What’s the biggest mistake you’ve seen a SaaS company make?

When I look at the SaaS companies I’ve worked with most closely over the past 5+ years, the #1 mistake stands-out … but is also an interesting contrast to #2.

  • The #1 mistake I’ve seen is transitioning to a new model / product too quickly. For example, moving to a 100% SaaS model from a non-SaaS or part-SaaS immediately, overnight. Too quickly, and prospects and happy customers are too confused, and the team has trouble adjusting.

By contrast:

  • The #2 mistake I’ve seen is transitioning to a new model / product too slowly. If you have to radically change your pricing, your model, or even your target customer, if you phase it in too slowly, momentum and/or competition can pass you by. This can be especially apparent in services companies that are too slow to go “all in” on becoming SaaS companies.

Boy it’s hard to get this just right.

I watched Logikcull make this transition twice, maybe best of all in my inner circle, first from a services to a SaaS business (never easy) and then later from a fully fixed pricing model to a hybrid fixed and usage-based one. But even there it was hard, and almost all the others it was even harder. Salesloft similarly had built up a market-dominating product before its current product, and did an incredible job with the transition.

So my learning is just these transitions of models, strategies and even products are tough. Too fast, everything breaks. Even a bit too slow, and it’s hard to grab the benefits of the transition. Maybe turn on a quarter, just not a dime, or something like that.

If nothing else, be decisive, go all-in on a big change … but perhaps plan for 2 quarters of maybe even flat growth before you see the benefits. Even Adobe growth was flat as it moved to SaaS … before going on an 8x run.

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Published on August 30, 2018

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