Added by NikkiElizDemere 5 years ago in
Software-as-a-service (SaaS) products are becoming commonplace. It is an evolutionary stepping stone in business modelling, offering customers the flexibility they desire and businesses the potential for rapid growth. Even with such promise, the industry has witnessed the rise of a SaaS purgatory where once promising businesses fall flat. This is in part because while growing monthly recurring revenue (MRR) at 15% – 20% month over month is awesome, doing so with little regard for growth efficiency can result in expensive habits that become increasingly difficult to shake in subsequent years. Why is it hard for SaaS businesses to reach profitability? Their greatest strengths can also be their greatest weaknesses. SaaS businesses have high upfront acquisition costs reflecting, sales and marketing, research and development, hosting infrastructure and customer support. On the flipside, SaaS earns revenue over the lifetime of the customer. Therefore, SaaS is typically unprofitable for the first 12 – 24 months of operation and, in four years time, produces only a small fraction of revenue as profit. So how do we change the math, and unlock the value that SaaS promises? It’s simple; consider the following customer acquisition-related best practices I learned at online SaaS startups like Zendesk, Autopilot, and Codesion, companies that found efficient growth and eventual industry success.
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