5 Industry Experts Share Their Advice for Fast-Growing SaaS Firms
How should firms prepare themselves for an economic slowdown? What moves can help them stay afloat and competitive when such a crisis hits?
The underlying learning during such high-pressure situations is that firms should be agile and ready to adapt.
Economic downturns are ruthless. Yet, some businesses thrive by investing in technology, analytics, and agile business practices. Such companies are better able to understand the threats they face, respond quickly, and uphold their efficiency and revenue pipeline.
To understand what goes into thriving in such a fiscal slump, we gathered insights from ecosystem experts who’ve weathered such slowdowns and achieved sustainable growth.
For this session, we relied on the collective wisdom of these experts each of whom delivered unique insights.
- Ian Leadbetter - Director, Ruler Analytics
- Julia Draghici - Co-Founder & CEO, CPV Lab
- Kate Bradley Chernis - CEO, Lately.ai
- Mor Niane - Co-founder & VP Growth, Weego
- Shonal Narayan - Principal Consultant, Hylite Marketing, Inc.
In this article, we look at how the recession has impacted these businesses, what they did to stay competitive, and their take on the emerging trends during these times.
How the Recession Impacted Businesses - Big and Small
Economic blows impact business sales and profits. There’s a curb in credit access, delayed collection, and a spur in bankruptcies. Some of these effects are predictable while others come as an unwelcome surprise.
Here’s what our experts think changes during downturns.
- Convincing Clients That Investing in Tech Isn’t Splurging Gets Tough
This is one of the biggest challenges SaaS firms face during a crisis. In a G2 survey, the general opinion of respondents was that during a downturn companies will only be spending the very minimum needed to keep functioning. Though the spending on tech increased, firms were increasingly focusing on plans to “do more with less.”
Julia Draghici, co-founder and CEO of CPV Lab, tells us that this was one of the top challenges their business faced during this period.
The drop in demand can come as a huge blow to businesses. This makes it all the more critical for businesses to up their product features and marketing strategies.
Mor Niane, co-founder and VP of Growth at Weego affirms -
- Tighter Budgets and Drop in Demand Noticeably Impacted Efficiency but Encouraged Firms to Be More Agile
The effects of a recession ripple through many aspects of a business - mostly efficiency. The demand for SaaS platforms has reduced and budgets are tighter during this period, breeding uncertainty, according to Ian Leadbetter, Director at Ruler Analytics.
Ian further shares that to uphold efficiency they’ve been focusing on optimizing their internal processes, ensuring that their resource allocation is strategic. They’ve ramped up their customer retention by placing a heightened emphasis on delivering exceptional value to their existing customer base.
Shonal Narayan, the Growth Marketing and Operations at ** shares that during the economic downturn, many firms put a microscope on marketing spending. They spent time identifying channels where they could cut costs without compromising lead flow. That according to him is one of the most effective ways to boost efficiency during these unprecedented times.
Besides Shonal reaffirms the central role of customer success and retention in reducing acquisition costs and churn and maintaining ARR growth.
Yet, Kate Bradley Chernis, the CEO of Lately.ai shares a fresh perspective by saying that recession or no recession, startups need to hustle.
Thus, the economic slowdown has taught businesses (those who’ve been proactive enough to adopt and adapt) to become lean and agile while focusing on areas that offer the maximum ROI. The recession has taught them to eliminate bottlenecks and redundancy, thereby improving efficiency
What’s the Most Effective Strategy in Times of Economic Downturns?
Here’s what our experts feel.
- Blend Cost-Cutting with Customer Centricity
Cost cutting is the first tactic businesses resort to when faced with an economic crisis. Though cost-cutting measures offer short-term benefits, if not done strategically can have long-term effects on customer satisfaction, brand reputation, and overall performance.
Ian from Ruler Analytics is in favor of cost cutting to improve efficiency. However, he believes in taking a cautious approach.
Ian adds that firms should leverage a blend of prudent cost management and customer-centric initiatives.
For instance, during the pandemic, they adapted their approach by offering more flexible payment options, thereby intensifying their commitment to customer success.
Thus, firms should focus their efforts on building strong customer relationships.
Julia adopts a similar approach at CPV Labs.
According to Julia, this is a great time to build customer relations with existing customers and understand their evolving needs. This is key to delivering exceptional value.
Balancing cost optimization and revenue growth can help businesses navigate turbulent times. Shonal shares that cost cutting should be done strategically.
Thus, it’s important to first identify the unprofitable channels and reallocate resources to areas that can help nurture a strong bond with customers.
- Solve Real Customer Problems
Understanding customer pain points and addressing them can never go out of style.
Julia shares that it’s the best way to safeguard your business from any form of economic crisis.
Solve real problems and stay relevant in the industry - recession or no recession.
In fact, Mor shares that this can be a great brand differentiator.
- Prioritize Innovation to Unlock Post-Crisis Growth
A McKinsey survey report showed that investments in innovation suffer in an economic slowdown. Most executives surveyed shared that they will return to innovation-related initiatives once the world has stabilized. They plan to shore up their core business.
