Why ambitious SaaS companies need a revenue delivery strategy 🚀
SaaS CEOs and founders are realizing that scaling up is about more than building the right product and go-to-market strategies. There’s a whole strategy needed to steer how your SaaS business handles the operational complexities that surface as your sales grow in different markets: localizing checkouts, managing payments, billing different types of customers and remaining compliant with global regulations.
Not the sexiest of problems to solve, sure, but getting this wrong can cost you painful amounts of MRR from new and existing customers. Failed payments, involuntary churn, and sales tax evasion are just some of the revenue leaks your SaaS business will face with the wrong (or no) revenue delivery strategy.
Hang on, what’s a revenue delivery strategy? 👀
A revenue delivery strategy is a plan that specifies how a company will manage the systems, processes, and teams – also known as the revenue infrastructure – responsible for optimizing acquisition, retention, and expansion to exceed growth objectives.
Today, this infrastructure typically consists of a chaotic and fragile ensemble of tools and platforms that have been integrated one by one, without an overarching strategy.
Managing this complex set of tools – including payment gateways, subscription platforms, and tax platforms – is a huge resource drain that nobody wants to touch and you’re constantly having to firefight to maintain it.
This isn’t just a logistical headache for your RevOps team; A chaotic revenue delivery infrastructure is holding back your growth.
The case for a robust revenue delivery strategy 💪
An ill-defined or non-existent revenue delivery strategy inhibits your ability to respond quickly and effectively to new market demands, customer needs, and opportunities. It also impacts your retention of customers and the ease with which they can upgrade and spend more.
Here’s a flavor of the kind of impact this can have:
Say you see a surge in customer acquisition in Germany, a country you haven’t actively tried to grow in yet (but you’re delighted to welcome them to the fold).
Did you know that 70% of transactions under $50 in Germany go through PayPal?
It doesn’t take a lot of friction to block a conversion. You’ve not integrated PayPal into your checkout process, so your potential German customers are confronted with a barrier that many will choose not to overcome, leaving their money right there on the table.
This means the surge you’re seeing in Germany is only a fraction of the customers you could have been acquiring in that market if your payment experience catered to local conventions.
Better switch on that PayPal integration! But your revenue infrastructure isn’t growth-ready, and enabling a new payment method becomes a project in and of itself.
A month or so later you get it done and your sales in Germany shoot up 👏 . But hang on, what’s the sales tax rate on digital services in Germany? Have you been charging your customers the right amount? Did someone say audit?
While finance get on top of those particular questions, someone takes a look at your churn rate. Your current setup for recurring payments pings your customers’ chosen payment method once, and if the payment fails, they churn. There’s no retry logic in place.
Between 20% and 40% of SaaS churn is involuntary – a result of payment failures caused by everyday events like credit card limits being reached. This will be taking its toll on your net dollar retention . How much revenue from new and existing customers have you been losing because of payment acceptance issues 😬?
All of these headaches, time sinks, and losses (as well as many others) can be avoided by having a well-designed revenue delivery strategy in place. Your revenue infrastructure is the foundation of your company’s growth potential. The right strategy will give your company the power to experiment with and activate new business models instantly, enter new markets with ease, begin cross-selling without causing havoc with your billing, and retain more customers at renewal.
How’s yours coming along?