Building a Resilient SaaS Business Model

SaaS business leaders presently live in a painfully “in-between” state. Every day, they wake up to a metaphorical coin flip. One side of the coin indicates economic prosperity and encourages investment: inflation is beginning to slow, the jobs report is strong, the NASDAQ is approaching a 5-year high, and the Fed is again considering interest rate reductions. The other side discourages investment, screams “preserve cash,” and portends doom: domestic political uncertainty, a divided electorate, and global crises too numerous to list. For SaaS leaders, planning for resiliency is more important than ever.

Planning for resiliency takes work, and many (if not most) organizations could be better at it. Resiliency is “an ability to recover from or adjust easily to adversity or change.” Too often, the methods used to recover from adversity are extreme. Rather than adjusting “easily” to market conditions, enterprises undertake drastic measures: cease all discretionary spending, freeze hiring, deploy a reduction in force, reduce sales and marketing spend, and ride it out. None of these behaviors fit the definition of resiliency, yet all of these behaviors can be seen in the daily news headlines. 

So what should businesses do? What steps can SaaS companies take to build a resilient business plan?

Stop Planning in Spreadsheets

A recent survey indicates that over 88% of SaaS companies use spreadsheets to build plans. Using spreadsheets typically means that a select few individuals can access and understand plan details and assumptions. It also means that those who want to model changes to things like sales capacity or marketing spend do so in a vacuum – divorced from the original plan assumptions and likely using some new format. Companies should shift planning for go-to-market spending from siloed spreadsheets into collaborative SaaS applications to create resiliency.

Build Better Predictive Models

Because so much planning is conducted within spreadsheets, predictions are built atop hardcoded data points or assumptions that are “best guesses.” As with spreadsheet-based planning, the logic behind these assumptions may be undocumented, inconsistent, and not widely understood. It is much better to build and deploy predictive models that leverage larger datasets to generate predicted outcomes with the assistance of artificial intelligence. To create resiliency, companies should deploy living predictive models that constantly update predictions of future results

Evaluate Spend More Effectively

Decisions on how and when to invest in go-to-market strategies are frequently evaluated using faulty metrics. It is fundamentally unsound to spend $X to generate Y number of leads.  By themselves, leads have no value. Leads are not financial instruments that can be spent or deposited. The correct way to evaluate the spend would be to spend $X to generate Y number of leads that will convert to bookings on timeline Z and cash on timeline Z2. Further, the decision-making process should include more than one option. Evaluating ten investment options and selecting the best 2 or 3 is better than assessing just one option. Companies should deploy solutions that evaluate investment options based on AI-predicted returns to create resiliency. Returns should be expressed in terms of leads, opportunities, bookings, revenue, and cash-on-hand

Force Cross-Functional Collaboration

In a challenging economic climate, investment decisions must be made collaboratively. Departmental boundaries and budgetary protectionism have to disappear. Ideally, this collaboration occurs at the departmental level. Revenue leaders (Sales, Marketing, Account Management, RevOps) should evaluate all options and present a unified front to the CEO and CFO. For example, revenue leaders may evaluate many options and decide this the time to lessen the focus on new business acquisition and instead focus on customer marketing, expansion, and churn prevention. To be resilient, SaaS CEOs need to foster collaborative cultures. Where collaboration cannot be found, CEOs may choose to eliminate new go-to-market investments unless and until Sales, Marketing, Account Management, and RevOps align and agree upon where to invest.

According to a RevOps Co-op Trend report, 80% of companies miss their forecasts/plans by 25% or more. This lends credence to the idea that the ability to “recover from or adjust easily to adversity or change” is paramount to business success. What steps are you taking to build more resiliency in your business?

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