📆 Monday, 23rd October 2023
Hi, and welcome back to SaaS Espresso. Your one-stop destination for 👏 everything 👏 in the SaaS industry.
In this edition, find:
📰 In News: Atlassian Buys One-Time Unicorn Loom At Hefty Discount To 2021 Valuation
🤓 From experts: 3 Strategic Steps Toward Your SaaS Profitability
🛠 Resourceful: 66 Websites to Promote Your Project For Free (Downloadable FREE resource)
📰 In News: Atlassian Buys One-Time Unicorn Loom At Hefty Discount To 2021 Valuation
💡 Key insights for you
Atlassian has acquired video messaging startup Loom for $975 million, marking a significant decline from Loom's $1.5 billion valuation in May 2021.
The acquisition reflects a shift from the high-flying venture capital and remote work trends of 2021, as both have seen changes.
Despite recent layoffs and a slowdown in venture capital funding, Atlassian sees potential in Loom's asynchronous video technology for team collaboration.
This acquisition is unlikely to reinvigorate the somewhat sluggish M&A market, which has seen fewer deals compared to the previous year. The deal is expected to close in the first quarter of the next year.
Read the full story here: CrunchBase
🤓 From Experts: 3 Strategic Steps Toward Your SaaS Profitability
Back in the good old days (read two years ago), turning a profit wasn’t at the top of the minds of most founders and VCs. However, times have changed in 2023. In today’s market, even fantastic companies struggle to secure scarce venture capital. Nowadays, you need to have a rare combination of high growth, profitability, low customer churn and high net dollar retention just to get your foot in the door.
In this section, we focus on three strategic points to consider when steering your company toward profitability and growth.
Targeting the right customers
Picking the right customers while making a GTM strategy is paramount.
For example, if you’re a cyber-security SaaS making around $30k annual gross profit per customer and are tempted to target Fortune 500 names, you might want to rethink it. These customers will come at a hefty CAC, long sales cycles and whatnot. Even at a decent retention rate, the customer lifetime value ratio will not be 3x the customer acquisition cost — you will bleed hundreds of thousands of dollars per client leaving you in a cash crunch.
Going after SMEs is less time-consuming and expensive, therefore, if CAC is $40,000 and your customer lifetime is four years you can achieve an LTV/CAC ratio of 3. Notice that your CAC payback period is just under a year, which is ideal.
Making the most of your existing customers
Founders often rush to acquire new customers when they raise capital. That’s great, but only if you’ve mastered two things first: monetization and retention.
If you do not know how to retain and monetize your existing customers, best not to bother chasing new ones.
For example, if you’ve shifted your focus to SMEs and spent $40,000 to acquire a new customer who contributes $30,000 in annual gross profit and leaves after six months, you’re in trouble. You’ve only made $15,000 in gross profit, but with the $40,000 acquisition cost, you’re losing $25,000 per deal, creating a cash crunch.
Knowing how to keep customers around for many years with superb customer service, and knowing how to upsell, cross-sell and grow the value of each customer over time is crucial for sustainable growth.
Focus on the right place in the value chain
Companies often expose themselves to unnecessarily costly operational burdens, attempting to take on a larger portion of the value chain than necessary.
For example, in the case of a cybersecurity company, there’s an opportunity to strategically focus on specific technological strengths while outsourcing or integrating third-party solutions for complementary functions such as data visualization. Every company should hone in on its core strengths, cut unnecessary operational expenditures and maximize efficiency.
In today’s competitive landscape, achieving both growth and profitability is a must. To succeed, entrepreneurs need to be agile, make data-driven decisions, and be ready to adapt their strategies. It’s about focusing on your core strength and going after the right customers and maximizing their value over time.
🛠 Resourceful: 66 Websites to Promote Your SaaS For Free
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