Very often, professional services suffer from the “feast and famine” phenomenon. Developing the company’s sales team helps to prevent this and grow the business, however several potential pitfalls also need to be considered.
We visited the SaaStock event in Dublin, Ireland in October. Here re some of the key findings from the presentations and discussions. THE key lesson? Invest in client monetization and retention more than in new client acquisition.
Thoughts and notes below by our Managing Partner Markko Vaarnas:
If I were to name two key takeaways from the SaaStock, they
are the following
- According to all research evidence, investment on MONETIZATION and RETENTION of existing clients, brings a much better ROI than investment in new client ACQUISITION. Nevertheless, pretty much all companies are putting >80% of their energy and investments in ACQUISITION. There are big opportunities in doing a better job with existing clients.
- Being in a global conference focused on such specific topic as SaaS is interesting in the sense that you get to see the granularity of niche service providers. It was very interesting to meet companies who are the best experts globally in SaaS pricing, SaaS KPI reporting, and SaaS client success management just to name a few examples. We just don’t have this level of in-depth expertise in Finland.
Selected Success Factors for running SaaS businesses
To further summarize, the discussions in the event focused around six specific areas, which here could be perhaps referred to as Key Success Factors of SaaS businesses:
Acquisition, i.e. how to build an automated sales and marketing machine, which
generates sales leads / free trial users for the company.
Marketing that generates client interest and supports client acquisition as
well as monetization and retention.
- Inside Sales
operations which focuses on converting sales leads coming from marketing and free
trials into continuous subscription clients.
- Pricing which, when properly done, helps in optimally monetizing the acquired clients.
- Client Success
Management which focuses on retaining and expanding the acquired clients. (More
than 10 years ago we called this account management, but today this field has
lots of possibilities to automate interaction with the clients so I guess it
deserves a new title as a discipline.)
- KPI reporting
with focus on measuring traction as well as customer lifetime value (CLTV) and
customer acquisition cost (CAC).
To further comment, there was not much discussion about
traditional personal saleswork whereby sales person goes out to meet enterprise
clients. Perhaps everybody felt ashamed of bringing that type of old fashioned
working model up, or it might be that companies have really moved into
automated sales and marketing focus coupled with inside sales and client
success management activities.