So, you’ve succeeded in setting up your SaaS landing page and you’re busily making your own break into the sector. You’ve seen countless other firms establish a firm foothold in the niche, and you recognize the immense opportunities it presents. Certainly, over the last decade software as a service (SaaS) has grown at a remarkable clip, with new startups appearing all the time and joining the party. But if you’re new to the game, you need to be prepared for all eventualities – and this means having a plan in place for what happens when growth starts to slow down.
Too many people seem to think that SaaS is a safe bet and that once they’ve entered the market, the good times will never end. They believe that sustained, rapid growth is a sure thing. Of course, nothing is guaranteed whatever sector you happen to be in, and as the Covid-19 pandemic has proven, you just never know what might be around the corner. It pays to be prepared, therefore, for any slowdowns that might affect your business. A flexible and pragmatic SaaS marketing strategy, for example, can help your business adapt to any bumps that might lie in the road ahead.
Any experienced entrepreneur knows that running a business can throw all sorts of challenges at you. We’ve seen in recent years how the pace of technological change has transformed both the way we do business and consumers’ expectations of what businesses can do for them. Augmented reality, for instance, is changing the customer experience almost beyond all recognition. Algorithms, meanwhile, are reshaping firms internally, as well as helping consumers to find what they’re looking for more easily. We should, therefore, expect turbulence as an occupational hazard – and this applies with particular force to the SaaS sector. It’s more fast-paced and unpredictable than most.
So, whether you’re new to running your own SaaS business or you’re simply looking for new ideas on how to be prepared once growth starts to slow, we’ll provide you with some useful insights. The most important thing to state here at the outset is that there are steps you can take to steer your business through those more difficult periods, and there will be opportunities to grow your sales. The sooner you act and take decisive measures, the sooner you’ll see growth pick up again. Failing to act, though, could have damaging consequences for your business, with long-term implications for its ability to resume its upward growth trajectory.
Challenges ahead for the SaaS sector
First, you need to ensure you have sufficient appreciation for the likely challenges facing the SaaS sector in the months and years ahead. There will, inevitably, be a lot of people in the industry who have never had prior experience of leading their businesses through a marked slowdown. As that is what we are currently facing because of the ongoing pandemic, it’s all the more important to start making preparations now. SaaS has been remarkably resilient and is perhaps better placed than most to weather the coming economic reversal, but nobody should expect it to be completely immune.
However, we shouldn’t just be thinking about exogenous shocks (i.e. slowdowns resulting from external causes) but also considering endogenous (i.e. internal) factors as well. As the SaaS market as a whole has expanded so rapidly in such a relatively short space of time, it is inevitable that at some point it will begin to run up against certain limits. The kind of things that constrain its ability to expand further. It is at this point that SaaS startup funding, for example, might no longer flow quite as freely as it did – with real consequences for aspiring newcomers.
Indeed, the funding environment for SaaS firms does look like becoming somewhat more difficult as the wider economic situation deteriorates. Nevertheless, SaaS companies are perhaps better placed to ride out these difficulties due to their ability to generate high rates of recurring revenue. That thus enables them to continue to tap into credit more easily than firms in other sectors. Venture capital has already plowed considerable amounts into SaaS, enjoying high rates of return on its investments. It remains to be seen, though, how far it will continue to invest during the impending recession. We should expect it to become somewhat more risk-averse, including with regard to SaaS.
You should also expect customers to rein in their own spending as the economic outlook darkens somewhat. This applies as much to businesses, of course, as individual consumers – because the fortunes of the two are intimately interconnected. Clients are still looking to invest in new SaaS technologies (as well as other business services, such as email marketing and copywriting), but at the same time, they have to take account of consumer confidence. This makes it all the more essential that you’re able to demonstrate exceptional value for money to your clients (and prospective clients). There may be continued opportunities here, as businesses will be looking to cut costs and improve efficiencies where they can. We will return to this point later.
A key aspect of the challenge ahead for SaaS companies is hanging on to their existing client base. It may simply not be possible to maintain the kind of breakneck expansion that you’ve seen over the last few years. A consolidation period may therefore be in order. Your long-term customers are the foundation of any successful business, and customer lifetime value (CLV) is particularly vital in SaaS. Keeping these existing clients on board will require you to demonstrate that you’re continuing to sharpen and improve your services, and that you’re delivering on real value for money. This will be essential to maintaining client confidence in the coming months.
