April 2020
Responding to the COVID-19 shutdown

Welcome to The Cirrostratus Group April newsletter.

I hope you and your families continue to be safe and healthy as the COVID-19 shutdown continues. As I said last month, for those of you dealing with the challenges of loss of business, sick employees or family members I'm sorry you're having to deal with this.

In the conversations that I've had and the reading I've done, it appears that although horizontally focused SaaS businesses have challenges these types of businesses are doing ok because they don't rely on specific industries. For vertically focused SaaS businesses it depends entirely on the vertical. Verticals that support travel, restaurants, non-home based entertainment and non-essential retail generally have significant challenges. SaaS businesses supporting essential retail, logistics, supply chain and grocery businesses are doing well. Is this consistent with what you're experiencing?

There are SaaS pricing and packaging strategies that may be good options for you during the current challenges. A good set of possibilities are in this article from Openview Partners. A good example is Fender which I talk about below. I believe that there are also opportunities to make product changes to deal with the new short-term and long-term challenges. Whether the changes facilitate new realities in payments, social distancing, communication, scheduling, logistics or other areas, there very likely are opportunities to help your customers with new creative features.

Last month I talked about the advantages that SaaS businesses tend to have because of previous experience with home based and distributed work teams. Another advantage is that SaaS businesses did better than many businesses during the previous recession because of the general growth of the SaaS software model and the reduced volatility of revenue due to the subscription model. SaaS Capital previously did a review of SaaS businesses during the previous recession and I think there is value in understanding what happened to SaaS businesses during that recession and what lessons we can learn.

Stay safe and healthy.

Paul Ressler
The Cirrostratus Group  

Free Subscriptions for Fender Play

Time to sign up for guitar lessons?

In my October 2018 Newsletter I talked about how Fender was applying SaaS software concepts to their business by setting up subscription online guitar lessons. Recently, during the COVID-19 shutdown they changed their Fender Play online service by providing a valuable service to potential future customers and adding a million potential new customers. They extended their normal free trial time to 3 months, so you get free online guitar lessons for 3 months. They originally provided 100,000 free subscriptions but have increased the quantity twice and they now are providing 1 million free 3 month subscriptions during this stay at home period. You can read the details here. Although there is some small risk that some of the new customers would have paid for the service I believe that this is more than offset by the goodwill they've generated. It will be interesting to see how many of these customers they retain beyond the three months.

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