3 Crucial Stages of a SaaS Deal Lifecycle
If you’re running a SaaS startup, you should think about the lifecycle of SaaS deals. You have to be aware of it so you can design deals that can be beneficial to all of your customers.
It’s a simple cycle, but it needs a lot of skillful timing and understanding to do it right. When you’re attempting to get a new customer, you’re also trying to maintain the one you already have. In essence, there are several factors that might lead to either a successful or a disgruntled consumer.
This article will look into the lifecycle of SaaS deals and what you should know about them.
What Is the Lifecycle of SaaS Deals
Most organizations and businesses are now making the switch to SaaS solutions. Around 80% of all end-users in the U.S. prefer SaaS solutions for their communications and task organization. That’s a major increase from a little over 50% back in 2016.
The lifecycle of SaaS deals can be broken down into three major stages; acquisition, engagement, and retention. Those major stages can be broken down further into substages. You need to understand each stage to have a clear idea of how your customers will behave. That allows you to give them what they need and serve them better.
As a SaaS startup, you need to emphasize building strong relationships with your customers. In the following sections of the article, we will go through the different stages of a SaaS deal.
1. Customer Acquisition Stage
In some ways, the acquisition stage is the most challenging stage. Getting customers to sign up for your deal is never easy, and with the stiff competition in the SaaS industry, it’s now even more difficult.
This is because when you are coming in contact with your leads for the first time. They have zero knowledge about who you are and even less about the product you are offering. Another thing to keep in mind is that they might not even be aware that they have problems that your product can resolve.
So, you will have to aim for two things during the acquisition stage. First, you need to introduce yourself to your customers. You need to tell who you are and what your products are about. More importantly, you have to make them aware of the deals that you are offering for your products or service.
Then you have to make them aware that they have a problem. Some of your leads will already know their pain, but some are not. For example, if you have bookkeeping software for small businesses, you need to make your leads aware of what they are missing if they are not doing proper bookkeeping. Tell them about the possible losses they are incurring.
Here are the substages that are under the acquisition stage and what you need to do for each stage:
Create USPs, Buyer Personas, and Targets
A Unique Selling Proposal (USP) is what makes your product different from the competition. It’s the reason why your customers should buy your product. There can be more than one USP, but you need to identify what is right from the start.
Once you have identified your USPs, the next move is to determine who will actually benefit from them. What are the segments of the markets that will be interested in your product?
Once you have identified your targets, you need to identify the ways and channels to reach them. For example, for a SaaS startup, LinkedIn is arguably the best channel to market as it is where the decision-makers of a business can be found. While its 700 million-plus users are a lot less than Facebook, it is better focused.
Build Up Awareness
Your initial SaaS sales should be focused on building up awareness about your company and your product. The awareness campaign should be focused on how you can resolve their problems for them.
To create awareness, you need to do a lot of content marketing. You need to publish videos, blogs, and social media posts that showcase that your product is the solution to the problems faced by your potential customers.
Qualify Your Leads
Qualifying leads is the process of determining whether they have the potential of becoming a customer in the future. This is done while your leads are assessing if you or your product can help them out. One way to gauge their interest is by looking at the pages they are browsing.
Another way that you can qualify your leads in real-time is by using live chat. With a live chat feature on your site, you can ask your leads directly what exactly they are looking for.
2. Customer Engagement Stage
The first stage was about knowing your leads and letting them learn more about you. The customer engagement stage is all about convincing your leads to make purchases. In some ways, this is easier than the first stage. Here are the substages of the engagement stage of the customer lifecycle:
Purchase and Conversion
The main thing that you want to achieve during the lifecycle of a customer is the purchase. This is when you convert a lead into an actual customer. At this point, you can map your customer journey, and you can see why people buy and why people don’t buy from you.
Be sure to engage with that new customer whenever you see a conversion. Tell your new customer about the support you have ready for them if they need anything.
What’s the next step after your customer makes a purchase? It will be training and onboarding. At this stage, you need to learn more about your newly-acquired customer. You need to educate them on how to use your software. Likewise, you need to guide them on the best way for them to maximize the solution you provide.
Your training materials will play a very crucial role here. While written manuals can be handy, video demos will actually be more helpful. You should also consider going into calls, although that might not be sustainable once you gain a lot of customers.
When your customers purchase your product, you will forget about their satisfaction. In fact, you have more reasons to ensure their satisfaction once they give you their money.
