How to start the Saas ROI conversation?

Let’s talk on how to start the Saas ROI conversation. If you are here; you understand the importance of ROI (return on investment for a customer) in sales as well as retention journey. We can start with what is important to your ideal customer profile (ICP), both in small, mid-market and enterprises. These things may change a bit based on the industry the customer is in, however mostly the framework remains the same. I have used these ROI techniques and acquired enterprise customers with millions plus in TCV (total contract value). 

Small and mid-market customers expect below and Saas product should consider these in ROI conversations - 

• Efficiency - We need to do things efficiently. Get a high level plan, do a proof of concept in a leaner way, execute, learn and repeat if needed. 

• Speed - I expect most of the things to happen immediately. Small and mid-market companies believe in moving fast with what we already have … 👍   

If you are selling to enterprises, they are a bit different. Let me merge both enterprises which are big and which are very very big; you know what I mean. Here are three criterias which enterprises consider while making Saas product decisions. 

• Is there any risk here? Definition of risk can include risk of projects/ initiatives failing, internal resistance, loss of time and money, people allocation, relationship damage to name a few. I am sure I have missed many. What should we do to mitigate this risk? Risks include and are not limited to privacy, audit, compliance, legal and so on. 

• Can we reach a consensus regarding this? For enterprises, it is important to get buy-in from multiple departments/ leaders before making a decision. All departments may have their own processes, workflows, priorities and while making a Saas product decision these things will be considered … 🫠 

They work in similar way as that of democracy; it is right that way. 

• Does this align with our strategy? Enterprises usually have annual planning and a multi-years strategy. There can be changes however, mostly the framework remains the same. Strategy can involve resources, execution, finance, change management and more. Saas product ROI should consider these. 

Hope you are with me so far. Let's add size of the company, maturity of the company, geographies, maturity of the Saas product/ platform to this mix, shall we? Most of these pointers will be spoken in detail with the customer, customer teams and buyers during sales, onboarding as well as operations phases of the Saas product execution. 

• What are the key customer goals? These can be 2 to 3 goals which the customer is trying to achieve. All teams are kind of marching towards these. We need to show through the Saas product ROI that the product is part of this journey … 🙋  

• Which are the key use cases? Which are the key use cases and/ or workflows the Saas product will solve or help solve? This is key in mapping the benefits of each use case to dollar amount and eventually to the cost of Saas product. 

• How does Saas product solve these key use cases? Ideally the customer, teams and users should not have any other alternative to solve these use cases. Even if the alternative exists it should be used very rarely. If the alternative is allowed to users, they may opt for it affecting the Saas product ROI negatively. 

• Who is accountable for the outcome? Someone in the customer team should own the initiative from onboarding, operations and then the adoption, usage of it. That person/ team should be the Advocate of the Saas product for the entire lifecycle. This improves the Saas product ROI and increases the adoption exponentially. 

Here is a refreshing quote for you relevent to ROI, value - 

"What the customer buys and considers value is never a product. It is always utility, that is, what a product or service does for them." 

Peter Ducker

I hope this helps you in your Saas ROI conversations.  

Additionally, trust me, everyone’s focus is to save money, save time, be efficient, and/ or unlock revenue, value with your Saas product. It is advisable to show the ROI year over year for a period of minimum three years. Cost benefits analysis, Total cost of ownership are widely used frameworks. 

Consider doing 5-year Saas contracts; because the value to buyers, users as well as customers compound year over year as Users use the Saas more, add data to it, Saas product becomes part of their workflow and so on. 

I have added innovation indexation (yoy % price increase) in the price and many of the customers have agreed and if not it becomes a key negotiation lever. 

Last but not least, for a Saas product, it is beneficial to have an ROI calculator. Customers can give 6-8 key parameters about their business as an input and the ROI calculator gives cost and benefits analysis and gives ROI. Examples of ROI can be 5x, 7x, 10x and so on. More than 10x ROI is hard to show but it is ok as a benchmark however less than 5x ROI is not advisable … 🏆  

If you wish to build an ROI calculator, here are the steps I suggest - 

• Find the key use cases which the customer is using through data. Confirm those use cases with multiple/ most of the customers. 

• Align hours, time saved, money saved, monetary benefits to each. Trust me even if your Saas product is doing tasks such as reporting, your users are using those reports, attending meetings, making decisions and doing business. All because of your Saas product. There needs to be a metric and benefit attached to it.

• Use an approach similar to those of online calculators. There are a lot of good ones. Example - m hours of time saved x average dollar cost/ hour = dollar amount. 

• Use a parameter such as adoption in the first 90 days towards key use cases or goal based for transactions. It is important to show Time to value as ROI.

• Create this for 4-6 customers and get their feedback. See what they comment on. Make tweaks and use this customer specific personalized ROI deck in your pre-sales as well as retention conversations. Use Ai tools, they work well as well. 

• Show benchmarking against similar/ peer companies if you have suffcient customers. I have found in my experience that customers like benchmarking very much.

Start with an excel, copy and paste those outcomes in a word doc and share with prospects and customers. Get their feedback and repeat. Once there are more prospects, customers then go for a tool or use a Saas. There is a Saas for that too. 

So there you go. 

……. 

Swagat Irsale is Growth Advocate. He works with startups and scale ups to grow revenue and build products which enterprises love to use. 

Reach him for work and partnership opportunities.