Key SaaS Lessons to Maximize Revenue
One of the big things [Sean] Joyce has seen pretty consistently is companies leaving money on the table because they design their processes and pricing around technical limitations of the subscription platforms or solutions they have in place. What’s important to note is those limitations are rarely because of actual weaknesses in a specific product or vendor, but a poorly designed integration between your own systems and the vendor you choose, which means you’re limiting capabilities of both systems.
“If you have a complex integration that requires maintenance every time you want to make a change to pricing or creating a bundle, then [SaaS] companies just don’t do it,” Joyce says. “They don’t introduce a new price or new packaging or a new bundle because it’s too complicated and they ultimately think it’s not worth it. Looking at your holistic technology stack is important to succeed.”
The biggest challenge is making sure you have the ability to make changes quickly. You always want to be able to do A/B testing, but you also may not know what B actually is. Whatever your pricing and packaging is, whatever your plan is on day one, is likely going to shift. You’re going to want to try out new models.
Too many companies design their services based on what’s required to go live. They have A/B plans and things they want to test in the market, so they design everything based on that. But then a few months after they go live, they have some completely brand new idea that wasn’t considered in the original design, and now they’re stuck. They can’t introduce that new model without undertaking some big IT project to talk about the integration.
“From a testing standpoint, the best advice I would give anybody looking at recurring revenue is to make sure you approach the project holistically,” says Joyce. He’s adamant about not taking a siloed approach to marketing, sales, and finance, but rather making sure all your key business functions have a seat at the table when you’re choosing the solutions and designing your end-to-end processes.
“If you don’t bring everyone together and think about it together, you’re almost certainly designing problems into your tech stack, and you’re not going to be able to test plans, because you just don’t have the ability to create the products to do it,” he explains.
That’s because there’s so much interdependency in recurring revenue models. The sales process is completely intertwined with the finance process, from a billing standpoint. When you make changes to contracts and your sales team is trying to do an upgrade, they have to do billing calculations during their quote. If they’re doing billing calculations and finance doesn’t have a seat at the table, finance has a really hard time untangling that as it gets into their system that wasn’t designed to support whatever sales comes up with.
“It’s getting buy-in from all the key players,” Joyce explains. “Because in the recurring revenue models, you can’t succeed unless everyone is together and pulling together as a team.”
This article was also paired with a webinar, Essential SaaS Benchmarks for a Competitive Advantage. You can view the on-demand webinar here.