Why do Indian SMEs pay top dollar for SaaS
Like most investors do, NowFloats was questioned about the ability for Indian Small & Medium Businesses (SMEs) to pay for our SaaS product. And this was a constant question for almost 2 years till we were past MVP and had renewals to show. (We are almost 5 years old as a company now.)
We were just not conditioned to believe that SMEs in India are willing to invest in “fancy, internet, mobile-based B2C technology”, when it is easier to see returns from distributing pamphlets in the newspaper or rely on word-of-mouth for dhandha.
Over the last five years, we at NowFloats have brought almost 250,000 small businesses online (80%+ from India), and our direct sales channel charges INR 25,000 (~$400) per year to avail our services. The last I checked our ARPU from this channel stood at a healthy INR 20,000 from this ‘Feet on the Street’ across 40 branches in India. Our other channel’s, which are indirect, the ARPU is significantly lower. At the end of 2016, we even had 105 channel partners who were helping us sell our technology.
This might, at the outset, seem like a sales intensive business and an army of highly trained people to sell our product. As true as that may be, the distinguishing factor between other SaaS companies, and companies that specifically cater to SMEs is this: we do not sell our product to small businesses, we solve their problems. And they are happy to pay for it!
We may tend to approach SMEs with facts, numbers, and figures, trying to generalize what areas require innovation. But when it comes to SMEs, it’s not the big data that matters, it’s the small details. It’s about the small insights, it’s about ‘visibly demonstrating’ that you are helping them. (See DigitalDesh, which is right now in Karnataka figuring out even more granular insights for NowFloats). And we are happy to share these insights with the Indian eco-system. Because we believe in win-with.
For now, in India (and I suspect in many other markets) engaging with your SME customer is best done face-to-face. Else, how will you ever meet Nawab in semi-urban Karnataka and figure out that he is already on Instagram! Interacting with your customers personally will tell you not only how to solve their problem, but how to do it, and most importantly, how soon. And it this ability to help the India SMEs in the unique Indian way which attracts the top dollar from them.
SaaS is more about the service than about the software itself. Pun intended.
