Over the past few years, the SaaS community has gained a solid understanding
of SaaS financial metrics, as well as many of the operational principles
required to achieve them. However, there has always been an obvious gap
between what happens on the top line and what happens on the ground. It’s
one thing to claim that a 50% reduction in churn will result in a 2X increase
in recurring revenue, but it’s quite another thing to make it happen.
Achieving that 50% reduction in churn is usually a tedious and unreliable
process of trial and error. This is about to change. As the SaaS industry
matures, we are witnessing the evolution of SaaS metrics beyond simple,
historical financial measures toward sophisticated operational measures in
the form of new SaaS customer success metrics and predictive analytics.
We are witnessing the evolution of SaaS metrics beyond simple, hist... (more)
We are witnessing a dramatic change in the way SaaS businesses are managed.
While SaaS financial metrics, such as recurring revenue, acquisition cost,
service cost, churn, growth and lifetime value have dramatically increased
our understanding of the economics of SaaS businesses, they have proven
inadequate for managing them. As useful as they may be, SaaS financial
metrics look at the past, not the future. They can tell you that you have a
problem with churn, but they cannot tell you what you should do about it.
Motivated by the need to better understand churn, many Sa... (more)
SaaS growth isn’t a goal; it’s an obsession. The good news is that SaaS
growth can be very smooth and predictable, because of the SaaS recurring
revenue subscription model. The bad news is that SaaS growth can also be
predictably slow the bigger you get. After a few years of rapid SaaS startup
growth, it’s easy to find yourself on the short end of the hockey stick if
you don’t know the right levers to push.
The Three Levers to Break Through the SaaS Growth Ceiling
At any given time, you can calculate the SaaS growth ceiling for your SaaS
business with a simple formula: c... (more)
It seems a little late in the game for me to be asking a question like
“What is SaaS?” But, I’ve always harbored a few embarrassing little
secrets on the subject and I think it’s time I came clean.
There is a classic Harvard Business School case study called Marketing Myopia
by Theodore Levitt that is familiar to every MBA student since the
60′s–the moral of which is not to define your business too narrowly lest
you become obsolete. Well I don’t think software is going away any time
soon and neither is service, but what about software-as-a-service? Between
the rise of the cloud ... (more)
SaaS branding has some unique challenges that aren’t covered in the average
MBA program. As a new communication channel, the Internet has altered the
rules of branding for almost every category of product. However, cloud brands
that owe their very existence to the Internet often find that the message,
the medium and the merchandise are a confusing tangle of clicks, words,
sounds, images and experiences that is difficult to describe.
I’m not going to re-hash branding 101, there are plenty resources available
for that. I’m also not going to provide a fool proof recipe for ... (more)