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Archive for the category: Best Practices

SaaS Growth Strategy | A Customer Lifecycle Approach

Driving sustainable growth is a challenge for every SaaS business from startups to public companies. In the beginning, the SaaS recurring revenue model seems like a dream compared to the revenue fits and starts of licensed enterprise software. But within one short customer lifetime, every SaaS CEO startles awake to the fact that the churn monster is always looking over your shoulder.

In the short run, SaaS growth scales with customer acquisition, but in the long run churn kicks in and dominates even the most aggressive SaaS growth strategy, creating a SaaS growth ceiling that can be incredibly difficult to break through. SaaS churn naturally scales with the size of your customer base making it negatively viral. Overcoming churn and breaking through the SaaS growth ceiling requires a relentless focus on growth that pushes every available SaaS growth lever.


saas growth strategy

Click the image or link to download the complete SaaS Growth Strategy eBook

A compilation of recent popular articles at Chaotic Flow, this detailed eBook outlines a framework for driving sustainable SaaS growth throughout the SaaS customer lifecycle. It introduces the concept of the three fundamental SaaS growth levers: customer acquisition, customer lifetime value, and customer viral network effects as well as the SaaS Growth Pyramid that outlines the corresponding SaaS growth strategies for pushing them. Finally, it wraps up with Eleven SaaS Product Secrets that Drive Growth, one for each stage of the SaaS customer lifecycle.

Enjoy. And if you like it, please share it!

Cheers,

jy

Customer Self-Service | The Holy Grail of SaaS

self-service holy grailOne hundred percent customer self-service is the holy grail of SaaS. Everyone looks for it, but it is never found. Even if your product is simple enough to provide complete self-service purchase, you are unlikely to get away with complete self-service support, because you can’t hang unhappy customer’s out to dry or you will ruin your reputation. Nonetheless, the divine power of the Internet to help customers help themselves combined with the promised land of lower customer acquisition cost and lower cost of service will always enrapture the true SaaS believers and hasten them on their quest.

SaaS Top Ten Do #3 : Accelerate Organic Growth depicts the SaaS self-service holy grail as revenue generation with zero marginal costs, because your customers can find, try, buy and use your product even if no one shows up for work. But just because your customers can, doesn’t mean they will. It’s very hard to build a product that enables one hundred percent customer self-service. In some cases it is impossible. Imagine your frustration when you finally achieve it and those pesky customers simply refuse to do it.

The Self-Service Maturity Model

The closing post of my recent New Breed of B2B Buyer series introduced the concept of the self-service limit in B2B sales. The self-service limit is that point where a customer’s desire for instant gratification is thwarted by the complexity of purchasing and using your product. Purchase complexity comes in two flavors: informational and emotional. Informational complexity arises when the buyer requires education to consummate the purchase. Emotional complexity arises when the purchase entails a personal risk to the buyer. When either or both of these purchase barriers becomes high enough, the buyer simply will not make the purchase without the aid of a salesperson.

Complexity, however, is a subjective measure that is different for every single customer. In particular, and this is the point of this post, it is very different for the novice and the experienced buyer. An experienced buyer knows your company and trusts your brand. An experienced buyer knows your product and fully understands both its value and its use. As your customer base increases, so does the percentage of experienced buyers in your market, your knowledge share.

saas self-service

The percentage of experienced buyers in the market, knowledge share,
increases as a SaaS business matures.
Experienced buyers that trust and understand your brand,
are not only capable of one hundred percent self-service,
they usually prefer it, bringing you closer to this holy grail of SaaS.

Increasing knowledge share reduces both the emotional and the informational complexity of buying your product. A strong brand reputation reduces purchase risk and Read more »

SaaS Benchmarks | Acquisition Cost and Churn Challenges

saas benchmarkI routinely get asked questions like the following: What is a typical churn rate for SaaS? How much should I pay my SaaS sales reps? What is a good time frame to recover acquisition costs? A few years ago, the best answers I could give were simply based on my own experience and conversations with other SaaS colleagues. However, as SaaS has matured as a category, some high quality SaaS benchmark studies have appeared.

Recent conversations with Lauren Kelley over at OPEXEngine highlight for me how SaaS companies across the board struggle with customer acquisition costs (CAC) and churn. The 2010 OPEXEngine SaaS benchmark study shows a WIDE range of results across these critical performance metrics, indicating that there is no one right way to tackle these challenges that will work for SaaS companies across all sizes and sectors. But, there are plenty of wrong ways.

SaaS Benchmark Results – Customer Acquisition Cost

SaaS companies vary a lot in their willingness to invest in customer acquisition. For example, the OPEXEngine SaaS benchmark report gives an average payback period for CAC alone of about Read more »

SaaS Best Practices | SaaS Inside Sales Benchmark Report

The BridgeGroup recently surveyed 115 North American technology companies with a special focus on SaaS inside sales metrics and sales compensation for SaaS companies. As SaaS sales organization, metrics and compensation have all been recent topics here at Chaotic Flow, and since it’s always best practice to test theory with reality, I thought I’d share and comment on some of the results.

saas sales hunters farmers


According the survey, about 50% of SaaS inside sales organizations segment hunters from farmers. Of those that do, the average ratio of hunters to farmers is 2:1.

The report covers lots of great questions from average deal size to organization size and focus as well as compensation. Of course it is an informal survey, so it is what it is, but I found that many of the results jive with my own internal SaaS benchmarks. For example, Read more »

SaaS Best Practices Community Blog | Open Current is Live!

From time to time, I come across what IMHO are really fantastic and enlightening blog posts and SaaS best practice guides that truly stand out above the rest….by authors other than Chaotic Flow ;) . To me the value of these gems is immeasurable, because I generally have to read through a lot of crap to get to them. It’s a big Internet.

In the hope of adding more value than I alone can muster for my loyal Chaotic Flow readers and in the spirit of supporting the authors of these high quality gems by spreading their words to my small corner of the SaaS and cloud computing business community, I’m launching a new SaaS best practices community blog companion to Chaotic Flow dubbed Open Current (cute right?).

Open Current is an open repository of SaaS best practice insights and tools for executives charged with building SaaS and Cloud Computing businesses…moderated by yours truly, so ONLY THE BEST will be make it through the rigorous evaluation process (basically, I have to read it and think it’s earth-shatteringly good…but, please don’t let that deter you….help wanted, submit your favorite SaaS and cloud related posts!)

ANYONE CAN POST to Open Current and I need your help! Please comment on this post, email info[at]open-current.com, or directly submit your favorite SaaS and Cloud Computing blog posts, SaaS best practice guides, and industry research and reports for inclusion.

SaaS Best Practices | The Top Ten Dos and Don’ts

If you own, manage or are considering starting a SaaS business, then you can’t afford NOT to check out these fundamental SaaS best practices and cutting-edge tips for business success.
Hot off the presses!
Enjoy,
JY

saas top ten dos and don'ts

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