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Freshbooks Launches Benchmarking Service: SaaS Will Never Be the Same

Way back at the Office 2.0 conference FreshBooks CEO Mike McDerment dropped a bomb in the last 20 seconds in his presentation: being software as as service, they can aggregate customers’ data, categorize it by industry, size ..etc, and once they do that, why not turn it into a service, providing customers with their own performance metrics as well as benchmarking them against their peers.

A few months later, the Small Business Report Card service will launch tomorrow at the Web 2.0 Expo as well as online. The service will be free to all Freshbooks customers, who will:

  • all receive their own performance metrics, and
  • if they select their peer group based on (currently) 80 types of business / professions, geography and several other business criteria, they will also receive their relative position, “score-card” within that group.

The sample below is a mock-up of the actual Report Card, but is shows the initial metrics reported. Clearly, as they further enhance the program, there will be more and more criteria, and FreshBooks customers will have a say in what performance metrics they find valuable.

Remember, FreshBooks’ customers are mostly small businesses who don’t have an army of MBA-types crunch the numbers and look for business (in)efficiencies. In fact it’s probably fair to say some would not even know how to interpret the numbers, until they are put in prospective – hence the value of relative benchmarking.

But why will SaaS never be the same? This isn’t just about FreshBooks and its customers.

It’s *the* hidden business model enabled by SaaS. An opportunity not talked about, but so obvious it has to be on the back of all SaaS CEO’s mind. Benchmarking is a huge business, practiced by research firms like Forrester, Hoovers, Dunn and Bradstreet, as well as by specialized shops like the Hackett group – none of which are affordable to small businesses. More importantly, all previous benchmarking efforts were hampered by the quality of source data, which, with systems behind firewalls was at least questionable. SaaS providers will have access to the most authentic data ever, aggregation if which leads to the most reliable industry metrics and benchmarking.

Being pioneers always carries a risk, and clearly, Freshbooks will have to keep an eye on their customers feedback. There may be a backlash due to data privacy/ownership concerns; some customers will not opt in, they may even lose some customers entirely. But I believe the majority will see the light and benefit from the service. If Mike’s blog post on the subject is any indication, the feedback there was overwhelmingly positive, with 13 comments for, 3 against.

I suspect a year or two from now benchmarking based on aggregate customer data will be standard industry practice, and little (?) FreshBooks will be looked upon as the pioneers who opened up the floodgate of opportunities.

Last, but not least a word on the creative launch – or a lesson on how to launch from a conference you don’t officially participate atsmile_wink:

Yugma is a web-conferencing company and an exhibitor at Web 2.0 Expo. What better way to demo a web-conferencing product than by showing real-live use… without Yugma having to move a finger to create content. They created Stage 2, a platform for companies to showcase their products remotely at the Yugma booth and simultaneously to the World through a Net broadcast. Both the presenters and Yugma win – congrat’s, and my personal Creativity Award to Yugma thumbs_up

Update (4/19): read Jeff Nolan’s comments.

Update (10/8/2008):  Congrat’s to Freshbooks for getting on  Fox Business.

Comments

  1. Anonymous says:

    Very cool about the Yugma session support at the upcoming conference. Moreover, this could be ideal for companies allowing their partner network to present to audiences at annual conferences.

    Cheers,

    DC

    http://www.batipi.com

  2. I bopped over to comment on the two-word strategy and then saw this article, so I had to stop and comment here, too.

    I think this data is very valuable and I am certain we will see a lot more of this kind of benchmarking — and I can’t wait.

    But it’s not really new. Dealer 20 groups and other companies have been doing it for nearly two decades for automotive and powersports dealerships, using manually entered data and spreadsheets until data started going online. I was involved in acquiring a company in the 90s that did this, and I had created something similar for the powersports industry way back in 2000. Today I get data sent to me regularly from at least a half dozen companies that are currently doing aggregated statistics and benchmarking for the small biz market.

    I am glad to see it being done and think SaaS will make it more common in a few years, but I wouldn’t say it is exactly new.

    Best,

    Anita

  3. Hi Anita – Mike from FreshBooks here.

    I am inclined to agree – this is not new, and it’s not rocket science, but there are some noteworthy differences in how this service is being delivered by FreshBooks and the resulting benefits.

    First, there is no manual work for the entrepreneurs…no spreadsheets to be fed. All the calculations are done by machine with no human involvement. Better still the data is source data which means the quality of it is basically as good as can be.

    Second, there is a major benefit from a learning point of view for the entrepreneurs. Over time we will delivering a historical record to the entrepreneurs so they can measure their progress and work towards improving their results. To accelerate this we will be connecting best performers within the FreshBooks ecosystem with the group so knowledge can be shared and everyone can get smarter and run their businesses better.

    Lastly, we are serving undeserved businesses and doing it in the context of their daily work flow at now additional charge. The kinds of businesses we are assisting can’t get the information elsewhere and the information is tailored to their unique needs therefore it’s more relevant and more compelling.

    All of which is to say, we’re reinventing and old concept and delivering value in new and deeper ways. What was done before was two dimensional. So you might say that what FreshBooks is doing possesses the third dimension of depth.

Trackbacks

  1. […] first time I said SaaS would never be the same was referring to Freshbook’s launch of their benchmarking service: It’s *the* hidden business model enabled by SaaS.  An opportunity not talked about, […]

  2. […] receive their own performance metrics (benchmarking) for their data and their processes […]

  3. […] addition of roll up data analytics to provide customers with performance metrics and benchmarking shows that […]

  4. […] so they can cut out the fat and enhance the in-demand features. New Business Models, like benchmarking – based on anonym aggregate data provide your customers with performance metrics.  Even newer […]

  5. […] soon did, launching their benchmarking service, which for the first time gave small businesses the insight needed for comparative analysis.  […]

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