McGurk: Continuous updates make SaaS products stickier than perpetual software
Jamie McGurk · a16z Podcast | Valuing Today's Fast-Growing Software Companies · Jan 2, 2019 · at 11:52
Jamie McGurk, Operating Partner at Andreessen Horowitz, discusses customer retention mechanics and software architecture differences between subscription SaaS and traditional perpetual licensing models.
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“You know, you really don't know. So you have to the stickiness of your customers really dictated by in part by the product really, because in a you have constant updates. If you're a Salesforce customer, if you're a any SAS model customer, you're constantly getting updates to the product, even on a daily, weekly, monthly basis versus, you know, you have a product that you buy and you buy maintenance for a three year period. You're making another purchase decision at the end of that three year period. So you almost have to spend to reacquire that customer if you're the company selling them the product versus in a SAS model, the purchase decision is made one time upfront. And of course you're the relationship with that customer dictates how long they stay on board, but you have the opportunity to keep that customer and make them sticky.”
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