When Should Your SaaS Company Update Its Software Packages?
Excellent user retention and increased revenue are the bedrocks of Software as a service (SaaS) company. Revenue expansion using existing customers is key to increasing your monthly recurring revenue in the SaaS industry.
According to Forbes, it’s 5-10 times cheaper to upsell current clients than to acquire new ones. However, if you get it wrong, you run the risk of increasing your churn rate and hurting your conversion rate. Things change so fast in the SaaS industry. As a software company, you have to be smart about changing your packages to address your customer’s needs. So, why should your SaaS Company update its software packages?
If your audience changes
It would help if you had a tool such as the all-in-one CRM to help you monitor your clients’ growth and needs, and align your pricing strategy with the value you provide to each segment of your market. If the alignment is perfect, most clients will upgrade to your higher tiers of service organically.
Collect data on your clients’ growth projections and align them with your package offerings. If clients feel you are up to date with their growing needs and anticipate their future needs, they’ll stick with you.
However, if you are experiencing a high churn rate, clients aren’t upgrading to higher packages, or they’re downgrading, it could mean:
- Your clients’ needs might have changed; hence they can no longer achieve their desired outcomes using your products.
- Clients don’t find value in your services.
- Your competitor’s packages appear to offer more value for money.
- Customers perceive your packages as relatively too expensive.
- Users think you can’t fix existing bugs in your products.
- Your support team is doing a terrible job.
- You aren’t attracting the right customers
- Your team is ineffective at causing a conversion
Fortunately, you can fix most of the above challenges by updating your SaaS packages. A software update can mean you need to add or improve your product’s features, seal security loopholes, eliminate bugs, and boos your program’s stability and performance.
If your sales are in a slump
You can charge the fairest price and set up the best support team but still fail to attract new subscriptions. If your sales are in a slump, it might be the right time to update your software packages. The chances are that your services aren’t effectively solving user’s problems and that they are losing their perceived value.
Your analytical tools can help you compare user-profiles and service consumption patterns with SaaS package updates that add value. It will enable you to have a continuous conversation with your customers, helping you personalize your marketing campaigns.
If you want to improve your sales and make clients upgrade to higher tiers of service, you have to make them feel their problem is unique and solve any of their problems. If you create a sense of importance in your clients, they’ll quickly turn to your products when challenged with a new need or problem.
If your sales team is experiencing issues
A common headache for a SaaS sales team is how to cause a repeat sale, cause a conversion, and reverse a high churn rate. However, a package update can be the best solution for dwindling sales. You can add new features to your packages, making them appear too attractive to ignore, then upgrade or even up-sale.
However, if your sales department is still experiencing problems to convince clients to upgrade, here are some tips for you:
- Ensure clients understand the updated and new features
- Know what to charge for and what to give free
- Make customers get used to the new updates first before charging them—For instance, Offer a one-month money refund guarantee if the user didn’t like the features. You can also let the price increase affect those on yearly contracts only after the expiry of their contacts.
- Ensure any software update adds value to the and provides clients with core functionalities
- Focus on customer’s needs—provide upgrades to different packages depending on what the user needs.
How often should you update your software package?
You should be updating your packages and modifying your pricing strategy at least after every 3 and 6 months.
Quarterly SaaS Software package update
Any update that you make within intervals of three months shouldn’t be major or need extensive customer communication. Depending on your company’s quarterly goals, pull, or collect necessary data that can help you analyze your price metrics—price level, value metrics, feature marketing, etc.
Common quarterly goals that might necessitate an update include:
- Improving the customer’s Lifetime Value (LTV)
- Lowering the Customer Acquisition Cost (CAC)
- Managing the churn rate
- Improving QoQ growth
- Improving conversion rate
Quarterly changes in price can include reducing the value metric you offer and reducing or eliminating package discounts. Remember, such measures can only work well if data shows that you’re already giving you too much. You can as well improve package features or move features from one plan to another.
Half-yearly major update
Six month is enough for making major updates to a SaaS company of any size. However, conduct an impact assessment before making any major changes to your packages. Examples of half-yearly changes can include:
- Package price changes—use your price sensitivity data to price your packages based on the perceived value of your products
- Increasing or reducing the number of tiers
- Significant alterations to free or trial packages
- Major value metric changes
conclussion
Updating and raising your SaaS rates can be a disruptive period for your clients. Nevertheless, it’s also indispensible for your sustained success and growth. Unfortunately, you risk a high churn. However, by making the switch as seamless and clear as possible, you are unlikely to upset your company’s stability.