Active SaaS, Passive SaaS, Value and Churn
By Justin Talerico
Mar 19 2019
Active SaaS Product Strategy Proves Value
We’ve all subscribed to passive SaaS products that may be cool, but never become indispensable. It’s likely you’ve also used at least one active SaaS product that goes out of its way to shove its value in your face. And if that active SaaS was actually valuable, then it’s likely it became indispensable in the process of showing you its value.
I come from the cutthroat world of martech SaaS, where precious few tools are fundamentally indispensable. There are loads of cool tools, plenty of sexy tools, and a massive number of ehh tools. But beyond the basics of CRM and marketing automation, how many SaaS products in martech are truly indispensable? Not enough.
Nice-to-Haves are First-to-Churn
We learned (several times over) that nice-to-have works okay for acquiring customers, but only must-have works for renewing them. I also like to say if you’re selling work, you’re expecting churn. Both of these ideas track back to SaaS product strategy and are fundamental to stickiness. Tools that are active, valuable participants for the customer will be renewed.
Active and valuable are not accidental. And the shame of it is that many more SaaS products are more valuable than they are active. Unfortunately, you can have a very valuable product that’s too passive and still churn your way to flat growth. So to me, an active SaaS product strategy is key to revenue retention (and expansion).
This gets us back to selling work. Passive SaaS products require users to work to see their value. Active SaaS products don’t. They push their value to their users, illustrating current and future worth in the process.
Active SaaS Product Feature Ideas
How your product can be more active depends on your space, your basic value proposition, your user persona(s), and so on. The foundational idea is that the product externalizes value beyond its borders and illustrates its value within its borders. Without making the effort to log into the tool, how can it share what it’s doing for your users? Once they are logged in, how can it show them what it’s been doing for them? And what they should do next? So here are some back-of-the-napkin ideas to stimulate your thinking around baking perceived value into your product:
Notifications can take many forms. From periodic, automated, pre-fab email cheerleaders on performance, usage, or engagement; to timely text messages of valuable moments; to continuous RSS feeds of performance. There are a lot of options to brainstorm, but notifications (outside of the product) are a great way to export, set and fulfill your narrative. But remember, if they require work to set up, they won’t happen. Bake them in, with full-value automatically delivered. Zero effort and more logins and usage to get the details. And don’t forget in-product notifications too — show value everywhere you can.
- Vehicles: Email, SMS, RSS, and in-product
- Messaging: Results, Usage, ROI, Engagement
- Automagic — zero config
Many SaaS users utilize a small fraction of a product’s capability. Features often go undiscovered, leaving value unrealized. Part of what an active SaaS product can do for its users is to constantly show them what to do next. The kicker with these types of productizations is they have to be smart and personalized for each user’s maturity with the tool. This gets into an AI-ish realm where the software needs to understand what to recommend. Of course, this is hugely indispensable as the SaaS becomes an extension of the team — doing work, rather than requiring work. Think about using notifications to surface the coaching and the product itself to actually deliver the coaching.
- AI Dashboards
- Dedicated Coaching UI Real Estate
- Contextual Recommendations
How a SaaS surfaces itself in third-party tools frames its value. For example, we use Outgrow to create our calculators and assessments. Outgrow automagically creates plain-English events in Google Analytics that consistently push Outgrows value to me — without me logging into Outgrow. Yes, everyone integrates with Google Analytics. But, not like this. Outgrow frames its own value prop by the events it creates and I see them everytime I look at GA (which is much more often than I log in to Outgrow). Too many SaaS products look at integrations as perfunctory functionality rather than value-building opportunities.
Focusing on the value of your tool with the third-party enhances your indispensability as a participant in that ecosystem. Remind them that you’re connected, and why that’s valuable to them. And alert them if the connection malfunctions. That, in and of itself, is valuable. Too many integrations can fail in a vacuum, devaluing both tools in the process.
- Value-focused integrations
- Automagic — zero additional effort
The last broad category of ideas I want to plant is around social sharing. People love to share successes and your SaaS can lead them to do just that. One-click, pre-fabricated, value-driven tweets and posts will get shared and will spread the good word about your tool. Too many tools leave this too much in the hands of the user. Again, that’s too much work. And, by putting it in their hands, you lessen the chance that their framing of your value prop is on point. Of course, even when you pre-fab a tweet or post the user can override. But that’s less likely than them just running with it.
- Integrated results or performance sharing
- Pre-fabricated, value-driven messaging
- One-click bragging
Prioritizing an Active SaaS Product Strategy
All of my ideas above sort of assume you have product/market fit and that your SaaS is fundamentally valuable. If it’s not, you have to prioritize delivering value before you can prioritize communicating it. But too many product teams continually focus on delivering more and more value to the exclusion of communicating the value they have. As a consequence, they may never go from optional to required — from nice-to-have to must-have — from disposable to indispensable. More value may not lead to more retention and that can be a hard lesson to learn. Some of the capabilities that truly illustrate an indispensable product are challenging and resource consuming to develop. They’re still important. In many ways, the opportunity cost of not pursuing an active SaaS strategy couldn’t be higher.