What is SaaS? SaaS is the abbreviation of Software as a Service, and refers to a software licensing model based on user subscription with monthly or annually payments. The model… is an increasingly growing industry; which means there are tons of newbies to the whole concept.
If you are at the beginning of your SaaS journey too, this article is just the right piece for you!
I’ll try to explain what SaaS is to the best of my ability, as well as provide you with a few examples of SaaS businesses and a number of different concepts that you should grasp.
Let’s start from the basics:
What Is a SaaS Business Model?
The SaaS concept revolves around provisioning software to users via licenses and/or a subscription plan. If you lease or provide your software to users via a cloud-based system, you are a SaaS company.
SaaS business model has many benefits, including:
- Recurring payments, thanks to monthly or annual subscriptions.
- Better customer What is retention? Retention refers to a customer continuing to use a business’ product or a service and to pay for the said product or service. It is a key…, because you are constantly bringing in new customers to paid or higher-level tiers instead of interacting with them only once, closing a deal, and forgetting about them.
- Regular updates, because you can provide smaller but more regular updates to maintain retention and build responsivity and customer feedback into new releases.
Metrics to keep an eye on – regardless of any specific SaaS model you may choose – include:
- LTV – the lifetime value of each customer.
- CAC – customer acquisition cost, which is used to calculate revenues and profitability and can be used to justify new marketing campaigns or other acquisition initiatives.
- MRR & ARR, which are monthly and annual recurring revenue respectively, are used to measure your predictable revenue on a monthly or annual basis.
- What is churn? Churn refers to a customer cancelling their subscription to your products or services. It is a common metric among especially SaaS(service as a subscription) businesses. Churn exists… rate, which can help you identify issues in reach, onboarding, or other process flows.
- Retention rate, which measures your ability to keep customers once you have locked them in or engaged with them in some way.
Who Are the Top SaaS Companies?
Software-as-a-Service solutions can be found in virtually every market, in every niche, and for every conceivable use case.
Here are some of the biggest, most successful, and most highly recognized SaaS companies:
- Salesforce, which was launched around the concept based on customer resource management (CRM) and now works in platform development, analytics social networking, and marketing.
- Microsoft has moved Office to the cloud and rebranded it as “Office 365” which generated about $20 billion in revenue in 2019.
- Adobe, a leader in creativity software, now provides Photoshop and other editing tools via subscription.
- Amazon Web Services (AWS) helps organizations build and run online services and is the backbone of many businesses in this list.
- Google G Suite provides paid tiers for popular products such as Gmail, Drive, Photos, and Google Calendar.
- Slack is a relative newcomer but is a popular collaboration platform that provides individuals, teams, and companies with instant messaging and communication tools.
- Zendesk has revolutionized customer support and brings together tracking, billing, shipping, and other services in one tightly integrated app.
Other notable SaaS companies include:
- DocuSign (facilitating document signing)
- Zoom/GoToMeeting (collaborative connections for meetings)
- GitHub (software development, storage, and versioning)
- Atlassian/Jira/QuickBase/Trello (task management)
- Intuit (financial services and tax filing)
- Shopify (online stores)
- Eventbrite (event management and planning)
- Blackboard (in-class and remote learning)
As is clear, these tools and services cover many industries and have a substantial footprint. They also bring in considerable amounts of revenue and are used by millions of people every day.
Structuring Your SaaS Company
The organizational structure that is best suited to your SaaS company depends on how large the company is (defined in terms of full-time employees, not in terms of revenue) and what stage of the startup, growth, or expansion phase you are in.
SaaS company structures change significantly as the company grows from a small team of 5-10 people to an organization with 25-50 and beyond 100 full-time workers.
A quick breakdown of roles and responsibilities of different workers – and applicable titles – for SaaS companies of different sizes might look something like this:
5-10 Full-Time Workers
- Founder 1: Responsible for Sales and Marketing
- Co-Founder 1 (or first senior hire): Responsible for Product and Technology
- Co-Founder 2 (or next senior hire): Responsible for Administration, Operations, and Processes
Reporting to these three senior or founding members will be full-time workers within each operational vertical.
25-50 Full-Time Workers
At this size, you have room for (and require) more hands-on, operational people to get things done on a daily, weekly, or monthly basis. These new hires still fit into the three broad categories of sales and marketing, product and technology, and admin and processes, but they have specialized tasks and responsibilities, identifiable by titles such as Marketing Manager, Sales Manager, What is Customer Success? Customer Success refers to the approach that has your company in a position where it ensures that each customer is successfully connected to their desired outcome…. Manager, Product Development Manager, Admin/Accounting Manager, etc.
