Hey Reader,

Welcome to The Middle, your midweek rundown of the most interesting things we've read this week.

Is it Summer, yet? I think so... Cue up the “How is it already summer??” banter to your next Zoom call.

Before we go on, we sent out a recap of our (sold out) webinar, The Big 3 of Subscription Revenue. You can catch up on it here.​

Our main takeaway: the ARR Bridge/Waterfall is valuable to visualize the growth and contraction that’s happening within the customer base (everyone on the call wanted this template).

Now, let’s jump into The Middle.

Jeff

PS: You can’t really sell out webinars, can you?​

Inflation impacts on SaaS

Jenny Millar, a pricing expert who worked for years at eBay, recently shared her thoughts on the impact of inflation on pricing strategies in the SaaS industry.

Yes, inflation does impact enterprise software and not just eggs and milk.

Here's a nugget I pulled from Jenn's article:

Inflation isn't just a buzzword from your ECON 201 class; it directly impacts your bottom line.

For SaaS companies, it's crucial to build flexibility into your pricing models (and ensure your teams can negotiate towards the most beneficial outcomes).

For instance, a company could implement an annual 5% price increase clause in their multi-year contracts, ensuring revenue growth while allowing customers to budget for predictable cost adjustments.

This helps maintain your revenue's real value and ensures that you're staying competitive in a volatile market.

If you're not adjusting your pricing strategy in response to inflation, your recurring revenue is deteriorating. Don't be flat-footed.

Innovation in your product category

Anthony Pierri, another regular in this newsletter, shared the importance of leveraging product categories effectively.

Many people think in today’s age that you HAVE to create a new category to stand out and gain enough momentum to succeed.

But Anthony shares examples to the contrary and he states:

SaaS is a crowded market. Merely fitting into an existing category can often leave your product feeling like just another face in the crowd.

If you’re feeling embarrassed about your product’s lack of distinction then it should serve as a wake-up call. This is your opportunity to innovate.

You don’t have time (or capital) to be marginally better than your competitors.

Sure, you can create differentiation through product features or service delivery.

But you can also create differentiation by creating a different narrative about the market's future. Or by curating an ecosystem of partners that is unique.

Find the differentiation that will warrant a response from your competitors.

Don’t sprint to create a new category and miss the opportunity to compete in the one right before you.

Get The Culture Right

In a conversation recently, I was reminded of Tony Hsieh.

You know, the former CEO of Zappos, renowned for his approach to building a great team. (I enjoyed his book, Delivering Happiness)

There is a quote of his that I still remember (almost verbatim):

Hsieh believed that by fostering a great culture, you must create an environment where employees are not just present, but engaged and passionate about their work.

Sometimes in business, we get overly focused on the metrics. The year-over-year change, or even the day-over-day change. Sure, these can be the difference in building a healthy and sustainable business.

But when our focus is on the metrics alone, we often ignore the people aspects that contribute to a strong culture.

We miss on change management.
We miss on communication.
And we miss on alignment.

It’s the difference between a bunch of people rowing the boat in the same direction vs opposite directions.

He believed that a strong, positive culture would naturally lead to excellent customer service and business success (everyone rowing in the same direction).

You don’t have to be radical like Hsieh (he was known to offer new employees $2,000 to quit after the first week) in order to drive buy-in across the team.

But, you do have to strike a balance in leading your people and focusing on the metrics.