Keep Your Customers Happy without Burning Out on SaaS Professional Services

Most SaaS businesses deliver professional services in one form or another. But in this post, former Oracle VP Chuck Linn explains why doing so doesn’t have to be such a burdening expense for expansion-stage companies.

In a post earlier this year, OpenView Senior Advisor and former Oracle VP Chuck Linn laid out a very simple argument for why expansion-stage SaaS companies should be investing more heavily in developing a professional services team that helps ensure customer success and satisfaction.
Doing so adds value in many different ways, Linn wrote, not the least of which is stronger customer retention and a steadier stream of customer referrals.
The problem with providing those professional services, however, is that the process for doing so can be expensive, particularly if SaaS companies are delivering tailored onboarding services designed to meet each customer’s unique needs. And all too often, SaaS businesses are not comfortable passing those costs on to their customers.
“When we talk about product implementation and customer onboarding, it’s actually incredible how many SaaS companies give those services away for free and don’t pay close enough attention to how much that actually costs them,” Linn says. “I can see doing that in the early stages when the goal of most SaaS businesses is rapid customer adoption. But as companies scale, it’s not sustainable to spend an arm and a leg to ensure the success of every single client.”

So, what’s the alternative?
Believe it or not, Linn says that it is possible to make implementation and onboarding services cost neutral, if not revenue positive.
“There are several different models that SaaS businesses can use to — at the very least — mitigate the costs associated with providing implementation and onboarding services,” Linn explains. “And they don’t require you to simply hand new customers an additional bill on top of their standard SaaS fees.”

Two Things to Consider Before Monetizing Professional Services

Before getting into the specific approaches that a SaaS business can use to monetize professional services, Linn says it’s important for a company’s leadership team to answer two key questions:

1. What services does the business actually provide to its clients, and are they all necessary to ensure customer onboarding and success?
2. How could your software be enhanced for additional self-service, user-defined parameters, set-up capabilities, and functionality in order to lessen the need for a robust services division?

The goal, Linn explains, is to evaluate how and why your business provides implementation and onboarding services, and decide whether those services can be streamlined, improved, or eliminated altogether.
“The only way to really control onboarding and implementation services costs is to make the process of delivering those things much more repeatable and prescriptive,” Linn says. “You need to have a fixed approach, fixed deliverables, and a fixed timeframe that gives you and your customers a clear roadmap to a successful implementation. If you’re trying to customize everything for every customer, that’s going to get very expensive as you scale, and you’ll certainly never be able to monetize that process.”

Why Monetizing Professional Services is Really About Improving ROI

The truth about monetizing implementation and onboarding services, Linn says, is that doing so has more to do with improving the return on your investment than making them profitable on their own.

“The best way to look at implementation and onboarding services is that if they allow you to improve your margins by 10 percent and your market share by 30 percent, they’re certainly worth the investment,” Linn says. “Too many SaaS companies look at services like they’re a separate piece of the puzzle, and that piece needs to be independently profitable. The reality is that services are just one component — similar to marketing or customer success teams — of a much bigger picture.”
In other words, it might cost you $10,000 to successfully onboard a new customer, but if that investment creates a happy customer that delivers you two or three actionable referrals, the investment is certainly worth it. Likewise, if you can lower the costs of implementation and onboarding services by streamlining the process of delivering them, Linn says you can indirectly impact your margins on the back end.
“Ultimately, it does you no good to try to bleed your customers dry by charging them for every service,” Linn explains. “At some point, you have to look at your model for delivering services and focus on how you can improve it. Doing that won’t always make services revenue positive, but it might allow you to more easily justify them as a worthwhile cost of doing business.”

Have questions about SaaS professional services? Ask Chuck below.