SaaS and the Human Touch

In 11 years running a software development shop, we’ve been lucky enough to create a SaaS product, ThunderTix, now representing over 65% of our revenue. On a small scale, our SaaS product, ThunderTix has reached product/market-fit. In other words, we found real customers willing to pay for our event management and box office service and reached a level of product success that Sean Ellis describes as the state where 40% of users “would be ‘very disappointed’ without your product”. Despite the economic downturn, we’ve managed to grow our customer base, residual income, and net profit, while at the same time managing to pare back on our custom software development (and the required staff) that is more support intensive yet less profitable and less enjoyable.

Once we recognized we solved a real need in the event management business (our software allows venues to sell tickets without added–and hated–ticket fees), we gained confidence in bringing our product to market while ironing out the wrinkles any new software business faces. We’ve slogged away for week after week of 80+ hour work weeks bringing our product up to snuff, and our attention to detail and customer commitment has earned outstanding ratings for customer service.

Customer feedback provides an appreciated pat on the back and justification for the long hours we’ve put in, and in the most important metric, we’ve doubled clients year over year. The kudos, rising profits and job satisfaction certainly point to a job well done. Yet I know that our future relies on quantifiable metrics that will help us aim our budget, expertise, and time with accuracy.

That in mind, I’ve been spending time learning more about the numbers that drive decisions for successful startups, and I’m trying to assign values for standard business metrics that measure success: CAC, LTV, churn, gross margin.

My learning suggests that where human touch is involved in the making of a sale, the cost of customer acquisition (CAC) leaps exponentially over a pure web-based service. Yet human touch isn’t something that should be eschewed and quite frankly, it is a requirement for many businesses–for example, retail, medicine, or legal. But in the world of Internet businesses, human touch is considered the evil to be rooted out of any system. Try as we might to find ways to off-load some of the “human component” of our work, it ain’t gonna happen.

In my world, our customers are small venue owners that need to know there is someone on the end of the phone line to help them through a crisis. They want their hands held as they apply for their merchant accounts and gateways. And most of all, they want to feel like they matter.

So while I’ll continue to look at the numbers that drive growth and applaud the occasional web-based sale that occurs without the human touch, I know the biggest driver of our success right now is the fact that I am one member of the human race caring about the business prospects of another human whose business is their life.