Goals vs System in SaaS: The Gears of Success
From a young age, most of us are taught that completing – or just having – a goal is everything. From health and academic performance to career and business planning, reaching a goal is the foundation of success.
But what most don’t realize is that a goal is nothing without a system. Think about that for a second.
If you’re a business and are aiming for a goal – like increasing your ARR (annual recurring revenue) – you’ll only be able to achieve your target if you’ve developed a system.
The same is true for any other endeavor. Losing weight, training your pets, or learning a new skill – all those goals are nothing without an effective system.
That’s what we’ll be covering in this blog. But we will try to confine our discussion to the SaaS industry given this site is dedicated to that market.
With that being, let’s first define what is a goal and what is a system.
This way, we can truly pin down the very topic we’re trying to differentiate: goals vs systems in SaaS.
Goals vs System: The SaaS Perspective
Similar to all businesses, the ultimate goal for a SaaS solution is to increase your revenue. But to do that, you’ll need to create a systemic step-by-step process in how to achieve it.
That could be through:
- Content marketing
- Email marketing
- Social media engagement
- Stellar customer support
- Adding/improving features
- A comprehensive onboarding process
These are just some of the systems you’ll need to focus on if you have a SaaS application business. And each of these systems is going to be divided into other sub-branching segments, with those segments broken up into smaller pieces still.
Think of it as the gears in a massive clock.
The clock’s purpose is to provide accurate time. But behind the two hands that are constantly ticking are the turning gears working together.
If one of the gears stopped, the others follow. The clock’s purpose is the goal; its gears are the system.
So between the two, having a system is far more beneficial than having a goal.
If you’re a SaaS company, your goal might be to reach $2 million then transition that success to a T2D3 growth. But while a goal is a great thing to focus on, it does have its drawbacks.
A SaaS system, on the other hand, has few. And if there are any, you could easily create a system within that system to address any problems that might pop up.
Let’s dive deeper.
Why a System is Better Than a Goal
- Goals are temporary; a system is nigh eternal
- Goals need motivation; a SaaS system is a routine
- Goals always seem impossible; a system more realistic
Goals are temporary; a system is almost eternal
Like most goals, achieving what you’ve set out to do almost always result in temporary satisfaction followed by complacency.
For instance, say you’re trying to increase your customer base from 50 to 100. Once that has been reached, you’ll be celebrating with your team. But what happens afterward?
You set another goal. Then you achieve that and set another. For most, this can be an exhausting endeavor.
But a system is different. A system ingrains the very process in your team.
Think of it from the perspective of someone trying to lose weight. If you’re 200 pounds and want to get down to 150 pounds, you might try dieting and exercising. But once you reached your goal, complacency kicks in.
The same is true for a SaaS company that is trying to increase its customer base. Once that target has been reached, contentment sets in and you might be satisfied with what you have.
A system works differently as even when you’ve hit your mark, it will perpetually keep turning and produce more positive results, more or less.
You’ve grown your customer base even if you didn’t plan on surpassing your 100 goals in the first place.
It just keeps on and on. In short, the system has been imbued in the very culture of your company. It’s no longer a goal. It’s just your regular Monday.
Goals need motivation; a system is just a routine
As mentioned earlier, reaching a goal can be exhausting. And to counter this exhaustion, team leaders usually need to motivate their team.
Meetings are held. Speeches are given. And a whole lot of time is wasted. Although motivation is still relevant in any form of business, producing it is difficult.
But a system doesn’t need such fuel. A system is a routine, a habit. And habits don’t need the mental stamina to stay consistent. You just do it. In time, the routine you’ve developed with your team becomes second nature.
The result is quality performance in your daily process.
SaaS metrics are followed. Customer service is excellent. And satisfying team performance – from sales rep to account executive – is maintained.
Goals seem impossible; a system is more realistic
Going by our example earlier, going from a small startup to getting a $2 million ARR is a tall order. It can be done, to be sure.
But when you’re just a small company, staring at that massive mountain appears to be a nigh insurmountable task. But when you start breaking it down using a system, the overarching task doesn’t seem impossible anymore.
So rather than trying to get $2 million on the outset, try to create a SaaS system that would address how to get there.
Again, lowering churn, creating a smooth onboarding process, and providing excellent customer support are just some of the factors you’ll need to address.
Approaching your target like this allows you and your team to easily digest your objective. In a lot of ways, this is similar to what cognitive psychology referred to as chunking.
Put simply, chunking is when you break down information into individual pieces then combine them for easier memorization.
The same process is applied when you’re going for a massive goal like increasing your ARR from $0 to $2 million.
Now that we’ve established why a SaaS system is better than any company goals, let’s proceed to the next step. Which are the various processes you can implement in your company to achieve your desired outcome.
SaaS Systems You Can Implement
Ever heard of HEARD?
Let’s start with customer support. Customer support is one of the major pillars of a successful SaaS company.
Without it, you risk increasing your churn rate, which is the number of customers canceling their subscription on a given period. Read more on that topic here.
So your goal is to lower your churn rate caused by inefficient customer service. Let’s dive deeper to further identify why you have poor customer service and what actionable methods you can apply to address it.
In SaaS, most of the problem in this sector comes from:
- Missing features
- Hidden features
- Complicated features
- Improper handling of frustrated customers
- Delayed responses to complaints
Diving deeper still, we’ll need to explore each of these elements to create our system. Let’s take the improper handling of frustrated customers as an example.
A great SaaS system to follow here is what’s referred to as HEARD.
