Welcome to the first episode of our new webinar series: Monkey Business! 🐒 In this first episode, we’re curious to learn how to build a good SaaS revenue model, and how to create new streams of income.
Every month, Hela Kacem and Nataliia Deineha invite a SaaS leader on their show to discuss their challenges, opportunities and creative solutions to grow their SaaS business. As a SaaS founder or enthusiast, you’ll walk out with easy to implement yet powerful ideas to accelerate your own SaaS.
In this first episode, we had Patrick De Pauw join us. Patrick is CEO at Social Seeder, an employee engagement & advocacy platform. He started Social Seeder 6 years ago to help companies boost their brand through their most powerful asset: their employees & ambassadors.
We interviewed Patrick about their business model. How did it evolve over time? What are the different strategies they use to generate revenue? And what did they learn along the way?
Rewatch the full episode, or read the transcript below.
Today we have Patrick from Social Seeder with us. Welcome Patrick! Could you briefly introduce yourself and your company?
Thank you for having me. My name is Patrick, I’m CEO of Social Seeder. I started Social Seeder 6 years ago coming from the airline industry. In the meantime, we have about 270 clients worldwide working with Social Seeder. We’re a Belgian company, but we have operations internationally.
Thanks a lot, Patrick. So, just to briefly introduce the topic we’ll be talking about today. One of the most challenging things of scaling business is to find new ways of expanding in the market and to build a SaaS revenue model that works.
Therefore, today we’ll be discussing specifically how you can add new revenue streams to any SaaS business.
Which SaaS revenue models can you use?
So Patrick, related to this, can you tell us a bit more about Social Seeder’s current SaaS revenue model? Do you have different revenue channels?
Well to start with a bit of context, Social Seeder is a platform that enables employee engagement and employee advocacy. So basically, we make it very easy for a company to ask their coworkers to share content and thus create more impact.
So, it’s a SaaS platform, but next to this we also offer a methodology because we are working with different companies, cultures, different sizes of companies. We give workshops on that, so we sell our expertise together with our platform.
So we currently already have 2 separate revenue streams in our SaaS revenue model.
Interesting! Did you start out with this exact business model, or did it somehow evolve along the way?
It’s definitely something that evolves, because in the beginning you don’t have that much expertise yet. You have the platform and hopefully *laughs* the platform works. But the expertise will come through the amount of customers you have and the learnings you gain from that.
So in the beginning, our main focus & revenue came from the platform, and we gradually expanded our second revenue stream by offering our expertise.
Did you ever come a point that it felt as if you hit a plateau in the market? That you needed to find new ways to expand your SaaS revenue model, apart from regular customer acquisition?
I believe a SaaS company can grow exponentially. So normally, when you’ve found product-market fit, it means you can keep growing until you reach the borders of the market size. For a company like Social Seeder, that market size can be huge, provided that we have the setup to scale internationally.
However, it’s not only about that. It’s also about creating your own USPs to differentiate in the market. Now, one of the USPs that we wanted to create is to offer our clients more valuable insights in their data. That was the next step that we had to take in order to be competitive worldwide. So that gave us the idea of also implementing a reporting engine in our platform as a potential new revenue stream.
How to adapt your SaaS offering to market demand?
That’s interesting. So are you currently experimenting to make data analytics a part of your SaaS revenue model? Any other new revenue channels you’re considering or testing?
We are looking a couple of new revenue channels to try out. But basically, what we see today – especially today given the situation that COVID has put us in – is that companies really want to see what the impact is of the efforts that they are doing.
A lot is changing when it comes to marketing & publicity. Specifically during COVID, marketing budgets will be under very high pressure. So, for every dollar a company invests, they want to see the impact. So, the data that shows the positive effects of using a tool like Social Seeder is obviously of very high importance to our clients.
That completely makes sense. On the other hand, have you tried out new revenue channels along the way that did not work out for you?
We never had something that failed completely. But like any business, we’ve had times we had to adapt ourselves the market. And the market is evolving véry quickly today. So you have to adapt fast.
In my experience, the best thing to do is to talk to your customers. Once you have a solid client base, ask their feedback. What do they like? What do they need? How do they see the future?
