Once you’ve released your SaaS v1.0, it won’t be too long before your CFO or CEO has enough data to start building SaaS business forecasts. He/she will say something like: “For our next release, if we reduce acquisition cost by 15 percent, reduce churn by 10 percent and improve upsell by 20 percent we’ll have a profitable year!” Unfortunately, this kind of high-level model provides no actionable direction on how to turn this forecast into reality.
In this article I describe nine data-driven measures for tuning your next SaaS release to maximize the chances of achieving SaaS business forecasts. By focusing on quantifiable measures of user experience, you will make informed operational decisions and effective design updates.
Top three SaaS tuning tips
Every SaaS project is unique; but if I were to generalize about three ways that every SaaS v1.0 project could be tuned for a v2.0, they would be:
- Optimize perceived and real performance
- Measure and monitor customer engagement
- Map the full SaaS customer life cycle
1. Optimize perceived and real performance — milliseconds matter
Speed is (almost) everything when it comes to user experience that impacts SaaS acquisition, churn, upsell and referrals. Performance has proved to have a direct impact on how people use an application and if they are willing to use it again.
For example, almost half of Web users expect a Web application or site to load in two seconds or less and will decrease use or drop out if it takes only one second more. Google found that a change in loading search results from 0.4 seconds to 0.9 seconds decreased traffic and ad revenues by 20 percent.
Speed also affects acquisition. Users will choose software with higher perceived speed over one that is slower but has better features. This is especially important for users that access SaaS on their mobile devices.
Finally, even if you manage to acquire users that do not drop out, speed still impacts their likelihood to read, learn, engage or use/buy new features (and your ability to upsell).
But it doesn’t stop there: If you have two visually identical applications but one performs slightly slower, users perceive the slower app as less visually attractive. Moreover, users don’t just keep this experience to themselves. Almost half of users that experience an issue with Web/mobile app performance share this negative experience with a colleague or friend (resulting in anti-referrals).
Perceived performance clearly impacts the success of your SaaS. So how do you optimize it in v2.0?
Review of load times and performance analysis can quickly devolve into geeky discussions of DNS lookup, Gzip, caching, etc. What is important to note is that it’s not directly page load time that matters. It is the time it takes for a user to successfully complete a task that has the real impact.
If users can start using a page very quickly, even only partially, (such as with large dataset grid display virtualization), they will perceive performance to be good. Conversely, additional milliseconds that prevent users from accomplishing their tasks will negatively impact perception and the bottom line.
Fortunately, there are a lot of techniques, tricks and methods for bumping real and perceived performance in the UI to a superb level. For example, understanding that having the browser make a request to a server is actually an expensive operation with its own inherent overhead, we can try to optimize the page-loading code to make one or two page-level data requests instead of panel-level or even field-level data requests during the initial load. The page appears to load almost instantaneously so the user can immediately begin real work.
Take away: Tune your SaaS v2.0 to increase perceived performance by minimizing the time it takes for a user to start and successfully complete a task.
2. Measure and monitor customer engagement
SaaS is unique because it offers continuous monitoring and direct measurement of customer interaction and engagement. If you did not design your SaaS v1.0 with the ability to collect and analyze data, v2.0 is the time to do so in earnest. If you already have a user monitoring system via your SaaS host, or even just rudimentary tracking via JavaScript, then you are sitting on an operational gold mine. Identify KPIs and then track and dashboard this information for every customer.
For example, frequency and length of use are key predictive indicators of churn or advocacy. The first sign of losing customers in a SaaS is when they stop using it. A customer who has not logged in for the last 30 days is at a high risk of churn. Design your SaaS to measure this and provide alerts that trigger an email or advise customer success reps to offer help or check in before customers drop out.
Conversely, identifying high-use customers can help you identify social advocates for referrals as well as opportunities for upsell.
