How a SAAS company should focus

The business model of Software as a Service (SAAS) is very different from transitional software in which licences are sold.  SAAS relies on subscriptions and consequentially offers a lower barrier to entry.  Because of this, it is extremely import for SAAS companies to keep their users for long periods of time.  In fact, the software has to be built to keep users engaged and finding value from the software.  Lets take a look at what the software product must focus on.

Lifetime Customer Value (LCV).  This is an important concept in SAAS businesses.  The lifetime customer value is the recurring revenue the company can expect to gain over the period of time the company expects to keep the customer.  To increase LCV, the company has two options.  One, increase the amount the customer is paying.  The other, increase the amount of time the customer is a client of the company.

So the software has to always be evolving and offering new services to its clients to increase the potential its clients can be paying the company.  It also must be relevant to the client for as long as possible.  So it must stay current with changes in the market and be able to grow with the customer.

Churn.  Churn is when a customer cancels their service with the company.  To fight churn, companies must have a product that is sticky and always showing value.  On top of that, they must have a support team that is doing the same.  Keeping clients happy and making sure they understand the value the software is providing them.

Customer Acquisition.  The product must be attractive enough to acquire new customers.  Sales must be increasing for the company to be growing.  So building a product that is easy to sell and easy to demonstrate value is very important to a software company.

Out of the 3, the most important is likely to be churn.  It costs a lot of money to acquire new customers.  It is also much easier to sell something to existing customers.  So reducing churn keeps current clients paying and keeps the pool of people to sell new products or services to large.

This means the product has to focus on reducing churn.  It should take a look at where churn is most likely to happen, why it does happen and then solve for those reasons or situations.

One of the most likely places a client will churn is during implementation or shortly there after.  Sales and Implementations teams have to set great expectations but at the same time, the barrier to entry or the resources needed to implement the software should be as limited as possible.

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Evolution of Customer Success

Software as a service is changing the customer service standard as a whole.  Prior to SAAS, customer service in technology was either non existent and sold as technical support with a heavy price tag OR it was very simple.

What the SAAS model is doing is forcing companies to provide a high quality of service because customer retention is key to the companies growth.

The name has changed.  It once was customer service and is now customer success.  Its about successfully getting customers using the software to make their business better.

The great thing about this is, rather than just helping a customer user the software, the customer success department has the opportunity to change the way the customers runs their business because of the software.  That is where the value is to the end user.  Being able to speak to someone who knows how to leverage technology to make their lives better.

This is how customer success departments must hire, train and evaluate themselves.  Its not about how happy the client is with the software or how well they know how to repeat their normal business functions in it.

The excellent customer success department must evaluate its success on how well they can understand the clients business needs and solve their business problems efficiently and effectively with the software tool their company sells.  Its about feature adoption but more importantly its about demonstrating value.

Great customer success members must intimately understand the clients business AND intimately understand the software tool being used to solve business problems.

That is where customer success is headed.

Freshbooks – Bookkeeping for the non-beancounter

Freshbooks stands out as accounting software for the business who has no interest in accounting.  It makes accounting easy.  Although it lacks some transitional small business accounting software features that accounts love.  It is very easy to use.

The most powerful feature of Freshbooks is its Accounts Receivable features.  It is easy to create simple invoices that look professional and can be paid easily.  You can setup credit card payments in order to get paid faster and not have to record checks.  You can even view when the invoice was viewed by your client so you can make sure they received it.  If none of that works, the system will even send out late payment reminders to your clients.  Freshbooks is built around collecting money and making it easy for the business owner.

Freshbooks also handles payables in a very simple way.  Leveraging the smartphone, they allow the user to take picture of receipts and classify them into the software.  All expenses can be associated to a customer for reimbursement.  The system can also pull transactions directly from the bank account so there is less data entry involved and it makes the dreaded bank rec a heck of a lot easier.

The last feature that is really useful for the business professional who bills by the hour is the ability to track your time.  Not only can you track your own time and bill it, you can see how the rest of you team is spending their time on the various projects your organization is working on.

Freshbooks is a feature rich bookkeeping tool that is powerful for the business owner who does not have the time to maintain a full small business accounting software.  It also integrates with more reporting rich accounting software like Quickbooks and Xero.  This is an excellent piece of software to use in conjunction with a more traditional software managed by an accounting professional.

Small Business Moving Accounting to the cloud

Ten years ago the accounting landscape was completely different than it is today.  With the advent of the CLOUD, there has been a complete change in the way micro and small business think about handling their bookkeeping and accounting needs.  What has probably changed how business’ operate even more are smart phones and tables.  These portable devices are letting more and more business owners operate their business from anywhere they are at.

