What Things in SaaS Were Like in ’08-’09. And What They Probably Will Be Like in ’20.

We’re obviously in a very unique situation today.  The pace at which Corona is impacting us all right now is so fast, it’s hard to keep up.  Even just in the past 2 weeks, SaaStrAnnual.com has gone from what we thought was one of the safest events out there to … rescheduled for September.

Today is different from other times.  But I suspect in SaaS, it will be like ’08-’09 downturn — just faster.  I suspect the moment we’re past some point in the Corona virus cycle, everyone will be anxious to get back to work and resume normalcy.  We’ll see.

But for as long as business is in flux, let’s take a look back at what happened to us as a SaaS vendor in ’08-’09, and maybe what learnings you can leverage there.

At least right now, ’08-’09 was much more brutal.  The DJIA had plummed to a 1/3d of what it is today.  Every single retail store in downtown Palo Alto was shuttered.  It was truly bleak, in a way we aren’t remotely close to yet.  And yet, even through those bleakest times, here’s what happened:

  • Every enterprise customer we had renewed.  100%.  No one went under, and everyone still maintained some sort of budget for the next year.  Some did try to renegotiate price down in the renewal, but not that many.
  • SMBs started to go under at an accelerating rate, and churn there doubled.  None of our big customers went under, but tons of our smallest ones did.  The smaller the customer, the greater the increase in churn.  It more than doubled for our single-seat customers.  But again, was basically 0% for our largest customers.
  • Sales cycles slowed down, but we still closed deals.  Looking back, this was the most surprising.  Even in the depths of despair on the ’08-’09 downturn, customers still bought.  Deals were smaller for a while, and took longer.  I can’t quite tell from the data looking back how much sales slow down.  It was a lot.  But not quite as much as I was expecting.
  • Account growth slowed way down, but still happened.  We didn’t pressure any customers to buy more seats in ’08-’09.  And in fact, many customers shrunk their sales teams and their core users of Adobe Sign / EchoSign.  But a handful of accounts did expand.
  • Annual renewals helped buffer the impact.  As tough and bleak as ’08-’09, the reality was in the end, we only had to get through 1 renewal cycle with bigger customers in most cases.  By ’10, things weren’t back to normal yet, but were in growth mode.  Since all the bigger customers and most of the mid-sized customers renewed, looking back, Keep Calm and Carry On was the right approach.
  • Thank goodness we didn’t need more capital. VCs came back in force by early ’10, but they sort of evaporated in ’09.
  • Marc Benioff said not hiring more sales reps in 2009 was one of his top mistakes.  Something to think about.

These are unique times.  It’s not clear when things will end, and how tough things will be for SaaS.

But if your customers are larger and happy, they will renew.  And if they are smaller and happier, just do the best for them that you can.

And if they aren’t happy — do what you can ASAP to fix that.

Palo Alto is Finally, Totally, Fully Back After 4 Years. What Does it Mean?

Published on March 10, 2020

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