However, we believe that innovation is all the more critical during a crisis.
Ian shares that during these times, businesses should identify and quickly address new opportunities created by the changing landscape.
Innovation builds a strong foundation for post-crisis growth, enabling firms to stay competitive during the recovery period.
- Eliminate Wasteful Expenditures
We spoke of cost-cutting as an effective solution to improving efficiency. However, Mor stresses the importance of distinguishing between strategic cost cutting and merely slashing expenses.
Top Trends Emerging During the Economic Slump
- Cloud-based and SaaS Solutions Gaining Prominence
The period of recession saw an acceleration in the adoption of technology to boost efficiency. The cloud and SaaS solutions seemed resilient to economic downturns.
In fact, Ian shares it as one of the top trends that emerged during this time.
Julia too believes cloud technologies to be a transformative trend that has a lasting impact on the business landscape.
Cloud-based solutions have helped organizations improve their efficiency and profitability by substantially reducing their hardware and software expenses. When compared to traditional on-premise infrastructure and data centers, cloud solutions prove to be flexible and easy to deploy.
The same is true for SaaS which offers the pay-as-you-go model, allowing companies to pay monthly or quarterly while promising scalability.
- Growth in Outsourcing Roles
The pandemic forced businesses to switch to digital solutions and next-gen technologies like robotic process automation (RPA) and AI, thus propelling rapid digitization across the globe.
However, pre-COVID most businesses lacked in-house IT infrastructure and software solutions. The crisis encouraged them to increase their outsourcing budget because ramping up modern tech solutions would need external support.
Shonal Narayan, Principal Consultant, at Hylite, tells us how outsourcing emerged as one of the top trends during the pandemic because it offers benefits like cost savings, access to specialized skills and talent, and increased efficiency.
Any form of crisis throws challenges that require businesses to be agile. In such cases, outsourcing becomes a logical step to accommodate customer needs and sustain operations.
- Openness to Embrace the AI Wave
The Harvard Business Review confirms that the AI adoption skyrocketed during the past 2 years. During the pandemic and post, an increasing number of companies leveraged it to boost their efficiency, deliver new products, address supply chain issues, and accentuate corporate values.
AI and automation proved to be instrumental in driving insights, minimizing human error, and boosting overall business performance and efficiency.
Kate tells us how AI is being applied for advanced analytics and logic-based techniques like ML to automate decisions, eliminate repetitive tasks, and reduce time to market.
During the COVID crisis, technologies like AI were the lifeline of businesses as it helped them solve business problems at scale and speed.
- Increased Emphasis on Data-Driven Decision-Making
Building in-house capabilities to efficiently convert data into actionable insights is necessary for companies when navigating a crisis situation. In an economic slowdown, emotions run high and the absence of data-driven insights can lead to poor business outcomes.
No wonder, SaaS industry experts speak of how making informed decisions by leveraging data became crucial during this period.
The state of flux that exists during a crisis, demands businesses to be agile. This can only be achieved through data analytics. Real-time analytics allows firms to make informed decisions and manage risks proactively. They can trends or patterns on a deeper level and boost their competitiveness and relevance in the industry.
Julia adds that data-driven decision-making has helped firms in their strategic planning and driving business efficiency.
This trend has made it critical for teams to have historical and current data on a single screen with the flexibility of interacting and digging deep into single KPIs or generating an overall view of business performance. That’s what increased the demand for marketing ROI dashboards that offer a holistic outline of important information and share recommendations on the next best actions.
- A Solid Foundation for the Gig Economy (Julia and Mor)
The rise of the gig economy can be traced back to 2007-08 when the global financial crises loomed over our economy.
Mor shares that the rise of the gig economy was one of the highlights during the economic slump.
He goes on to share that this period saw an increase in the use of digital and remote working tools and this trend has only accelerated in the subsequent years.
Technology and Digitization: The Friends in Need
There’s no doubt that technologies like AI and machine learning have had a huge role to play in predicting recession indicators that offer the likelihood of the presence or severity of an economic crisis.
We asked our experts if they relied on such models and here’s what they had to say.
Ian shared that they’ve been closely tracking data, market trends, and industry performance.
Mor reemphasizes the importance of using analytical models and data when spotting indicators of recession.
Some Burning Questions That Follow
What should be a firm’s go-to tactic when faced with a crisis?
Mor Niane sums it up in one word ‘flexibility.’ He shares that businesses should be open to pivoting business models, reallocating resources, and adjusting strategies.
Another question was - do layoffs help?
Julia shares that she isn’t a big fan of layoffs. Laying off team members should be avoided as much as possible, as the team is the most important part of the product. She would rather cut other costs from unprofitable channels than shrink the team.
So, those were our expert panel’s take on upholding efficiency during an economic downturn. We hope you benefitted from these conversation outtakes. For more such expert-led content, visit our revenue-led blog or LinkedIn page.