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Welcome to the latest weekly roundup of SaaS news! Every week we bring together the top stories in the SaaS industry you need to hear about. But first, we hope everyone had a great time at SaaStr Annual! It was great to see some of you and we look forward to seeing some of you at LTV Conf in New York!
This week, we cover churn, SaaS marketing, and a new cloud service accessible for SaaS applications. We also share an excellent podcast from David Abrams and Corey Haines, two leading industry figures.
The article reveals that 18% of SaaS companies focus on customer retention. This is surprising given the industry’s emphasis on churn. Written by SaaS veteran Anna Talerico, it argues the case for reducing churn to enable growth:
“ SaaS company’s capital must be used wisely to maximize growth — regardless of its source or quantity. If revenue churn rate is too close to the capital burn rate, you’ve got a problem to solve. How capital is used has everything to do with how steep growth can be. Too much capital used to replace churned revenue is a recipe for a treadmill that makes it harder and harder to post strong growth numbers.
I’ve had it happen in my own SaaS business, I’ve seen it happen in my client’s businesses and I’ve heard woes of it from my friends who run SaaS businesses. It happens. Left unchecked, the growth treadmill that comes from revenue churn can burn through capital faster than you realize. You must have a solid grasp on the fundamentals of SaaS revenue metrics to understand the mechanics of why revenue churn is such an impediment to growth.”
Many people see Neil Patel as one of the world’s leading authorities on digital marketing. He’s a founder of a number of multi-million dollar businesses and continues to contribute fresh ideas every day. So, when you see a post specifically on SaaS marketing, it’s worth reading.
Patel on SaaS
In this post, Patel sets out the challenges SaaS marketers face. He identifies what they should focus on, and shares insights from others on how to do it. Here’s a good example:
“The acronym SaaS stands for “Software as a Service.” I propose that we place the emphasis on service. Yes, the software must be important, flawless, powerful, and awesome, but service needs to be upheld as the paragon of virtues.
Lincoln Murphy nailed it when he wrote, “When creating your SaaS marketing plan, you must understand that your business model of choice is a fully-integrated architecture where all aspects of the business — product, support, revenue model, and marketing — are tightly-coupled.”
The BVP Nasdaq Emerging Cloud Index is a widely-respected Barometer for SaaS market performance, and is showing that stocks of many SaaS companies are performing strongly, closing just barely shy of the index’s record high this week. Strong performance comes at the same time Slack has announced they have filed paperwork with the SEC for a 2019 IPO.
“All this goes to say that the fear has been squeezed out of the market, at least as it pertains to the companies that fit under the cloud rubric. The largest tech companies have not recovered as much as smaller-cap software shops.
For startups, the return-to-form means that public comps are winsome again, and revenue multiples likely back to where they were before December’s unsettling Brief Period of Concern. For investors, the exit possibilities of their investments have perked back up; since public SaaS shops are trending up, so too are expected values of startup M&A and IPOs.”
Bettercloud has recently announced that it’s now possible to add any SaaS application to its operations dashboard and monitor usage across applications via an API.
As founder and CEO David Politis explains, “A tool like Okta provides a way to authenticate your SaaS app, but once an employee starts using it, BetterCloud gives you visibility into how it’s being used.
“The first order problem was identity, the access, the connections. What we’re doing is we’re solving the second order problem, which is the interactions. Companies lack the ability to monitor and understand the interactions going on across SaaS applications. BetterCloud has been designed to give IT control and security over what is occurring in their environment.”