A few bits of advice you hear a lot in SaaS that I think often don’t really work in practice:
- Move to annual contracts to generate more cash. Sure, if customers want to pay annually for a discount — do it. Do it. But if your product is cheap, many will prefer to pay monthly. Force them to go annual, and you are just adding friction to the sales process. More here.
- Focus, focus, focus on 1 core product. This is often pretty critical in the early days and even all the way to $10m-$20m ARR. But after that, sometimes you really do need to be working on a big second product. Sometimes, the market just isn’t big enough for Product #1 alone to get you to $100m+ ARR growing at a decent clip. More here.
- Your customer acquisition costs need to be low — in all segments of the market. Here’s a subtle but very important mistake so many VCs, blogs, social media, etc. get wrong. Yes, as you scale you do need to maintain efficiency in sales and marketing. But not necessarily in new segments of the market you are expanding into. As long as your core customer can be acquired efficiently, it often makes sense to spend $1 to make $1 when you are growing into new markets, new segments, etc. where your playbook is still evolving.
- Never build a custom feature. This advice is certainly accurate in the narrow sense. You can’t afford to build one-off custom features to make bigger customers happy. But … but … 9 times out of 10, there’s another customer that also will want that exact same feature. So instead of saying No, ask yourself if others would also value it. And then just charge more for it. More here.
- Give that VP of Sales / Marketing / Engineering more time. It does take time to turn the ship. More time, the bigger the ship. It does take time to deliver some results. But others can be seen in just a few weeks. You can move deals down the pipe faster. You can go visit all the top customers ASAP. You can bring in 1 or 2 great sales execs to the team. You can get a new marketing initiative going this week. You need to see some tangible improvements quickly from any true VP. You’ll see. More here.
The post 5 Common Pieces of SaaS Advice … That Are Often Wrong appeared first on SaaStr.
via https://www.aiupnow.com
Jason Lemkin, Khareem Sudlow