And then eventually, you start eliminating features that people don’t want or use. Even if I thought it would be the coolest feature ever. If it’s not being used, we just take it out of the platform. Sometimes less is more: simplifying your platform can actually create more excitement.
How to create an ecosystem for SaaS revenue?
Interesting that you think of revenue channels in terms of new features that you add on. Have you also thought of other creative ways to offer something that you don’t usually offer, like services or a completely new business unit?
Yes, and part of that is mostly creating an ecosystem. In our line of business, we focus on distributing content, but eventually you also need someone to create that content. There are so many things you can eventually sell.
On the other hand, you need to focus on what you’re good at. So we focus 100% of our resources on that one single thing we excel at. But next to this we’re also creating an ecosystem of additional services. That means we can serve our clients with a broader range of services, but doing it through partners.
So you’re actually finding ways to expand, but keep the risk for your company low. That’s smart! Especially in SaaS, where opportunities are exponential as you said, this way of working allows you to keep growing in your safe spot.
How to measure the success of your SaaS revenue model?
So, to circle back to testing out new stuff for your SaaS revenue model. How do you actually measure if something was successful? Are there any special KPIs or metrics you use at Social Seeder?
We measure the usage of everything we develop. So it’s simple: if a feature is used a lot, it’s high value for our clients. If it isn’t used at all, it means it has little added value. It’s really just looking at the data in the platform. And depending on what the data shows us, we will further develop some features, and put other features aside.
That’s bold, but definitely a good strategy! So, you previously mentioned having different pricing plans for your clients. How did you evaluate if a pricing model works, while you’re still adapting? And how did you adapt pricing along the way?
Typically we have 2 types of companies. Either new clients that are still starting out, or companies that have been running the program with us for 2 up to 6 years. They both have completely different requirements.
For the first-time users, we want to make it as simple as possible. If you keep it simple, onboarding will be much faster and smoother for your customers properly. They’ll see the value of your product much faster.
In the second phase, it’s important to evaluate which extra features our loyal clients are interested in. Next to this, we also have our own long-term vision of the direction our business should take. This combined gives us a pretty good roadmap for our development team.
Honestly, our pricing model has been changing all the time. Which is logical. Once you’ve created something new and you’ve found market fit, the next step is to value it? Yet, the value we can give to a company with 50 coworkers compared to one with 5,000 coworkers is completely different. That means your pricing will be different as well. It’s a quite complex thing, so I don’t see it as a problem that you change your pricing from time to time.
How has COVID impacted your SaaS revenue model?
We’re living in a quite special time. So it would be weird not to ask: how did the pandemic influence your business and sector?
The pandemic has had both positive and negative effects. The positive thing is that many companies were forced to go and think digital very fast. Until recently, we still had companies that didn’t do any investment in digital skills with their employees. Now, we see they focus much more on digital skills, which you need in order to work remotely.
Secondly, you need to trust your coworkers if they work from home. Before COVID, lots of people couldn’t work from home because there was no trust. So this is a positive change for employee engagement and advocacy, because companies now understand they have to trust and invest in their people.
Then, people who are working remote are very proud that they are still able to work. They are proud of their company and want to belong to the company. The result is that employee engagement of our clients actually went up: more people shared content and there was more engagement on that content.
Now, the negative thing is that it IS a big crisis heading towards us. Budgets are frozen, some companies literally stall every expenditure. Our licenses are a cost, so it’s a challenge for us to cope with these budget cuts.
But again, the best thing you can do now is to invest in your coworkers. If you invest in your coworkers now, the return will be higher in the end.
Well, a question that’s a bit more personal, Patrick. If you’d go back to your past self when you were starting social seeder, what would you tell him?
First of all, I wanted to be much younger. I started at the age of 50, and I know they say running a startup is heavy, and it really is. You put all your energy in it and there are times that you go down and have to pick up again.
I love what I’m doing and wouldn’t change it for the world, but it’s challenging at times. Another thing I’d like to see differently, is having more development skills. Because we’re in a SaaS environment it would help me to coordinate better with our development team.
How to monetize data inside your SaaS platform?
You mentioned you’re now focusing more on monetizing the data inside Social Seeder, and giving more insights to your customers. When exactly did you start moving in that direction? And when did you start considering Cumul.io?
