SaaS integrations with tools like Close, Quickbooks, and more have always been important for any B2B SaaS tool. But now, interoperability of your SaaS tools is more key than ever.
Data integration is not a new concept for anyone in the SaaS industry. In fact, it is one of the first things that SaaS companies paid attention to. If you look at the top 15 SaaS companies, they average having 347 integrations.
You can see this in action with a tool like Quickbooks, where their integration library is humongous. Their integration strategy is one of the reasons they maintain their market positioning today as the number one accounting solution (over 62% market share).
So while integrations are known to be an integral piece in building great software, what is often overlooked is how key SaaS integrations are to reducing switching costs and closing deals.
What are switching costs (and how are integrations related)?
Switching costs are the pains that a customer endures when changing to an alternate provider for a service, product, or good.
Minimizing switchings costs are an important piece of the SaaS sales process. Any time a customer is evaluating your solution, they are asking themselves, "What will it take to get started?"
When they ask that question, what they really are asking about is switching costs. Let's say a company that currently uses HubSpot as their CRM wants to switch to Close. On the other hand, they would still like to utilize HubSpot's marketing tools. One of the questions they will ask is "How can I get all the data I have in HubSpot into Close?" The answer is simple: integrations.
Integrations are no longer a feature that SaaS products can show off as a differentiator - they are a pre-requisite to using products now. For example, let's say you are working in Sales for an email marketing automation software. You hop on a sales call and demo the product - your potential customers love it! They get excited about using the product and ask you, "So how do we get started?" which really means, "How can we migrate off of our current solution and onto yours?" There are two ways that this can go.
You explain that while you don't offer integrations with Close, Salesforce, HubSpot, and other CRMs, your customers can manually input each contact's information or upload an Excel file to your tool.
This is not ideal - it requires your user to do custom work. Even if the customer does manage to get an Excel file of all the data necessary (which only some softwares provide as an option), your team then has to figure out how to handle those Excel uploads to your platform (which are rarely in the format you want to receive them).
You explain that your platform offers integrations with all of the most popular SaaS tools, allowing the potential new customer to onboard by simply connecting their previous platform to your product in less than a minute.
Obviously, option 2 is the ideal situation. You significantly reduce the switching cost by allowing your user to connect their other tool to your platform. Now it's time to get started on expanding your integration library. What are the next steps?
Exploring how to connect to these systems
When exploring the world of SaaS integrations, you will come to learn that the most important technical piece of integrations is a company's API.
An API, which stands for application programming interface, is a way for two softwares to communicate with each other and pass data. One important thing to remember is that each API is configured in a different way, so with every API there is documentation that details how developers can work with that specific API.
Companies offer APIs so that other softwares can request data from their software, or provide data from other softwares. Let's break it down with an example.
Example of an API interaction
You are the customer of two softwares, a CRM software called Software A and an email automation tool called Software B.
In Software A, you have a list of potential customers and their emails. This past week, you rolled out an awesome new feature for your customers so you want Software B to email all of your potential customers and let them know. This means that software B needs to grab the list of contacts from Software A.
To do this, the API of Software B makes a request to the API of Software A to get a list of all the names and emails of the potential customers. Software A then takes that request, finds the list of names and emails and sends it over to Software B's API. Now Software B has the data it needs to send out all those emails!
Now, of course, this example is a simple demonstration of the function of APIs for a software. They act as an outward facing spokesperson for the software. The issue lies in that sometimes, it is really hard to work with a company's API.
How companies use their API to create vendor lock-in
While almost any modern SaaS company has an API for their software, it is up to the company to make that API available and easy to work with. Let's dig in to a couple main differentiators when it comes to a company's API.
A closed API is when a company decides that only certain people can access their API. It could be that they only offer the API to their paying customers, or that there can be a large fee to get access to the API.
For example, Oracle NetSuite has a closed API making it hard to get data out of NetSuite. The fee for access is thousands of dollars a year, so if you wanted your software to be able to connect to NetSuite, you would have to pay this annual fee.
On top of the annual fee, you also need to have an active NetSuite subscription to access any sample data or documentation on how the NetSuite API works. Once you do have access to the documentation of the API (which is necessary to know how to work with the API), you quickly realize that the documentation is out of date and the technology used for their API is old.
