software as a service

Software as a Service: Switching from a Service Oriented Business to SaaS

Today, more and more startups offer Software as a Service (SaaS) solutions. With more flexibility, less upfront cost and easy updates, SaaS offers an attractive advantage for small businesses.

For example, consumers stream endless amounts of music on Spotify rather than buying a CD from a brick-and-mortar store. They order an Uber rather than waste money on an expensive vehicle. There’s a number of million-dollar SaaS ideas, and entrepreneurs are starting to take notice.

Many companies have begun offering cloud-based SaaS solutions to their clients for lowered costs, increased convenience and simplicity, and streamlined collaboration. SaaS reduces initial hardware investments, eliminates the hassles associated with the installation of enterprise software, and connects sales forces around the globe. With these tantalizing benefits, businesses are better positioned to reach higher sales growth.

In today’s business environment, however, it isn’t enough to simply grow your SaaS company needs to grow faster than your competitors. When scaling your business, you should understand that SaaS offerings are not one-size-fits-all.

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What is Software as a Service?

Switching from a service-oriented business to a SaaS company has its benefits. But first, you must understand SaaS from the business side.

Think of SaaS in this manner: you provide software, and must sell clients on a particular application they need to improve business. Instead of giving them a USB drive and telling them to install it on their servers, host an application on your own servers and charge a subscription fee for users to access via the internet.

SaaS applications are often used via email, tax forms, accounting sheets, human resources files and more. These standalone applications provide business services that streamline sales efforts among many other benefits.

Related: 8 Creative Ways for SaaS Businesses to Generate Leads

Benefits of Software as a Service

When you’re able to solve potential clients’ problems with SaaS, you can considerably lower the overhead costs of providing service to individual clients.

There are plenty of reasons why SaaS is beneficial to your clients, such as:

Global network

Teams all around the world can converge, creating a more level playing field for sales teams that span the globe. People living in rural areas of Russia, for example, can securely coordinate their work with business enterprises in New York, London or Los Angeles.

Lower costs

SaaS applications are subscription-based, meaning your clients don’t have to license software or install hardware. Their IT infrastructure will need minimal management.

Easy upgrades

Since SaaS providers manage application updates, there’s no need for the user to have to navigate through confusing software upgrades.


When a SaaS offering really delivers on a particular sequence of automation (for instance, giving a sales development rep an alert when a prospect is showing interest), that kind of value can be exponential to a business. Find serious pain points, solve them with automation, and if the value is clear enough, your platform will sell itself.

Lower overall cost

Organizations that understand how expensive inefficiency is on their team will find the right tools to make their teams more efficient. Even though there is some cost to a better tool, if that tool saves you hundreds of hours a month within your team, they will quickly show their return on investment.

If these benefits appeal to your customer base, here are some important criteria to consider when making the switch from a traditional service-oriented business to a SaaS in sales development.

Tips on making the switch

Get moving!

The first and most important step in switching to a SaaS model is to simply get moving. Since it can be a long and ongoing process that may impact all departments within the company, it would be wise to start as soon as possible. Many large vendors may consider transitioning each product line individually throughout the next few years to ensure a smooth adjustment.

You can use a SaaS solution that is in the process of being built to serve existing customers benefitting from your service offering until it is ripe for a full-launch as a standalone platform.

Analyze the market

Just like with any new product or service offering, the total addressable market should be determined for your SaaS. Many markets already have SaaS offerings, but since they have such high growth potential, market opportunity throughout many industries will increase over time.

Identify your competitors’ strengths and weaknesses, while finding partners who can assist you with the transition. For instance, if you previously offered sales as a service, you can leverage your current clients by offering them your valuable new solution first. If you’ve already been working with these clients with your service offering, you will have unique perspective about what your SaaS solution can offer that isn’t currently available on the market. In short, you will understand the demand.

Start scaling your business

Here’s a scary statistic: if a software company grows at 20 percent annually, it has a 92 percent chance of ceasing to exist within a few years. This means that your new SaaS offering must be compelling enough to both new customers and salespeople that will eventually have to sell it. To give you something to shoot for in your initial operations, the fastest growing SaaS companies generate $3.9 in revenue for every $1 they lose to churn.

Understand valuable sales insights

Refine your sales strategies so that your sales force understands that it’s significantly cheaper to upsell and retain than it is to acquire new customers, and it’s nine times cheaper to retain existing customers than acquire new customers. That’s much more valuable than hunting down new customers all day.

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Determine pricing strategy

Since SaaS offers much more flexibility in terms of pricing structure, deciding on a price for your new offering will be key in helping you scale. With SaaS, you can charge monthly or yearly subscriptions, or charge based on usage. Once you have some customers, up-selling them on supplemental services such as advanced reporting, extra features or operational improvements will help bring in additional revenue.

Making the switch to Software as a Service

SaaS is on the rise, offering large growth opportunities to companies who want to offer it as a product. Remember these tips if you’re thinking about making the switch to SaaS. It may be a difficult initial shift, but if your product offers significant value, the possible upside is serious.

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