SaaS companies operate in a rapidly changing environment. As they say, in software it is not “the great that eat the good, it is the fast that eat the slow”. Having an excellent product or even a leading market position is not an adequate defense against new entrants with a more modern technology stack or superior funding position.
The art of the SaaS turn around is grounded in a gut level honesty about the optimal members of the selected turn-around team’s (TAT) composition, the competitive environment, and the opportunity landscape. The competitive environment is comprised of direct competitors, large systems that claim the category as a feature, upstarts which lack market share but which can evolve quickly, and lastly ubiquitous and emerging technologies which are not domain specific but which offer would-be-users an alternative way to fulfill the use case.
Ultimately, the commitment to transparency and accountability within the turn-around team will cultivate trust and buy-in from all members. By fostering a culture that not only accepts but encourages experimentation, the SaaS company can explore innovative solutions without fear of failure. This proactive approach will ultimately strengthen its market position and drive sustained growth.
With an honest assessment of where the SaaS fits and where the opportunity and competitive pressures are beneficially mixed, one can begin to formulate a plan to leverage one’s strengths in the direction of greatest tactical opportunity. If one is up against a marketing behemoth, then outspending them on advertising or go-to-market sales efforts will squander capital with suboptimal outcomes. A more capital efficient tactic is to look for the seams where a niche player can carve out a winning position of strength in a sub-market. The seam can be geographic, vertical, or horizontal in nature. Counter-intuitively, the weaknesses which hold one back on the broader market might actually serve to strengthen your competitive advantage in certain service-able addressable markets.
The presence of hub and spoke environments should also inform your target market. Are there industries in the SaaS customer portfolio which are served predominantly by a legacy software provider? If so, how can integration and partner strategy be adjusted to streamline the sales and implementation process? Are there raving fan clients in that space which can be leveraged as references during the sales process? Is there enough center of gravity in that vertical to have a dedicated team that speak the language and which networks deeply? Pondering these types of questions can be key to grabbing market-share quickly and cost effectively.
The strategic plan should include necessary technology stack upgrades so that technical debt does not compromise the margins long term. Likewise, a talent assessment and resource planning exercise should be conducted to determine what is lacking from the team and what is present which might hinder rather than expedite the turn-around. Cultural issues can derail a turn-around so it is important to formalize the guiding principles for the go-forward strategy and to identify pockets of resistance to the articulated vision.
Ultimately, success hinges on a willingness to pivot and innovate. The turn-around team must implement feedback loops to gauge the effectiveness of changes while encouraging team members to share insights freely. This adaptability not only strengthens internal dynamics but also enhances responsiveness to market shifts, ensuring the SaaS company thrives amidst competition.
How does one measure the success of a SaaS turn around? Measuring the success of a SaaS turnaround involves several key performance indicators (KPIs). These include revenue growth, customer acquisition and retention rates, churn reduction, and overall profitability. Additionally, monitoring customer satisfaction through Net Promoter Scores (NPS) and engagement metrics can provide insights into user experience improvements. Regularly assessing the performance of the turnaround team and their initiatives is also crucial, ensuring that strategic goals align with market demands and internal capabilities.
Once the turn-around has become a go-forward with a momentum of its own, it is possible to quickly reach escape velocity and achieve exit valuations which would have seemed highly unlikely prior to the pivot.
