Computers have revolutionized the world that we live in. Within a couple of decades or so, computers have become widely available and are vital for our daily work. We carry on our work on computers, kids carry on their education through computers, e-commerce has made online shopping popular, and of course, recreation by computer games and movies are quite common.
These activities couldn’t have been possible if there weren’t appropriate programs that could make them possible. Because software programs are necessary for a computer to function, with the rise in popularity and consumption of computers, software programs and the companies involved in their production and distribution have risen as well.
The process of software program distribution consumption has changed with time. Earlier software programs were available only in compact discs and other storage devices. The software could be used as long as the operating system supported it and the services provided by it were relevant.
Later on, companies began providing updates online with the requirement of license to continue to utilize some of the premium services and avail updates. Now that cloud computing has become so prominent, companies have started providing web-based software programs on a subscription basis. While this is convenient for users to utilize, they also bring a lot of revenue to the developing organization.
The revenue is generated by users’ subscriptions which they have to renew regularly. The steady flow of revenue through the SaaS business has enticed several organizations, especially startups to opt for this method of software distribution. Apart from being lucrative in terms of revenue generation, being cloud-based, it is easy to manage and maintain as it is being centrally hosted and users don’t have to go through the hassle of installing the upgrades.
Though the technology and trends offer a lot of opportunities, generating profits through the SaaS Development Services isn’t as easy as it looks. With the rise in the quality of products, the expectations of customers increase as well, and with that, patience decreases. In this business, where revenue is generated through timely subscriptions, handling and retaining customers becomes a challenge.
Apart from customer retention, other factors come into play when increasing profits is concerned. They are: making more revenue from the customer and bringing in more customers. Let us discuss some ways to control these aspects to increase profits in SaaS businesses.
Firstly, let us discuss some ways to reduce Churn. Churn is the percentage of customers that cancel their subscriptions before the beginning of a certain period. This is of utmost significance in the case of marketing and business analytics. The lower the Churn, the better. Here are some ways to Reduce Churn-
Customer Retentions/ Engagement campaigns-
Businesses lay a lot of emphasis on the growth of the customer base. The majority of the advertisements and campaigns that we come across are concerned with increasing the customer base. However, a successful business is identified by the number of returning customers it has. To ensure customers return, make sure they are provided exclusive services, discounts, and other campaigns that would make them feel valued and special.
Win-back campaigns-
It is inevitable for some customers to unsubscribe from the service even after providing them with the utmost quality service. The factors may vary from customer to customer, but it is not impossible for them to return and subscribe to the services. From time to time, businesses need to launch campaigns that entice customers to return. This is easier than pitching new customers as they are already familiar with the services.
Predictive analysis-
Analytics plays a huge part in making business decisions. It is because the numbers reveal a lot of information. Monitoring the customers’ pattern of utilizing the service can reveal a lot about their behavior. When a customer is spending a lot of time with the software, he/she will likely remain subscribed, whereas, someone who rarely visits the SaaS platform is likely to unsubscribe soon. Attention should be given to such customers.
Because the discussion is focused on increasing profits, it is obvious for revenue to come into play. The greater the revenue, the greater the profits. Here we will discuss generating more revenue by focusing on Average Revenue Per User (ARPU). SaaS businesses are dependent on revenue generated by subscribers which in turn varies with subscribers as services and packages differ. We, therefore, need to focus on increasing ARPU to increase the net revenue.
Encourage more usage-
SaaS businesses offer many service plans and tools to their subscribers. A lot of clients ignore those plans that seem costly or are irrelevant. Encouraging more usage will lead to two things, firstly, a customer will explore more tools that are relevant to his/her plan. Secondly, the customer will try to explore other services, service plans, and the tools involved. This will in turn increase the revenue.
In-app upsells-
In-app upsells are interactive and effective ways to generate revenue. For businesses with a considerable user base, it is like free marketing and advertising. In-app upsells is the method through which a business offers updates and advertises its products on its own platform. This practice is prevalent these days and often at times, users are bombarded by apps with these ads. Appropriate pitching with proper timing, however, can do wonders.
Third part cross-sells-
The same feature, that of advertising products in case of upsells can be utilized to advertise third-party products. Such deals are made as per some agreed commission to the advertiser, and this helps generate revenue. This practice is also rampant, however, planned and properly designed advertisement methods can certainly do wonders, both for the advertiser and the advertised.
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Now that we have discussed two aspects of profit generation, we are left with the last aspect which is concerned with the growth of the user-base. Increasing the number of users is directly related to revenue generation and is therefore important for profit generation. Let us look at some ways to grow the user base-
Risk-free guarantee-
While a customer subscribes to a service online, there is a risk aversive mindset. Lately, people have become a lot comfortable with online transactions with a new platform, however, it wasn’t the case a decade ago. A lot of people have such reluctance even now. A guarantee regarding money back and a free trial keep them assured that they aren’t taking a blind aim.
Make Plans Simple-
Simple things like the landing pages play an important part in the growth of the user base. The proverb- ‘the first impression is the last impression’ is relevant here. The pricing site is a page that receives a lot of traffic that has the potential of conversion. Make it simple, and pleasant to see and comprehend.
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Signup Testing-
The signup process is a significant stage of clients’ conversion. Like the landing pages, these are supposed to be simple, pleasant, and devoid of any unnecessary hassle. All these while being robust when security comes to play. A little experience that matters.
Charging options-
It is important to make this stage smooth for customers because, even if the customer is pleased with all the offers and features if he/she is unable to pay for it, nothing matters. Incorporate all the mainstream payment methods and make the process smooth. Integrate the payment system using third-party service providers. This will ensure that the focus on the payment system and security is appropriate.
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Conclusion-
SaaS is a growing field of App development and distribution these days. The trend is prominent and isn’t subsiding anytime soon. While the opportunities are tremendous, competition is huge as well and increasing profit margins remain the big challenges among all. The above mentioned are some simple yet powerful ways to increase the profit gradually with time, as they say- little by little, a little becomes a lot.
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