When you start nearing the 50-60 worker range, you can start thinking about introducing C-suite executive roles such as CTO, CMO, COO, and CFO.
New roles (such as VP or Director-level roles) will then report to these new C-suite executives.
100+ Full-Time Workers
Between 50+ and 100+ full-time workers, it is up to you to gradually add the roles you need to fill based on your market, growth trajectory, and business needs.
With 100+ people working full-time, you can add:
- VP Sales, VP Marketing, VP Customer Success, followed by Directors for specific markets, regions, or brands, all of whom report to the Chief Marketing Officer or CMO.
- VP Product, VP Development, VP Quality Management, and Director of Development, all of whom report to the Chief Technical Officer or CTO.
- VP Performance, VP Operations, and Directors of Communications and Implementation, all of whom report to the Chief Operating Officer or COO.
- VP HR, VP Finance, Director Billing, Director Accounting, and Director Legal, all of whom report to the Chief Financial Officer or CFO.
All of the C-level executives, in turn, will report to the CEO.
Sales in the SaaS World
There is a great deal of emphasis on sales in the SaaS world – especially since getting your product or service into the hands of users is the logical next step after the always difficult first step of coming up with a viable SaaS idea that can compete in the market.
SaaS sales are vital if you are to generate revenue, get feedback to improve your idea, and expanding your offerings.
Sales roles in Software-as-a-Service companies are just as important – if not more so – than sales roles in traditional companies. SaaS companies, by the nature of the business, must deal with low customer switching costs and, more often than not, many available solutions from which to choose. This is why having the right people to target the right audiences and getting the right messaging across and perfecting What is user onboarding? User onboarding is the crucial process that starts from the first login of a new user and ends up in their aha moment, and usually beyond…. are so important when you are dealing with cloud-provisioned tools and apps that users use remotely.
Startup growth and expansion in the SaaS world tend to occur quickly.
You have a great idea, have identified a workable solution, and have provable demand. In many cases, the roles of the professionals who are tasked with execution at different levels of the business are not clearly defined. Over time, this can lead to confusion and even conflict if workers are not sure of what they are to do.
It can also make assigning responsibility difficult, both for good as well as poor performance.
The Benefits of Clearly Defining SaaS Sales and Marketing Roles
Earlier we talked about the pitfalls of growth without outlining who is responsible for what in your company.
As startups grow, the founding members and early hires tend to sacrifice a little authority for more structure. Whereas the founder or CEO may have once been directly involved in hiring or sales, he or she will likely take a step back from those duties and will focus more on strategy.
Similarly, sales and marketing roles must be defined so that everyone knows what he or she is responsible for and that senior management has the ground-level metrics on performance, engagement, sales, leads, conversions, and churn to establish a link between different initiatives, campaigns, regions, or even workers when it comes to success – or failure.
As mentioned above, there are different ways you can design and structure your SaaS hierarchy or organizational chart, but any design or approach you adopt will inevitably have clear lines between different roles and functions based on department, operation, function, region, or target market.
Use the job descriptions from the lists provided above to:
- Help you clearly define roles and responsibilities.
- Make it clear to existing workers and new hires what is expected of them.
- Connect company inputs (resources, time, efforts) to outputs (revenue, goals, acquisitions).
- Make resource allocation, succession planning, and career progression easier to visualize.
- Identify gaps in service coverage, such as creating a new role to cover for gaps in affiliate or vendor management or including high-value customers in a senior manager’s portfolio.
Getting into SaaS can be a challenging journey for you, and you’ll find starting a SaaS company from scratch soul-devouring.
Try to take things one step at a time, and hire the best talent where you can’t catch up. Remember, the journey in SaaS is never a 40-yard dash, it’s usually a triathlon 🏃♂️
Frequently Asked Questions
What Are Professional Services in SaaS?
In SaaS, Professional Services are used to manage short or mid-term engagements that help customers and the company to achieve specific and defined outcomes. PS consultants are responsible for supporting their sales teams with opportunities that may be more complex or may involve more customization to the typical user or client.
How Do I Get a Job at a SaaS Company?
If you come across an open position in a SaaS company that you’d definitely want to nail, make sure you learn the hardships of working especially in SaaS and let the recruiters know you have the skillset to overcome these challenges.
Who should I hire first for my SaaS company?
As an early-SaaS-startup, your focus for your first hire should entirely be around wherever you’re lacking. Also, since early startups constantly change focus to stay on their toes, you should hire a bit of a generalist that can aid different parts of the business when necessary.