SaaS Vendors: Here’s How to Deliver Value in a Competitive Economic Climate
By: Chessy West, Chief Financial Officer at Kevel
Heightened modern work demands and the hyperspecialization of competitive business have made it increasingly clear the SaaS bubble will continue to grow exponentially. Looking back to last year, Gartner forecasts showed this trend would only soar, with the expectation of market growth rates accelerating from 18.8% in 2022 to 20.7% in 2023 and organizations likely to spend close to $490.3 billion on cloud vendor services.
Those outlooks are all well and good. However, how can SaaS vendors consistently demonstrate their value and stay ahead of the competition? The answer lies within creating new and innovating ways to retain customers by way of function-rich solutions that are customizable for every user experience across all touchpoints. Customer retention is the ultimate challenge within this industry, where churn is inevitable and investing in optimized retention strategies turns out to be crucial.
Here are best practices SaaS vendors should implement to find success in a competitive economic climate, and how offerings like free-tier pricing plans to the incorporation of privacy regulations into applications can further boost value and profitability.
Identify desired business outcomes, and work with your customers to bring them to reality.
Anyone, in any industry, can argue that their market is currently at an inflection point and on a great precipice of change. This, brought on by ongoing talks of economic uncertainty and a looming recession, still open questions surrounding the after effects of the pandemic, and concerns around evolution timelines thanks to the broadening appeal of next-generation technologies like AI.
It makes business outcomes confusing, which is a challenge that smart SaaS providers must be ready to help their customers overcome. The SaaS vendors that will stand out are those that model their pricing structure and overall sales approach to help their customers identify their unique market challenges, and then actively position their offering as a solution for those challenges. All while keeping in mind the long game — helping the customer weigh the overall cost of the solution to the long-term effects, and benefits, that the solution will uncap for the customer in question.
If a SaaS can’t prove its value, the customer will walk.
Read More: SalesTechStar Interview with Ryan Studer, Chief Product Officer at Khoros
Double down on your customer service teams.
In times of economic uncertainty, customer service teams are an essential resource to help keep any SaaS organization from being the next catastrophic budget casualty. Once the sale closes, the real work begins. Particularly when it comes to SaaS-oriented solutions. We’re dealing with complicated markets, where technology moves quickly and what was presented as a viable solution one day could quickly become antiquated the next.
The SaaS vendors that do best here are those that invest in strong customer service teams. Value is something that has to be proven repeatedly. Customer services teams that are knowledgeable about, and can help clients anticipate, upcoming market trends are critical. It’s no longer enough to have a team that gets through the day to day in a reactive stance. Today’s customer service centers have to be nimble. They have to know what’s coming around the corner and act as a true strategic partner to their customers. If they can do that, they can continue to prove the value propositions first outlined.
And that doesn’t mean that this relationship will be without its challenges. Technology is fast moving and sometimes SaaS vendors can only evolve so quickly to keep up with changing customer demands. But if the relationship does fizzle for such reasons, a SaaS vendor can be guaranteed that customers are more likely to return and / or refer out business if they feel they formed solid relationships with their customer service partners, and know the company did everything it could to help them overcome these new business obstacles.
Focus on the future, and pay special attention to evolving privacy regulations.
Same as technology is rapidly evolving, so too are privacy regulations. The most important currency in our world today is data, and SaaS vendors usually deal with a great amount of it. Customers need to trust that their confidential information is being kept undisclosed, which can be a tricky feat, considering how often the rules and laws seem to change and vary across regions.
The SaaS vendors that can stay on top of changing policies and, again, anticipate those forthcoming changes as much as possible, will be the ones who do the best. This is one area where communication — and over-communication, at that — with the customer is particularly pertinent.
It’s a competitive economic climate, but it’s arguably the best climate for SaaS vendors. This is their chance to shine. To prove their value and stay ahead of the competition by providing customers with unique solutions that have the potential to not only solve current industry challenges but set their customers up for long-term success on the evolving road ahead. This is not a moment that any SaaS vendor can afford to let pass by.
Read More: Five Ways Business Leaders can Capitalize on the New Era of B2B sales