Basic metrics you should build in and be able to visually and statistically analyze include:
- Performance latency — how quickly the app and navigation react to user actions
- User productivity — accomplish specific tasks faster, with less steps and fewer errors than competition or existing apps
- Scenario or conversion analysis for specific tasks
- Analysis of leakage points and completion rates
- Discoverability of features
- Reduction in support costs / training
- Search terms and actions
- Changes in usage frequency or duration
Once you have granular, real-time data monitoring in place, you can begin using it for predictive analysis to pinpoint individual churn risks as well as user preferences for profitable upsell and cross-sell opportunities. SaaS 2.0 dashboards and predictive analysis can point customer reps to where they can have the biggest impact on financial results as well as point them away from activities that will (statistically) have little impact on customer success.
With real-time data monitoring, you can even track where customers are stuck in the onboarding process (since your customers probably won’t tell you when they hit a snag). Then either intervene with help, or use this as a way to streamline the customer experience. Once you have sufficient users and historical data, you can identify correlations that you can use to build in auto-alerts (e.g., customer #5765 has not logged in for four weeks, which correlates with a 75 percent probability of drop out).
Takeaway: Tune your SaaS v2.0 by incorporating user monitoring, dashboards and predictive alerts to manage customer user experience and maximize financial results. Find the disparities between your most engaged users and the ones who drop out. Then use this to identify advocates as well as at-risk users and get involved right away.
3. Create an experience map of the full SaaS customer life cycle
The SaaS customer life cycle refers to the full progression of steps a customer goes through when exploring, purchasing, using, getting support and upgrading a product or service. Unlike traditional license software that follows a “high-touch” customer model, SaaS shifts to a “selective-touch” approach where automation and self-service handle much of the work.
As part of your v2.0 UI design process, you should identify all of the points in a SaaS application where the software or staff will touch the customer and then evaluate which of these touch points you can design directly into the SaaS application.
A very effective way to do this is with an experience map. Essentially the map is an infographic that visualizes all the different touch points that a user or a person might go through along a journey with a SaaS product (e.g., early sales, marketing, demos, provisioning, configuration, billing, monitoring, renewals, support, etc.). This infographic lets you document and visualize the existing experience path at each one of those touch points and the connections between different services and different people that may interact with them throughout that progression. This is where user validation and user feedback come into play.
The end result is an easy-to-understand, highly actionable document that pinpoints and clearly calls out pain points, insights and opportunities for improvement. Of course, SaaS life cycle experience maps work in tandem with and act as great visual analysis tools for SaaS user monitoring and engagement metrics.
Take away: Tune your SaaS v2.0 using an experience map to clearly call out current pain points as well as opportunities for improvement.
Six additional SaaS tuning tips
Once you’ve committed to tackling the first three tuning tips, you will be well positioned to address six more refinements that can greatly impact the ability to meet SaaS v2.0 business forecasts. Here are brief descriptions of these refinements.
4. Get a mobile strategy (if you don’t already have one)
By now every SaaS business should have a mobile app. But a recent Robert Half Technology survey of CIOs found that one in four companies haven’t even formulated a mobile strategy. If you are one of these, it’s time to get a strategy and development plan fast.
Mobile is critical to SaaS customer retention. Customers that use a dedicated app tend to spend three to four times longer than they would using a mobile version of a SaaS site. (Remember, as I stated earlier, milliseconds matter in customer experience.) Mobile helps you consolidate customer relationships and reduce churn.
If you don’t yet have a mobile strategy (functionality, technology, UI), your competitors or new upstarts with a fully realized mobile solution will quickly erode your customer base.
5. Deliver a consumer-grade UI
Enterprise and B2B software have for years gotten away with being complex, difficult to use and downright ugly. But that status quo is changing. Today’s business employees are savvy consumers who are accustomed to sleek tablets, the latest smartphones and cloud-based applications with highly streamlined UIs. They expect the same level of refined user experience in their business applications.
Balancing commercial grade UI with productivity can be challenging for complex business applications. UX teams therefore need to do the work to identify which pieces of functionality actually need to be on screen so employees can do their job better. The risk of not designing consumer-grade UI is that users will go rogue and download their own apps.
