lead in transforming the shaving business into a subscription model. Gillette lost more than 15 points of market share between 2010 and 2016 to then deciding to invest in subscriptions and start to recover. 

Nike hired in January 2020 the new CEO from Service Now, a SaaS company.

There is clearly a shift of go to market playbooks to something different compared to the previous reality and SaaS players have been pioneers of this shift for the last 20 years.

People want the Netflix and Spotify experience in all aspects of their life, personally and professionally.

The Automotive industry is in full transformation.

Between 2014 and 2017  I was SVP in a marketing and sales tech scaleup partnering with marketing leaders of Automotive brands in Europe and US and most manufacturers were already working on a vision of moving part of the business to a “mobility as a service” model.

Volvo’s CEO expects that one out of every five of the Company’s vehicles will be delivered via subscription by 2023.

Appliances is another interesting industry where is  going to happen something similar. It’s not far a moment when we’ll pay a fridge as a service fee, like it happened last year  to Ikea that launched in several countries pilots of furniture as a service for both B2B and B2C customers.

Another example is Peloton that launched an innovative formula of fitness at home as a service with a flat fee 39$ per month and raised more than 1 billion $ in a recent pre-coronavirus IPO.

THIS IS THE NEW REALITY.

 

 

There is a New Normal that was happening before the pandemic and what was already in the process of becoming is now going to accelerate.

The 2 most important points here:

First, the winners today understand that the competition is not on product and marketing but it’s on experience. The real work starts after the sales. Building a solid Customer Success organisation is part of the playbook kit needed in the next 10 years in any industry.

Second, we are at the start of the end of the transactional age. The future will reward companies that are able to build resiliency to shocks and the way forward is finding opportunities to build recurring revenue.

Recurring revenue are of higher quality and the value of the equity is much higher.

It doesn’t mean necessarily to move 100% of the business to subscription. Or offer subscriptions at all. Uber doesn’t run subscriptions, it’s pay per use, but if follows the same mantras of the other SaaS companies.

 

CONCLUSIONS

All companies should go to market like a SaaS business. 

Why?

To build more resilient and valuable businesses

People got spoiled by Netflix, Spotify, Amazon and now they expect the same experience in all aspects of their life, personally and professionally.

How?

Applying the same 7 Mantras and 4 Go-To-Market fundamental that SaaS companies have followed in the last 20 years.

 

The Airline industry, like many others, need to transform. We do not have yet a Netflix of the Airlines but people are looking for it.

Subscriptions or not subscriptions, the winners post-Covid will be the airlines that will focus on 3 main Mantras:

First, bundle is the model of the future, The Box. Which can include physical and digital products/experiences. How you build your Box is a great opportunity of value generation and differentiation.

Second, the winners behave omnichannel and understand that the winning formats are a mix of content and digital merged with the physical world.

Why do you think Amazon bought Whole Food (top retailer in US) and Alibaba bought Sun Art (big retailer in Asia)?

In the new era of retailing how can airlines get out from the airports and go mainstreet building experience stores to gain a refreshed connection with people. Following the Apple playbook of the showrooms like other industries have been doing.

Finally the last point, go-to-market fundamentals have changed and the business models of the new reality focus on acquiring more customers, increasing the value of those customers and holding on those customers longer.  Like in SaaS.

This is the fundamental difference vs trying just to sell them more tickets.