The ‘S’ in SaaS doesn’t stand for ‘sticky’

I attended an interesting conference yesterday called the Software Marketing Perspectives Conference here in Austin.  Although the focus of the conference was on Product Management and new trends or solving some common issues for product managers, the most interesting portion I found was a discussion we had about the growing emergence of SaaS (Software as a Service). 

I’m sure most everyone is familiar now with SaaS since the rise of certain companies like Salesforce.com have given legitimacy to the concept, so I certainly don’t want to expound on the virtues, many thought there may be.  I was definitely more interested in the challenges of creating a product that is SaaS focused and how to sustain and grow said product. 

Certainly one of the big benefits for SaaS is the low cost to get started when using an application.  I don’t know how much Salesforce.com costs, but I am focusing more on smaller applications anyway, such as an application like OpenProj from Projity.  They have an MS Project killer application on their hands that costs only $19.99/month per user.  Awesome!  Hereis a recent review of OpenProj.

Here’s the issue I thought of yesterday when I was discussing this with one of the conference attendees…what is there to stop anyone from switching products as often as they gas up their Prius?  As I mentioned in an earlier posting, there is no shortage of companies out there trying to sign you up as a customer for their next killer project management application.  Certainly given the low cost (or often free for a while) price tag companies can continually shop around trying new products and seeing who truly is the best of breed.

Here’s the bottom line – the challenge for SaaS vendors, especially smaller ones who may come late to a market, is how do you keep your customers coming back after you’ve given them the taste of your product?  What keeps your products sticky?  It’s much easier for big enterprise companies because the investment up front was already substantial and to switch to another large enterprise vendor will cost considerable dollars.  But in this new nimble world of smaller, on demand software what is going to be the catch that keeps the customers coming back when the barriers to switch are getting lowered all the time?