Software-as-a-Service has experienced considerable growth. Since 2008, the annual revenue forecast has grown from $5.56 billion to a predicted $160 billion. Due to the industry’s size, those numbers do not accurately reflect the challenges that small and medium-sized startups face—or even what the average one goes through during its life cycle. One of the initial challenges they must face is how to balance their first average contract value with their customer acquisition costs. It may take upwards of 90% of the former to pay for the latter.
Some of the difficulties these tight margins create only compound because the SaaS industry has developed faster than the software needed to manage a SaaS company’s financial operations. Financial hires can be paramount for identifying inefficiencies and understanding how much capital you need to create your minimum viable product. Anything beyond that, at least initially, can be viewed as a wasted expenditure.
Despite the inherent financial challenges, there must be clear, established, and systematic methods of communication among finance, sales, and the client-facing element within your company. This is so vital because renewals are the lifeblood of your business. The majority of cancellations come from a lack of customer service. Customer service has a high bar to meet because it is one of the few touchpoints that your company will have with the people buying your product. Furthermore, customer service representatives are also in a critical position to understand what the customer wants the most out of the product and whether you are meeting that need.
When the subscriber sees a rift, they question the value. However, should you learn that your software resolves a specific issue throughout your existing customer base, you can build your marketing strategy around it. Where does your company fit in, and why are you in a unique position to offer it? On the reverse side, cancellations and customer service representatives can speak to which features your product still needs because they field the complaints.
Inceptiv Law
We understand the unique needs that high-growth companies face. Our experience stems from a combination of real-world operational experience and financial understanding. Inceptiv Law represents clients in technology-based industries such as SaaS, blockchain, and mobile applications. For more information about how our world-class legal knowledge can be your company’s greatest asset, contact us today to set up a consultation.
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