Every single year competition heightens for SaaS Products. The average SaaS product has 9 competitors on average
This heightened competition has led to increasing demand gen budgets which drive up your costs. Companies pour more and more money into paid channels to acquire as many leads as possible. Well, we are starting to see the pendulum shift.
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Between 2000 and 2014, 52 percent of Fortune 500 companies disappeared, either by going bankrupt or through acquisition. Humans have always been transformed by their tools and now Digital transformation is reaching spaces within society.
As Marc Andreessen famously said, “Software is eating the world,” meaning every company will become a software company, engaging with its customers through digital channels. Any company from a fortune 500 to your local builders can build a loyal customer base by using mixed digital methods.
As the technology itself becomes cheap and commoditised it becomes normalised and harder for your company to differentiate. The saying goes that “ hard work and good service isn’t a differentiator” but it’s not the case anymore working hard to provide good service as part of a great customer experience is what will create a competitive advantage for your company.
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Customer expectations are constantly evolving
Digital transformation also brought a whole new wave of online-first and digital-only services. Revolutionary consumer companies reimagined how experiences could provide enormous value to customers. In cases like Apple, Uber, Lyft, Amazon, and Airbnb, this changed entire industries, or invented a new category of products and services. These disruptors have raised the bar of customer expectations; now the rest of the software industry must catch up.
When we buy and consume great products and services, and experience brands in our daily lives, we may question why other SaaS products do not match our expectations.
This shift can be attributed to two very simple ideas: We’re all more active “shoppers,” and the web and technological innovations have removed friction from traditional business processes.
The early days of digital transformation brought a new subscription-based business model to enterprise software. Today, SaaS is synonymous with B2B and enterprise software. SaaS opened the door to many other variations of a subscription-based model in the B2B market, such as Infrastructure-as-a-Service (IaaS) and Data-as-a-Service (DaaS), to name just two. To succeed in an Everything-as-a-Service world — the new ideal — companies must fundamentally change how they think about customer experience and engagement.
It requires creating experiences, engagements, journeys, and touchpoints to match and exceed customer expectations. The first wave of SaaS replaced on-premises software installations, introducing many advantages by moving to the cloud. The second wave brought major changes in workflow and automation processes. It’s the third wave, however — with its focus on customer experience and personalisation — that has revolutionised how companies go to market.
So you may be asking how do we achieve this for our product? How do we get the product to market and engage our customers enough to change that market? The answer - Product focussed Inbound marketing.
This year instead of investing purely in lead generation you should be investing in your brand and your customers to break through the noise and create a groundswell among your potential user base.
SaaS companies need to recognise they will not win by just having the first spot in the search results or by creating a feature war with the competition. Prospects want to know what companies stand for as a brand. Your Narrative and culture have never been more important.
To build brand awareness and create a community, you need to push for more authentic and value-add communication. Investment in podcasts and events that bring together prospects and customers are increasingly important for SaaS. There is even more emphasis on video across all channels including websites, emails and social to have a more human connection. Your customers, not your tech is the important part of any SaaS product. Remember that and you will be able to charge your growth.
Customer experience has become critical for all companies in the attention and experience economy. A study published in the Harvard Business Review found that good customer experience led to 140% increase in transactions/contracts from those who had a bad experience. In recent years companies that have been successful haven reinvented the wheel but they were the ones who were the first to respond to and meet changing customer expectations with maximum effectiveness — think Amazon, Netflix, Uber, and Airbnb.
Amazon didn’t invent e-comms and delivery, Netflix didn’t invent streaming services but they perfected and changed the experience of buying these services.
This need for an improved customer experience twinned with a great product is now much more relevant in B2B and enterprise SaaS markets. People are just not engaging with complicated sales or implementation processes and why should they? Why should you need to submit a lead form, have a full onboarding discussion and then sign contracts to simply try a software product? It’s getting harder for SaaS companies to justify a complex, non personalised or contextual buying process in a world where frictionless customer experiences are on the rise.
To be successful the experience of great contextual marketing needs to start the moment a potential customer becomes aware of a company or its product, through to the actual point of purchase and after. Rather than being intimidated by the Ubers and Amazons and writing them off as Unicorn if you are a strategic thinking SaaS company you should be implementing strategies to focus your delivery on the customer.
Though the SaaS business model often promises a truly modern user experience, few companies realise how to enable the frictionless end-to-end experience that today’s customers crave. Those that do will be rewarded in the form of increasingly higher rates of conversion, retention, and loyalty.
Pricing Committees Are Key To Your Success
Pricing needs to reflect value, simple.The harder thing to pin down is what is considered valuable? Companies are finally waking up to the importance of pricing based on input from the company but also the consumers.
Nearly two-in-three SaaS companies changed their pricing in 2018, according to data from over 400 companies surveyed. For companies that did change their pricing, these changes had a substantial positive impact on revenue growth. Two-in-five reported a 25% or higher increase in Annual Reported Revenue (ARR) just as a result of the pricing change. Only 2% said the pricing change decreased their ARR.
This change was based on taking a long look as a collective at how they were pricing and modifying this to suit the needs of the customer. This process was achieved using a pricing committee. This committee, which could also be called a Product/GTM committee, should be cross-functional and include key people across departments (Product, Finance, Sales, Marketing, Customer Success).
They meet to review pricing KPIs, monitor the competitive landscape and make pricing decisions in quarterly intervals. Successful companies double down on what’s working and include the entire organisation. Pricing committees are a simple yet effective way to create a unified approach to pricing that’s value focussed. If you want more information on how to implement a Pricing committee strategy then get in touch with one of our experts.
We believe that Product Led Growth (PLG) is the future of SaaS. Not just another buzzword, PLG refers to instances when product usage serves as the primary driver of user acquisition, retention, and expansion. In simple terms make something great for the user and it will sell itself.
So how do companies actually leverage PLG? The best PLG companies flip the script on every aspect of their business. They put their customers first and are obsessive about measuring (and optimising) every aspect of their funnel for the customer. Product usage – not just marketing qualification – becomes the most important trigger for conversion and expansion. The sales team has a product-first mindset and they look and act more like customer success.
Companies that adopt PLG find that their biggest sales channel is word of mouth. We all know everybody likes a freebie, and encouraging others to use the software for free and removing the traditional paywalls most software has, already puts your product in a positive light to potential new customers.
The end goal is of course getting your free users turned into paid users. Many software companies offering free versions have limitations on their free usage (such as Slack’s maximum 10k messages), and others limit the more advanced tools to their paid versions. If your paid version offers something that may help your user solve a problem – shout about it in the free version and encourage them to sign up.
Make sure you develop good relationships with your free users and establish a sales team who can be advisors to your potential paying customers. Customers are ( or should be) key to the success of your organisation so ensure that you are adopting PLG to drive real value. If you want to speak to someone about how to implement a product led growth strategy then get in touch
Filling a product with new users is key to success right? Well that’s partially true. We all know it’s more efficient to retain an existing customer than to acquire a new one. However, all too often start-ups don’t invest in customer success until churn becomes a poignant issue.
If you are a startup, the early adopters are the lifeblood of your organisation, your biggest advocates and will enable you to grow.
Successful early-stage companies recognise that customer success is the backbone of their business and invest in building out their customer success teams proactively.
This is imperative in the product led era. More and more companies are adopting product led growth strategies such as empowering self-service sign-up and simplifying their sales process.
Customer success plays an increasingly important role in ensuring customers are truly adopting the product and accelerating their growth. If you want more information on how to implement a product led growth strategy, get in touch with one of our experts.