Software as a Service (SaaS)

Strategic Insights

Software as a Service (SaaS) is a simply fascinating area to work in. Not content with the effort required to attract new customers, marketeers need to ensure they are retained! Founder Alan Gleeson was first introduced to SaaS over 10 years ago when it became obvious that 56K dial up connections were being replaced by broadband. The implications for software businesses are profound, and in many ways the increased power of consumers mean that switching costs have been reduced to a mere click of a button. Experience gained in a host of different startups, across Europe and the US means you can build your SaaS business in confidence.

The following represent some of the topics we would be happy to help with:

Acquisition

One of the main challenges with customer acquisition in a SaaS business is that you need to spend cash upfront with no guarantee that the acquired customer will stick around. This is particularly stark for startups who lack historic data on which to hang assumptions (particularly in relation to churn). Gaining clarity as to your customer acquisition cost (by channel) will help ensure you are building on firm foundations.

Blank Slate

The blank slate problem is one that is often overlooked by SaaS startups. In short, it relates to the initial experience that users have with an application when it is in a blank slate state. This is the state that the application is in without data. Take for example an accounting software application. With one year of data a user will easily be able to generate a whole host of chart. We will happily undertake an independent onboarding audit, creating some actionable insights into ways that you can reduce the risk of a customer churning due to a poor experience based on the empty state of your application (given the lack of data). 

Churn

Churn is the bane of all service companies lives. It refers to people who quit your service having signed up. Of course the reasons people churn are multi-faceted but the impact it can have on a fledgling business can be significant. Measuring churn rates needs to be a Key Performance Indicator (KPI) for all SaaS businesses, so that concrete tasks can be put in place to help reduce the rate of churn. Ideally companies need to strive for negative churn where existing clients increase the amount of business they do with you. We can help businesses to understand some of the drivers that are causing clients to churn, as well as to implement strategies to reduce the churn rate.

Lead Generation

Generating leads is the lifeblood of any business. Managing these leads through to conversions requires water-tight processes, with clear accountability. Marketing and sales teams need to collaborate ensuring that qualified leads are being created, nurtured and converted in collaboration with sales. Again the ‘devil is in the detail’ – SaaS business may often receive competing messages and pressure to deliver growth can lead to perverse incentives e.g. it is easier to drive low value leads if lead growth is a primary KPI over high value enterprise leads with longer sales cycles. Our years of experience in a range of different SaaS businesses helps ensure you are optimising your lead generation process.

Pricing

Pricing a SaaS service can be a real challenge, yet it is often overlooked as a source of value. Why spend so much time on pricing when you can be busy focused on sales and marketing? In fact, paying more attention to pricing will help ensure you are unlocking as much value as you can. Getting it right will support growth, getting it wrong can be catastrophic. Some of the areas we can help include thinking about versioning (price tiers), how to avoid cannibalization, testing pricing and dealing with international customers.

Reporting (KPI’s)

We are drowning in a sea of data, and one consequence is it can be hard to identify which data to set as a Key Performance Indicator (KPI). Similarly, measuring data can often be messier than the theory suggests. For example, many companies have a mix of online and offline lead generation processes, and as a result it can be difficult to ensure data integrity. We can support your reporting requirements helping to ensure that you are incentivising staff to focus on the data most likely to move the needle. 

Retention

We have mentioned churn above. Retention is the other side of the coin, with the desire to ensure that clients are retained on an ongoing basis. SaaS can place a strain on cashflow as the cost of acquisition is up front, and cashflows are often of an uncertain duration. The days of lock in and switching costs are gone, replaced by month to month subscriptions which can be cancelled at the click of a button. We help support retention efforts be it via platforms like Intercom, or via regular touch points via drip mail campaigns following sign up.

Venture Capital

Many SaaS companies rely on venture capital to support growth. We have extensive experience working in VC backed companies and thus can give an informed view as to some of the pro’s and con’s of external investment. VC investment comes at a price, one which can be hefty in many instances, but is a price worth paying in some situations. Again our experience means we can offer some impartial insights (rare in an environment where some erroneously position VC investment as the only route). And if you do seek to raise, we can help ensure your business plan covers all the main elements that VC's look for.