True that the revenue performance of SaaS business of B2B hi-tech software firms has been very robust through the turbulent times of COVID. However, some firms got it more right than others, and this trend didn’t correlate with the share of SaaS as percentage of total revenue of these firms.
Enquero, being a strategic transformation partner to the top hi-tech SaaS companies, had the pole position in helping companies manage the crisis, and observed some key traits in how firms responded, some totally Embracing chaos as an opportunity to experiment and break-away from the convention, while some firms Braced– focused on avoidance of chaos and attempting only to secure the core. The crisis isn’t over yet, and jury is still out, but there are some early interesting signs.
In this series of blogs, we will share some observations of how companies responded, and conflicting priorities we worked on with top players; the first trend being:
Digital Sales flywheel- the orchestrated Marketing-Sales customer journey
At the onset of the crisis, driven by a sudden need for digital interventions to human-run processes, enterprises were looking for rapid new solutions or to scale their past pilots/experiments. There was an intense need to engage with software firms to help them to select the right partners, but the Sales function had not yet woken up to the new world.
What happened was almost magical, a shift to a significantly digital process of Awareness-Consideration-Conversion-Post-purchase. A new Sales journey emerged, almost accidentally, and customers were able to purchase almost entirely digitally. Even better was that Business (Strategy)-Sales Operations (Process)-Technology/IT (Systems) came together to solve problems together rather than digging tunnels at either end!
SaaS companies, that sold significantly through Direct Sales & Channels, suddenly saw hundreds of Millions of dollars’ worth of new licenses sold with no human touch. New challenges of how to assign this business back to Sales & Customer Support theatres for post-purchase support emerged. The world was seeing an entirely new customer journey emerge. This is where we saw two broad categories of responses emerge:
Embrace: Some companies were already looking at advanced digital signals, quickly analyzing the new customer journeys, leveraging recent data and creating a quick series of digitally orchestrated digital-human customer journey experiments; even estimating CLTV early enough to identify the most optimal path for a given lead. Frictionless sales became an instant hit and reduced the dependency of human touch to achieve breathtaking Deal Velocity in responding to customer needs. Soon, the Configure-Price-Quote (CPQ) process (which is often a weak link) was optimized, as were the leakages in Order-to-Cash (time to revenue, provision/deprovision). The re-purchase journey was also similarly investigated and optimized by looking at digital signals, both internal (customer telemetry) and external (industry, geo trends). Consequently, marketing focus also narrowed to respond to company’s need for High CLTV or High Deal Velocity or More Profit or switching between these needs continuously for an optimum outcome. This was the fastest iteration between Strategy->Process->Systems and back that we at Enquero ever delivered for its SaaS customers.
Channel transparency, a utopian ask, became the need of the hour as channels were highly manual in their processes, and weren’t able to respond to customer needs at speed impacting deal velocity. While some customers shifted to purchase directly from the company digitally, some also opened their consideration set to include competitors. This was the time when some SaaS providers rapidly provided a shared CRM system with some key fields hidden to the company, allowing for the company to increasingly understand new trends as well as provide new interventions/support to orchestrate deals for channels.:
Brace: We saw some pre-SaaS companies (companies that were born prior to SaaS era) immediately rush to protect their core. These are companies that have survived and thrived in previous financial crises, and hence we studied their moves closely. The first priority was to secure revenue and payments from large customers. We quickly built systems to continuously analyze external data (market reports, industry/sector announcements, geo economic data and more) and internal data (sectoral purchase patters and deal velocity parameters) to identify a) impact on Existing Customer Existing Business (EE)/ Existing Customer New Business (EN) revenue with large clients and b) early signs of daily sales outstanding (DSO) distress. This system was available to Sales leadership and Finance to weigh the funnel and revenue forecasts, and to take required interventions where DSO distress was likely. The second step taken was to ship-to-sell for physical goods, finding the fastest way to sell inventory that was movable. This required a supply chain overlay which would analyze where inventory was available, and the locations to where inventory could be moved (advanced external and internal data signals), and then identify a list of customers and selling what was available. The sales time was completely re-purposed and goals/incentives were aligned to meet this changed expectation. The third think that was on a slow-burner but was expedited to reconcile telemetry data of product usage with other churn signals to identify potential customer leakages, and to bring the limited sales focus to plug the gaps so that the core could be protected. This required rapidly enacting huge data lakes, and making sense of short-term data and signals, and test-learn to validate and/or improve the decision models. The fourth important initiative was to look at Sales & Marketing, and create a new Sales process, and also to adapt the sales incentives to the new model and expectations.
Interestingly, we also saw the “cash” mindset more strongly in this segment, and helped create better linkage of initiatives to KPIs through Enquero Strategy-Process-Systems mindset that helped sharpen focus of IT & Ops budgets on things that matter and defer the non-essentials.
Fight-or-flight is only a natural physiological reaction to any unwarranted situation. It all boils down to how one would respond to survive a stress. The core nervous systems of all businesses are on high alert now. Flight is no longer an option. Businesses need to rewire their operation and process models to create opportunities for surviving these sudden impacts. It is about time they re-evaluate key business drivers, prioritize initiatives and build a cohesive digital ecosystem. No matter how far along a company is in its SaaS adoption, there is nothing that a data-driven strategy, a set of intelligent processes and a unit of well-functioning collaborative systems cannot solve or scale. Afterall, the only thing that matters right now is, how many of these nervous systems are living to fight for a better tomorrow.
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