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Don't leave money on the table
Jay Nathan & Jeff Breunsbach
August 21, 2024
The Middle from GrowthCurve.io
Three ideas to level up your week.
Hey Reader,
Welcome to The Middle, your midweek rundown of the most interesting things we've read this week.
Summer is almost over, kids are back to school, and football season is approaching.
This is my favorite part of the year- when I prepare for my heart to be broken by my beloved Buffalo Bills.
Let's get into The Middle.
Jeff
Today’s Newsletter is brought to you by Cover Your SaaS
Becoming a leader means making critical decisions that impact the longevity of the business - revenue, ARR, retention, cash, etc. - those types of financial decisions.
We built a course that helps you level up your SaaS financial knowledge. It is self-paced, with 5-10 minute lessons, and all virtual.
Don't leave money on the table
Sammy Abdullah's portfolio companies have had the following experiences with price escalators:
“We have a standard 5% increase. But so many companies want to strike that. Jenna has been awesome managing renewals and is increasing everyone’s rates significantly. She hasn’t been getting much push back. She just states it very matter of fact that our rates have increased.”
“We started including auto-price increases in our renewals at the start of this year and it’s been surprisingly effective. Our starting point is 10% and we get it more often than not; some customers negotiate us down to the 3–5% range.”
“The automatic price increases are a beautiful thing because they give us leverage:
i) we can trade an automatic price increase for an earlier renewal, longer contract period, or upselling to more features; and
ii) when we do waive price increases, the customer walks away satisfied. They feel like they’re winning.”
Multi-year contracts are beautiful, but don't forget to capture value.
Flipping the script on your customer journey
Ben Murray recently illuminated a critical aspect many founders grapple with: where do Tech Support and Customer Success fit in? Check out his post for a detailed answer.
One thing that stood out was his focus on the Specialization of Roles:
As a SaaS company grows, roles within the organization become more specialized and refined.
In the early stages, employees may wear multiple hats and span multiple departments. Don’t over-allocate!
Over time, assigning headcount to specific departments becomes easier.
Why It Matters:
Accurate gross profit calculations
A clear view of revenue stream margins
Fosters better decision-making as you scale
Your COGS structure today isn't set in stone. It'll evolve as you grow.
The key is to stay flexible while examining what drives your revenue delivery.
AI-Powered Metric Alignment Assistant
As a SaaS leader, use this prompt to leverage AI in creating a metric alignment strategy that fosters cross-functional collaboration:
PROMPT: As an AI assistant specializing in SaaS operations and team alignment, help me create a framework for aligning our key metrics across departments. Please provide:
A list of 5 critical SaaS metrics that typically require cross-functional collaboration to improve.
For each metric, suggest 2-3 departments that should be involved in its improvement.
Propose a method for tracking these metrics that promotes transparency and collaboration.
Outline a monthly 'Metric Alignment Meeting' agenda that brings together representatives from different departments.
Suggest 3 AI-powered tools that could assist in tracking, visualizing, or predicting these metrics.
Provide a template for a 'Metric Impact Report' that shows how improvements in one metric affect others.
Recommend a process for using these aligned metrics in goal-setting and performance evaluations across departments.
If your team is using AI in your day-to-day work, press reply with a specific tool or prompt that you use so we can highlight you.
MBWA
I was reminded of Hewlett-Packard and this article that Jay wrote up.
In an era of remote work, there's a management technique from the past that deserves a fresh look: Management By Wandering Around (MBWA).
Popularized by Hewlett-Packard in the 1970s, MBWA is exactly what it sounds like - leaders getting out of their offices and engaging with employees in their work environments.
Here's why MBWA matters in the SaaS world:
Real-time Insights By regularly interacting with team members in their workspaces, leaders gain unfiltered insights
Breaking Down Silos Wandering between departments fosters cross-functional understanding and collaboration
Approachability When leaders are visible and accessible, it breaks down hierarchical barriers.
Cultural Reinforcement Regular presence allows leaders to embody and reinforce company values in real-time
Spotting Innovation Some of the best ideas come from unexpected places
In our digital-first world, MBWA might look different - it could mean dropping into Slack channels, joining stand-ups you're not required to attend, or setting up virtual "coffee chats" with team members at all levels.
The principle remains the same: be present, curious, and engaged with your organization's day-to-day pulse.
 Jeff Breunsbach |  Jay Nathan |
Whenever you're ready, there are 2 ways we can help you:
CoverYourSaaS is a financial literacy course for SaaS leaders. It teaches you the fundamental language of business, SaaS metrics, and how to maximize your impact. This course sets the stage for you to make informed, focused, and profitable decisions. Purchase the course here.
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