How to boost SaaS growth
Already, SaaS companies have proven their resilience and their ability to adapt to changing economic conditions. This ability, we can safely say, will be tested to new extremes in the coming period. However, there are already tried and tested solutions proven to reinvigorate growth rates in the SaaS sector. Here, we’ll discuss a range of tips to help you put rocket boosters under your company when you find it needs a bit of a lift.
- Reconsider earlier client losses
If you’re looking for a relatively quick win, it’s a good idea to go back to past clients you’ve either lost or failed to gain and ask yourself where you might have gone wrong. We’ve already noted the importance of keeping existing clients on board, and how these are the bedrock of sustainable future growth. Granted, there’s always the temptation whenever you’ve lost a client to a competitor simply to move on. This, however, would be a mistake. There’s a lot you can learn from going into more detail.
So for example, you should ask yourself what might have caused your client (or prospective client) to take their custom elsewhere. Is there something that clients are looking for which you aren’t offering, but your competitors are? How might you adjust your own offering either to keep pace with client expectations or steal a march on your competitors? Did you manage to obtain any feedback from the client which you could put to constructive use? Catch up with your sales team and ask them for their input; they should be able to provide some important insights.
- Examine the wider market
Keeping up to speed with developments in the wider market is an absolute prerequisite of business success. That’s regardless of the industry you happen to be in. If you find yourself losing ground to competitors or failing to take advantage of new opportunities, it may be an indication that the rest of the sector has in some way left your business behind. You should always be keeping a watchful eye on what your rivals are doing as a matter of course. If such a pattern begins to emerge, it may be an indication that a wider reconsideration is required.
It could be something as simple as a new landing page builder having arrived on the market and captured the imagination of clients. It may, however, be something more fundamental – a broader shift in client expectations, perhaps. You need to go back to brass tacks and reconsider the market and your own position within it. Are you pitching your services at the right clients? Has the market become somewhat saturated and, if so, how can you discover new growth opportunities that your competitors haven’t yet exploited?
- Be more communicative
Good communication is the key to success in business, and this includes internal interactions as well as those with clients. Many businesses – and here the SaaS sector is no exception – devote so much attention to the pursuit of rapid growth and acquiring new leads that they fail to pay attention to the basics. Communication is one of these absolute fundamentals. A failure to communicate effectively can not only create confusion among clients and colleagues alike, it could also cost you business.
By consistently keeping clients updated about what you’re doing – including both the launch of new services and improvements to existing ones – you can provide them with valuable reassurance and keep them in the fold. This also helps to bolster your authoritativeness and give clients additional faith in your credentials. They will look to you for evidence that you’re on top of all the latest developments in the SaaS sector, as well as being in touch with their own changing needs.
- Rethink pricing
Amid so much economic uncertainty, it’s only natural that your clients will be reconsidering their expenditure across the board. Many of them will be looking to make savings wherever they can. This may mean that if they don’t feel their arrangement with you is delivering the kind of value they were expecting – or perhaps that they can get the same services for less money elsewhere – then they could head off to pastures new. This is why it could be a good idea to rethink your pricing strategy.
However, this does not mean that you should simply slash your prices. In any case, this may not be financially viable – if you were to do this, your margins would inevitably take a hit. While many SaaS firms are operating on quite generous margins, this may not be the case for startups. Another point to remember here is that taking the ax to your prices may – though this might seem counterintuitive at first – send out the wrong kind of signal to clients. It may suggest to them that your business is in trouble, and this is not a good way of reassuring them in uncertain times.
Instead of going for bargain-basement pricing, then, you should instead simply tweak your pricing model. You might be able to approach individual clients to adjust pricing arrangements or you could offer pre-payment discounts, for instance. Don’t forget that clients are currently looking for efficiencies in all areas – expanding techniques such as automated emails to drive up conversions, for example. Perhaps you could enhance your level of service provision so as to justify a modest price rise, providing the client with additional benefits but ensuring that your increased profits make up for it.
- Retool your team
Another way of giving your business the additional growth boost it needs is to reevaluate your staffing requirements. It could be, for instance, that a new hire may be able to bring in valuable fresh insights and suggest new practices. Alternatively, you might be able to drive up efficiency simply by reallocating duties around your existing team. That might help to unlock capacities that are already there among your current workforce but which were hitherto deprived of their chance to truly shine.
Revisit your internal processes and staffing arrangements to see whether or where improvements might be made. These might look like relatively minor tweaks, but you’d be amazed at the impact they can have on both short and long-term growth prospects. You should be as transparent as possible when undertaking such a process. Consult your team and ask them how they think they might be able to make better use of their talents to benefit the wider business. Not only should this help you retain your most talented employees, but it’ll also enable you to unlock talents you didn’t know your colleagues had.