Famous SaaS researcher Wei-Guo Xu: My take on XTools being featured on CCTV
The overall SaaS landscape in China is characterized by a "well-received but not commercially successful" situation. Some have even begun to voice the sentiment that "doing SaaS is finding death, not doing SaaS is waiting for death." Since 2007, companies entering the SaaS domain have surged, whether it be traditional firms transitioning to SaaS or new startups entering the space. In just one year, the number of management-type SaaS companies in China doubled. However, after two years of development, the market expected to explode has not started as planned. Without users, there's no market; without a market, there's no cash flow; and without cash flow, businesses cannot continue operations. It’s no wonder some SaaS companies have made such laments. But it's not all like this. Today, CCTV Channel Two aired a 10-second advertisement placed by XTools, with the tagline: "Corporate Vitamin, Promoting Healthy Sales Growth." Moreover, according to Yi-Min Xie, Vice President of XTools, this is only part of their marketing strategy, with more actions to come.
XTools' decision to spend a large sum on promotion on CCTV in the "well-received but not commercially successful" SaaS market environment raises several points worth considering:
First, XTools rode the wave of the larger environment and seized the existing market. Currently, everyone is riding trends and building future markets. This does not mean that SaaS lacks a market; rather, the perception is that the current market isn't large enough to provide sufficient returns for each vendor. However, for the online CRM market, it's not small for a single company—it's just hard to grasp the market's patterns and difficult to capture them, but XTools has managed to do so. XTools has quietly cultivated the SaaS market for five years and has a deep understanding of its target customers' characteristics. They use an internet sales model to accurately convey product information to users while reducing the cost of product sales, thereby ensuring the company has good cash flow and profits. Of course, this achievement is thanks to the continuous improvement and development of the market environment, precise control of internal costs, and other factors. Now, more and more SaaS vendors are rallying, user awareness is rapidly increasing, and channels for product exposure are becoming smoother, so the overall environment's improvement benefits XTools. According to reports, from early 2007 to early 2009, XTools’ registered user base grew tenfold. The fundamental reason XTools can do this is that it has captured the market and made money.
Second, XTools' sales philosophy aligns with the characteristics of SaaS. Companies doing SaaS must possess the traits of SaaS. These traits include having attributes of the internet and service in everything from websites, products, services, sales models, and even talent teams—these attributes can also be called "genes." Yi-Min Xie once stated that XTools' products are primarily sold via the internet. Therefore, they did not build a sales team of hundreds or thousands of people, nor did they develop buyout-style distribution channels. Instead, they focused on studying the characteristics of the internet, improving the user experience of their products, increasing investment in internet advertising and promotion, and bringing direct customers through internet marketing. Worth noting is that to improve the closing ratio, they put significant effort into post-sales customer service. They would provide remote training and remote support services to help users learn how to use their products in the shortest time possible and strive to increase the conversion rate of trial users to paying users.
Third, a customer-centric business strategy. Being close to customers means that whether it be product features, price, or language used in communicating with customers, XTools strives to align with its customers. XTools has worked hard on product usability, with media evaluations stating that among all SaaS products, XTools ranks highly in terms of ease of use. Regarding marketing strategies, in the CCTV advertisement, XTools introduced the concept of "corporate vitamins." Although this concept may not be immediately understood upon first glance, as a user, this term feels very humanized and leaves a lasting impression. At least we all know that vitamins are essential elements for the human body, and similarly, corporate vitamins are essential elements for businesses. Therefore, companies seeing this concept will find it more appealing than simply seeing SaaS. Thus, it is expected that this ad will bring better results when aired.
Fourth, a new breakthrough in promotional methods, focusing on TV advertisements. Whether TV ads will become the best promotional method remains uncertain. However, SaaS vendors face universal challenges in marketing. Customers are hard to find, products are hard to sell, prices are low, yet marketing costs are high. Some vendors rely on channel partners and collaborators, but the current business model and individual customer returns make it difficult to motivate channels and partners, leading to lukewarm sales across the entire market. XTools' decision to run TV ads might be a new approach. TV ads have broad reach and cover large audiences. It is reported that software vendors like Jinhe Software and Caike Online saw positive market reactions after airing ads or programs on CCTV, directly generating numerous sales leads. After participating in the Wealth Story Conference program, Caike Online's server couldn’t handle the volume of user visits. XTools' willingness to place ads on CCTV suggests they recognize this advantage. TV ads can quickly convey the message the vendor wants to express to end-users and generate a large number of sales leads within a short period, unlike trade shows or roadshows, which often yield only a few users, if any at all. Note that the timing of XTools' ad broadcast was neither during prime-time evening drama slots nor late-night hours but around 7:30 AM, before and after "The First Time." This time slot precisely targets its ideal customer demographic—just consider who watches "The First Time."
In summary, XTools' ability to advertise on CCTV today is closely related to the overall improvement of the industry environment. Under favorable conditions, it has achieved certain results. CCW Research released the "2008-2009 Report on the Status and Trends of the Chinese Software Operation Service (SaaS) Industry" and evaluated XTools: "Currently, XTools has a certain scale of customers and industry experience, with products featuring ease of use and short implementation cycles. Data shows that XTools' online CRM users have rapidly increased, ranking first in the number of paying online CRM users in the industry." It is reported that XTools has accumulated over four thousand paying users.
Additionally, XTools' decision to advertise on CCTV positively impacts the overall market atmosphere, allowing more users to understand SaaS through this ad.