The Ins and Outs of Going from Agency to SaaS Company
You aren’t alone if you’ve considered transitioning into a SaaS company; or launching a separate company to sell SaaS. The challenge is educating your team, your clients and yourself on how to go about it.
In this episode, we’ll cover:
- Reasons why you might want to develop a SaaS product.
- 4 steps to developing and launching a SaaS company.
- How to roll out your SaaS product and transition your agency.
If you’re thinking about developing or selling a SaaS product, this is the episode for you. My guest is Ethan Denney, founder and CEO of ConvertFlow. Ethan took his company from a service-oriented digital agency to a product-focused SaaS company. He shares the story of his agency’s transition including the steps he took to get there.
Why develop a SaaS product?
As a digital agency, Ethan’s company was focused on driving site traffic and lead generation. However, they found many clients needed site redesigns and lot of other, deeper services were more involved. These issues often decreased profitability and increased the sales cycle. (Not to mention that it created a major time suck.) Clients were not seeing results right away and Ethan’s agency was having difficulty proving their value right away.
In order to solve this issue they created a product that would provide more immediate value and shorten their sales cycle. It would also deliver faster results and more ROI to their clients. This cleared the way for ConvertFlow to charge on value and increase their profits.
Transitioning from digital agency to SaaS company
Often times the logistics of a product business sound much more appealing than a service business, am I right? Product companies have fixed costs, shorter engagement periods, and higher profit margins. But the grass is not always greener on the other side.
“The grass is greener on the side you water.”
Cashing in your digital agency and replacing with a productized company is not for everyone. In order to do be successful, it’s got to be done right. Ethan cautions us – it didn’t happen overnight and it wasn’t easy.
4 BIG steps to developing a SaaS company:
1- Determine your agency’s core service. Then figure out what’s keeping you from doing it. What obstacles do you face? For Ethan’s agency it was cumbersome site redesigns that were keeping them from driving traffic and generating leads for their clients.
2- Develop a solution. Once you’ve identified what’s keeping you from doing what you love doing, play around with possible solutions. Look at it from all angles. What solution can you create to will solve these issues for you or eliminate the obstacles?
3- Decide on the goal for your tool. Will you keep this solution in your arsenal and have it be your competitive advantage? Or will you sell this tool as a stand alone product? There isn’t a right answer – in fact, it’s a very individual decision.
4- Strategically launch your solution. In Ethan’s case, they chose to rollout a product-based solution to their clients that would be a shorter engagement and allow clients to see more immediate value. This included a multi-step launch to their existing digital agency clients.
Rolling out SaaS for your Digital Agency
As Ethan’s agency developed more of the productize business they were able to use it as a low-end “icebreaker” service. They discovered that charging $1,500 – $2,000, they were earning steady recurring revenue. Other benefits are a shorter sales cycle and shorter engagement period with new clients.
Transitioning bigger, long term clients took a little longer and a bit more thoughtful strategy. Digital agency service clients were first transitioned to a productized service where the product was introduced to the client but managed by the agency. Eventually, they transitioned those clients from a productized service to a product they could manage themselves.
Overall, Ethan is thrilled with the entire transition. Now, ConvertFlow is able to concentrate on doing what they love, without getting weighed down by doing the necessary stuff they don’t love.
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