Once a SaaS company establishes the core functionality of their product and has some market traction, they will usually start to think about providing their customers with product integrations.
There are many business benefits to offering integrations to your product, from generating leads, reducing customer churn, and increasing upsells and customer loyalty. But like most things, not all integration setups are created equally.
Though it might be tempting to go with the integration setup that costs the least upfront, it is important to be aware of the real business costs associated with different ways of providing integrations to your customers.
Here are the 6 major types of integration setups with their benefits and drawbacks.
Often the first stage of enabling product integrations is to provide customers with an external API to your product so they can use it to build their own integrations.
The customer bears the entire expense of creating and maintaining the integration. In addition, the customer can build their integrations to their exact needs and systems.
It is expensive and time-consuming for a customer’s developers to build an integration. Many customers simply will not do it, meaning many users will go without integrations, and will have to manually transfer their data out of your app, which is a frustrating and time-consuming experience.
If the customer’s developers do build an integration, if the integration is not updated when the APIs are updated with important new functionality or a version is sunset, the customer experience will suffer as the user waits for their developers to make updates.
In addition, while a customer's in-house developers CAN build the exact configurations the users in the organization need, many times they do not, as integration building is often not a priority for engineering teams.
The developers might provide configurations that are hard to use or at odds with the users’ actual needs, leaving the users of your product frustrated and needing to fashion workarounds or pester their developers. This can entail long delays, and a painful back-and-forth between developers and the users of your app.
VARs and MSPs will take a company's SaaS product and then customize it and re-sell it to customers. Part of the added value might be integrations into their customers' other systems.
VARs and MSPs are often selling solutions at scale so may have developed insight into how customers are using different products. They bear the cost of creating and maintaining the integrations.
With many different parties involved in configuring and maintaining integrations to a product, some users and customers will likely have subpar experiences, facing bad configurations or downtime. This reflects poorly on the core product and undermines your company’s brand.
VARs and MSPs are charging for their services and maintenance which may not align well with the true value of your product and the value they are adding. You lose some control over whether the end user will believe the value justifies the cost.
As when the customer builds the integration, a SaaS company cannot fully control when VARs and MSPs fail to properly configure, update or maintain the integration. The way the user interacts with the integration may be poorly designed. As software on the market quickly changes and gathers new functionality, failing to update can provide a poor customer experience and affect the customers’ core business functions, causing further dissatisfaction with the product.
A SaaS company can build a connecter to a tool like Zapier, and then direct their customers to use Zapier to integrate with their other applications.
Your company can provide customers with a way to connect your product to other apps without your or their developers having to build all the different integrations. Zapier and other similar tools offer connections to many of the most commonly used applications.
You lose flexibility and control over the configurations between your app and the software your customers are looking to connect with. Customers might be dissatisfied with the options, which are often more simplistic and rigid.
Configurations between two products require thoughtfulness about how the tools should best be used together, and what shared customers are looking to do.
Any technical or support problems caused by the third party tool, whether it be Zapier or another tool, will also affect the integration’s success.
For example, ShopSync is a third party tool that connects MailChimp to Shopify. 10 of the 23 reviews left for ShopSync from January to May of 2020 were 1 or 2 (out of 5) stars. Complaints concern the configuration options, failure to work, and poor customer support.
While neither MailChimp or Shopify are directly responsible for these issues, they undermine customer satisfaction and provide a subpar experience of both products.
In order to use a third party tool, customers have to leave the app they are using and install the integration, and this causes your company to lose control over the customer experience. Many customers struggle to implement the integration and the specific configurations they need.
In addition, with three companies involved, customers often do not know whom to approach for support or other issues, and can get frustrated trying to connect with the right person.
These elements can easily lead to an integration that isn’t usable by customers, and, if it is, can cause frustration in the product experience as customers are forced to develop workarounds to challenging configuration options or poorly written code. Depending on how large and established the third party tool is, there might also be downtime or security issues.
Companies can offer an external API to third party developers who wish to build into their app with minimal or no oversight.
You do not have to build the integrations or maintain them.
The lack of review or fees for partners lowers the barrier to entry, which can potentially increase the number of integrations that are built. If your product is popular or filling a generally unmet market need, third party developers might be extra motivated to build into your product, giving your customers many integration options.
Companies or third party developers may build poorly designed integrations and fail to offer clear docs or any customer support. They also may fail to properly maintain the integrations or update them.
These elements can easily lead to an integration that isn’t usable by customers, and, if it is, can cause frustration in the product experience as customers face downtime, security issues, or are forced to develop workarounds to challenging configuration options or poorly written code.
All large in-app integration marketplaces have partner-built integrations that have been approved or certified by the company. Sometimes, these are reflected in partnered tiers, with increasingly rigorous standards of review; other times, integrations are either certified or not; and in some cases, every integration needs to undergo review by the company.
You do not have to build the integrations or maintain them, but you can still ensure a certain level of quality and security for your customer. You retain some control over your customer's experience.
Many platforms, like Shopify, Box and Workday, have tiers of approved partners, with the highest tier being reserved for those who meet arduous requirements around uptime, configurations, support, security, and performance of the integration.
This hybrid option allows them to keep a high volume of tech partners, while giving customers some integration options with guaranteed quality.
Putting requirements on building integrations can reduce the number that are built as companies do not want to put in the work to meet the requirements. This is especially a challenge for smaller SaaS companies as other companies might be less motivated to build into their smaller user base.
Even though requirements obligate the tech partner to meet the app company’s specifications, the app company’s reputation is still subject to the partner actually meeting those obligations and providing quality customer service.
It can also take organizational resources to define those requirements, ensure these obligations are met, and enforce them when they are not.
In addition, even rigorous approval leaves some discretion to the partner company; they may use it in a way that does not meet your customers' needs, especially around configurations.
Companies know their customers best, and they can build the integrations their customers want so that it is embedded in their application.
Building integrations natively embedded in your app provides you with the most control over the customer experience. Customers do not have to leave your app to implement the integration, and thus you can provide them with a seamless experience installing and using the integration.
In addition, you have the flexibility to provide the exact configurations your customers are looking for when you build them. You can ensure that the integration always performs, is secure, and is updated according to your customer needs and your tech partners’ (as well as your own) API changes.
This is the most expensive option upfront as it requires building the integrations and the UI for your customers.
Using an integration platform designed specifically for the purpose of building in-app marketplaces (like Pandium) can dramatically reduce costs, but it will still initially cost more than leaving your integrations entirely to third parties.
Costs of this option are mitigated over time because customers will have a more controlled experience and therefore need less customer support. In addition, for most companies, the business benefits of controlling the customer experience and having the flexibility to update and change the integration as needed can offset the costs of building and maintaining integrations.
Not all integration setups are created equally. Many companies start with directing their customers to third party tools and transition to building their own in-app integration center, where they build their own integrations as well as approve partner-built integrations.
Before you decide what is the best strategy for your company, it’s important to consider the benefits and drawbacks of each approach.