Bursts on the exploding Software As A Service Industry

1. Monthly Recurring Revenue (MRR) is your golden ticket. This is going to drive your business. Learn how to increase MRR and decrease churn (people who drop out month to month).
2. Analytics & Numbers
- Visitor/ Customer Analytics & Sales Funnel
- Number of Visitors to my site
- % of Free Signups
- % of Conversions
- % of Active Users
- % Churn
- Visitor Acquisition Cost (VAC)
- Trial Customer Acquisition Cost (TCAC)
- Customer Acquisition Cost (CAC)
- Average Revenue Per User (ARPU)
- Customer Lifetime Term & Value
- Cost of serving a customer
3. Tracking which marketing channel is valuable and giving you the most paid conversions.
4. Agile Development - quick monthly updates of the code base.
5. Knowing your target market from ground up. See what problem you are solving, who will use your service and then estimate the size of the market.
6. How will you serve your customers through the different customer service channels?
7. Hosting, Data centers & Security.
8. Your free trial strategy.
9. Pricing - pay per user per month or pay per account.
10. USP - There are so many services online. Why is your service the purple cow?

I read an interesting comment by Chris Strahl on a SaaS post here which stated

A meta point about why SaaS companies are interesting–you can boil most things down to the fact that SaaS represents a better fundamental alignment between vendor and customer.

Making the customer’s life easier increases willingness-to-pay. It is then up to the vendor to make sure that it architects its business appropriately to be able to serve the customer in a profitable manner.

I definitely agree with this point of view. Before, customers would be cajoled by the sales guy, only to know that the relationship with the vendor pretty much dies out once the software sale has been made. Today with online services, the relationship continues daily even after the initial sale is made. Interestingly, there are different mediums to carry this relationship forward - email, sms, Facebook, Twitter (Dell, Comcast & a lot of companies are using Twitter as a customer service extension), GetSatisfaction etc. If you have heard or used other services, feel free to mention them.

So, if you are a SaaS vendor, make sure you keep your customers happy every single day of the year. What you couldn’t do earlier is now possible with the plethora of online tools.

Another interesting blog article on the the SaaS model, hosting, compensation, VC funding, cash flow, pricing and usability. Excellent read.

Sneak Preview:

• it takes 70% to 100% more capital to fund a SaaS company
• SaaS companies need an average of $35M in VC capital, versus $20M for a similar perpetual license company
• Engineers must design in user customization
• Hosting is a big deal
• How do software companies price their SaaS offerings?

SaaS - new software model, new challenges

Jeff Kaplan Think IT Services, one of the prominent speaker on SaaS currently has written an interesting post on the maturation of SaaS Support. As people more their work online and use different types of services and apps, its going to more and more important for SaaS vendors to have a full-service support plan - email, phone, live chat, 30 days for free trials etc.  He mentions:

“The success of on-demand services is predicated on the speed at which vendors can acquire new customers and the rate at which they can retain and grow these accounts. Put another way, on-demand service providers cannot afford customer dissatisfaction, abandonment and churn.”

Hence, support is going to be vital. At DeskAway, we currently provide email support (moving on to phone very soon) with personal replies to all our growing customer base. In order to build better relationships with people online (whom you don’t even meet) I am very interested and curious to see how the process of support matures within SaaS companies.

Read Jeff’s The Maturation Process of SaaS Support article.