5 scenarios you should handle gracefully in your SAAS Recurring Billing Business

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5 Scenarios to handle gracefully in SaaS Recurring Billing BusinessSaaS sales organization strategies can make or break your business at a specific point in time i.e. product creation or deployment, customer acquisition, company growth, maturity, etc. Strategic reasons that determine the balance between maximizing revenues and minimizing acquisition cost can affect a SaaS business. These are some of the tough choices that SaaS Sales VPs and CEOs have to make. Below are 5 scenarios that can have a significant impact on the growth and profitability of SaaS businesses.

1. Allow Trial Extension

The Free Trial process of a SaaS service can be used early to qualify a customer. You can use the pre-trial and Free Trial process to build customer profile over time, and once a certain threshold of the customer is met, actively engage your sales team in closing sales. Allowing users to extend their free trial and actively encouraging them to try your app is crucial to the conversion process.

Free Trials allow users to test your app before deciding to purchase. You can front-load the process with automation and self-service features to cover the general things that your sales team may have identified that resonate with the customer through their actions and information.  When done correctly, users can interact with the sales team during the Free Trial process before the team actually becomes involved.

SaaS trial extensions should be optimized to convert. SixteenVentures.com has a great resource guide on optimizing free trial users.

2. Make it Easy to Cancel Subscription

SaaS businesses depend on recurring revenues and upgrades. What happens when your churn is way  too high? SaaS companies can be tempted to lock in customers into long contracts to ensure the business generates revenues over the time. Such an approach is, however, flawed in the long run.

Making it difficult for customers to cancel their subscriptions not only hurts your company’s image, but can increase your costs when customers file for chargebacks. Some payment processors have high chargeback fees and can even close your merchant account in case of too many chargebacks.

Making it easy for customers to cancel their accounts can actually increase their retention rates. Andrew Chen goes deeper on why you should let customers quit your product/service in this post.  Users are more comfortable knowing they are not locked in using a service that may not address their needs. Enabling easy subscription canceling gives users the confidence to try your solution at their own pace.

3. Easy Upgrades/Downgrades

For SaaS businesses, there is nothing as good as a customer who wants to spend more money with you. Upsells and upgrades can make a difference in your SaaS financial metrics. For example, if your CAC (cost of acquiring customers) is $100/mo. and you rapidly upgrade your users to $1000/mo., you are likely to break even quicker.

However, some customers may decide they don’t want the upgrade and in fact, some premium package users can decide to downgrade. Therefore, you should make it painless for customers to upgrade or downgrade their packages. Logically, you will not want customers to downgrade their subscriptions.  The best way to ensure upgrades/upsells without friction among users is to focus on value, not use, when designing your premium packages.

Enabling self-service in SaaS accelerates organic growth without your team having to go an extra mile. If customers have the need and your upgrade offers value, there should be nothing preventing them from upgrading without calling your team.

4. Data Portability

When users subscribe to your SaaS solution, they are putting faith in your businesses since you will be responsible for storing and managing all their data. In some cases, the data will be highly sensitive and confidential in nature such as addresses, incomes, insurance numbers and so on. SaaS vendors should offer users full rights to that data at all times. Vendors should guarantee that:

  • User contact data will not be sold or shared to third parties.
  • No third parties can retrieve user application data.
  • Users should have full access to their information for viewing or transfer at any time.
  • User information should be downloadable in a variety of formats for easy migration to other applications if needed.

More users are checking SaaS vendors’ data portability policies before they sign up for the solutions. Your company should have a clearly stated data portability policy. Locking data in your site makes customer migration difficult. As the SaaS economy shifts from a product centric to a service centric model, it is becoming crucial for site owners to give users complete control over they data they store and create in their online accounts.

5. Usability and Application Integration

Users may be looking to use certain services in the cloud such as accounting, documents and so on. However, they may still need these applications to work in conjunction with their existing hardware and servers. As a SaaS provider, you should accommodate users’ needs in terms of integration of your app with their existing in-house CRM tools.

Make it easy for users to achieve integration without the need of creating a custom code, and at a premium price. Use of open standard APIs that enable integration to on-site systems is cost-effective and sensible to users.

Make your user experience simple and as pleasant as possible. Compromising on design in the beginning can be expensive in the long run. Neil Patel of KISSMetrics digs deep on why you should invest in good design. Your UX should be simple and easy to understand with no support ever needed. A complex or beautiful design may not always work to your advantage. Test your landing pages and optimize them for the highest conversions.

There are many variables that affect the growth, operations and profitability of a SaaS business.  Sales VPs, CEOs and CFOs need to constantly think about their customers when implementing new features, changing design or adding support for third-party applications. Failure to design and develop for users can lead to slow adoption and struggle revenues.


Posted on September 2, 2013

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