Why It’s Hard To Fix a Broken SaaS Model: 6 Ways To Do It In Your Business

Why It’s Hard To Fix a Broken SaaS Model: 6 Ways To Do It In Your Business

I recently had an unfortunate Growth Session with a SaaS founder who was running his company straight into an iceberg.

… an unforgiving 25% churn rate
… about 3 months cash runway
… total mis-management of capital

Instead of fixing the leaks (churn), he insisted on keeping the sales and marketing engines on full blast.

Essentially a great way to crash into that iceberg even faster. 😬

While it’s usually great advice to maintain a growth mindset (I’m all about that growth)…

… sometimes you need to take the foot of the accelerator and re-assess things on a foundational level before moving forward.

Doing so can be the difference between getting KO’d and living to fight another day.

In this week’s video, I share the 6 ways to fix a broken SaaS model.

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At a high level, here’s the “emergency plan” I would’ve given that founder had he been open to hearing my advice:

  1. Baseline metrics
  2. Cut expenses
  3. Correct churn
  4. Nail positioning
  5. Perfect pricing
  6. Ramp up partner marketing

Only once you get super clear on your actual metrics in step 1, can you begin plugging up the big holes and charting your course correction.

I personally love to see a founder who’s willing to get scrappy in bringing revenue (aka lifeblood) back into company.

One of the easiest (and most profitable) ways of doing this is to offer a DFY service that’s related to your product. Many founders will resist this as it feels like a defeat and a step backwards (personally and professionally).

Unfortunately, it’s those same founders who’d rather hold their head up as their ships capsize.

At the end of the day… righting the ship can be scary (and takes a lot of unpopular moves)… but there are few things more satisfying than surviving that storm en route to massive success.

(plus makes a cool chapter in your future best selling biography)

If you suspect that your SaaS model may be broken, I encourage you to watch this full episode

…  and then leave me a comment telling me a bit more about your situation and how you plan on navigating your way through it.

 

  • https://twitter.com/mortenta Morten Tangerås

    Great post, Dan! I’ve experienced myself that offering services, especially in the beginning, can give some benefits in lowering the churn rate as well. By offering customers extra services (and getting paid for it), I revealed bottlenecks, confusing, missing or bad designed features (in some cases just changing button naming would help). And I belive this have had a good influence of the average customer lifespan.

  • Chris Rempel

    This definitely resonates Dan. In the process of rolling out a DFY / upmarket service option as we speak, and for exactly this reason.

    I think our product is too complicated for self-serves, and rather than work on the UX to dumb it down, we may need to move to a (much) higher touch model.

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