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How To Make Your Agency a SaaS Business
How To Make Your Agency a SaaS Business

As the SaaS model gains traction in multiple industries, more and more businesses are trying to break into the SaaS game. Turning your agency into a scalable business based on the SaaS model has many benefits, so let us tell you what it all means and how to go about it.

What is a SaaS business?

SaaS stands for ‘software as a service’. Most SaaS companies have some common, fundamental traits that set them apart from traditional buy-and-sell businesses. Previously, software was bundled up and sold like anything else, in discrete iterations. You bought the current version of the software and if you needed to update, you bought the next version. This is characteristically different to subscription bundling. SaaS allows users to subscribe to your software for periods of time, paying for the software usage, instead of buying specific versions.

How is a SaaS Business Structured?

There are two main ‘types’ of SaaS business – vertical and horizontal. A vertical SaaS business is specific to the needs of an industry (such as financial services, healthcare services, etc) and a horizontal SaaS business is industry non-specific but focuses on a software type (such as marketing, sales, development, etc). SaaS developed into the model we recognize in the last 5 years and it’s only recently that the business model has been adapted to non-software products and agencies.

What Are The Characteristics of a SaaS Business?

SHORT SALES CYCLE

When compared to a typical agency client, the SaaS sales cycle is short. At a creative agency, for instance, the process of poaching a client, negotiating the contract, price, defining KPIs and scope can take weeks or months. If the same agency was to run with a subscription model, it would be significantly faster as all the services are explicit and defined from the get-go. Clients pick and choose what offerings they want and pay as they wish.

SCALABLE SALES PROCESS

The final characteristic that sets SaaS platforms apart from traditional platforms is that they are easily scalable, which is important for small agencies with ambition. SaaS platforms can automate a large proportion of your sales engine, meaning that you can focus your time and resources on lead generation and inbound marketing.

SUBSCRIPTIONS BASED

Most SaaS businesses require a small ongoing fee. SaaS software might or might not have set-up or implementation costs, and even some layer of customization per client, but all of them require a subscription of some sort. In the agency context, think of your client as a long-term investment. Instead of individual projects you will be building a relationship with the client that means consistent work, consistent communication and consistent revenue.

LITTLE OR NO CUSTOM WORK

Most SaaS have no customization allowed on their software, or at least keep the custom work to a minimum. This means no extensive contract negotiations as the services are packaged up like a product, clients either like it or they don't. The benefit for the customer is that every update to the software or service itself benefits every customer engaged in the platform. For the SaaS business, they can look at improving their overall saleable products and services rather than having to waste hours iterating with each client individually.

So How Best To Leverage the SaaS Model?

Be Explicit About Your Product and Prices

In a SaaS model, your greatest asset is your information. It’s important to empower your consumer by sharing clear information about what you do and relevant content that demonstrates your authority in your field. This process doesn’t give them the tools to make your services redundant. 'It demonstrates your value and the value of what you do.

As we mentioned before when you operate in a SaaS model, you have to be clear about what your services are. From the get-go, you have to explicitly state what you do, what you offer and at what price point. At the same time, educating your potential clients about the industry and what they need to be competitive will benefit you. You empower the user with information to make their own decisions. Let the client decide if there’s a product fit.

Demystify Your Processes

In the past, agencies have done themselves a disservice by making it seem that what they do is incredibly complicated. They do this for many reasons for this. They might need to justify high prices, to keep the client on the books or to create an air of authority. They’re not at fault though as clients often struggle to understand the overheads and the time that goes into deliverables.

The SaaS model works hand-in-hand with content marketing. Content marketing (from a SaaS point-of-view) seeks to teach the clients the value of the service or product the business is offering. If you educate your client on your process, it will build trust and actually reduce the amount of time spent on-boarding new clients.

As they say - teach a man to fish and he’ll become a long-term subscriber.

Use Technology To Power Your Services

There is a reason why technology companies are growing so fast. They are incredibly valuable for businesses of all sorts. Chances are if you need something done “there is an app for that”. So power your agency with automation to facilitate your day-to-day operations. Using technology doesn’t mean you need an IT department and most software is really easy to use.

Using the right analytics tools, and using a SaaS model to package your services as products, let's you collect data that can help you make better decisions on your business from both a marketing and an operational perspective.

What are you waiting for?

Selling your services through a subscription model will reroute the heavy work from your sales department and help you to better understand the clients that walk through the door. It will also help you mine data that can point out your highest revenue clients, identify which clients have the highest Life Time Value (LTV) and what indicate target markets you should start chasing.

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