7 SaaS resilience lessons for doing business in a volatile market

Beyond the past year, we witnessed one of the most turbulent times in the history of software. Intrepid founders and teams battle seemingly endless and unprecedented obstacles – from macroeconomic uncertainty, to banking collapses, to geopolitical instability, to fears of recession. For startup leaders and operators today, it seems the blows keep coming. But know that you are not alone – even the most battle-tested leaders are challenged, as most headwinds are not idiosyncratic and affect everyone in the industry.

We have unmistakably moved into a new paradigm, and much of the industry’s thought leadership and benchmarks from the past decade—in addition to bull-market exuberance—fail to accurately capture the nuance and conditions of operate in a quick time. Cloud leaders will inevitably experience up and down markets depending on the market cycle.

As we approach the 24-month mark in this dark period and begin to see more light at the end of the tunnel with stabilizing macro conditions and recent watershed IPOs and M&As, we reflects on seven lessons about resilience based on the actions that growth-stage SaaS leaders took last year to equip founders to weather any future storms.

1. Leverage expansion as a strong growth driver

In recessionary times, companies must be prepared to face “double-whammy” headwinds that affect both new customer acquisition and existing customer expansion.

For new customer acquisition, it can be unsurprisingly more difficult to place new logos in an uncertain market environment due to frictions such as:

  • Extended sales cycles.
  • Delayed deal.
  • Increased budget review (eg, requiring C-suite sponsor sign-off for new deals).
  • Need more justification for new purchases.
  • Freezing budgets blocking new software purchases.
  • Transfer of key stakeholders.

Cloud leaders will inevitably experience up and down markets depending on the market cycle.

All of these headwinds have a rapid impact on sales efficiency. For example, in 2022 we see CAC payback periods for EMCLOUD (Emerging Cloud) companies increasing to an average of 30 months, even increasing to 40 months in Q1 2023. These statistics are poor compared to benchmarks for CAC payment periods in extreme market periodswhich is closer to 12 months for SMB-market focused accounts, 18 months for middle market-focused accounts, and 24 months for enterprise-focused accounts.

EMCLOUD: Median CAC Payback graph for Q2 2021 to Q2 2023

Image Credits: Bessemer Venture Partners

In addition, while existing customer expansion moves are also not immune to winds, there are many levers to pull on this front, such as:

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