Maintenance and Regularity
After they pay for your software, you can expect that most of your customers will be using it regularly. You need to work with your customers to use your products to their advantage.
To help your customers utilize your software, you have to understand their internal process. That’s needed so you can give recommendations on how they can optimize the use of your software to their advantage.
The key here is instant support. Remember, your customers know little about your product’s capabilities. You need to go the extra mile in providing support to them.
For example, you can go on a live call with a client as they are trying to use your software, and you can make changes to accommodate their needs in real-time. That would show your commitment to your customers, and it’s a great way of building a loyal base.
While it is okay to be on calls with your clients when they need you, your goal is to cut those calls as much as possible. Your customers can feel frustrated having to go on calls with your sales rep all the time. Frequent calls will also be a strain on your customer support capabilities. If you can give them all the information they need beforehand, that would be much better.
3. Customer Retention Stage
Although retention is the last stage in your customer cycle, it is crucial. Retention refers to the process and the steps taken to keep the customers you have. Customer success or ensuring consumers get the results they expect from your product or service is vital in this stage.
Many SaaS businesses focus too much on gaining new leads and converting, and they forget to put any effort into retention. That’s a major mistake because the existing customers have already paid and have trusted you. Failure to retain them means something seriously wrong with your system and process.
Here are the different substages of the retention stage of the SaaS product lifecycle:
Your aim for your existing customers is for them to sign up for renewals. This can be more challenging if you are following a monthly SaaS subscription program. That’s because your customers will have a monthly opportunity to cancel their service with you. That’s also the reason why many SaaS companies prefer to offer annual or multi-year deals to their customers.
There are fewer opportunities for customers to think about dropping the subscription to your service for annual and multi-year deals. But when it comes to deciding if they will renew or not, you need to give them reasons to renew. The main reason they will renew is improved service and a good product. So, if you want to keep customers, you need to improve everything continuously.
Follow Up and Referral
If a customer renews their subscription, make sure that you thank them for their choice. Ask them why they renewed their subscription to your app. This can be a risky move. There could be instances when your customers may forget about their subscription to your service and have no plans on renewing the subscription. This is true when you have an auto-renew option for the subscription.
If your customers are satisfied with the service you are providing, they will respond to your message and tell you why they renewed. They will be more than happy to engage with you, and it will be an excellent opportunity to build rapport with them.
You could even ask your customers to refer your service to their friends. People still trust word-of-mouth recommendations. In fact, the percentage of people trusting word-of-mouth recommendations is at a whopping 92%! If you can get even half of your existing customers recommending you to people they know.
Innovation and Improvisation
The customer cycle does not end with the renewal or the ending of the subscription. Keep in mind that you want your customers to stay with your service for a long time, not just for a year or two. You want to keep your existing customers and add to them.
The way to achieve that is by continuously innovating and improving your product development for your customers. The reason why you were able to get most of your customers is mainly because of the innovation that you introduced. Keeping them and getting even more customers is by developing even newer innovations.
Remember, you are a SaaS company offering tech-based products and services. You stop developing and say that you have created the perfect Saas software because your competitors will soon overtake you.
The Customer Lifecycle and Customer Journey?
When talking about the lifecycle of saas deals, you need to consider the customer lifecycle and the customer journey. These two sound similar but are very different.
The customer journey refers to the steps taken by the lead until he becomes a renewing customer or until he cancels the service. If a company wants to succeed in the long run, it needs to look at the larger picture. To put it another way, they integrate customer lifetime value (CLV) in their approach. You may use CLV to understand your customers better. It’s an estimate of how much value your customer connection can add to your company.
On the other hand, SaaS customer lifecycle marketing is the whole relationship of that customer with your company, brand, and product. It’s the route a client takes from Point A to Point B of customer acquisition until they ultimately decide to buy.
What’s the Deal?
The kind of deal you are offering is another important factor that you must consider. The customer journey discussed above is best applied to a monthly subscription plan. That is where you need to plan for the retention of the customers. That becomes less pressing when you are offering an annual plan.
It’s even more complicated when you have chosen to offer lifetime deals to customers. The customer journey of those with lifetime deals will be very different from regular customers.
These are just some things you should know about the lifecycle of SaaS deals and SaaS product lifecycle. For more information about SaaS deals and the industry in general, visit our blog to find relevant articles.