4 ways a more efficient tech stack drives SaaS growth
January 2, 2023
2022 has brought a whole new wave of challenges for SaaS firms – which look set to continue into 2023. Hot on the heels of the pandemic, as the US and Europe head into recession, global uncertainty and rising interest rates have driven a wider move towards cost-cutting across the industry.
For many SaaS firms, born into an age of easy access to capital, these changes call for major adjustments in how they do business. If you’re in a commercial role, you’ll almost certainly be tasked with finding ways to promote greater operational efficiency.
One key starting point is your firm’s tech stack. In this piece, we’ll explore four ways to drive SaaS growth via improving tech stack efficiency. We’ll also give you actionable ideas for important areas to focus on, whether you're building out a new tech stack or tweaking your existing setup.
Armed with these insights, you’ll position your firm to accelerate growth and seize new opportunities – even during the challenging times ahead.
4 Ways a More Efficient Tech Stack Drives SaaS Growth
#1. Reduce Your Costs
Businesses are using a lot of SaaS apps these days. In fact, the average organisation used 110 SaaS apps in 2021 – a 38% increase on the previous year. But the 2022 downturn is already bringing a rapid shift in this trend – with nearly a quarter of SaaS companies reviewing or consolidating their app use this year.
For an easy win, start streamlining your tech stack by reviewing it with a clear eye. Look for barely used subscriptions, or those that have outlived their usefulness. Be ruthless. Cancel those subscriptions as soon as you can. Another area to look out for is areas where different SaaS apps overlap in their feature set. Can one product handle several tasks and eliminate another? Are you subscribed to several tools that cover the same range of tasks, such as multiple project management tools?
Examining software features in detail is time-consuming. But it pays off handsomely when it lets you get rid of an expensive yet redundant subscription. Another advantage of reviewing your tech stack is the opportunity to take advantage of special offers (for example, Black Friday or Christmas deals), or negotiate better prices ahead of upcoming subscription renewals.
#2. Get More From Your Metrics
Improving the efficiency of your tech stack also produces more accurate metrics. Understanding your key SaaS metrics is critical for making smart decisions to drive business growth. Metrics unlock meaningful insights about what’s really happening in your business, including growth, engagement, and competitive advantage.
Having this data will put you in a confident position to tackle future challenges, fix any lurking issues and decide which areas are best for investment. SaaS is jam packed with metrics. It’s impossible to track them all. Instead, first figure out what you need to know, then identify the right metrics to tell you. In tough times, the key metrics to track and improve are your cost per acquisition, net recurring revenue (NRR), voluntary and involuntary churn, cost of sales, plus how your operating expenses measure up in relation to your budget.
Another critical area where metrics matter is those times when you need to raise funds or report to the board. In such high-stakes moments, having the right metrics data lets you craft a compelling yet credible story. With recession on the horizon, expect due diligence processes to become far more rigorous. To convince wary VCs to invest, you’ll need an exceptionally effective narrative, backed up with solid data.
#3. Understand Your Customers
Optimizing your tech stack gives you important insights into your customers’ behaviour. For example, if you want to understand how well your customers are engaging, look at metrics for daily active users, customer churn, customer renewal rate, and net promoter score.
Identifying which customers are most likely to churn allows you to make targeted changes to keep them on board. You could also use metrics such as net promoter score (NPS) to identify your most satisfied customers and create a targeted upsell strategy for them.
One way to boost customer lifetime value is by optimizing your strategy towards longer-term offers – such as promoting the benefits of annual subscriptions over monthly ones. Keeping customers onboard for longer periods really pays off. In a recent Paddle survey, we discovered that longer-term plans have 200% to 800% higher lifetime value.
By tackling churn risks and creating new upsell and cross-sell opportunities, you’ll drive more revenue and create more potential for expansion. Understanding your customers is key to success – and optimizing your tech stack helps you get there.
#4. Streamline Your Sales Processes
Another huge benefit of a well-designed tech stack is the key role it plays in building seamless customer journeys. Once you’ve mapped your customer journey and identified each individual touchpoint, you can then leverage your tech stack to automate those touchpoints, making the journey more streamlined and more efficient.
What’s more, improving your customer journey produces better quality data. That leads to an enhanced understanding of how your sales processes perform – creating opportunities to identify growth and drive improvement.
What to Think About as You Build Out Your Tech Stack
We’ve looked at four key areas where your tech stack drives SaaS growth. But what exactly should you focus on as you build out your stack?
Perhaps you’re changing things up based on what you learned during the streamlining process in step 1. With that in mind, let’s explore what’s going to move the needle most.
Ways of Working
Every successful SaaS has great people in place throughout every stage of its growth. But without careful planning, the technology you use for managing everyday working processes may compromise the efficiency of your overall tech stack. Your HR software, project management tools, and technical documentation are all areas where efficiency can fall by the wayside.
Focus on getting as many people as possible across your organisation to use the same tools. This is especially critical if your organisation includes people working remotely or asynchronously.
Having the same tools for shared processes company-wide will maximize people efficiency, while reducing subscription costs for multiple apps or unused seats.
Payments and Billing
This is an area bristling with different tools and integrations. You’ve got your payment processor software, your invoicing tool, and your subscription management software – to name but a few. That’s why payments and billing tools are prime targets when streamlining your tech stack.
Having a lot of integrations puts unnecessary strain on your engineering team, as they need to implement, maintain, and troubleshoot the technology. Stripping down payments and billing integrations to the bare minimum frees up your engineers to focus on keeping the fundamentals running smoothly.
Payments and billing data is the beating heart of your SaaS business. But it’s prone to being messy and expensive to manage.
It’s essential to have a single ‘source of truth’ for your payments and billing data, rather than stitching together your numbers from various different places. That leaves too much room for error. Your payments and billing data must be reliable and trustworthy.
Finance and Compliance
Another critical focus area of your tech stack is your finance and compliance tools. These include tools for handling sales tax, risk and onboarding, fraud protection, and finance and accounting. In those sensitive business-critical areas, errors risk creating a whole host of problems – ranging from fines to potential criminal charges.
Take compliance for example. A SaaS firm handling international clients must follow local regulations in various different regions. That adds an extra layer of complexity to your tech stack. What’s more, finance and compliance tools must work smoothly with the payments and billing parts of your stack.
Sales and Marketing
Sales and marketing is the final piece of the tech stack puzzle, but one that’s no less important. With a recession looming, getting your sales and marketing on point matters more than ever. Key parts of the tech stack here include CRM systems, marketing automation tools, and analytics platforms.
All tools here should work smoothly together, combining sales and marketing into a cohesive ecosystem. Otherwise, you’ll struggle to track your sales and marketing processes, monitor costs, and make crucial decisions.
Your tech stack should be a prime target in the quest to drive SaaS growth amid challenging economic times.
Ready to make your tech more efficient? Keep an eye on our website, because together with Paddle we're hosting a webinar on the first of February.