As a global recession looms, the growth of subscription e-commerce and B2B SaaS companies is taking a breather for the first time since their unprecedented growth during COVID-19. Throughout the pandemic, the influence of money managers has had a profound impact on the growth of subscription-based services, but with soaring costs and capital becoming scarce, extending your cash runway might be more crucial than ever.
Chargebee is quite literally leading the charge when it comes to aiding subscription-based SaaS and e-commerce companies, both big and small, in managing their recurring revenues. Through a suite of products ranging from subscription automation to revenue intelligence to managing retention and receivables.
I sat down with Chargebee CMO Sanjay Manchanda to learn more about how the company is helping global subscription companies sail through a sea of shifting tides.
While the past few years have seen a pervasive growth-at-all-costs mentality, we're seeing a shift in this thinking due to the global downturn. Capital is becoming more expensive, Manchanda citing that "Cash flow is king," says “With macro uncertainty on the rise, investors are now paying less for growth at all costs. They are looking for companies that can demonstrate profitability and generate strong cash flows."
"Not to say that growth is not valued, but the emphasis now, across the board, in both private and public companies, is on profitable growth. It's a bit like the first dot com wave when everyone was chasing eyeballs, and eyeballs were interesting, but the wake-up call came, and everyone said, where's the money behind it?" explained Manchanda. "This new focus has put a greater emphasis on efficiency, with doing more-with-less becoming fashionable again."
So companies must focus on maximising revenues and improving operational efficiencies and cash flows. This requires building a robust tech stack that can provide real-time insights and a focus on automation to create greater efficiencies across the board. And this is where Chargebee aims to take centre stage on every subscription-based businesses' radar.
"Our platform helps companies automate and optimise the 'jobs to be done' that result in these greater efficiencies," says Manchanda. "So for us, the question then becomes, how do we help companies drive efficiencies in an environment where you no longer have the luxury or the time it takes to spin up a new development team to build something from scratch?"
Chargebee, with its suite of revenue management products, is helping global subscription businesses become more profitable by retaining customers better, improving the efficiency of payment collections and cash flows, monetising their products effectively, and streamlining revenue operations.
Global uncertainty makes it all the more difficult for businesses to acquire new customers. "With decisions taking longer, and thus acquiring customers becoming longer, companies are having to figure out some new and interesting ways to incentivise customers to make a decision, or find new ways of delivering better value," says Manchanda.
Having spent a day or two deep in the trenches of sales myself, it's clear that Chargebee plays a crucial role in increasing the lifetime value of their customer's customers. Industry estimates say retaining a customer is up to 5x cheaper than acquiring a new one. So, identifying customers that might be ready for an early renewal, for example, or an upgrade, and allowing and presenting these customers with these options via a self-serve mechanism at just the right time, it's easy to see how the company is delivering on the promise of helping its clients monetise.
No one comes out of a recession unscathed. Still, the companies that make the right investments in building a tech stack and revenue management platforms that help them monetise better will emerge stronger when the market cycle turns.
Even as they cautioned their portfolio companies, the legendary VC fund Sequoia believes that the current market environment is a crucible moment that will provide challenges but also opportunities for all. And companies that pursue the path of disciplined growth will be rewarded and see meaningful value appreciation.