Many business are used to the traditional accounting practices.  They look like this:

1) They have in house software installed on a local machines connected thru a LAN and possibly on services.  The initial investment in this technology was significant and the ongoing maintenance costs are high.

2) There is a paper based office. Information transfer between small business and any outside accountant is cumbersome.  Files are put on thumb drives and mailed, accounts have to go onsite, reports are emailed and all records are on paper.

3) Communication is slow and during business hours.  It is mostly in person or by phone.  Email is also used.

4) The primary utility of the accountant is to prepare taxes year end.  The small business is typically responsible for the bookkeeping and they analyze the financial reports to varying degrees of competence.

It is time to change.  With the 100’s of SAAS Cloud based software options available to small businesses, every small business should be looking for a more efficient accounting partner.  While tax mater proficiency is still important, knowing how to integrate financial technology to enhance a business’ efficiency is far more important.  Lets take a look at what a modern technology firm can do for your small business.

1) Host all accounting records securely in the CLOUD accessible from smartphones, tables and any computer with an internet connection.  Say goodbye to paper.

2) Give their clients a real time portal with a dashboard so they can get the information they need when they need it from the location they are at.

3) Not just provide tax services.  Include bookkeeping, technology integration, virtual CFO, payroll, financial analysis, and consulting services.  Really partner with their clients to provide value which will effect the bottom line.

4) Invest heavily in knowing and learning cloud based technologies.

Change is coming to small business accounting.  Are you ready for it?

Xero

Inuit finally has a real competitor in the small business accounting software space.  Peachtree/Sage never became a household name and Intuit always had market share.  With the advent of SAAS software becoming commonplace, Xero has put together a great piece of accounting software suited for the small business.  Its goal, to keep professional doing what they do best and automate much of the account for them.

Xero’s feature set comes with everything you would expect out of a small business accounting software.  It handles invoicing, inventory, bill payment, asset depreciation and financial reporting.  One of the key ways they differentiate themselves is that Xero plugs into a large amount of 3rd party applications.  At the time of writing this, over 350.  You can plug in anything from time-tracking software to payment platforms to payroll.

Xero also has a simple pricing model.  It starts at $9, has a $30 option and a $70 option.  From first look on their website, the differences are that that $9 has transaction limits and the $70 has multi-currency support.  Most business are going to need to use the $30 option and then get the corresponding add ons that make sense.

With over 350 add ons, it can get confusing which ones hold their weight.  In future editions we will be looking into the most popular add ons to give insight as to what they actually do and solve for.

Competition is exciting.  Xero and Inuit are going to push each other and this is only going to benefit the end user with more features and better business tools.

Quickbooks Online

Quickbooks online has been around for a long time but it hasn’t been until recently that Intuit has made an effort to make this software something accountants and business will actually use.  I think with the advent of Xero and their quick entry to market has made them have to get serious about having a SAAS product.

Quickbooks online + their online payroll solution is going to be part of the service package I will be providing.  I am going to create a Xero center package as well as a Quickbooks Centered offering.  One of the main advantages of the Quickbooks offering is that everything seems to be integrated.

Quickbooks has integrated payroll as well as an integrated payments platform.  In terms of user experience that will be much better for the user.  Also, the Plus version allows for more complicated functionality like job costing, categorizing into classes, vendor 1099 prep, inventory tracking, etc.  A lot of functionality that Xero would have to include thru a 3rd party add on.

The Quickbooks offering starts at $13 per month, has a $27 level and a $40 level.  Each offering offers more services.  The $27 will be the most common level and I will probably be able to build the bookkeping services around the three levels and include each one with the corresponding level of service.  I am thinking I will offer a Xero track as well as a Quickbooks track.  That way we can keep pricing different and the client experience different however there might be an opportunity to keep pricing the same, just the software different depending on client preference.  Onward to exploring more software.

For more on the Quickbooks online offering, click here 

Build a website

My number one focus right now is building a website.  I am looking to build a draft.  Something sufficient enough to build on.  Reason I am starting on the website is because it will allow me to start telling the story of the company.  Who are we and why do we exist on this earth.  I am not looking to make it more than a handful of pages and it will be built to capture leads interested in the services we will offer.

I envision the website to be the place where I can put together to services offering that we will be providing to our clients.  Come up with a pricing model and then work on the specific services that will be provided in each model.  Once this is put together it should translate well into a proposal to give to prospective clients, etc.

The other section on the website I was to build out are all the 3rd party tools I will use to pull off the services.  I think a dedicated page for each tool would be great.  A short description of what it is and how it will help add value to the business.

Once the website is built I still will need to put together a contract, develop a way to charge clients, learn the software I will be using to execute the services and finally, start my soft launch to close friends.