Behind the question of whether a billing system can help your SaaS business grow is the question of what it means for a SaaS business to grow. This guide tackles both — it creates a model you can use to approach SaaS growth and a 360-degree view of how your billing system fits into it. Read More >
When discussing successful SaaS companies, one of the companies that is usually referred to is Salesforce. The cloud based sales application provider is a leader in innovation, growth and customer satisfaction. What can start-up SaaS companies learn from Salesforce?
Salesforce is one of the most successful SaaS companies and if you are looking for ways to swim through the murky waters of subscription businesses, you can learn a lot from the company. When running a subscription based business, there are many challenges that you can solve by looking at what Salesforce has done. Below are some lessons start-up SaaS companies can learn from Salesforce.
1. Deliver services that your users will love
Because SaaS offers are delivered via the web, they can be deployed faster to more than one platform. However, the services must be of high quality and meet the expectations of customers who are used to quality web services like Amazon.com and Google.
Users of SaaS applications expect automatic upgrades that will leave all their customization intact, an intuitive customizable interface and constant availability of the application. In addition, users are always looking up for new and improved features. SaaS businesses have to delight their customers and meet their expectations day after day to keep them renewing their contracts.
Users love Salesforce because it does nearly everything they need to improve sales. With over 3 million customers using the application, it is clear that the company has a service that solves the problem of generating sales.
2. Sell a service, not a product
A SaaS company, regardless of whether it is delivering services or products, should operate more like a service business than a product business. This brings challenges not faced by traditional software vendors when interacting with customers before, during and after a sale. Other challenges related to customer loyalty, fulfillment and pricing are also bound to come up.
The greatest advantage of a SaaS business model is that it shifts the implementation burden from the customer to the vendor. Customers know they will save time and resources by not having to deploy, update or maintain Salesforce’s applications and thus have more time to concentrate on their core objectives of delivering their organizations’ goals. How is your service benefiting your users?
3. Customer success is paramount
The success of any subscription business depends on contract renewals by customers. Therefore, SaaS businesses have to operate more like services companies than product companies. Customer satisfaction is critical to keeping churn low and increasing revenues.
Together with keeping customers happy, subscription businesses have to look for cross-sell and up ell opportunities to get customers “addicted” to their services. Companies have to constantly interact and make their customers happy to create demand for their services.
Salesforce users may start with basic packages and as their needs change, can upgrade to packages with more robust services. Moreover, customers who buy the one service, for example Sales Cloud, can be upsold to other products like Force.com, Service Cloud, Data.com and others.
4. Create a 24/7 demand generation machine
SaaS companies have to find ways to generate leads without spending a lot on marketing and advertisement. Moreover, since customer interaction with the apps can be monitored, it is easy to design add-on solutions and upgrades based on first-hand knowledge on customer behavior.
Your company has to find a way that will best work for you. For example, you can use inbound marketing techniques to generate leads quickly and at a low cost. Perhaps you can give a free eBook blog regularly, do regular webinars to generate buzz about your product, educate your prospects and make your existing customers brand ambassadors.
Each marketing message has to be different and tailored for a particular audience. Even if you just have a single product, the way you approach a large company and individual users has to be different.
5. Develop a highly disciplined financial process
SaaS businesses have to manage their finances differently from traditional software businesses. Because revenue is collected during the contract period that the customer has signed up for, the business cannot afford lax accounting practices and hope to cover it up with large uptake.
Moreover, there is the problem of attrition i.e. customers failing to renew their contracts after the expiry of their terms. CFOs have to find ways to cater for operational costs in case the expected revenues are not realized. In keeping costs low, a subscription business can undertake different measures such as lean hiring and automated processes like billing.
Start-up SaaS companies face many challenges, from product development to marketing, pricing to legal matters. Companies have to constantly test and tweak their strategies to find a mix that will work for them. The above are some lessons that a SaaS business can learn from Salesforce. What has your business learned?
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