I. The Customer Life Cycle of SaaS

The customer life cycle of SaaS can be divided into several steps, as shown below:

While there is not much difference between SaaS software and traditional software sales in terms of links, there are a few distinctions worth noting:

• The sales plan for SaaS software involves providing a matching scheme of existing software for customer business rather than customized software development solutions.
• SaaS implementation is not about deploying software like traditional software, but about guiding customers to use the SaaS software effectively.
• SaaS software requires persistent after-sales maintenance. Continuous after-sales service must be provided as long as the customers are using the software. On the other hand, traditional software has a clear after-sales maintenance period, where software maintenance costs will be paid after the expiration.

With these differences in mind, it's important to understand the key links of the SaaS customer life cycle.

II. From Leads to Business Opportunities

In the SaaS customer life cycle, leads and business opportunities play an important role in the early stages of customer acquisition. However, many product managers may be confused about the difference between the two. Leads refer to the pool of potential customers that we can reach through various means, while business opportunities refer to potential sales opportunities where customers have been approached and have corresponding business needs. In this section, we will discuss how to improve the conversion rate from leads to business opportunities through various means.

1) Expand Product Influence

Expanding the influence of the product can increase its visibility in the target industry and improve the trust of initial contacts. One effective way to do this is to participate in large-scale exhibitions or forums of the industry, or even to organize forums jointly with industry associations. These events can help the target customers establish brand recognition and increase their confidence in the product.

2) Contract with Typical Customers in the Industry

Signing contracts with typical customers of the industry, even if it means a loss of money, can be very important in gaining the trust of traditional companies who may be hesitant to use new software. By showcasing the use of the software by top 100 enterprises in the domestic industry, it can attract more potential customers who intend to change the software to consult, and the subsequent sales process can become smoother. This approach can also be seen as winning the endorsement of high-quality enterprises in the industry.

3) Shape the Core Selling Point of the Product

In the product promotion, it is best to focus on the core business of the industry and form the impression that "we are the experts to solve the problem of xx" and "we are the best manufacturer in xx". This approach allows potential customers to think of the product quickly when they have related needs, rather than being overwhelmed by too much information. Shaping the core selling point of the product is essential for effective marketing.

With the above preparations, it is easier to "break the ice" and arouse the interest of potential customers through telephone sales, door-to-door visits, or organizing activities without making them too disgusted. By expanding the product influence, contracting with typical customers in the industry, and shaping the core selling point of the product, the conversion rate from leads to business opportunities can be significantly improved.

III. Sales Plan

To successfully sell SaaS software, it's important to have a sales plan that is tailored to the customer's business needs and reflects your professionalism. A customized approach is essential for key customers rather than a generic one-size-fits-all solution.

One example of such a customized approach is when a company providing enterprise qualification application services visited our company. They provided us with a comprehensive set of materials, including basic information about their company, their industry of service, main business directions, and an analysis of the necessity of the application qualification. They even highlighted key contents with pens to demonstrate their high level of professionalism.

To create a successful sales plan for SaaS software, it's important to meet the customer's business demands and reflect your professionalism. This approach will communicate to the customer that you can solve their problem and that your services are worthy of their confidence. Typically, a sales plan for SaaS software consists of the following steps.

• Company profile: This should provide a general introduction to the company's basic information, such as its honors and qualifications, and showcase the company's professionalism through client testimonials and case presentations.
• Overall solution: The purpose of this section is to give customers an overall impression of the industry-specific solutions offered by the company, highlighting what it can do for them.
• Demand analysis of customer business: This is the key section and should include a complete and professional analysis of the target customer's needs, combined with an explanation of how the software can meet those needs, including data comparison support for added credibility.
• Service process and safeguards: This section should inform the customer about the service process and the safeguards in place after signing to reassure them that the company can provide excellent follow-up service.
• Cooperation pattern: For SaaS software, it is important to include an introduction to the sales version and payment mode, but not to provide pricing information upfront. Instead, the price should be finalized through further business discussion and matching, as discounts and sales strategies may vary for different customers.

