Updated June 01, 2022
Recent disruptions in the market have shown just how important it is to future-proof your organization to be ready for new challenges as well as opportunities. Software-as-a-service (SaaS) providers are seeing a more competitive environment as companies turn to them for help with business continuity and to leverage digital technology for remote workers, online customer purchases and communications.
As SaaS companies plan for what lies ahead, they must be able to adapt for this volatile new normal. The place to start is by looking for ways to automate processes for efficiency, updating old technology that prevents business leaders from making quick, informed decisions and empowering your teams with real-time information across multiple departments.
These are some of the most critical areas to leverage digital technology to help keep your SaaS business agile and thriving.
The Great Resignation, also known as the Big Quit, has impacted every industry. For SaaS companies it means an increased gap between the supply and demand of tech workers as well as a disruption for renewal business. The employees who have relationships established with signers of renewal contracts may have departed. Also, the contact at the client likely has changed so now your renewal sale has become a new sale situation. This is forcing leadership teams to put practices and technology in place that ensure the continuity of your team and your pipeline. Digital technology fuels real-time communication between teams. It allows them to stay connected and collaborate across departments in a hybrid environment.
Ensuring that budgets reflect reality will likely be a challenge for the foreseeable future. For your organization to endure and flourish, it should be nimble and ready to react to shifts in the market. If your budgets and forecasts live in spreadsheets that have multiple versions, it becomes very labor-intensive to update them on the fly.
One example that is particularly important for a SaaS company is accounting for trends in the labor market and their own personnel. If key employees leave, it can cause delays in the execution of your business plans. A lack of needed talent could trigger an inability to launch new services, functionalities, features and revenue streams. As a result, your budgets and plans should have more wiggle room than before or the ability to reforecast based off the changing workforce you have at your organization.
Making these budget adjustments can be a timely and labor-intensive process if the right technology is not in place for your team to do proper financial analysis and planning (FP&A). It could also be an ongoing one, too, as continued economic uncertainty makes revenue forecasts unpredictable.
SaaS companies need data insight to help drive pricing models and strategy. For example, if your organization offered discounts to customers affected by a natural disaster, it’s important to plan how to manage those customers moving forward. Should you remove those discounts? If so, it’s no easy feat to decide how to best administer price increases.
Thanks to client participation in NPS research, we’ve heard about how different individuals and groups have gone above and beyond to help clients with their most pressing challenges. We’ve learned about what resonates most with our clients and what they’d like to see us do differently.
One approach to address this challenge is to develop a pricing strategy. You will want to understand how much your customers are willing to pay for the services they’re currently receiving. Once you understand this you can plan how to roll out the new pricing model. Is it a situation where the band-aid can be ripped off or is a phased approach better?
Knowing your data is the best way to discover the impacts of adjusting the price of products. You should have visibility into critical metrics including customer acquisition cost (CAC), customer lifetime value (CLTV), customer monthly recurring revenue (CMRR), gross retention and customer retention.
If you do not have timely insights into this data, a cloud-based financial management system built for SaaS companies can help you track subscription revenue and other key data. For example, a solution like Sage Intacct lets you tag dimensions on your entries to provide the calculations for real-time SaaS dashboards to track these important metrics.
Whether you’re a small or large business, cash is still king! Many SaaS companies struggle with managing cash flow, but the rewards can be phenomenal when it’s done correctly. Here are some areas to review to improve your cash flow processes.
SaaS companies require high customer satisfaction and automated processes at the forefront of their business strategies to be at the top of their game. Accurate and efficient processes are critical for successful sales cycles, achieving satisfied customers and generating loyalty within that customer base. For example, by implementing a complete quote-to-cash process, you accelerate the sales process, deliver an excellent customer experience and keep your team connected with vital information.
Quote-to-cash encompasses the configure price quote (CPQ) process. By implementing a solution to manage this, such as Salesforce, the product you deliver becomes more solution-oriented and customer-centric. This not only aligns the sales team on quotes and pricing, but it also empowers other teams with the ability to provide real-time solutions. As a result, you can increase your revenue by saving time in the sales process, limiting your product discounts, reducing pricing errors and offering a variety of options when discussing a customer’s needs.
In addition, if you’re going to increase prices or get added revenue from existing customers, they will want to see a justification as to why they should expand their relationship or investment with your company. When customers have a high level of satisfaction with an existing product, you can highlight the success they’ve attained with your services. This, in turn, makes it easier to show how they can expand on that success by adding additional services or products that you offer.
Your SaaS company can best adapt to disruption through strengthening key aspects of your business that enable you to be more flexible. The ability to adjust budgets and forecasts on the fly, capture the right metrics to optimize the pricing of your services, identify ways to increase cash flow and getting your customers to invest more heavily in your products, all go a long way towards solidifying the success of your business. By improving these fundamental business processes, you’ll equip your business to stay on top of its game through the short- and long-term future.
To learn more about making sure your SaaS company has the right processes, tools and resources to be successful, contact our experts.
