Software-as-a-service (SaaS) companies are very different from Enterprise software companies. Successful SaaS companies have reinvented the “business of software” by replacing the expensive enterprise sales model with end-user centric marketing, support and product development.
Typically, SaaS companies target small to medium businesses (SMBs). However, selling to SMBs is tough. Retaining/renewing SMB accounts can also be challenging; subscription cancellation is common, even with the best of breed services.
Why customer acquisition and retention is tough
Often, there is resistance in an organization to adopting new tools/software. This is because new tools require training. Employees are not enthusiastic about learning something new, especially when they don’t fully understand the benefits they get!
Even if they overcome the initial resistance and signup for a new tool, its configuration, usability, complexity, etc. can be a challenge for regular business folks. Unfortunately, SMBs don’t have the luxury of having a full-time IT staff member, nor do they have budgets for IT training. So if regular business folks are unable to easily grasp the product features & UX: then engagement drops, IT simply doesn’t work and the tool is eventually shelved.
How successful SaaS companies solve the customer acquisition/retention problem
What does a small business need the most?
More Functionality? Scalability? Mobility? Affordability?