with the economy As businesses cool down and tighten their belts, the coming months will be make or break for many startups. The business is moving from a “growth at all costs” mindset to a more measurable one. This means leaders need to know where to save money, where to target costs effectively, and which customers are at risk so they can take proactive steps accordingly.
SaaS companies are in a better position than most, because they have access to data that can guide these decisions. By nature, you know not only whether a customer has purchased a product, but also who uses it, how they use it, and how often. Management teams should pay close attention to this data for signs of changing customer behavior and monitor their sales pipelines for clues on where to target and cut costs.
At the highest level, leaders need to understand if this year’s slowdown is affecting their organization’s needs and where it’s happening—before it becomes obvious. The goal is to pick up the warning signs early and be accurate as they go, and these signs are often hidden in the breadcrumbs.
Do you know what your customers think?
Not all industries are affected equally, so don’t assume your customers will cut back on spending this year because the headlines are weak.
When considering metrics for SaaS companies, it’s important to look at how existing customers use your product to identify areas of concern. You need to read the tea leaves in your pipeline to understand where to cut and where to invest.
Every CFO looks closely at contracts to evaluate areas for cost reduction. Only those technologies that deliver real value will survive, so SaaS providers must stay ahead of it. Traditional customer satisfaction metrics like NPS are a lagging indicator and won’t help you respond adequately. Instead, check out the following places to be more proactive:
How often do customers use your product?
You can measure usage trends by access points, number of registered users, number of requests, or any other metric depending on the size of your product. The point is, as a SaaS company, you don’t have to guess who’s using your product, when, why, how much, and whether that’s changing.
Say you have a customer who logs in and uses your product 10 times a day, and that number hasn’t increased over the last year. It’s a sign that you’re adding new use cases and not creating new value.