We realized in time that data would be important in our product offering. But again, you need to have a decent amount of customers & engagement data before you can start with intelligent dashboarding.
In our 2.0 version, we included basic dashboards with the first benchmarks and learnings we gathered in the platform.
However last year, considering we wanted to go international and had even more companies joining our program, the sheer amount of data became bigger and bigger. That was the point where we said: we need to improve the dashboard and the learnings, as this is the USP of our company.
That was the first time we connected with Cumul.io. End of last year we met again at Slush, and more than ever I realized the importance of an ecosystem. Cumul.io has the expertise, much more than we do, so we have to put our resources in what we do best.
Agreed. I think it’s safe to say that data visualization is no longer a luxurious add-on. It’s rather a must-have that your users expect in a SaaS platform. A lot of our customers can actually relate to that.
One case that comes to mind is Commspace. They needed to offer reporting dashboards to their users, but without taking up time from the development team. So they decided to integrate Cumul.io so that their users could see the reports with their own data within the portal of Commspace.
This helped them not only to improve their functionality and stay competitive, but it also generated new revenue. Customers pay an additional monthly fee of 10% on top of the total license cost, just to get their hands on these valuable insights.
Related to that, you were telling us that you were thinking from the very beginning to outsource this type of feature, as you didn’t have the experience in-house. How did your development team react to this? Did you get any objections and how did you deal with them?
We had some discussions with our development team. The first thing we decided was that the basic dashboard offering that we already had would remain. However, for more specialized dashboarding for sales, marketing and HR, I wanted to have specialists develop that second layer.
This was a solid reason to cooperate with Cumul.io. Now, they still have control over the essential part, but we still can outsource the specialized dashboards on the other hand.
So, another company that comes to mind with a similar case as yours is Strobbo. It’s a personnel management platform, mainly for the hospitality sector.
They approached client reporting in 2 different ways. First, they added an advanced reporting layer to their platform. This became a good first upsell possibility, because not every client is ready to dig into the data themselves. But those who want, can have this possibility.
In addition to this upsell, analytics also became part of their long term strategy. It helped them to convince larger deals even before they became a client. By offering them nice analytics, they were able to scale the deal sizes and generate new business they otherwise might not have been able to close.
So, this example leads me to the following question would be. Do you offer analytics to all of your customers? Or you also differentiate dashboard offerings depending on the type of client?
We actually have 3 levels. First of all, there’s a basic dashboard to which everyone has access, so they can get some form of advanced insights.
Secondly, we have 2 extra dashboards to offer on top of that:
Dashboards on ambassador level
Dashboards specifically on the company industry level
Those 2 dashboards are greyed out in our software. If you want to use them, you’d have to upsell and pay for this feature.
The third level, which we dont have yet, is where customers could eventually ask for completely customized dashboards with personalized insights.
Sounds like a recipe for success! Regarding the personalized insights, another case to mention that could be inspiring to mention is Proximus. They participate in lots of different initiatives that generate quite some data. Yet each project is slightly different, so it needs more personalization.
For example, they used mobile phone signals to track crowd movement during the Tour of Flanders. That way, the police could get a good view on which places were overcrowded. They did a similar project with location data, just after the lockdown. People started travelling to the Belgian coast again, so they created a dashboard for the Belgian coastal cities that visualizes how the public is spread across the coast. In that way, everyone can stay safe and socially distanced at all times.
That leads us to another way we see our users generating additional revenue, Patrick, like you mentioned. It’s actually to white-label Cumul.io’s dashboard editor. This way, your end-clients can create their own dashboards in an environment that is completely adapted to your branding.
Usually, we do this through a shared revenue model, we sit together with our client and work out a model that works for both of us. Usually in this case, they will have an additional license that they will be charging their customers for.
So that’s pretty similar to the 3rd phase you mentioned for customers that want to deep dive into the data themselves and completely personalize their insights.
Yeah exactly. Every customer has different wishes. And obviously a SaaS company doesn’t have the possibility to offer 25 different dashboards. That’s not really scalable for a SaaS platform. But then again, if you can offer that through partnerships like Cumul.io can, you can adapt better to your customer’s demand.
On that note, we would love to thank you for being a guest on this first episode of Monkey Business. Thanks for sharing your thoughts and experiences!