HEARD stands for:
- Hear – allow the client to vent their side to get a clear understanding of their frustration
- Empathy – you’ll need to connect with the client to show them you truly understand
- Apology – genuinely offer a sincere apology
- Resolve – quickly act on the specific complaint. Better still, have the customer participate through the solving process. “How can we make this right?” is a question that could quickly deescalate the situation
- Diagnose – once the complaint has been resolved, identify why it occurred in the first place. By doing so, you’re going to prevent it from happening again, leaving your customer support team to handle other problems like bugs. Which is a constant problem for any SaaS company.
As you can see, a system provides a detailed response to a problem that ultimately help you reach a goal. In this case, lowering customer churn caused by poor customer service stemming from improper handling of frustrated clients.
Congratulations, you now have a working system for a specific issue. The next thing you’ll need to do is to create another system for another problem to reach yet another goal.
In our clock analogy earlier, the first gear of the entire mechanism has been made.
A SMART system
Another gear you can add to your system is what’s called SMART. SMART stands for:
Again, you’ll need to disassemble each of these when creating an effective and efficient SaaS system. So let’s assume your goal is to increase your site’s position on the SERP (search engine result page).
Now, this could be attained through multiple means. And one of those methods is content marketing.
Content marketing is an incredible tool for attracting site visitors, compiling leads, and turning those leads into paying clients.
Using the SMART system, your process will now look something like this.
What are you hoping to get from your content marketing efforts? As a SaaS company, your aim may be to:
- Educate your target audience
- Increase your conversions
- Highlight why your SaaS solution solves their problem
- Or forge a relationship between you and your customer base to turn them into advocates
Each of these requires different content. Thus, by defining your objective to its most fundamental form, you can determine what path you’re going to take moving forward.
After defining your specific objective, your next step is to measure your content marketing’s performance. And to do that, you’ll need to evaluate your KPIs (key performance indicators).
These may include, but is not limited to:
- Increase organic social shares
- Increase in organic traffic
- Decrease in bounce rate
- Increase page in-depth
- Increase form submissions
- Decrease the rate of funnel abandonment
Do you see how this is shaping up? A specific objective means you’re able to measure the various metrics that will help you achieve your overarching goal.
Of course, all of these are going on the assumption that your goal is an attainable one in the first place. So let’s say you’re trying to increase your conversion rate to boost your ARR.
In SaaS, that usually means your target is between 3-5 percent as this is the average. Pushing that to 8 percent and beyond will be an achievable yet challenging goal.
With that said, what you want to focus on is the conversion rate of your specific company. This brings us to our next SMART process…
Content marketing, or any SaaS metrics for that matter, isn’t achievable if it isn’t realistic. Take our 3-5 percent conversion rate average example above.
If you don’t know what you’re doing, you might target some unrealistic conversion number like, say, 50 percent. And even if you’re targeting the average, you’ll still need to dive deep to truly determine if your goal is realistic or not.
Here’s an example.
- You get a visitor from your website
- They turn them into a marketing qualified lead (MQL) into a sales qualified lead (SQL) through lead nurturing
- A meeting is set up with your account executive (AE) to evaluate if they’re the right fit
- They check all the boxes and your AE tries to convert them
- After a few more meetings, your SQL has now been converted into a paying client
This is a normal process in SaaS. Now that we’ve defined this process, let’s look at your goal: increasing your ARR from $50,000 to $1 million.
Assuming your SaaS solution has an annual subscription fee of $50,000, you’ll need 20 new customers to reach that $1 million mark. But we’ll also need to determine what’s the conversion rate with each stage of the conversion funnel.
- If your sales team creates a proposal and that proposal converts on a 20 percent average, you’ll need to send 100 proposals to get 50 new customers
- If your AE needs to create proposals for an SQL by a 50 percent average, then you’ll need to set up 200 meetings with an SQL to get 50 new customers
- If your sales rep can set up a meeting with an SQL on a 20 percent average, you’ll need 1,000 SQLs
- If an MQL becomes an SQL on a 20 percent average, you’ll need 5,000 MQLs
- Thus, if your visitor-to-paying customer has a conversion rate of 5 percent, we’ll need 100,000 visitors to get 50 new customers.
With 50 new customers paying an annual fee of $50,000, you now get $1 million in ARR.
But all of that started on your SMART system. And then creating a system within that system to truly hone in on the performance of each sales funnel.
Lastly, you’ll also want your SMART SaaS system to operate within a certain timeframe. So let’s continue with our given example and assume you’ve managed to hit $2 million.
Your next goal may be to reach $100 million. That may be a tall order but it isn’t impossible either.
One of the best ways to achieve such a seemingly ambitious goal is the T2D3 framework. We’ve extensively covered that topic here.
But the main idea here is to set a timeframe for how long your system will achieve your goal. And depending on your objective, it may take months or years before you see an apparent improvement towards that massive objective.
But you are ensuring that your process will yield results in the future you’re targeting.
The SMART and HEARD systems are just some of the many processes you’ll need for your SaaS application.
The good news is that once these are in place, the mechanism inside your company will run more efficiently. What’s more, you’ll be able to tweak these systems to suit your specific product and how your benchmark will evolve.
Goals vs Systems in SaaS: A Collaboration of Both Parts
As you can see, developing a SaaS system is far more important than simply having a goal. However, this isn’t to say that you shouldn’t have goals either.
It simply means that it’s easier to achieve an objective if you have a proper system that’s already running. Once these have been ingrained in your company, you’ll find that you and your team will be a lot more efficient with your work process as there’s a detailed guide you can follow.
For more marketing tips and strategies about the SaaS industry, visit our marketing blog here.