With inflation and interest rates rising in 2022, many cutting edge software as a service (SaaS) companies are preparing for a potential downturn. In the event that the world economy slows down, they can expect to struggle to raise capital as well as to see their clients spend less money on digital transformation.
Smarter SaaS companies are thus already adapting their businesses to survive, with an eye on operational efficiency. A survey from Paddle found that 50% of SaaS companies have changed their go-to-market strategy, 35% of SaaS companies have made changes to their hiring plans in 2022 and one in three SaaS companies say that efficiency is their top priority for 2023.
Operational efficiency thus will be top of mind for SaaS companies throughout the year to come. In short, SaaS companies will want to improve the ratio between inputs such as capital, employees and time, and outputs such as quality, revenue, customer acquisition and customer retention.
Here are some tactics the leaders will consider in their efforts to drive operational efficiency:
- Smarter unit economics: SaaS companies, unsurprisingly, are trailblazers in the adoption of FinOps tools and practices to simplify financial metrics and accelerate progress to business results. This year, those that are more mature in FinOps will pay closer attention to SaaS unit economics and use them to steer budgets and forecasts.
SaaS unit economics refers to the revenue and cost of a business measured on a per-unit basis. For a SaaS company, unit economics is typically all about how adding or losing a new customer affects the bottom line. This may include customer acquisition costs and customer lifetime value.
- Accelerate automation: Cutting edge automation tools are the key to rapidly scaling a SaaS business without letting expenses get hand of hand. Smarter SaaS companies will look carefully at all of their processes—marketing, billing, support, service, software development, and more, to find manual bottlenecks and address them. For example, they can consider using a B2B marketplace enabler to accelerate and automate deployment of their solutions to the public cloud.
- Simplify and refine customer journeys: The key to operational efficiency in SaaS is attracting and retaining a self-sustaining customer base without runaway customer acquisition costs. Smarter SaaS companies with a well-established customer base can focus on cross- and upselling to them rather than winning new business.
They will also sharpen customer experience and reduce friction in processes like billing to retain customers. When it comes to acquiring new customers, they will focus on using analytics to identify the best sources of new leads and target them with offers and messages that lead to conversions.
- Good old-fashioned cost-cutting: Many SaaS companies run lean, but even the mostly tightly managed business can find costs to trim. Check whether costs such as advertising and office space are justified. Dive into the data collected through FinOps tools and practices to identify any wasteful practices or anomalous spending patterns.
Let’s talk about smarter approaches to operational efficiency
At 1Nebula, we have years of experience in helping companies to become more efficient in their digital transformation journey. Our background in IT cost management solutions and our own journey as a SaaS company mean our knowledgeable experts have unique insight into FinOps, DevOps and Cloud Security and Networking. Talk to us about how we can help you accelerate your path to success.