Software service business are Software-as-a-Service providers have been growing fast while the contemporary research literature has neglected analysis of their business-critical marketing and sales processes.
Software business includes segments with rather different characteristics with respect to marketing and sales. Embedded software is usually developed for a single company either as professional services or in-house. IT firms providing professional services implement bespoken systems as well as deploy and tailor enterprise systems for the customer.
In professional service business trust is important as the software to be delivered does not yet exist. The number of customers is small while transaction costs and the revenue per customer are high, which require investing on customer relationship management. Instead, standardized and packaged software products with relatively low prices are examples of offerings of Internet generation firms with strong brand marketing and marketing alliances. The customer-base is large and the users are distant to the vendors. For these software product firms the marketing costs are a major share of the budget.
The relevant marketing means for software service business include relationship management, seminars, fairs and other form related to personal communication, software product business relies more on advertising and direct sales while both use Internet as a marketing channel. Personal selling, representatives and value added-resellers (VAR) are typical sales channels for software service business. A network of software service firms can also co-produce a service offering for customers in process of value co-creation following the service-dominant logic. Instead, software product businesses use more wholesale and resale organizations as well as Internet as a sales channel.
From this perspective the multitenant software can be seen as a cost-efficient model to provide services to new, underserved market segments, such as small enterprises. SaaS shares also some characteristics of software service business with a need to avoid churn and invest on customer relationship management to retain customers.