Death by a Thousand Duck Bites

...props to Kelly for the title (I never heard the phrase before)

After the first couple of sessions as SaaScon, Kelly made the comment that it seemed like a lot of the big players are moving down-market (to smaller businesses). Then, towards the end of the conference, one of the moderators mentioned that he noticed a recurring theme which was that SaaS vendors are actually moving up-market as more and more enterprises adopt the SaaS platform.

Let's assume for a moment that they are moving up-market. Clearly, it opens up the true small biz market for us and makes the quadrant diagram (do we have a name for that thing?) more of a reality. But I think we need to ask ourselves a couple of questions:

1. Can we sustain competitive growth given the fact that our sales/support overhead is several times (proportionally) that of the big boys? (we have to sell/support 1,000 customers to equal 100 larger SalesForce clients) or is this "Death by a thousand duck bites"?

2. Does this get us to "The leading provider of active crm software for small businesses"?

I think the first question is answered by asking another question: When we say competitive growth, who are we competing against? Is it SalesForce and RightNow? or is it Act and Goldmine? Or is it another on-demand company out there. From everything I can tell, it's none of the above. We appear to be the lone wolf in the land of automated crm software. The big boys can't afford to come down to true small business. For SalesForce to increase their revenues by 5% in Q3, they would have to sell 83,000 seats PER MONTH on their current small business pricing model. I would imagine the same for the other large CRM vendors. And that assumes that their current pricing structure would include the equivalent feature-set of ours (which it doesn't come close to).

So, looking around - I don't see another player in the true small business space that can provide the feature-set we provide, for the price we provide it. Our sales guys said that we just don't lose sales to SalesForce. We don't really lose sales to anybody! In fact, they said that our close rate on people who attended a demo is incredibly high! And if there's no other competitors in our space, then instead of asking ourselves if we can sustain "competitive growth", we should be asking ourselves how fast we can grow, and if we can sustain our profit margins. Because if we can sustain our margins - there's a butt-load of money to be made.

And I think I answered my second question.