By presenting a customized sales plan that addresses the unique needs of each customer, companies can demonstrate their professionalism and build customer trust, leading to increased sales opportunities and business success.

IV. Managing the Critical Periods

SaaS software undergoes two critical periods, which are 30 and 90 days. The first 30 days is the trial period when the customer's employees are adapting to the new system. During this time, the workload of grassroots staff is doubled as they switch from the old system to the new one, which may cause some negative feedback. Dealing with negative feedback properly is crucial.

The next 90 days is the period when customer employees develop their habits using our software. After 1-2 months of torment, employees are generally used to the system. At this time, it is crucial to help customers further explore the value of the software.

For key customers, we can organize a product sharing session to invite middle and senior leaders, as well as grassroots employees, to share their feedback about the use of our products. However, this sharing session should only be held if the overall customer experience is positive. If the sharing session becomes a "roast," it will backfire. Through the sharing session, we can learn which functions are used well, which functions are not, and which functions are underused. This information helps us promote the in-depth use and application of our software from a professional standpoint.

Furthermore, "data empowerment" of our product is critical for middle and senior leaders. We should guide customers to pay attention to business data that our software has accumulated after 3 months of use. When middle and senior leaders can access and analyze the operational data of each project in real-time on their mobile phones, they will feel that our software is an effective means of data management. This will motivate them to promote the continuous use of our software. For instance, one of our customers' general manager praised our products because he could access operational data in real-time on his mobile phone, instead of waiting until each project was reported.

V. Renewal

During the subscription period, if there are no issues with the after-sales service and the product, using the software becomes a given for customers. The next step is to ensure that customers renew their subscription. The key to increasing the renewal rate is to increase the switching costs for customers, either by making it cheaper for them to continue using our software or by making it too expensive to switch to a competitor. There are two main ways to improve the renewal rate of customers.

• Renewal discount: Providing exclusive offers for renewed customers, like Alibaba Cloud and Huawei Cloud, which often launch exclusive discounts for old customers.
• Value-added services: Offering additional value-added services can increase the "sunk cost" of the customer, making them more likely to renew their subscription. These services may not be used up by the end of the subscription. For example, offering pay-as-you-go marketing SMS packages in e-commerce SaaS.
• Free trial of new features: One of the advantages of SaaS is the ability to continuously upgrade and optimize, so renewed customers can be offered new features for free. These new features should be the ones that customers want. For example, the newly developed function of contract management may be attractive to customers in some CRM systems. Continuously introducing new features drives customers' business to our SaaS platform, resulting in higher switching costs.

Of course, the above strategies are just tactics. The key to making customers renew is the value that the SaaS product brings to customers. Customers will continue to subscribe to our products only if they feel that our products can really help their business achieve the purpose of cost reduction, efficiency improvement, and quality improvement. Therefore, we need to have a deep understanding of customer usage scenarios and constantly optimize products to empower customers as a product manager. Only then can we truly maintain a high renewal rate.

VI. Summary

Currently, the profitability of domestic SaaS software is not high, and there is talk of a "SaaS winter" this year. This is due to the fact that many SaaS software products are homogeneous and fail to address the core business problems of customers, resulting in a low renewal rate. Additionally, the decision-making chain of enterprises is long, leading to slow customer growth.

However, these challenges also present opportunities for SaaS software. By deeply integrating with the customer's core business, SaaS software can guarantee a relatively high rate of customer renewal, and with the accumulation of customers, can reach the break-even point and generate profit.

Nevertheless, the profit cycle for SaaS software is relatively long, and explosive growth, like that seen in the mobile internet industry, is unlikely. Therefore, designers and operators of SaaS products must focus on getting key components right to improve the chances of product survival.

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Author bio :

Product Dolphin Bay: specializes in the design of C-end and B-end SaaS products, as well as product architecture design and demand analysis. Their C-end products have entered the top 30 in the App Store classification list, while their B-end products have gone through the complete process from 0 to 1 and from 1 to N.