Nervous About Transitioning to SaaS? Here is What You Need to Consider

The growth of your business is not a fixed quantity. If you are in it for the duration, you cannot count on a perpetual upward slope without realizing there will be adaptations and changes to your business structure along the way. Customer needs are fluid. You're not going to succeed unless you're willing to adapt.

This has never been more evident than in the past decade or so for those in the software industry. It isn't just about providing a software product. Consumers today want a software service that demands an entirely different business model.

Transitioning to a SaaS model allows companies to react to their customer's specific needs. Companies that are new to the market are busting out of the gates with a SaaS model already in place. However, there's a sea of existing companies that need to transition to survive. This leaves them with questions about how to most efficiently transition and what to consider along the way.

The answer to this question can be broken down into 4 components. Considering each will make for a smoother, more profitable and successful transition for your company.

Assess Your Current Business Model

For many businesses, the most difficult area of transition is how they view their business model. With a SaaS offering, keep in mind that you are taking on the cost of building the product upfront and the return on that investment kicks in over time. This means you need to have a "runway" to stay afloat while the revenue stream builds in over time.

Businesses can make huge profits with a SaaS model, but it takes some time to get there, no matter how reputable your product. Instead of focusing only on the next sale, your business model needs to reflect how you're going to win the trust and respect of subscribers, so they stay committed to you. This is going to involve restructuring financial expectations during the initial period, along with adapting marketing, billing and customer service strategies to match a new type of customer.

Look at Your Customers

When transitioning to a SaaS model, it's crucial to look at your customers for inspiration and guidance. The trend in software is overwhelmingly pointed at SaaS models. Still, the transition isn't always easy for your customers, and there will be some who are resistant to change. Your goal is to get a complete picture of what your customers expect and do your best to meet their expectations with this new model.

Paying attention to your customers now will reduce your churn rate later. Know your market and understand the features of your SaaS model that will win them over. Enhanced customer service is huge, and so is engagement. You need to make sure that your software is adapted to encourage consistent engagement. If software that costs $90 a month goes unused because they aren't engaged, what do you expect to happen?

You should be focused on customer retention just as much as customer acquisition, especially during the transitional period. You're not just selling a service, you're selling a relationship. Knowing your customer, optimizing analytics and testing are going to be huge in determining your success.

Identify How a Subscription Model Will Provide More Value for Customers

The customer should be the center of your SaaS transition. The whole purpose of switching to a SaaS model is the value it's going to provide to your customers. But, before you begin, you need to recognize what that value is.

While you're taking a little time to get to know your customers, use your insights to get a clear picture of the value you're going to be providing. There are reasons that software users are flocking to the SaaS model in droves, here are just a few of them.

• Customer Service: With companies having a greater interest in retaining subscribers, customer service becomes more of a focal point.
• Agility: With automatic updates and exposure to new products through subscription services, customers benefit from greater agility.
• Less Headaches: There's no need to worry about when the next version is coming out, or constant notifications that their software is about to expire. Renewal and payment is automatic.
• Consistency: All your SaaS subscribers are on the same release schedule.
• Trust: A SaaS model allows you to build a relationship, and with that comes trust. Customers who engage with businesses they trust generally have a higher level of satisfaction.