Putting Customers at the Center of Your As-a-Service Business Model
Knowing who your customer is and where they’re going is fundamental to creating a successful As-a-Service (AAS) business.
By Tamarah Usher and Charles Schreiner
Customer needs and support differ for all business models. However, in As-a-Service (AAS) models, the real-time feedback and data generated create the opportunity for unprecedented platform precision and dynamic support.
Actively investigating and finding clarity in your customer's needs ensures efficient use of resources, leverage of capabilities, and discovery of new revenue streams. Finding the best way to serve your customer in an as-a-service model aligns with many proven customer strategy methods with only a few considerations for the uniqueness of this platform's business model.
Truly knowing your customer
You must know your customer intimately. While this can come in the form of demographics and psychographics, going beyond these factors to the depths of pains, gains, and perceptions of value will allow you to find true product/market fit. Whether your platform is B2B or B2C, understanding the pain and opportunity in your users’ jobs to be done is essential.
Jobs to be done
The jobs to be done (JTBD) framework for thinking about customer behavior was popularized by Clayton Christensen in his book The Innovator’s Dilemma. JTBD starts with the premise that people don’t just buy products — they hire products to do a specific job. To better understand what people are hiring your product to do, you need to understand the circumstances surrounding the use of your product, what other options are available, and what tradeoffs the user is willing to make.
Pains and gains
Start understanding users’ JTBD by modeling assumptive pains and gains and promptly testing them with users via prototypes or on the existing platform. Two types of pains and gains need to be considered: functional and emotional. Functional pains and gains relate to the practical features and benefits of the service model, while emotional pains and gains relate to the way a product or service makes customers feel. Regarding AAS business models, it’s essential to provide value with both functional and emotional gains.
Customer segments
Some customers (particularly those looking into using a freemium model) want a frictionless and automatic experience. These customers value self-service and can frequently operate with AI-driven chatbots, standard reporting, and a limited set of options within your service. On the other hand, large enterprise customers with many users will want a high-touch, live model that can show them all the functionalities at their fingertips. They also often require or request customization to work with their business processes.
Your customer focus should follow your corporate strategy and should help you make active decisions regarding which customer segments to prioritize. Your customer segments will also likely shift based solely on the move to an AAS model, so keep an eye out for your customer mix and run models frequently to understand their shift in behavior. On the back of those decisions should be robust cost-to-serve and propensity-to-buy analyses. These tactics will inform not only your product strategy and roadmap but can also unlock newer, higher-margin customer segments by pivoting to their specific needs.
Discovering alternate use patterns
People often find innovative and original ways to use existing software to solve current problems. This is especially true for software-as-a-service (SaaS) business models. Since SaaS models allow users to access and use software on demand without having to install or maintain it themselves, they’re often used in ways not initially anticipated by the developers.
For example, a project management SaaS might be used by a marketing team to track the progress of their campaigns, or an accounting SaaS be used by a human resources team to track employee vacation days. The possibilities are endless, and while some of these uses may be outside of the original intent of the software, they can still be incredibly valuable to the businesses utilizing them. Leveraging user data and behaviors from your platform will allow you to pick up on these patterns and customize features, offerings, or pricing models for the discovered use cases.
Finding underserved markets
AAS disruptors are constantly exploring segments of opportunity using the jobs-to-be-done lens, creating a portfolio of growth opportunities through research, customer-defined metrics, and measurable innovation. Using customer data constructed performance metrics or customer desired outcomes, opportunities must be rigorously and continuously evaluated. A process we often use and recommend is the Outcome-Driven Innovation (ODI) framework.
The ODI framework aggregates the customer strategy to the market level. The five key steps to unlocking this insight include:
- Defining the market by jobs to be done
- Uncovering measurable outcomes for these segments
- Finding unmet needs, whether under or over-served
- Segmenting the market
- Conceptualizing products for each segment
This market-driven perspective of innovation ideation differs from the typical product concept development approach.
Business model innovation starts with the customer
Addressing who your customer is and where they’re going is one of the fundamental steps to succeeding in an AAS business model. The tactics and analyses we highlighted here — JTBD, pains, gains, customer segmentation, and alternative uses of your AAS — not only make your offering attractive and extensible but also promote customer longevity and increased lifetime value by the gravity created in the business model. Employ these customer-obsessed approaches, along with data and insights from the platform, to continue to add value and extend the utility of your offering over time.
Slalom is a global consulting firm that helps people and organizations dream bigger, move faster, and build better tomorrows for all. Learn more and reach out today.
