Is Firmex a Product or a Service?

Jun 10, 2010 - by Joel Lessem

When I first went to trademark Firmex virtual data rooms as a software company, the trademark attorney told me that to trademark us as a product company I had to physically be able to “ship” something.  “Send us a copy of your product on a disk with packaging.”  My reaction was “huh?” – We have the internet – we don’t “ship” software on FEDEX trucks anymore, we let the internet take care of the distribution.  According to the Trademark office, then, you’re not a software product company,  you are a service company.

Still, I was confounded since Firmex behaves like a software product company: we build a product; we show people how to use it and 99% of our revenues are from “product licensing.” However, we don’t install the software on our clients’ computers, and that, according to the Trademark office, makes us a service company.  I disagreed.

Four years later, I realize that we are in many regards a SERVICE company.  I have spent the last few months interviewing clients, finding out what they like and what they wish to improve about the Firmex “product.”  Despite perhaps some feature requests, almost inevitably our clients are quick to volunteer that their SERVICE HAS BEEN GREAT.

What I have learned is SaaS business forces you to focus on service. If a SaaS customer is not happy with your company’s support, s/he can “unsubscribe” with far less difficulty than if s/he was dealing with a locally installed system. Unlike a traditional software vendor that charges a licensing fee up front and a 20% support fee for ongoing use, a SaaS vendor has 100% of their recurring revenue to protect. Those customers are valuable.

Finally, referrals are the leading source of our triple-digit growth and service is a leading reason a client will switch from another vendor. At the end of the day we license a product, but we are in the service business. So when it comes to my client services team I have learned to spare no expense and I hire the best service people I can find!