6. Simplify the core work areas where your users spend 80 percent of their time
All too often companies engage in feature wars with their competitors — causing their software user interfaces to become bloated with unnecessary features — rather than using simplicity and focus to differentiate their offerings in the marketplace.
For your SaaS v2.0 you may actually pare down your feature list to focus your app on areas where 80 percent of your users spend 80 percent of their time. You can make additional features or niches available as modules or as connected applications.
Alternatively, you can apply adaptive system design to learn the way individual users use the software and adjust the UI accordingly. For example, the software can reduce/increase the prominence of items depending on how much they are used over time.
7. Design for habits
In a previous article, I detailed how to reduce SaaS churn by designing the UI/UX to transition users away from exclusively goal-directed behavior and towards habitual behavior (i.e., using the SaaS becomes a habit). By designing the UI for emotive and sensory triggers, variable rewards, actions and opportunities for personalization or commitment, you can deliver a habit-forming SaaS that is additive and uncomfortable to give up. Whereas typical goal-directed UI designs can deprecate and lose value over time, habit-forming UI designs can actually appreciate over time.
8. Identify and design opportunities for sharing and collaboration
As anyone who has used Facebook or other social media knows, sharing is addictive. If you design your SaaS v2.0 to include easy opportunities to share and collaborate on information, results, images, diagnostics, etc. with others, your customers will vest publicly in your software each time they share or collaborate using your software. In other words, they make a public statement saying, “I am using this software.” This acts as an endorsement and also helps commit the user to stick with your SaaS.
9. Provide data visualizations with streamlined queries and reporting
Every SaaS app is based around some kind of transaction. Identifying, visualizing and enabling analysis/reporting of this transactional information will add significant value and stickiness to your SaaS v2.0. A well-designed data visualization UI-informed design around high-value workflow makes it possible (and entertaining) to uncover interesting relationships in multi-dimensional data.
But visualizations are not sufficient. Financial and customer analysts (or their support staff) spend significantly more time searching for and organizing data than they do analyzing and interpreting it; so it is important to reduce bottlenecks in iterative report /query cycles using interactive and consistent query filters and faceted search.
Data visualization, along with simplified query/report UI, will go a long way to increase SaaS use and retain customers. It also has the added benefit of being easy to sell to management, who may not regularly use the software but appreciate the visual analytic reports.
Four key issues for in-house SaaS 2.0 optimization capability
One question I am often asked is if a firm can implement these optimizations for v2.0 using their in-house UI/UX staff. From a self-serving angle I would say no. But the reality is you need to look at four key issues.
- Are you a software company first (e.g., Evernote) or a domain company first (delivering your domain expertise/product via SaaS, e.g., banking, insurance, life sciences or most “enterprise” applications)? In my experience, the former can be successful but the latter will not succeed.
- Can your UX team design beyond the discrete product or service and evaluate the customer life cycle experience map to find new ways to address unmet needs, create talk-worthiness and fuel differentiation?
- Is your UI team empowered to work across groups? Software products are typically managed by one person or department, whereas user experience must be curated by several different stakeholders/groups with separate goals and metrics.
- Finally, do you have the resources to update and refresh the UI at least every six months? The SaaS market moves fast, and your software becomes stale if you stretch out update intervals longer than this.
Getting a SaaS v1.0 out the door is a huge accomplishment for any company. Typically it goes out with enough core functionality to begin acquiring feedback and user metrics but still a bit ragged around the edges. The nine tips in this article provide you with actionable insight into how to bring your SaaS v2.0 to the next level.
Paul Giurata is the managing partner for Catalyst Resources, a user experience and application design and development firm headquartered in Silicon Valley. He and his teams have worked on more than 450 software projects in Financial Services, SaaS, Life Sciences / Biotech and mission-critical Systems. For more information, contact info@catalystresources.com.