All of these characteristics of closed APIs lead to vendor lock-in (which is typically by design). In this case, Oracle offers tons of solutions for almost any software a business could want. They make it easy to connect data between those systems, but not solutions that are outside of their suite of softwares.
An open API is when anyone can test and use a company's API. Even when companies have an open API, it doesn't mean that their API is easy to work with.
An example of a company with an open API (that isn't easy to work with) is Salesforce. You can quickly create a free developer account and test their API with your own, which gives the impression that their API would be easy to work with.
But it is not! Once you begin using the Salesforce API, you realize that you still need to take time to study their data model (what they call certain types of data within their product) as well as their endpoints (these are specific branches of the API where you can request certain types of data).
Once you have studied their data model, and you manage to pull the data you would like out of Salesforce, you still need to then transform that data into the format that your product uses. While these challenges aren't unique to Salesforce, their API certainly isn't the easiest to work with.
How companies offer integrations today
There are a couple things that should be clear now.
- Integrations are an essential part of selling your SaaS solution.
- Building and maintaining integrations yourself is hard.
It is no surprise that integrations are hard - which is why there are companies dedicated to helping startups like yours add integrations to your product. Let's go through some of the ways that companies currently handle offering their users integrations.
While this isn't really offering your users integrations, this is a way that companies handle bringing customer data into their own product.
Moving the data manually involves a company employing a team of engineers and data analysts to go and do the work of manual data entry that they then have to massage and fit into the new tool. Depending on how much data there is to move, this can take weeks and sometimes months to complete.
This means that you have at least a couple of employees working on moving this data over for an extended period of time, costing thousands of dollars in salary to the company (and sometimes, this cost is passed onto the new customer).
One-time data sync tools
There are multiple tools that help your new customers do a one-time import from their previous tool, meaning right when your customers onboard, it will go and grab all the data available from their previous business app. Let's take a look at a couple of the best ones.
Import2 takes all the records from your previous business app and imports them into the new business app that customers are using. They are limited in the integrations they support, but have great data consistency. You can even try pulling data out from Close using their free demo on their website.
Hotswap is similar to Import2 but their user-interface is better. You can also input your own logic for transforming data within Hotswap, making it an extremely flexible solution.
Trigger-based automation tools
There are also multiple tools that are great for doing simple trigger-based automation between tools. These tools are not great for more complex integrations or moving larger amounts of data on a consistent basis. Additionally, your customer would set this up outside of your product (extra custom work for your potential customer).
These tools would be good if you wanted to set up a flow where when a new contact is added in Close, a new task is created in Asana to onboard that user. Let's look at a few of the hottest tools in this space.
Undoubtably, the king of the simple trigger-based automation space is Zapier. It is simple to set up and reliable. It is not native to your product so your user still has to step outside of your product to configure the integration, and your user pays for this solution separately from your SaaS tool.
Similar to Zapier, Tray is a tool that allows your users to set up workflows and automations. The interesting differentiator about Tray is that you can embed the solution inside of your product.
Workato, similar to Tray, is a tool that allows for user-defined trigger based workflows and offers to embed the automation workflows within your product. Workato is more flexible than Tray and offers great support.
Native integrations are the most customizable of all the options. They allow for the initial data sync as well continuous data syncing. When it comes to native integrations, there are two options.
- Building it yourself
Building native integrations from scratch is the most customizable option of all. The issue is that these integrations are, as mentioned before, difficult to build and maintain. You would need engineers to build integrations which can take a small team up to two months for each integration.
hotglue is a tool that helps companies build native integrations for their product. It takes away all the tedious parts of building native integrations yourself, while still allowing you the full flexibility of choosing what data you want from each source as well as allowing your team to define any transformations they want on the data. Teams are able to build native integrations within their product in a matter of hours instead of months.
What's next in SaaS integrations?
If your startup is growing, it is likely that you are having leads that get turned away because you don't support integrations to the tools that they use today. After all, a growing startup always has an endless list of feature requests it is trying to get through.
It makes sense to solve the data integration problem now by using one of the aforementioned tools to help your team provide all the SaaS integrations you could want or need.
Not only will your product be able to better serve customers, but the sales team will be happier, too, because there will never be a time when they have to turn away a customer coming from another platform. Want to know more about building SaaS integrations in minutes? Check out hotglue.