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SaaS Q&A: What are the ingredients of a sustainable SaaS business?

In a time of wavering valuations and uncertainty, tech businesses are doubling down on sustainability. But what does that mean for SaaS?

If you’re in for the long haul and you truly want to build a sustainable SaaS business, you need to effectively build a well oiled machine. The machine has a lot of moving parts, the failure of any single piece causing triggering the inevitable breakdown of the entire thing.

locomotive
source: oldbookillustrations.com

So what are the key parts?

It always starts with a great product, that solves a meaningful real-world problem in a compelling way. If you don’t have this, you may as well forget the whole thing. Solve a problem, then figure out how to put your solution in front of people. Many SaaS businesses that fail often see success in the early days, through intensive sales and marketing efforts, only to be fatally bitten by an inadequate product eventually.

So what does a great SaaS product do that a good one doesn’t?

  • It onboards users with an experience that’s not just trouble-free, it’s actually so good people will write about it and use it as an example.
  • It gets users to the “aha” moment within the first few minutes of using the product.
  • It has built-in virality

The second part of the machine is an efficient Customer Success process. If you want your SaaS business to be sustainable, you need to have near-watertight levels of customer retention. And the only real way to do that is to hire a great Customer Success person and send them out into the world.

Once the machine is watertight and not leaking steam from every pipe, it’s time to pour in the coal… er, customers.

For most SaaS businesses, by far the most cost-efficient method of acquiring customers is through Content Marketing. Educate your target audience, become a thought leader in your space, and put your brand front and center on the most high quality content people have seen. This is the only true way to stand out. While most other people are pushing for growth hacks and quantity, you can only win by standing out, being different and telling a story.

All of the parts of the business that I’ve mentioned here can (and should) be measured, with metrics. If you build a machine with a good balance of:

  • Customer Acquitision Cost to Customer Lifetime Value
  • Excellent Retention
  • Low Churn Rate
  • Healthy Account Expansion

…You can go crazy pouring in more coal with the confidence that it’ll efficiently add momentum to your growth.


This post was originally published on Quora – read the original thread here.

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